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CIT Group (CIT) Up 1.9% on Q2 Earnings Beat, Revenues Down
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Shares of CIT Group Inc. gained 1.9% following the release of second-quarter 2019 results. Earnings from continuing operations of $1.32 per share surpassed the Zacks Consensus Estimate of $1.13. In the prior-year quarter, the company recorded adjusted earnings from continuing operations of $1.00. Notably, the reported quarter did not have any noteworthy items.
Results benefited from stable operating expenses, lower provisions and a modest rise in net interest revenues. However, lower non-interest income was a headwind. Moreover, capital ratios deteriorated during the quarter.
Net income available to common shareholders (GAAP basis) was $128.2 million or $1.33 per share, up from $117.4 million or 94 cents per share in the prior-year quarter.
Revenues Decline, Expenses Stable
Total net revenues (non-GAAP) were $466.8 million, down 11% year over year. Moreover, the figure lagged the Zacks Consensus Estimate of $469 million.
Net interest revenues were $272.8 million, up 1.6% year over year.
Total non-interest income was $319.1 million, decreasing 19.6% from the year-ago quarter.
Net finance margin contracted 24 basis points to 3.13%.
Operating expenses (excluding intangible asset amortization) were $262 million, on par with the prior-year quarter level.
Credit Quality: A Mixed Bag
Provision for credit losses was $29 million, down 12.1% from the year-ago quarter. Also, non-accrual loans decreased 7.2% to $271 million.
However, net charge-offs were $31 million, up substantially from $15 million recorded in the prior-year quarter.
Strong Balance Sheet, Capital Ratios Worsen
As of Jun 30, 2019, interest bearing cash and investment securities amounted to $9.5 billion comprising $1.4 billion in interest bearing cash, and $8.1 billion in investment securities and securities purchased under the agreement to resell.
As of Jun 30, 2019, Common Equity Tier 1 and Total Capital ratios (as calculated under the fully phased-in Regulatory Capital Rules) were 11.6% and 14.3%, respectively, down from 13.2% and 16.0% in the prior-year quarter end.
Share Repurchase Update
During the reported quarter, CIT Group repurchased 3.2 million shares for $158.8 million. As of Jun 30, 2019, roughly $112 million share buyback authorization remained.
Our Viewpoint
CIT Group’s business streamlining initiatives along with the improving economy, rise in demand for financing of inventories and capital equipment will continue to support profitability. However, worsening credit quality is a major near-term concern.
Washington Federal’s (WAFD - Free Report) third-quarter fiscal 2019 (ended Jun 30) earnings were 67 cents per share, surpassing the Zacks Consensus Estimate of 64 cents. The figure reflected year-over-year growth of 10%.
Hancock Whitney Corporation’s (HWC - Free Report) second-quarter 2019 operating earnings per share of $1.01 were in line with the Zacks Consensus Estimate. The bottom line was 5.2% higher than the year-ago quarter figure.
East West Bancorp’s (EWBC - Free Report) second-quarter 2019 adjusted earnings per share of $1.24 were in line with the Zacks Consensus Estimate. Also, the figure was up 5.1% from the prior-year quarter.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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CIT Group (CIT) Up 1.9% on Q2 Earnings Beat, Revenues Down
Shares of CIT Group Inc. gained 1.9% following the release of second-quarter 2019 results. Earnings from continuing operations of $1.32 per share surpassed the Zacks Consensus Estimate of $1.13. In the prior-year quarter, the company recorded adjusted earnings from continuing operations of $1.00. Notably, the reported quarter did not have any noteworthy items.
Results benefited from stable operating expenses, lower provisions and a modest rise in net interest revenues. However, lower non-interest income was a headwind. Moreover, capital ratios deteriorated during the quarter.
Net income available to common shareholders (GAAP basis) was $128.2 million or $1.33 per share, up from $117.4 million or 94 cents per share in the prior-year quarter.
Revenues Decline, Expenses Stable
Total net revenues (non-GAAP) were $466.8 million, down 11% year over year. Moreover, the figure lagged the Zacks Consensus Estimate of $469 million.
Net interest revenues were $272.8 million, up 1.6% year over year.
Total non-interest income was $319.1 million, decreasing 19.6% from the year-ago quarter.
Net finance margin contracted 24 basis points to 3.13%.
Operating expenses (excluding intangible asset amortization) were $262 million, on par with the prior-year quarter level.
Credit Quality: A Mixed Bag
Provision for credit losses was $29 million, down 12.1% from the year-ago quarter. Also, non-accrual loans decreased 7.2% to $271 million.
However, net charge-offs were $31 million, up substantially from $15 million recorded in the prior-year quarter.
Strong Balance Sheet, Capital Ratios Worsen
As of Jun 30, 2019, interest bearing cash and investment securities amounted to $9.5 billion comprising $1.4 billion in interest bearing cash, and $8.1 billion in investment securities and securities purchased under the agreement to resell.
As of Jun 30, 2019, Common Equity Tier 1 and Total Capital ratios (as calculated under the fully phased-in Regulatory Capital Rules) were 11.6% and 14.3%, respectively, down from 13.2% and 16.0% in the prior-year quarter end.
Share Repurchase Update
During the reported quarter, CIT Group repurchased 3.2 million shares for $158.8 million. As of Jun 30, 2019, roughly $112 million share buyback authorization remained.
Our Viewpoint
CIT Group’s business streamlining initiatives along with the improving economy, rise in demand for financing of inventories and capital equipment will continue to support profitability. However, worsening credit quality is a major near-term concern.
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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Washington Federal’s (WAFD - Free Report) third-quarter fiscal 2019 (ended Jun 30) earnings were 67 cents per share, surpassing the Zacks Consensus Estimate of 64 cents. The figure reflected year-over-year growth of 10%.
Hancock Whitney Corporation’s (HWC - Free Report) second-quarter 2019 operating earnings per share of $1.01 were in line with the Zacks Consensus Estimate. The bottom line was 5.2% higher than the year-ago quarter figure.
East West Bancorp’s (EWBC - Free Report) second-quarter 2019 adjusted earnings per share of $1.24 were in line with the Zacks Consensus Estimate. Also, the figure was up 5.1% from the prior-year quarter.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>