CIT Reports Q3 Net Loss; Vendor Business 'Disappoints'
CIT reported a third-quarter net loss from continuing operations of $301.6 million, or $1.13 per share, compared to income of $208.5 million for the comparable 2007 quarter. Finance revenue was $1.4 billion, down 12.6% from $1.6 billion in the third quarter last year.
Analysts had expected CIT would swing to a profit, with predictions on average earnings of $0.20 per share, according to opinion data surveyed by Thomson Financial.
CIT said the loss included a $455 million pre-tax non-cash write-down of goodwill and other intangible assets of the Vendor Finance business segment. The company's provision charge for credit losses in the third quarter was $210.3 million, up from $63.9 million in the same quarter last year. Year-to-date through September, CIT's provision charges were $606.2 million, up from $112.4 million for the same period last year. The reserve for credit losses as percentage of non-performing assets at the end of the third quarter was 80.6% compared to 123.7% at the end of the same period in 2007.
CIT noted in its news release that its Vendor Finance unit experienced a net loss for the quarter of $354.8 million, down from net income of $58.2 million in the third quarter 2007. Year-to-date, the vendor business swung to a net loss of $337.1 million from a $204.6 net profit for the same period last year.
Commenting on the vendor finance business, chairman and chief executive Jeffrey Peek said, "Vendor Finance returns were disappointing and we are undertaking a restructuring of that unit."
Thursday, October 16, 2008