CIT Income Rises to $142.1m in Q210 After $3bn Debt Pay-Down
CIT Group (CIT), a commercial lender that provides financing to small and medium businesses, reported $142.1m of net income for Q210, up from $97.3m in the previous quarter, after the company raised capital to pay down $3bn of debt. CIT, a bank holding company with more than $40bn in finance and leasing assets, provides capital to more than 1m small business and middle-market clients. The effort to de-leverage and pay down debt arrives after the company in late 2009 sought bankruptcy restructuring on the heels of several private capital infusions. CIT in October 2009 expanded an existing $3bn senior secured credit facility with a $4.5bn private capital infusion from a diverse group of lenders. During Q210, the company said it focused on cleaning its balance sheet, reducing total assets by $3.1bn to $54.9bn. Asset sales, net portfolio collections and $800m of new financings enabled CIT to pay down $3bn of its debt. "We improved our funding flexibility, repaid higher cost debt, streamlined our portfolio and largely completed the build-out of our senior management team," said chairman and CEO John Thain. "We remain committed to increasing the value of our commercial franchises and supporting the small business and middle market sectors that are vital to the U.S. economy." Thain, previously chairman and CEO of Merrill Lynch until its sale to Bank of America (BAC), joined CIT in February 2010 as part of a move to shuffle senior leadership at the company. CIT's new business volume of more than $1bn represented a 14% growth from the previous quarter. The firm's corporate finance unit completed the sale of a joint venture and other assets totaling $890m, proceeds of which the company also used to pay down debt. Corporate finance also drove an increase in companywide non-accrual loans to $2.1bn in the quarter, up from $120m in the previous quarter. Net charge-offs of $106m were up from $64m. Write to Diana Golobay. Disclosure: the author holds no relevant investments.