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CIT Group (CIT) Q3 Earnings Beat, Revenues & Costs Decline Y/Y

CIT Group Inc.’s CIT third-quarter 2021 adjusted earnings per share of $1.84 outpaced the Zacks Consensus Estimate of $1.33 by a considerable margin. The bottom line represents a significant rise from 84 cents per share recorded in the prior-year quarter.

Results primarily benefited from a decline in operating expenses. Also, the company recorded provision benefits in the quarter, which was a major positive. The balance sheet position remained strong. However, lower revenues acted as a headwind.

After considering noteworthy items, net income available to common shareholders (GAAP basis) was $172.7 million or $1.72 per share, up from $82.9 million or 84 cents per share recorded in the year-ago quarter.

Revenues & Expenses Decline

Total net revenues (non-GAAP) were $432.1 million, down 8.8% year over year.

Net interest revenues were $256.8 million, down marginally year over year.

Total non-interest income was $310.9 million, down 10.5% year over year. The decline was due to a fall in rental income on operating lease equipment as well as other non-interest income.

Net finance margin improved 17 basis points year over year to 2.44%.

Operating expenses (excluding noteworthy items and intangible asset amortization) were $259 million, down 9.8% year over year.

Credit Quality Improves

In the reported quarter, the company recorded net provision benefits of $67.1 million against provisions of $63.3 million in the year-earlier quarter. Net charge-offs were $5 million, plunging 92.4% year over year.

Non-accrual loans declined 37.4% year over year to $405 million.

Balance Sheet Strong, Capital Ratios Improve

As of Sep 30, 2021, average interest-bearing cash and investment securities amounted to $10.62 billion, comprising $5.30 billion in interest-bearing cash, and $5.32 billion in investment securities and securities purchased under the agreement to resell.

As of Sep 30, 2021, Common Equity Tier 1 and Total Capital ratios (as calculated under the fully phased-in Regulatory Capital Rules) were 11.9% and 15.3%, respectively, compared with 9.9% and 13.1% at the end of the prior-year quarter.

Our View

CIT Group’s efforts to diversify revenues, strategic expansion initiatives and a strong balance sheet position are expected to support growth. The company’s all-stock merger deal with First Citizens BancShares, Inc., which is now expected to close in March 2022, will likely create the 20th largest bank in the United States in terms of assets.

CIT Group Inc. Price, Consensus and EPS Surprise


CIT Group Inc. price-consensus-eps-surprise-chart | CIT Group Inc. Quote

Currently, CIT Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Zions Bancorporation’s ZION third-quarter 2021 net earnings per share of $1.45 surpassed the Zacks Consensus Estimate of $1.38. The bottom line represents an increase of 43.6% from the year-ago quarter’s number.

Hancock Whitney Corporation’s HWC third-quarter 2021 adjusted earnings of $1.45 per share outpaced the Zacks Consensus Estimate of $1.29. The bottom line improved 61.1% from the prior-year quarter.

First Horizon National Corporation’s FHN third-quarter 2021 earnings per share of 50 cents beat the Zacks Consensus Estimate of 41 cents. Results excluded an after-tax impact of 9 cents per share from notable items related to the IBERIABANK Corporation Merger and early retirement of certain trust preferred securities.

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