CIT posts profit as interest expense drops 60%
Small-business lender CIT Group reported a quarterly profit that edged past analysts' estimates as debt-servicing costs fell and its banking unit posted strong loan growth.
The company, one of the biggest financial sector victims of the credit crisis, said interest payments on its long-term debt fell 60 percent to $236.6 million for the second-quarter, while total interest expenses were down 56 percent to $281.4 million.
CIT filed for bankruptcy in 2009 after a debt exchange offer and bailout talks failed. It emerged from Chapter 11 bankruptcy protection later that year.
The company, led by former Merrill Lynch Chief Executive John Thain, reported net income was $183.6 million, or 91 cents per share, for the quarter ended June 30, compared with a loss of $72.9 million, or 36 cents per share, a year earlier.
Analysts on average expected the lender to earn 90 cents a share, excluding items, according to Thomson Reuters I/B/E/S.
The company's total interest income, however, fell more than 14 percent to $351.6 million.
In addition to the absence of significant debt redemption charges in the current quarter, the improvement in net income reflected lower funding costs and asset growth, partially offset by reduced gains on asset sales, the company said in a statement.
CIT Bank funded over $1.8 billion of new business volume, up 26 percent from a year earlier.
The company, which was being run under federal supervision since its emergence from bankruptcy, negotiated with Federal Reserve Bank of New York in May to terminate an agreement that restricted its ability to pay dividends and buy back stock.
CIT shares, which have gained 16 percent in last three months, closed at $49 on Monday on the New York Stock Exchange.
Analysts had expected to report earnings excluding items of 90 cents a share on $82 million in revenue, according to a consensus estimate from Thomson Reuters.