Press release issued by CIT Group Inc. on July 27, 2021 reporting its financial results as of and for the quarter ended June 30, 2021 (Form 8-K)

CIT Reports Second Quarter 2021 Results

NEW YORK -Jul 27, 2021 - CIT Group Inc. (NYSE: CIT) today reported second quarter 2021 financial results.

Financial Results

Second quarter net income to common shareholders of $215 million or $2.14 per diluted common share.

Excluding noteworthy items¹, second quarter net income available to common shareholders of $210 million or $2.09 per diluted common share.

Chairwoman and CEO Commentary

'Second quarter results reflect continued improvement in funding costs and credit quality as we grew capital levels,' said CIT Chairwoman and Chief Executive Officer Ellen R. Alemany. 'We completed the sale of the aviation lending portfolio, reduced non-accrual loans, and grew our tangible book value to over $54 per share. Additionally, we continued to deliver on our deposit strategy and grew HOA deposits, reduced average deposit costs and improved our mix.'

Alemany continued, 'The merger with First Citizens BancShares continues to progress and received approval from the FDIC in July. We remain focused on completing the transaction and creating a leading U.S. bank that can deliver a broader set of banking solutions to customers and communities.'

Areas of Strategic Focus

•Merger with First Citizens BancShares - Received regulatory approval from FDIC and remains subject to approval from the Board of Governors of the Federal Reserve System and closing expected in the third quarter, subject to such remaining regulatory approval and other customary closing conditions.

•Continued successful execution of deposit strategy, driving total funding costs down to 0.92% compared to 1.53% in the year-ago quarter.

oAverage deposits grew to 90% of total funding mix.

oReduced average deposit costs to 0.49%, compared to 1.23% in the year-ago quarter.

oLower cost HOA deposits grew to 16% of total average deposits compared to 12% in the year-ago quarter.

•Further improved risk profile - Maintained proactive portfolio management and disciplined underwriting standards:

oContinued Legacy Consumer Mortgage (LCM) loan sales - Sold $94 million of loans, $80 million of which were non-accrual loans.

oCompleted sale of Aviation Lending portfolio of approximately $700 million.

oAllowance for credit losses (ACL) - 2.52% of loans.

•CET1 ratio grew to 11.6%, exceeding our target CET1 capital ratio of 10.5%.

•Tangible book value per common share increased to $54.39 at June 30, 2021.

¹

Income to common shareholders excluding noteworthy items, Loss to common shareholders excluding noteworthy items and core loans and leases excluding MOB are all non-GAAP measures. See 'Non-GAAP Measurements' at the end of this press release for a reconciliation of non-GAAP to GAAP financial information.

1

Select Financial Highlights*

2Q21 change from

($ in millions)

2Q21

1Q21

2Q20

1Q21

2Q20

Net finance revenue⁽¹⁾

$

317

$

327

$

308

$

(10

)

-3

%

$

9

3

%

Non-interest income

161

230

103

(69

)

-30

%

58

57

%

Total net revenue⁽¹⁾

478

557

411

(79

)

-14

%

67

16

%

Operating expenses and (gain) loss on debt extinguishment

251

274

346

(23

)

-8

%

(94

)

-27

%

Income before credit provision

226

283

65

(56

)

-20

%

161

NM

Provision for credit losses

(72

)

(117

)

224

45

39

%

(296

)

NM

Income (loss) before provision (benefit) for income taxes

299

400

(159

)

(102

)

-25

%

457

NM

Provision (benefit) for income taxes

72

96

(73

)

(25

)

-26

%

145

NM

Income (loss) from continuing operations

227

304

(85

)

(77

)

-25

%

312

NM

Net income (loss)

227

304

(85

)

(77

)

-25

%

312

NM

Preferred stock dividends

12

3

12

10

NM

-

0

%

Net income (loss) available to common shareholders

$

215

$

301

$

(98

)

$

(86

)

-29

%

$

312

NM

Noteworthy items⁽²⁾

(5

)

(56

)

36

52

(41

)

Income (loss) available to common shareholders, excluding noteworthy items⁽²⁾

$

210

$

245

$

(61

)

$

(35

)

-14

%

$

271

NM

Per common share

Diluted income (loss) per common share

$

2.14

$

3.04

$

(0.99

)

$

(0.90

)

-30

%

$

3.13

NM

Diluted income (loss) per common share, excluding noteworthy items⁽²⁾

$

2.09

$

2.47

$

(0.62

)

$

(0.38

)

-15

%

$

2.72

NM

Average diluted common shares outstanding (in thousands)

100,340

99,076

98,438

1,264

1

%

1,902

2

%

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

$

54.39

$

52.13

$

49.93

$

2.26

4

%

$

4.46

9

%

Balance Sheet

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

$

40,981

$

42,424

$

44,712

$

(1,443

)

-3

%

$

(3,731

)

-8

%

Average core loans and leases⁽¹⁾ (includes HFS and net of credit balances)

39,479

40,770

42,646

(1,291

)

-3

%

(3,168

)

-7

%

Average earning assets (AEA)⁽¹⁾

51,811

53,202

57,589

(1,391

)

-3

%

(5,778

)

-10

%

New business volume

2,972

2,443

3,072

529

22

%

(100

)

-3

%

Key performance metrics, continuing operations

Net finance margin⁽¹⁾

2.45

%

2.46

%

2.14

%

-1bps

31bps

Net efficiency ratio⁽¹⁾

52.5

%

47.7

%

76.6

%

NM

NM

Net charge-offs

0.30

%

0.15

%

1.79

%

15bps

NM

Return on AEA (ROAEA)⁽¹⁾

1.66

%

2.26

%

NM

-60bps

NM

Return on tangible common equity (ROTCE)⁽¹⁾

16.73

%

24.07

%

NM

NM

NM

Key performance metrics, continuing operations excluding noteworthy items

Net finance margin⁽¹⁾⁽²⁾

2.45

%

2.46

%

2.14

%

-1bps

31bps

Net efficiency ratio⁽¹⁾⁽²⁾

52.2

%

54.6

%

71.8

%

NM

NM

Net charge-offs

0.30

%

0.15

%

1.79

%

15bps

NM

ROAEA⁽¹⁾⁽²⁾

1.62

%

1.84

%

NM

-22bps

NM

ROTCE⁽¹⁾⁽²⁾

16.37

%

19.65

%

NM

NM

NM

⁽¹⁾ Net finance revenue, total net revenue, TBVPS, AEA, net finance margin, net efficiency ratio, ROAEA, ROTCE and average core loans and leases are non-GAAP measures that management uses to evaluate the performance of the business. See 'Non-GAAP Measurements' at the end of this press release for a reconciliation of non-GAAP to GAAP financial information, descriptions of the non-GAAP measures, 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 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.

*Certain balances may not sum due to rounding.

2

Second Quarter Financial Highlights:

•

Net finance revenue decreased $10 million due to lower average balances and yields on loans and investment securities, as well as lower rail net operating lease revenue, partially offset by higher purchase accounting accretion from LCM loan prepayments and lower deposit costs.

•

Net finance margin of 2.45% was down 1 bps from the prior quarter, primarily reflecting the items mentioned above as well as a higher mix of cash.

•

Other non-interest income was down $69 million from the prior quarter, which was unusually high as a result of a noteworthy item related to the strategic initiative to monetize unrealized gains within Accumulated Other Comprehensive Income (AOCI). Excluding the noteworthy item, other non-interest income increased $14 million driven by higher capital markets fees, factoring commissions and gains from sale of loans, which more than offset lower gains on sale of securities.

•

Operating expenses decreased by $23 million to $251 million. Operating expenses, excluding noteworthy items and intangible asset amortization², decreased $10 million from the prior quarter to $249 million, reflecting a reduction in compensation and benefit costs and a reserve release related to indemnification obligations, which offset an increase in legal fees.

•

Provision for credit losses was a net benefit of $72 million, compared to a $117 million net benefit in the prior quarter.

•

The current quarter reflects a reduction in reserves of approximately $99 million due to lower loan balances (including off-balance sheet credit exposures) as well as continued improvement in credit trends and economic forecasts, partially offset by net charge-offs. The prior quarter net benefit reflected a reduction in reserves of approximately $130 million.

•

Net charge-offs were $26 million and included a higher level of recoveries as well as accounts that were previously reserved for. Although the level of net charge-offs increased from $13 million in the prior quarter, it still remains below our pre-pandemic levels.

•

Non-accruals decreased by $116 million to $549 million, primarily driven by the sale of LCM loans along with a reduction in Commercial Finance.

•

The effective tax rate was 24%. The effective tax rate, excluding noteworthy items³ was relatively unchanged.

²

^{Operating expenses, excluding noteworthy items and intangible asset amortization, is a non-GAAP measure. See 'Non-GAAP Measurements' at the end of this press release for a reconciliation of non-GAAP to GAAP financial information.}

³

Effective tax rate, excluding noteworthy items is a non-GAAP measure. See 'Non-GAAP Measurements' at the end of this press release for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.

3

•

Average loans and leases declined 3% primarily driven by sale of the Aviation Lending portfolio in Commercial Banking as well as LCM loan sales and continued run off in the LCM portfolio in Consumer Banking. We also had high prepayments in certain portfolios within Commercial and Consumer Banking.

•

Loans and leases to deposits ratio was 87% at CIT Bank and 101% at consolidated CIT Group, a decrease from 91% and 103% respectively from the prior quarter.

•

CET1 ratio increased to 11.6%, reflecting quarterly earnings and a decrease in Risk Weighted Assets (RWA).

•

$6 million (after-tax) ($0.06 per diluted common share) restructuring reserve release.

•

$1 million (after-tax) ($0.01 per diluted common share) related to First Citizens BancShares (FCB) merger costs.

4

Income Statement Highlights:

Net Finance Revenue

Net Finance Revenue*

2Q21 change from

($ in millions)

2Q21

1Q21

2Q20

1Q21

2Q20

Interest income

$

373

$

388

$

447

$

(15

)

-4

%

$

(74

)

-17

%

Net operating lease revenue

Rental income on operating leases

188

195

201

(7

)

-3

%

(13

)

-6

%

Depreciation on operating lease equipment

83

85

81

(2

)

-2

%

2

2

%

Maintenance and other operating lease expenses

55

52

56

3

6

%

(1

)

-2

%

Total net operating lease revenue⁽¹⁾

51

58

64

(8

)

-13

%

(13

)

-21

%

Interest expense

107

120

203

(13

)

-11

%

(96

)

-47

%

Net finance revenue ⁽²⁾

$

317

$

327

$

308

$

(10

)

-3

%

$

9

3

%

Average earning assets

$

51,811

$

53,202

$

57,589

$

(1,391

)

-3

%

$

(5,778

)

-10

%

Net finance margin⁽²⁾

2.45

%

2.46

%

2.14

%

-1bps

31bps

⁽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 for a reconciliation of non-GAAP to GAAP financial information.

*Certain balances may not sum due to rounding.

•

Net finance revenue declined to $317 million from $327 million in the prior quarter.

o

Lower interest income resulting from lower average balances and yields on loans and investment securities.

o

Lower rental income as the prior quarter included a $6 million customer settlement that mostly benefited rental income. In addition, higher maintenance costs were mostly offset by lower depreciation.

o

Partially offset by higher purchase accounting accretion due to LCM prepayments and lower deposit costs.

•

Net finance margin (net finance revenue as a percentage of average earning assets) was 2.45%, a 1 bps decrease from 2.46% in the prior quarter.

o

Primarily reflecting the items noted above as well as a higher mix of cash as a percentage of total earning assets.

•

Net finance revenue increased $9 million compared to the year-ago quarter.

o

Lower interest expense from lower rates in all deposit channels and a higher mix of lower cost deposits as well as lower borrowings.

o

Higher purchase accounting accretion from LCM loan prepayments.

o

Partially offset by lower average loans and lower market rates, impacting income on loans and investment securities.

o

Lower net operating lease income in Rail, primarily due to lower utilization and renewal rates.

•

Compared to the year-ago quarter, net finance margin increased 31 bps.

o

Primarily driven by the items noted above along with a lower mix of cash and investments as a percentage of total earning assets.

5

Other Non-Interest Income

Other Non-Interest Income*

2Q21 change from

($ in millions)

2Q21

1Q21

2Q20

1Q21

2Q20

Fee income

$

36

$

30

$

30

$

7

23

%

$

6

19

%

Factoring commissions

27

24

11

3

11

%

15

NM

Gains on leasing equipment, net of impairments

29

28

21

1

4

%

9

42

%

BOLI income

8

8

8

0

1

%

0

1

%

Gains on investment securities, net of impairments

4

105

8

(101

)

-96

%

(4

)

-53

%

Property tax income

4

4

5

(0

)

-5

%

(1

)

-17

%

Other income

53

32

20

21

68

%

33

NM

Total other non-interest income

$

161

$

230

$

103

$

(69

)

-30

%

$

58

57

%

Noteworthy items⁽¹⁾

-

(83

)

-

83

-

Total other non-interest income, excluding noteworthy items⁽¹⁾⁽²⁾

$

161

$

147

$

103

$

14

9

%

$

58

57

%

⁽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 $161 million, down $69 million from the prior quarter. The prior quarter included a noteworthy item of $83 million of gains on sale of investment securities related to our strategic initiative to monetize unrealized gains on investment securities in AOCI.

•

Excluding noteworthy items, other non-interest income was up $14 million from the prior quarter driven by:

o

Higher factoring commissions from higher factoring volume.

o

Higher capital markets fees.

o

Gain on sale of Aviation Lending portfolio of approximately $8 million.

o

Higher net gain on sale of LCM loans ($34 million in the current quarter compared to $22 million in the prior quarter).

•

Other non-interest income was up $58 million from the year-ago quarter due to:

o

Higher fee income.

o

Higher factoring commissions from to higher volumes and surcharges, as the year-ago quarter's factoring volume was significantly impacted by the COVID-19 pandemic.

o

Higher gain on sale of lease equipment.

o

Higher other revenues, which included higher net gain on the sale of loans (LCM loans and the Aviation Lending portfolio noted above) offset by lower income on derivatives.

6

Operating Expenses

Operating Expenses*

2Q21 change from

($ in millions)

2Q21

1Q21

2Q20

1Q21

2Q20

Compensation and benefits

$

149

$

155

$

166

$

(6

)

-4

%

$

(17

)

-10

%

Technology

33

33

43

-

0

%

(9

)

-22

%

Professional fees

21

14

30

7

53

%

(9

)

-29

%

Insurance

14

15

17

(1

)

-5

%

(3

)

-17

%

Net occupancy expense

16

18

20

(1

)

-8

%

(4

)

-19

%

Advertising and marketing

5

4

9

2

43

%

(4

)

-44

%

Property tax expense

4

4

5

-

0

%

(0

)

-8

%

Restructuring costs

(8

)

-

37

(8

)

NM

(45

)

NM

Intangible asset amortization

8

8

9

(0

)

-1

%

(0

)

-2

%

Other expenses

8

23

26

(15

)

-66

%

(18

)

-69

%

Total operating expenses

251

274

360

(23

)

-8

%

(109

)

-30

%

Noteworthy items

(6

)

7

57

(13

)

NM

(63

)

NM

Intangible asset amortization

8

8

9

(0

)

-1

%

(0

)

-2

%

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

$

249

$

259

$

295

$

(10

)

-4

%

$

(46

)

-16

%

Net efficiency ratio⁽²⁾

52.5

%

47.7

%

76.6

%

NM

NM

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

52.2

%

54.6

%

71.8

%

NM

NM

⁽¹⁾Operating expenses excluding intangible asset amortization and noteworthy items is used by management to compare period over period expenses. Due to the exclusion of intangible amortization and noteworthy items, this is considered a non-GAAP measure, as reconciled to total operating expenses in the table.

⁽²⁾These metrics are non-GAAP measures. See 'Non-GAAP Measurements' at the end of this press release for details on the calculation and description of the use of the metric. See non-GAAP disclosures for reconciliation of total net revenues.

*Certain balances may not sum due to rounding.

•

Operating expenses were $251 million, down $23 million from the prior quarter.

•

Excluding noteworthy items and intangible asset amortization, operating expenses were $249 million, down $10 million compared to $259 million in the prior quarter. The reduction was primarily due to lower compensation and benefit costs and a reserve release related to indemnification obligations, partially offset by higher legal fees.

o

Noteworthy items in the current quarter included FCB merger costs and restructuring reserve reversal.

o

The prior quarter noteworthy items included FCB merger costs.

•

Operating expenses decreased by $109 million compared to the year-ago quarter.

•

Operating expenses excluding noteworthy items and intangible asset amortization decreased by $46 million compared to the year-ago quarter, reflecting cost reduction initiatives including the recognition of cost synergies from our MOB acquisition.

o

Noteworthy items in the year-ago quarter included MOB integration costs as well as restructuring charges.

•

The net efficiency ratio increased to 53% from 48% in the prior quarter. The net efficiency ratio excluding noteworthy items and intangible asset amortization improved to 52% from 55% in the prior quarter reflecting higher net revenues and lower operating expenses.

•

The net efficiency ratio was 77% in the year-ago quarter. Excluding noteworthy items and intangible asset amortization, the net efficiency ratio improved from 72% in the year-ago quarter reflecting a decline in operating expenses and an improvement in net revenues.

7

Balance Sheet Highlights:

Average Earning Assets

Average Earning Assets*

2Q21 change from

($ in millions)

2Q21

1Q21

2Q20

1Q21

2Q20

Interest-bearing cash

$

5,583

$

4,634

$

7,111

$

949

20

%

$

(1,528

)

-21

%

Investment securities and securities purchased under agreement to resell

5,248

6,144

5,766

(897

)

-15

%

(519

)

-9

%

Loans and loans held for sale (net of credit balances of factoring clients)

33,227

34,592

37,110

(1,366

)

-4

%

(3,883

)

-10

%

Operating lease equipment, net (including held for sale)

7,754

7,831

7,602

(77

)

-1

%

152

2

%

Average earning assets (AEA)

$

51,811

$

53,202

$

57,589

$

(1,391

)

-3

%

$

(5,778

)

-10

%

*All balances above are averages. Certain balances may not sum due to rounding.

•

AEA decreased by $1.4 billion from the prior quarter, primarily driven by decreases in investments and loans, partially offset by an increase in cash.

o

Average loans and leases decreased 3% from the prior quarter.

o

Commercial Banking average loans and leases declined 3% and was primarily driven by the sale of the Aviation Lending portfolio within Commercial Finance as well as a reduction in Real Estate Finance, which continues to be impacted by lower origination volume and high prepayments. Excluding both items, Commercial Banking average loans and leases remained relatively flat.

o

Consumer Banking average loans declined 7%; the decline in Consumer Banking was primarily driven by LCM run-off and loan sales as well continued high prepayments across certain portfolios.

•

At June 30, 2021, total cash (including non-interest-bearing cash), investment securities and securities purchased under agreement to resell was $10.7 billion, up from $10.4 billion at the end of the prior quarter.

o

End of period cash balances decreased by $0.1 billion to $5.3 billion, while investment securities increased by $0.4 billion to $5.4 billion.

o

Investment securities are primarily High-Quality Liquid Securities.

•

AEA compared to the year-ago quarter, decreased by $5.8 billion as the decline in loans, interest-bearing cash and investment securities partially offset the modest increase in operating lease equipment.

o

Commercial Banking average loans declined across all divisions reflecting lower origination volume in sectors more impacted by the pandemic, the sale of the Aviation Lending portfolio as well as high prepayments, particularly in Real Estate Finance.

o

Decrease in Consumer Banking average loans was primarily driven by LCM loan sales, and continued run-off, as well as higher prepayments overall.

8

Deposits and Borrowings

Average Deposits and Borrowings*

2Q21 change from

($ in millions)

2Q21

1Q21

2Q20

1Q21

2Q20

Interest-bearing checking

$

3,492

$

3,442

$

3,163

$

49

1

%

$

328

10

%

Savings and money market

26,253

26,077

26,143

176

1

%

110

0

%

Time deposits

8,538

9,781

12,551

(1,243

)

-13

%

(4,013

)

-32

%

Non-interest bearing checking

3,361

3,386

3,020

(25

)

-1

%

341

11

%

Total deposits

$

41,644

$

42,687

$

44,877

$

(1,043

)

-2

%

$

(3,233

)

-7

%

Online

$

17,048

$

18,272

$

20,891

$

(1,224

)

-7

%

$

(3,843

)

-18

%

Branch

11,302

11,392

11,979

(90

)

-1

%

(678

)

-6

%

Commercial

4,319

4,306

3,866

13

0

%

453

12

%

Brokered

2,208

2,378

2,848

(170

)

-7

%

(640

)

-22

%

Homeowners association

6,767

6,339

5,293

428

7

%

1,475

28

%

Total deposits

$

41,644

$

42,687

$

44,877

$

(1,043

)

-2

%

$

(3,233

)

-7

%

Secured borrowings

$

599

$

1,006

$

3,487

$

(406

)

-40

%

$

(2,887

)

-83

%

Unsecured borrowings

4,233

4,448

4,466

(215

)

-5

%

(234

)

-5

%

Securities sold under agreement to repurchase

-

-

5

-

NM

(5

)

-100

%

Total borrowings

$

4,832

$

5,454

$

7,958

$

(621

)

-11

%

$

(3,126

)

-39

%

*All balances above are averages. Certain balances may not sum due to rounding.

•

Average deposits declined 2% from the prior quarter and represented 90% of CIT's total funding as average borrowings also declined this quarter.

o

The decline in average deposits was primarily driven by a continuation of our strategy to reduce higher cost deposits.

o

The decline in deposits in our online channel was partially offset by continued strong organic growth in the lower cost, HOA channel, reflecting our strategic growth initiatives for this channel.

o

Continued to shift the mix from time deposits to non-maturity deposits. Average non-maturity deposits currently represent 79% of total deposits, compared to 77% in the prior quarter and 72% in the year-ago quarter.

•

The weighted average rate on average outstanding deposits decreased 8 bps to 0.49% from 0.57% in the prior quarter.

o

Decline due to lower rates across most channels, along with a higher mix of lower cost HOA deposits and run off of higher cost Brokered deposits.

•

The weighted average rate on average outstanding deposits decreased 74 bps from 1.23% in the year-ago quarter, primarily due to lower rates in all the deposit channels.

•

The loans and leases-to-deposits ratio at CIT Bank was 87% at June 30, 2021, down from 91% at March 31, 2021, and unchanged from 87% at June 30, 2020, reflecting the decline in deposits, loans and leases at the end of each period.

•

For consolidated CIT Group, the loans and leases-to-deposits ratio was 101% at June 30, 2021, down from 103% at March 31, 2021, and from 99% at June 30, 2020, reflecting the decline in deposits and loans and leases at the end of each period.

•

Average unsecured borrowings comprised 9% of the funding mix, flat from the prior quarter.

9

o

The weighted average coupon on our unsecured senior and subordinated debt stayed flat from March 31, 2021 at 4.82%, with a weighted average maturity of approximately 3.1 years and approximately 3.3 years, respectively.

•

Average secured borrowings comprised 1% of the funding mix, down from 2% in the prior quarter.

o

Secured borrowings at June 30, 2021 was down by $600 million reflecting a paydown of the remaining Federal Home Loan Bank debt late in the quarter.

Capital

Capital*

2Q21 change from

($ in millions, except per share amounts)

2Q21

1Q21

2Q20

1Q21

2Q20

Preferred stock

$

525

$

525

$

525

$

-

0

%

$

-

0

%

Common stockholders' equity

$

5,511

$

5,291

$

5,214

$

220

4

%

$

297

6

%

Book value per common share (BVPS)

$

55.58

$

53.41

$

52.97

$

2.20

4

%

$

2.62

5

%

Tangible common equity⁽¹⁾

$

5,393

$

5,164

$

4,916

$

229

4

%

$

477

10

%

Tangible book value per common share (TBVPS)⁽²⁾

$

54.39

$

52.13

$

49.93

$

2.26

4

%

$

4.46

9

%

Common shares outstanding (thousands)

99,143

99,066

98,447

77

0

%

696

1

%

Total risk-based capital⁽³⁾

$

7,249

$

7,091

$

6,708

$

158

2

%

$

541

8

%

Risk-weighted assets⁽³⁾

$

48,365

$

50,081

$

50,730

$

(1,716

)

-3

%

$

(2,365

)

-5

%

Total capital ratio⁽³⁾

15.0

%

14.2

%

13.2

%

83bps

NM

CET1 ratio⁽³⁾

11.6

%

10.9

%

10.0

%

76bps

NM

Common dividends paid

$

35

$

35

$

35

$

1

$

0

⁽¹⁾Tangible common equity is a non-GAAP measure that represents CIT's common stockholders' equity, less goodwill and intangible assets. Tangible common equity is considered a key financial performance measurement by management and is used by other financial institutions. See Non-GAAP measures at the end of this press release and page 15, the unaudited consolidated balance sheets table, for a reconciliation of Non-GAAP to GAAP financial information.

⁽²⁾TBVPS is a non-GAAP measure, which represents an adjusted common shareholders' equity balance that has been reduced by goodwill and intangible assets. Tangible book value is used to compute a per common share amount, which is used to evaluate our use of equity. See Non-GAAP measures at the end of this press release and page 15.

⁽³⁾Balances and ratios on fully phased-in basis.

*Certain balances may not sum due to rounding.

•

Common stockholders' equity increased from the prior quarter, driven by the net income in the quarter, partially offset by the reduction on AOCI and dividend payouts.

o

Tangible book value per common share increased to $54.39 at June 30, 2021.

•

RWAs were down compared to the prior quarter reflecting lower loan balances and a reduction in off-balance sheet commitments.

•

The preliminary CET1 Capital ratio at June 30, 2021 of 11.6% increased from 10.9% at the end of the prior quarter, and the preliminary Total Capital ratio increased to 15.0% from 14.2% in the prior quarter.

o

Increase reflects quarter earnings and lower RWA.

•

Capital actions in the quarter included a regular quarterly cash dividend of $0.35 per common share, a semi-annual dividend of $29 per Series A preferred share and a quarterly dividend of approximately $0.35 per Series B preferred share. On July 19, 2021, CIT's Board of Directors declared:

o

A quarterly cash dividend of $0.35 per common share on outstanding common stock payable on Aug.13, 2021 to common shareholders of record as of July 30, 2021.

10

o

Aquarterly cash dividend of approximately $0.35 per share on outstanding Series B preferred stock payable on Sept.15, 2021 to Series B preferred shareholders of record as of Aug.31, 2021.

Asset Quality:

Asset Quality*

2Q21 change from

($ in millions)

2Q21

1Q21

2Q20

1Q21

2Q20

(Benefit) provision for credit losses⁽¹⁾

$

(72

)

$

(117

)

$

224

$

45

39

%

$

(296

)

NM

Net charge-offs (NCOs)

$

26

$

13

$

170

$

13

96

%

$

(144

)

-85

%

NCOs as a % of average loans

0.30

%

0.15

%

1.79

%

15bps

NM

Commercial Banking ACL

$

743

$

828

$

1,020

$

(85

)

-10

%

$

(277

)

-27

%

Commercial Banking ACL as a % of loans

2.73

%

2.95

%

3.52

%

-22bps

-79bps

Total ACL

$

851

$

942

$

1,203

$

(92

)

-10

%

$

(352

)

-29

%

Total ACL as a % of loans

2.52

%

2.70

%

3.21

%

-18bps

-69bps

Allowance for off-balance sheet credit exposures⁽¹⁾

$

62

$

69

$

81

$

(7

)

-10

%

$

(19

)

-24

%

Non-accrual loans

$

549

$

665

$

556

$

(116

)

-17

%

$

(8

)

-1

%

Non-accrual loans as a % of loans

1.63

%

1.90

%

1.48

%

-27bps

15bps

⁽¹⁾ Includes amounts related to the allowance for off-balance sheet credit exposures on unfunded loan commitments, letters of credit and deferred purchase agreements. The allowance for off-balance sheet credit exposures are included in other liabilities.

*Certain balances may not sum due to rounding.

•

The net provision benefit of $72 million included a reduction in reserves of approximately $99 million partially offset by $26 million of net charge-offs. The reduction in reserves included a decline of approximately $77 million for loans collectively evaluated and was due to lower loan balances (including off-balance sheet credit exposures) as well as continued improvement in credit trends and economic forecasts. The remaining decline of $22 million in the reserves related to loans that were individually evaluated and largely offset the net charge-offs.

o

Commercial Banking had a net provision benefit of $67 million and Consumer Banking had a net benefit of $5 million.

o

The provision in the prior quarter consisted of a $104 million benefit related to the Commercial Banking segment and a $13 million net benefit in the Consumer Banking segment.

•

The prior quarter net provision benefit of $117 million reflected a $130 million reduction in the reserve.

•

The provision expense in the year-ago quarter of $224 million was due to the adverse effects of the pandemic on the macroeconomic environment across our portfolio.

o

The provision related to the Commercial Banking segment was $215 million and the remaining $9 million related to the Consumer Banking segment.

•

Net charge-offs were $26 million (0.30% of average loans) compared to $13 million (0.15%) in the prior quarter and $170 million (1.79%) in the year-ago quarter and were primarily reported in Commercial Banking.

•

Net charge-offs in the current period reflect a higher level of recoveries and accounts that were previously reserved for.

11

•

The ACL was $851 million (2.52% of loans) at June 30, 2021, down from $942 million (2.70% of loans) at March 31, 2021 and $1.2 billion (3.21% of loans) at June 30, 2020.

o

In the Commercial Banking segment, the ACL was $743 million (2.73% of loans) at June 30, 2021, compared to $828 million (2.95%) at March 31, 2021 and $1,020 million (3.52%) at June 30, 2020.

o

In the Consumer Banking segment, the ACL was $107 million (1.66% of loans) at June 30, 2021, compared to $114 million (1.66%) at March 31, 2021 and $183 million (2.14%) at June 30, 2020.

•

Non-accrual loans were $549 million (1.63% of loans) at June 30, 2021, compared to $665 million (1.90%) at March 31, 2021 and $556 million (1.48%) at June 30, 2020.

•

In Commercial Banking, non-accrual loans were $417 million (1.53% of loans) at June 30, 2021, compared to $453 million (1.61%) at March 31, 2021 and $451 million (1.56%) at June 30,2020.

o

The decrease from the prior quarter was primarily driven by Commercial Finance.

o

The decrease from the year-ago quarter was driven by a reduction in Commercial Finance and Business Capital offset by an increase in Real Estate Finance.

•

In Consumer Banking, non-accrual loans were $132 million (2.05% of loans) at June 30, 2021, a decrease from $211 million (3.07%) at March 31, 2021, and an increase from $106 million (1.24%) at June 30, 2020.

o

The decrease from the prior quarter was due to the sale of $94 million of LCM loans, $80 million of which were on non-accrual as of March 31, 2021

o

The increase from the year ago quarter was primarily driven by COVID-19 impacted loans that became delinquent after the initial deferral period ended.

o

Although placed on non-accrual, the majority of the loans are residential mortgages with strong loan-to-value ratios and are therefore not expected to result in significant losses.

•

COVID-19 related deferments are minimal across all segments.

12

CIT MEDIA RELATIONS:

CIT INVESTOR RELATIONS:

Gina Proia

Barbara Callahan

(212) 771-6008

[email protected]

(973) 740-5058

[email protected]

13

CIT GROUP INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income

(dollars in millions, except per share data)

Quarters Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Interest income

Interest and fees on loans

$

355.7

$

364.0

$

417.2

$

719.7

$

884.8

Other interest and dividends

17.4

24.1

29.7

41.5

75.7

Total interest income

373.1

388.1

446.9

761.2

960.5

Interest expense

Interest on deposits

50.7

61.2

138.3

111.9

294.9

Interest on borrowings

56.1

58.4

64.2

114.5

133.3

Total interest expense

106.8

119.6

202.5

226.4

428.2

Net interest revenue

266.3

268.5

244.4

534.8

532.3

Provision for credit losses

(72.2

)

(117.4

)

223.6

(189.6

)

737.5

Net interest revenue, after credit provision

338.5

385.9

20.8

724.4

(205.2

)

Non-interest income

Rental income on operating lease equipment

188.2

194.7

200.9

382.9

410.7

Other non-interest income

160.7

229.9

102.6

390.6

233.2

Total non-interest income

348.9

424.6

303.5

773.5

643.9

Non-interest expenses

Depreciation on operating lease equipment

82.8

84.7

81.1

167.5

159.4

Maintenance and other operating lease expenses

54.8

51.6

56.1

106.4

109.7

Operating expenses

251.2

274.0

360.4

525.2

694.8

Goodwill impairment

-

-

-

-

344.7

Gain on debt extinguishment and deposit redemption

-

0.1

(14.8

)

0.1

(14.8

)

Total non-interest expenses

388.8

410.4

482.8

799.2

1,293.8

Income (loss) before provision (benefit) for income taxes

298.6

400.1

(158.5

)

698.7

(855.1

)

Provision (benefit) for income taxes

71.7

96.3