As part of its 2016 Amended Capital Plan, CIT Group Inc. announced that it has completed the repurchase of 818,071 shares for a total of $38 million through an open-market repurchase program (OMR). Additionally, the company has entered into an accelerated share-repurchase agreement (ASR) with Morgan Stanley & Co. LLC, a division of Morgan Stanley (MS Quick QuoteMS - Free Report) , to buy back common stock worth approximately $512 million.

Following the announcement, shares of the company increased 1%.

In Oct 2016, CIT Group’s amended capital plan was approved by the Fed, which authorized the company to buy back shares worth $3.3 billion subject to two conditions. First, up to $2.975 billion of equity could be used from the proceeds of the Commercial Air sale. Second, for the remaining $325 million, the company had to issue a like amount of Tier 1 qualifying preferred stock.

Thus, the total $550 million of capital return through the OMR and the ASR has been funded using a combination of the proceeds from the sale of the commercial aircraft leasing business as well as the preferred stock issuance.

This $550 million along with the recently completed cash tender offer for $2.75 billion of CIT's common stock completes the $3.3 billion of capital return for the company.

Terms of the ASR

Under the ASR, which is expected to be completed by third-quarter 2017, CIT Group will initially receive nearly 9.25 million of its shares from Morgan Stanley, for which it will have to pay $512 million.

During the final settlement, Morgan Stanley might have to deliver extra CIT shares to the latter, or, under any circumstance, CIT Group might be required to pay in cash or give away its shares to Morgan Stanley.

Nevertheless, the actual number of shares of CIT’s common stock repurchased under the ASR will be determined based on the volume-weighted average share price during the term of the ASR. This is subject to adjustments pursuant to the terms and conditions of the ASR.

Ellen R. Alemany, Chairwoman and Chief Executive Officer of CIT Group, said, "We continue to deliver on our strategic plan to create value for our shareholders."

Given the strong capital and balance sheet position, we believe that CIT Group is well positioned to continue enhancing shareholder value through efficient capital deployment activities. The company’s efforts toward becoming a leading regional commercial banking institution through restructuring and streamlining are also commendable.

Moreover, as the results of the stress test are about to come, we believe that there are chances that CIT Group might get approval for enhanced capital deployment activities.

Shares of the company increased 54.4% in the last one year, outperforming the Zacks Categorized Financial - Miscellaneous Services industry’s growth of 26.6%.



Currently, CIT Group carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the finance space are Comerica Incorporated (CMA Quick QuoteCMA - Free Report) and Moody's Corporation (MCO Quick QuoteMCO - Free Report) .

The Zacks Consensus Estimate for Comerica was revised 8.6% upward for the current year, in the last 60 days. The company’s share price surged 78.2% in the last one year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Moody's witnessed an upward earnings estimate revision of 1.7% for the current year, in the last 60 days. Its share price increased 27% in the last one year. The company currently carries a Zacks Rank #2 (Buy).

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