CIT Group reported a 12% fall in net income to $104 million for the first quarter of 2015. CIT said first quarter results were impacted by a higher tax provision resulting from the recognition of federal income tax expense due to the prior year partial reversal of the valuation allowance against our net deferred tax asset.
“Our results reflected lower profitability in our North American Commercial Finance business as well as lower utilization rates in our transportation business,” said John Thain, chairman and chief executive officer. “Looking ahead, we will continue to execute on our 2015 priorities while positioning CIT for the long-term. We remain focused on expanding our commercial banking and deposit franchises through the acquisition of OneWest Bank, returning excess capital to our shareholders through our additional $200 million share repurchase, and meeting the financing needs of our small business, middle market and transportation customers.”
CIT’s financing and leasing assets at March 31, 2015 were $18.8 billion compared to $19.0 billion at year-end and $17.6 billion at March 31, 2014. The increase from the prior year reflected growth in all transportation divisions including $0.9 billion in Aerospace.
The decline was driven by $0.4 billion of asset sales, including approximately $0.2 billion of aircraft to TC-CIT Aviation, its recently formed joint venture with Century Tokyo Leasing.
New business volume for the quarter was $0.5 billion, which included the delivery of three new aircraft.
CIT said that its net finance revenue was up to $215 million from $202 million in the year-ago quarter, primarily due to growth in earning assets, and down from $233 million in the prior quarter due to asset sales and lower equipment utilization. Net finance margin was 4.57% compared to 4.73% in the year-ago quarter and 4.88% in the prior quarter. The decreases from prior periods were driven primarily by lower net rental yields in Aerospace. Gross yields in Aerospace decreased from 11.5% in the prior period to 11.4%, reflecting lower equipment utilization.
CIT has been impacted by early lease terminations from three troubled carriers, which are thought to be five A320s with Cyprus Airways, one A330 with Skymark Airlines and one 737 with SpiceJet.