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Section 1: 8-K (8-K)

cit-8k_20191022.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 22, 2019 (October 22, 2019)

CIT GROUP INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

 

001-31369

 

65-1051192

(State or other jurisdiction

 

(Commission File Number)

 

(IRS Employer

of incorporation)

 

 

 

Identification No.)

 

11 W. 42nd Street
New York, New York 10036

(Address of registrant’s principal executive office)

Registrant's telephone number, including area code:    (212) 461-5200

Not Applicable

_________________________________________________________________________________________

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

CIT

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§240.12b–2 of this chapter). 

 

Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  


 


 

Section 2 – Financial Information

Item 2.02.  Results of Operations and Financial Condition.

This Current Report on Form 8-K includes as an exhibit a press release, dated October 22, 2019, reporting the financial results of CIT Group Inc. (the “Company”) as of and for the quarter ended September 30, 2019. The press release is attached as Exhibit 99.1. This press release includes certain non-GAAP financial measures.  A reconciliation of those measures to the most directly comparable GAAP measures is included as a table to the press release.  The information reported under this Item 2.02, including Exhibit 99.1, shall be considered furnished, not filed, for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Section 7 – Regulation FD

Item 7.01.  Regulation FD Disclosure.

In addition, this Form 8-K includes a copy of the Company’s presentation to analysts and investors of its Third Quarter 2019 Financial Results for the quarter ended September 30, 2019, which is attached as Exhibit 99.2.  The information included in Exhibit 99.2 shall be considered furnished, not filed, for purposes of the Exchange Act.  The Company also provides supplementary financial information on its website, which is not incorporated by reference in this Form 8-K.

Section 9 – Financial Statements and Exhibits

Item 9.01.   Financial Statements and Exhibits.

(d)

Exhibits.

 

    

99.1     

Press release issued by CIT Group Inc. on October 22, 2019 reporting its financial results as of and for the quarter ended September 30, 2019.

    

99.2

Presentation by CIT Group Inc. on  October 22, 2019 regarding its Third Quarter 2019 Financial Results.

    

104

Cover Page Interactive Data File, formatted in Inline XBRL (embedded within the Inline XBRL document).

 

Forward-Looking Statements

This Form 8-K contains forward-looking statements within the meaning of applicable federal securities laws that are based upon our current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. The words “expect,” “anticipate,” “estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,” “project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,” “pursue,” “commence,” “seek,” “may,” “will,” “would,” “could,” “should,” “believe,” “potential,” “continue,” or the negative of any of those words or similar expressions is intended to identify forward-looking statements. All statements contained in this Form 8-K, other than statements of historical fact, including without limitation, statements about our plans, strategies, prospects and expectations regarding future events and our financial performance, are forward-looking statements that involve certain risks and uncertainties. In particular, any projections or expectations regarding the proposed acquisition by CIT Bank of Mutual of Omaha Bank described herein, our future revenues, expenses, earnings, capital expenditures, deposits or stock price, as well as the assumptions on which such expectations are based, are such forward-looking statements reflecting only our current judgment and are not guarantees of future performance or results. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results, and our actual results may differ materially. Important factors that could cause our actual results to be materially different from our expectations include, among others, the risk that: (i) CIT Bank is unsuccessful in implementing its strategy and business plan, including, planned or potential acquisitions or divestitures; (ii) CIT Bank is unable to react to and address key business and regulatory issues; (iii) CIT Bank is unable to achieve the projected revenue growth from its new business initiatives or the projected expense reductions from efficiency improvements; (iv) CIT Bank becomes subject to liquidity constraints and higher funding costs; (v) the parties to the proposed transaction described in this Form 8-K do not obtain regulatory or other approvals or satisfy closing conditions to the transaction on a timely basis, or at all, or approvals are subject to conditions that are not anticipated; (vi) CIT Bank experiences (A) difficulties and delays in integrating CIT Bank’s and Mutual of Omaha Bank’s respective businesses or fully realizing cost savings and other benefits, or

 


 

(B) business disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities; and (vii) changes in asset quality and credit risk, interest rates and capital markets or other economic conditions. We further describe these and other risks that could affect our results in Item 1A, “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on the forward-looking statements contained in this Form 8-K. These forward-looking statements speak only as of the date on which the statements were made. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except where expressly required by law.

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

  

CIT GROUP INC.

 

(Registrant)

 

 

 

 

By:

/s/ John Fawcett

 

 

John Fawcett

 

 

Executive Vice President &

Chief Financial Officer

 

 

 

 

 

 

Dated:  October 22, 2019

 

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

cit-ex991_8.htm

 

 

 

Exhibit 99.1

 

CIT Announces Third Quarter 2019 Results                

NEW YORK – Oct. 22, 2019 – CIT Group Inc. (NYSE: CIT) today reported third quarter 2019 results.

Financial Results

Net income available to common shareholders of $143 million or $1.50 per diluted common share.

Excluding noteworthy items, net income available to common shareholders of $123 million or $1.29 per diluted common share1.

 

Chairwoman and CEO Commentary

“We posted solid third quarter results, despite a challenging rate environment,” said CIT Chairwoman and Chief Executive Officer Ellen R. Alemany. “We grew average core loans and leases by 2 percent, had strong credit performance, maintained disciplined expense management and increased tangible book value per share to $55.60. We expect the acquisition of Mutual of Omaha Bank to accelerate our strategic plan and improve returns. We remain focused on closing the transaction in the first quarter, pending regulatory approval.”

 

Strategic Pillars

Grow Core Businesses

Average loans and leases up 1% from the prior quarter. Average core loans and leases2 up 2% from the prior quarter.

Pending acquisition of Mutual of Omaha Bank to provide low-cost stable Homeowners Association deposits and expand our commercial banking franchise.

Optimize Balance Sheet

Issued $550 million in senior unsecured debt due 2025 at 2.969% at CIT Bank.

Tangible book value per share3 of $55.60, up 11% in the past year.

Enhance Operating Efficiency

Continued disciplined expense management.

Remain on track to achieve operating expense reduction target.

Maintain Strong Risk Management

Maintained strong credit performance and disciplined underwriting standards.

Credit reserves stable at 1.55% of total portfolio and 1.87% of Commercial Banking portfolio.

 

1 

Net income available to common shareholders excluding noteworthy items is a non-GAAP measure. See “Non-GAAP Measurements” at the end of this press release and starting on page 17 for a reconciliation of non-GAAP to GAAP financial information.

2 

Average core loans and leases is a non-GAAP measure. Core portfolios are total loans and leases net of credit balances of factoring clients, NACCO assets held for sale, Legacy Consumer Mortgages (LCM) and Non-Strategic Portfolios (NSP). See “Non-GAAP Measurements” at the end of this press release and starting on page 17 for a reconciliation of non-GAAP to GAAP financial information.

3 

Tangible book value per share is a non-GAAP measure. See “Non-GAAP Measurements” at the end of this press release and starting on page 17 for a reconciliation of non-GAAP to GAAP financial information.

 

 

1

 


 

 

 

 

Selected Financial Highlights:

 

 

Select Financial Highlights*

 

 

 

 

 

 

 

 

 

 

 

 

3Q19 change from

 

($ in millions)

3Q19

 

 

2Q19

 

 

3Q18

 

 

2Q19

 

 

3Q18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net finance revenue(1)

$

353

 

 

$

361

 

 

$

389

 

 

$

(7

)

 

-2

%

 

$

(36

)

 

-9

%

Non-interest income

 

101

 

 

 

106

 

 

 

86

 

 

 

(5

)

 

-5

%

 

 

15

 

 

17

%

Total net revenue(1)

 

454

 

 

 

467

 

 

 

476

 

 

 

(13

)

 

-3

%

 

 

(21

)

 

-4

%

Operating expenses and loss on debt extinguishment

 

311

 

 

 

268

 

 

 

267

 

 

 

43

 

 

16

%

 

 

44

 

 

17

%

Income from continuing operations before credit provision

 

143

 

 

 

199

 

 

 

209

 

 

 

(55

)

 

-28

%

 

 

(65

)

 

-31

%

Provision for credit losses

 

27

 

 

 

29

 

 

 

38

 

 

 

(2

)

 

-7

%

 

 

(12

)

 

-30

%

Income from continuing operations before (benefit) provision for income taxes

 

117

 

 

 

170

 

 

 

171

 

 

 

(53

)

 

-31

%

 

 

(54

)

 

-32

%

(Benefit) provision for income taxes

 

(26

)

 

 

33

 

 

 

41

 

 

 

(59

)

NM

 

 

 

(67

)

NM

 

Income from continuing operations

 

143

 

 

 

137

 

 

 

129

 

 

 

6

 

 

4

%

 

 

13

 

 

10

%

Income from discontinued operations, net of taxes

 

-

 

 

 

1

 

 

 

2

 

 

 

(1

)

 

-100

%

 

 

(2

)

 

-100

%

Net income

 

143

 

 

 

138

 

 

 

132

 

 

 

5

 

 

4

%

 

 

11

 

 

9

%

Preferred stock dividends

 

-

 

 

 

9

 

 

 

-

 

 

 

(9

)

NM

 

 

 

-

 

NM

 

Net income available to common shareholders

$

143

 

 

$

128

 

 

$

132

 

 

$

15

 

 

11

%

 

$

11

 

 

9

%

Income from continuing operations available to common shareholders

$

143

 

 

$

127

 

 

$

129

 

 

$

15

 

 

12

%

 

$

13

 

 

10

%

Noteworthy items(2)

 

(20

)

 

 

-

 

 

 

2

 

 

 

(20

)

 

 

 

 

 

(22

)

 

 

 

Income from continuing operations available to common shareholders, excluding noteworthy items(1)(2)

$

123

 

 

$

127

 

 

$

131

 

 

$

(5

)

 

-4

%

 

$

(9

)

 

-6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per common share

$

1.50

 

 

$

1.33

 

 

$

1.15

 

 

$

0.17

 

 

13

%

 

$

0.35

 

 

31

%

Diluted income per common share, excluding noteworthy items

$

1.29

 

 

$

1.33

 

 

$

1.17

 

 

$

(0.04

)

 

-3

%

 

$

0.12

 

 

10

%

Average diluted common shares outstanding (in thousands)

 

95,018

 

 

 

96,483

 

 

 

114,007

 

 

 

(1,465

)

 

-2

%

 

 

(18,989

)

 

-17

%

Tangible book value per common share (TBVPS)(1)

$

55.60

 

 

$

54.29

 

 

$

50.02

 

 

$

1.32

 

 

2

%

 

$

5.58

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average loans and leases (includes HFS and net of credit balances)

$

37,133

 

 

$

36,658

 

 

$

36,441

 

 

$

476

 

 

1

%

 

$

693

 

 

2

%

Average core loans and leases (includes HFS and net of credit balances)

 

34,798

 

 

 

34,014

 

 

 

32,224

 

 

 

783

 

 

2

%

 

 

2,574

 

 

8

%

Average earning assets (AEA)(1)

 

46,245

 

 

 

46,148

 

 

 

45,377

 

 

 

97

 

 

0

%

 

 

868

 

 

2

%

New business volume

 

3,369

 

 

 

3,411

 

 

 

3,130

 

 

 

(42

)

 

-1

%

 

 

238

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key performance metrics, continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net finance margin(1)

 

3.06

%

 

 

3.13

%

 

 

3.43

%

 

-7bps

 

 

 

 

 

-38bps

 

 

 

 

Net efficiency ratio(1)

 

63.8

%

 

 

56.1

%

 

 

54.1

%

 

NM

 

 

 

 

 

NM

 

 

 

 

Net charge-offs

 

0.34

%

 

 

0.40

%

 

 

0.35

%

 

-6bps

 

 

 

 

 

-1bps

 

 

 

 

Return on AEA (ROAEA)(1)

 

1.24

%

 

 

1.10

%

 

 

1.14

%

 

13bps

 

 

 

 

 

9bps

 

 

 

 

Return on tangible common equity (ROTCE)(1)

 

11.39

%

 

 

10.34

%

 

 

9.66

%

 

NM

 

 

 

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key performance metrics, continuing operations excluding Noteworthy Items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net finance margin(1)(2)

 

3.06

%

 

 

3.13

%

 

 

3.36

%

 

-7bps

 

 

 

 

 

-30bps

 

 

 

 

Net efficiency ratio(1)(2)

 

57.5

%

 

 

56.1

%

 

 

53.9

%

 

NM

 

 

 

 

 

NM

 

 

 

 

Net charge-offs

 

0.34

%

 

 

0.40

%

 

 

0.35

%

 

-6bps

 

 

 

 

 

-1bps

 

 

 

 

ROAEA(1)(2)

 

1.06

%

 

 

1.10

%

 

 

1.15

%

 

-4bps

 

 

 

 

 

-10bps

 

 

 

 

ROTCE(1)(2)

 

9.82

%

 

 

10.34

%

 

 

9.78

%

 

-52bps

 

 

 

 

 

4bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)These balances and metrics are non-GAAP measures. See "Non-GAAP Measurements" at the end of this press release and beginning on page 17 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items. TBVPS is detailed on page 15.

 

(2)We exclude noteworthy items due to their episodic nature and size. See "Non-GAAP Measurements" at the end of this press release and beginning on page 17 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.

 

*Certain balances may not sum due to rounding.

 

Unless otherwise indicated, all references below relate to continuing operations.

 

 

 

 

2

 


 

 

 

Third Quarter Financial Highlights:

Net finance margin of 3.06% was down 7 bps from the prior quarter, primarily reflecting lower yields on loans and cash & investment securities.

Other non-interest income decreased $5 million from the prior quarter to $101 million, primarily driven by a decrease in net gains on sale of loans in Commercial Finance from the prior quarter.

Operating expenses, excluding noteworthy items and intangible asset amortization, decreased $1 million from the prior quarter to $261 million, including the impact of higher professional fees related to the pending Mutual of Omaha Bank transaction.

Net efficiency ratio excluding noteworthy items of 57% increased slightly from 56% in the prior quarter, reflecting the decrease in total net revenue.

Provision for credit losses was $27 million, down from $29 million in the prior quarter.

Net charge-offs of $26 million (0.34% of average loans) included $27 million (0.43% of average loans) in the Commercial Banking segment. Non-accrual loans increased $27 million and represents 0.95% of loans.

Effective tax rate excluding noteworthy items of 24%.

Loans and leases to deposit ratio was 91% at CIT Bank and 108% at CIT Group, both down slightly from the prior quarter primarily due to deposit growth.

Tangible book value per share of $55.60 increased 2.4% from the prior quarter.

CET1 ratio remained unchanged at 11.6%, reflecting quarterly earnings, growth in risk weighted assets (RWA) and a decrease in disallowed deferred tax assets.

ROTCE excluding noteworthy items was 9.8%. ROTCE excluding noteworthy items, normalized for the preferred dividend4, was 9.5%.

 

Noteworthy Items

Financial results for the third quarter included the following noteworthy items:

$53 million ($0.56 per diluted common share) positive tax provision resulting from the assertion of indefinite reinvestment of undistributed earnings in our Canadian operations.

$22 million (after tax) ($0.23 per diluted common share) impairment related to the sale of our Livingston, NJ, office building.

$11 million (after tax) ($0.12 per diluted common share) restructuring charge related to our strategic initiatives to support operating efficiency improvement.

 

 

 

4 

ROTCE, normalized for the preferred dividend, is a non-GAAP measure. See “Non-GAAP Measurements” at the end of this press release and starting on page 17 for a reconciliation of non-GAAP to GAAP financial information.

 

 

3

 


 

 

 

Income Statement Highlights:

Net Finance Revenue

 

Net Finance Revenue*

 

 

 

 

 

 

 

 

 

 

 

 

3Q19 change from

 

($ in millions)

3Q19

 

 

2Q19

 

 

3Q18

 

 

2Q19

 

 

3Q18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

503

 

 

$

516

 

 

$

474

 

 

$

(12

)

 

-2

%

 

$

30

 

 

6

%

Net operating lease revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income on operating leases

 

212

 

 

 

213

 

 

 

264

 

 

 

(1

)

 

-1

%

 

 

(53

)

 

-20

%

Depreciation on operating lease equipment

 

76

 

 

 

77

 

 

 

78

 

 

 

(1

)

 

-1

%

 

 

(2

)

 

-3

%

Maintenance and other operating lease expenses

 

42

 

 

 

48

 

 

 

57

 

 

 

(6

)

 

-13

%

 

 

(15

)

 

-26

%

Total net operating lease revenue(1)

 

94

 

 

 

88

 

 

 

130

 

 

 

6

 

 

7

%

 

 

(36

)

 

-28

%

Interest expense

 

244

 

 

 

243

 

 

 

214

 

 

 

1

 

 

0

%

 

 

30

 

 

14

%

Net finance revenue (2)

$

353

 

 

$

361

 

 

$

389

 

 

$

(7

)

 

-2

%

 

$

(36

)

 

-9

%

Noteworthy items(3)

 

-

 

 

 

-

 

 

 

(9

)

 

 

-

 

 

 

 

 

 

9

 

 

 

 

Net finance revenue, excluding noteworthy items(2)

$

353

 

 

$

361

 

 

$

381

 

 

$

(7

)

 

-2

%

 

$

(28

)

 

-7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

$

46,245

 

 

$

46,148

 

 

$

45,377

 

 

$

97

 

 

0

%

 

$

868

 

 

2

%

Net finance margin(2)

 

3.06

%

 

 

3.13

%

 

 

3.43

%

 

-7bps

 

 

 

 

 

-38bps

 

 

 

 

Net finance margin, excluding noteworthy items(2)

 

3.06

%

 

 

3.13

%

 

 

3.36

%

 

-7bps

 

 

 

 

 

-30bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)Net operating lease revenue is a non-GAAP measure, and is reconciled in the table as a combination of GAAP balances, rental income on operating leases less depreciation on operating lease equipment and maintenance and other operating lease expenses. Net operating lease revenue is used by management to monitor portfolio performance and returns on purchased equipment.

 

(2)These balances and metrics are non-GAAP measures used to measure the profitability of our earning assets. See "Non-GAAP Measurements" at the end of this press release and beginning on page 17 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.

 

(3)See "Non-GAAP measurements" for a listing of Noteworthy items.

 

*Certain balances may not sum due to rounding.

 

Net finance revenue was $353 million, down from $361 million in the prior quarter.

 

o

Lower income on loans and cash & investment securities from lower market rates.

 

o

Lower income from interest recoveries on commercial loans and lower purchase accounting accretion.

 

o

Lower maintenance expenses from productivity improvements and a $3 million lease warranty recovery.

Net finance margin (net finance revenue as a percentage of average earning assets) was 3.06%, a 7 bps decrease from 3.13% in the prior quarter driven by the trends noted above.

Excluding noteworthy items, which impacted depreciation on operating lease equipment in the year-ago quarter, net finance revenue decreased $28 million compared to the year-ago quarter.

 

o

Higher interest costs driven by a higher level of deposits.

 

o

Higher interest income on commercial loans driven by loan growth.

 

o

Lower net operating lease revenue, as NACCO was sold in the fourth quarter of 2018.

Compared to the year-ago quarter, net finance margin excluding noteworthy items decreased 30 bps.

 

o

Lower operating lease net yields in Rail.

 

o

Higher deposit rates.

 

o

Lower borrowing costs from decreases in unsecured, secured and FHLB debt balances.


 

 

4

 


 

 

 

 

Other Non-Interest Income

 

Other Non-Interest Income*

 

 

 

 

 

 

 

 

 

 

 

 

3Q19 change from

 

($ in millions)

3Q19

 

 

2Q19

 

 

3Q18

 

 

2Q19

 

 

3Q18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenues

$

29

 

 

$

28

 

 

$

28

 

 

$

2

 

 

6

%

 

$

1

 

 

4

%

Factoring commissions

 

25

 

 

 

24

 

 

 

27

 

 

 

1

 

 

6

%

 

 

(2

)

 

-7

%

Gains on leasing equipment, net of impairments

 

18

 

 

 

17

 

 

 

14

 

 

 

1

 

 

5

%

 

 

4

 

 

32

%

BOLI income

 

8

 

 

 

7

 

 

 

7

 

 

 

1

 

 

8

%

 

 

1

 

 

20

%

Gains on investment securities, net of impairments

 

2

 

 

 

2

 

 

 

4

 

 

 

(1

)

 

-24

%

 

 

(2

)

 

-56

%

Property tax income

 

5

 

 

 

6

 

 

 

-

 

 

 

(1

)

 

-12

%

 

 

5

 

NM

 

Other revenues

 

14

 

 

 

23

 

 

 

7

 

 

 

(9

)

 

-37

%

 

 

7

 

 

100

%

Total other non-interest income

 

101

 

 

 

106

 

 

 

86

 

 

 

(5

)

 

-5

%

 

 

15

 

 

17

%

Noteworthy items(1)

 

-

 

 

 

-

 

 

 

11

 

 

 

-

 

 

 

 

 

 

(11

)

 

 

 

Total other non-interest income, excluding noteworthy items(2)

$

101

 

 

$

106

 

 

$

97

 

 

$

(5

)

 

-5

%

 

$

4

 

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)See "Non-GAAP measurements" for a listing of Noteworthy items.

 

(2)Total other non-interest income, excluding noteworthy items is a non-GAAP measure and is reconciled to the GAAP balance, total other non-interest income, in the table above. Total other non-interest income, excluding noteworthy items is used by management to monitor the underlying level of income.

 

*Certain balances may not sum due to rounding.

 

Other non-interest income was $101 million, compared to $106 million in the prior quarter.

 

o

Lower other revenues from a decrease in net gains on sale of loans in Commercial Finance.

Excluding noteworthy items, which impacted other revenues in the year-ago quarter, other non-interest income increased by $4 million compared to the year-ago quarter.

 

o

Higher property tax income from the adoption of the lease accounting standard in 2019.

 

o

Higher gains on sale of leasing equipment.

 

o

Lower factoring commissions.

 

o

Lower gains on investment securities.

 

o

Lower other revenues, which included lower income on derivatives partially offset by higher net gains on the sale of loans.


 

 

5

 


 

 

 

 

Operating Expenses

 

Operating Expenses*

 

 

 

 

 

 

 

 

 

 

 

 

3Q19 change from

 

($ in millions)

3Q19

 

 

2Q19

 

 

3Q18

 

 

2Q19

 

 

3Q18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

$

138

 

 

$

141

 

 

$

137

 

 

$

(4

)

 

-3

%

 

$

0

 

 

0

%

Technology

 

34

 

 

 

35

 

 

 

32

 

 

 

(0

)

 

-1

%

 

 

2

 

 

6

%

Professional fees

 

21

 

 

 

17

 

 

 

17

 

 

 

4

 

 

27

%

 

 

4

 

 

26

%

Insurance

 

13

 

 

 

14

 

 

 

16

 

 

 

(1

)

 

-8

%

 

 

(3

)

 

-21

%

Net occupancy expense

 

45

 

 

 

15

 

 

 

16

 

 

 

30

 

NM

 

 

 

28

 

NM

 

Advertising and marketing

 

14

 

 

 

6

 

 

 

11

 

 

 

9

 

NM

 

 

 

4

 

 

36

%

Property tax expense

 

6

 

 

 

6

 

 

 

-

 

 

 

-

 

 

0

%

 

 

6

 

NM

 

Restructuring costs

 

15

 

 

 

-

 

 

 

-

 

 

 

15

 

NM

 

 

 

15

 

NM

 

Intangible asset amortization

 

6

 

 

 

6

 

 

 

6

 

 

 

-

 

 

0

%

 

 

(0

)

 

-3

%

Other expenses

 

20

 

 

 

30

 

 

 

28

 

 

 

(10

)

 

-33

%

 

 

(9

)

 

-30

%

Total operating expenses

 

311

 

 

 

268

 

 

 

263

 

 

 

43

 

 

16

%

 

 

48

 

 

18

%

Noteworthy items

 

44

 

 

 

-

 

 

 

-

 

 

 

44

 

NM

 

 

 

44

 

NM

 

Intangible asset amortization

 

6

 

 

 

6

 

 

 

6

 

 

 

-

 

 

0

%

 

 

(0

)

 

-3

%

Operating expenses, excluding noteworthy items and intangible asset amortization(1)

$

261

 

 

$

262

 

 

$

257

 

 

$

(1

)

 

0

%

 

$

4

 

 

1

%

Net efficiency ratio(2)

 

63.8

%

 

 

56.1

%

 

 

54.1

%

 

NM

 

 

 

 

 

NM

 

 

 

 

Net efficiency ratio, excluding noteworthy items and intangible asset amortization(2)