Profits at CIT Group declined during the second quarter, dragged down by a mix of higher deposit costs, an increase in loan-loss reserves, as well a range of one-time issues related to its restructuring.
The New York company on Tuesday said it earned $126 million, or 19% less than in last year's second quarter. Earnings per share were 94 cents, or 5 cents short of an estimate of analysts compiled by FactSet Research Systems.
The year-over-year decline was influenced by the sale of CIT's commercial air business, which closed in the second quarter of 2017.
In a press release, Chairwoman and CEO Ellen Alemany praised the results, describing CIT's "steady progress" on its turnaround plan. The company is in the
Alemany highlighted the company's progress in gathering retail deposits, noting that its online bank added $1.5 billion in average deposits and 20,000 customers during the quarter. She also drew attention to CIT's business capital division, which "posted another quarter of solid growth, which was fueled by the investments we have made in technology and talent in our equipment financing operation," she said.
Business capital loans, primarily for midsize companies, climbed 8%, to $6.7 billion.
Credit costs weighed on the $49.8 billion-asset CIT’s results. The provision for losses rose to $32.9 million from $4.4 million a year earlier, due to higher reserves in the company’s commercial finance division.
Net interest income was flat at $268.4 million. The net interest margin sunk 15 basis points, to 3.29%, due in part to higher deposit and borrowing costs.
Total loans rose 1%, to $36.4 billion, as stronger commercial lending was offset by the sale of the Financial Freedom reverse mortgage business, which closed during the second quarter.
Noninterest revenue was a bright spot, jumping 18%, to $396.7 million, thanks to stronger rental income, as well as a one-time gain on the sale of the reverse mortgage portfolio.
Noninterest expenses, meanwhile, plunged 28%, to $427.5 million, on declines in several areas, including compensation, professional fees and insurance.
