CIT profits plunge on restructuring costs

CIT Group’s exit from its commercial air and reverse-mortgage-servicing businesses cost it heavily in the fourth quarter.

The $64.2 billion-asset company swung to a $1.2 billion loss from a $144.5 million profit a year earlier. The loss per common share was $5.71.

The results, reported Tuesday, were driven by expenses associated with CIT’s year-and-a-half-long restructuring effort. The Livingston, N.J., company recorded a loss of $730.5 million on discontinued operations due to various tax and accounting charges.

CIT announced in October that it would sell its $10 billion commercial aircraft division to HNA Group in China. The company is also in the process of shedding its Financial Freedom reverse mortgage unit, which it acquired through its August 2015 purchase of OneWest Bank in Pasadena, Calif.

Additionally, in October the company completed the sale of its Canadian commercial lending division to Laurentian Bank in Montreal.

CITIZENS FINANCIAL GROUP, INC./PR NEWSWIRE/Newscom

“Our recent actions to transform the company and address legacy issues significantly affected our financial results but were necessary measures in our journey to simplify and strengthen the company for the future,” Chairman and CEO Ellen Alemany said.

Outside of the discontinued businesses, it was still a tough quarter for CIT.

Net interest income was $296.6 million, or flat from a year earlier. The net finance margin declined 5 basis points to 3.59%. Total loans dipped 3% to $29.5 billion.

Noninterest income plunged 49% to $140.6 million partly because of charges associated with a total return swap in its Canadian business.

Noninterest expenses rose 42% to $843.3 million as restructuring costs and a $333.7 million goodwill impairment charge in consumer banking overshadowed declines in compensation.