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CIT Swings to A Loss, Cuts Dividend

CIT Group, a commercial lender hit hard by the credit crunch, posted a quarterly loss on Thursday, said it would sell off chunks of itself and cut its dividend by 60 percent to shore up capital.

The company, which said in March that it had drawn down on its entire $7.3 billion of bank lines, posted a first-quarter net loss of $257.2 million, or $1.35 a share, compared with a year-earlier profit of $200.6 million, or $1.01 a share.

Total net revenue, after credit provisions and valuation allowances, was only $2.3 million, down from $737.4 million a year ago. On a non-GAAP basis, total net revenue fell to $607.3 million from $808.5 million a year before.

CIT said it agreed to sell $4.6 billion of asset-based loan commitments, of which $1.4 billion is currently drawn, would sell a total of $770 million worth of aircraft and was in the process of identifying another $2.0 billion of loan assets that would be either used for a secured financing or sold during the second quarter.

"As we look ahead, it's clear we will operate a smaller, more nimble company that is competitively positioned to take advantage of both economic contractions and expansions," Chief Executive Jeffrey Peek said in a statement.

CIT said it would engage financial advisers to explore various other capital-raising initiatives, including the possible sale of stock and possibly its $4 billion rail leasing business.

It also said it was funding $335 million of first-quarter commercial loan originations through CIT Bank.