CIT Group reported a net loss for the quarter ended September 30, 2012 of $305 million compared to a net loss of $32.8 million for the third quarter of 2011. The current period includes charges of $471 million related to the redemption of $4.6 billion of high cost debt, while the year-ago period included charges of $169 million related to the redemption of the $3 billion first lien term loan and approximately $1.5 billion of high cost debt. Pre-tax income excluding debt redemption charges was $170 million, down modestly from $176 million in the year-ago quarter. The net loss for the nine months ended September 30, 2012 was $822 million including debt redemption charges of $1.4 billion, compared to a net loss of $17 million including debt redemption charges of $0.4 billion, in the comparable 2011 period.
 
“We achieved several strategic milestones this quarter that will lower our funding costs and better position CIT for future profitability,” said John Thain, Chairman and Chief Executive Officer. “We eliminated the last of our $31 billion of restructuring-related debt, grew commercial assets for the fourth consecutive quarter, and exceeded $3.5 billion in Internet deposits at CIT Bank. We will continue to focus on achieving our financial targets as we meet the needs of our small business and middle market clients.”

Summary of Third Quarter Financial Results

Third quarter operating results reflect continued solid business activity and execution of our liability management strategy. While we reported a $301 million pre-tax loss for the quarter, pre-tax income excluding debt redemption charges was $170 million, compared to $176 million in the year-ago quarter and $245 million in the second quarter. Pre-tax income excluding debt redemption charges and net FSA accretion/amortization was $103 million, up from $91 million in the year-ago period but down sequentially primarily due to lower gains on loan sales.

Total assets at September 30, 2012 was $43.6 billion, up $0.8 billion from June 30, 2012, but down from $44.6 billion at September 30, 2011 as growth in the commercial portfolio was offset by sales and runoff of over $3 billion of government-guaranteed student loans over the past four quarters.

Commercial financing and leasing assets increased to $29.6 billion, up $0.6 billion from June 30, 2012 and $2.6 billion from a year-ago. Total loans rose approximately $300 million during the quarter to $20.4 billion but declined $1.4 billion from a year ago due to the decline in consumer assets. Operating lease equipment increased to $12.1 billion, up approximately $0.2 billion since June 30, 2012 and nearly $1 billion from September 30, 2011, reflecting aircraft and railcar deliveries. Cash and short-term investments increased $0.2 billion from June 30, 2012 to $7.2 billion, largely due to higher cash balances at CIT Bank reflecting the success of raising deposits.
 
Funded new business volume of $2.2 billion increased 16% from the prior-year quarter, while committed new business volume of $2.5 billion increased 7% reflecting strong increases in Corporate Finance and Vendor Finance. Compared to the second quarter, volume decreased in Corporate Finance and Vendor Finance, as well as in Transportation Finance, which had fewer scheduled deliveries. Trade Finance factoring volume of $6.4 billion increased 8% sequentially, reflecting seasonal trends, but declined by approximately 6% from the year-ago quarter.

Vendor Finance

Financing and leasing assets grew to $5.2 billion, representing increases of 3% from June 30, 2012 and 7% from a year ago. Funded new business volume was $705 million, a 9% increase from the prior-year quarter but down sequentially. Essentially all U.S. funded volume in the current quarter was originated by CIT Bank.

Non-accrual loans and delinquencies declined from a year ago and were essentially unchanged from June 30, 2012. Net charge-offs rose modestly from prior periods due in part to lower recoveries.

Read the full CIT earnings press release.