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CIT Group (CIT) Stock Up 2.5% on Q4 Earnings Beat, Costs Down
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Shares of CIT Group Inc. gained 2.5% following the release of fourth-quarter 2018 results. Adjusted earnings from continuing operations of $1.21 per share surpassed the Zacks Consensus Estimate of $1.10. Also, the bottom line came in higher than the prior-year figure of 99 cents.
Results benefited from a drop in operating expenses. However, worsened credit quality and lower net revenues were on the downside.
After considering several non-recurring items, net income for the reported quarter was $82.3 million or 78 cents per share. The figure compares favorably with loss of $97.8 million or 74 cents per share recorded in the prior-year quarter.
Adjusted earnings per share for 2018 came in at $4.04 per share, which outpaced the Zacks Consensus Estimate of $3.97. Further, the figure compares favorably with earnings of $3.07 per share reported in 2017. Net income (GAAP) available for common shareholders for 2018 amounted to $428.2 million, down from $458.4 million witnessed in the previous year.
Revenues & Expenses Decline
Total net revenues for the fourth quarter came in at $553.8 million, down 17.2% year over year. However, the figure surpassed the Zacks Consensus Estimate of $507 million.
Total net revenues for 2018 were $2.46 billion, down 1.3% year over year. The revenue figure, however, beat the Zacks Consensus Estimate of $1.99 billion.
Net interest revenues for the fourth quarter were $276.5 million, down nearly 1% year over year.
Total non-interest income was $277.3 million, decreasing 28.9% from the year-ago quarter.
Net finance margin shrunk 20 basis points to 3.39%. The fall was mainly due to higher funding costs and lower net rental income.
Operating expenses (excluding restructuring costs and intangible assets amortization) were $252 million, down 5.3% from the prior-year quarter.
Credit Quality Worsens
Provision for credit losses was $31.2 million, up 2.6% from the year-ago quarter end. Also, non-accrual loans increased 27.6% from the prior-year quarter end to $282 million.
However, net charge-offs were $24 million, up 33.3% from the end of the year-ago quarter.
Balance Sheet & Capital Ratios
As of Dec 31, 2018, interest bearing cash and investment securities amounted to $8.2 billion, comprising $1.6 billion in interest bearing cash and $6.6 billion in investment securities purchased under the agreement to resell.
As of Dec 31, 2018, Common Equity Tier 1 and Total Capital ratios was 12% and 14.8%, respectively, as calculated under the fully phased-in Regulatory Capital Rules compared with 14.4% and 16.2% in the prior-year quarter end.
Capital Deployment Update
During the reported quarter, CIT Group repurchased 9.7 million shares for $460.3 million.
Further, the company received approval from its regulators to repurchase up to $450 million of common stock through Sep 30, 2019. Additionally, it received the approval to increase its quarterly dividend by 40% to 35 cents per common share, starting in second-quarter 2019.
Our Viewpoint
CIT Group’s business-streamlining initiatives are impressive. In addition, exemption from annual stress tests will provide the company financial flexibility to some extent. However, steady rise in credit costs might keep hindering its bottom-line performance.
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2019 (ended Dec 31) earnings came in at 65 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflected year-over-year growth of 10.2%.
Synovus Financial’s (SNV - Free Report) fourth-quarter earnings of 92 cents per share lagged the Zacks Consensus Estimate of 94 cents. However, the reported figure came in 27.8% higher than the prior-year tally.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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CIT Group (CIT) Stock Up 2.5% on Q4 Earnings Beat, Costs Down
Shares of CIT Group Inc. gained 2.5% following the release of fourth-quarter 2018 results. Adjusted earnings from continuing operations of $1.21 per share surpassed the Zacks Consensus Estimate of $1.10. Also, the bottom line came in higher than the prior-year figure of 99 cents.
Results benefited from a drop in operating expenses. However, worsened credit quality and lower net revenues were on the downside.
After considering several non-recurring items, net income for the reported quarter was $82.3 million or 78 cents per share. The figure compares favorably with loss of $97.8 million or 74 cents per share recorded in the prior-year quarter.
Adjusted earnings per share for 2018 came in at $4.04 per share, which outpaced the Zacks Consensus Estimate of $3.97. Further, the figure compares favorably with earnings of $3.07 per share reported in 2017. Net income (GAAP) available for common shareholders for 2018 amounted to $428.2 million, down from $458.4 million witnessed in the previous year.
Revenues & Expenses Decline
Total net revenues for the fourth quarter came in at $553.8 million, down 17.2% year over year. However, the figure surpassed the Zacks Consensus Estimate of $507 million.
Total net revenues for 2018 were $2.46 billion, down 1.3% year over year. The revenue figure, however, beat the Zacks Consensus Estimate of $1.99 billion.
Net interest revenues for the fourth quarter were $276.5 million, down nearly 1% year over year.
Total non-interest income was $277.3 million, decreasing 28.9% from the year-ago quarter.
Net finance margin shrunk 20 basis points to 3.39%. The fall was mainly due to higher funding costs and lower net rental income.
Operating expenses (excluding restructuring costs and intangible assets amortization) were $252 million, down 5.3% from the prior-year quarter.
Credit Quality Worsens
Provision for credit losses was $31.2 million, up 2.6% from the year-ago quarter end. Also, non-accrual loans increased 27.6% from the prior-year quarter end to $282 million.
However, net charge-offs were $24 million, up 33.3% from the end of the year-ago quarter.
Balance Sheet & Capital Ratios
As of Dec 31, 2018, interest bearing cash and investment securities amounted to $8.2 billion, comprising $1.6 billion in interest bearing cash and $6.6 billion in investment securities purchased under the agreement to resell.
As of Dec 31, 2018, Common Equity Tier 1 and Total Capital ratios was 12% and 14.8%, respectively, as calculated under the fully phased-in Regulatory Capital Rules compared with 14.4% and 16.2% in the prior-year quarter end.
Capital Deployment Update
During the reported quarter, CIT Group repurchased 9.7 million shares for $460.3 million.
Further, the company received approval from its regulators to repurchase up to $450 million of common stock through Sep 30, 2019. Additionally, it received the approval to increase its quarterly dividend by 40% to 35 cents per common share, starting in second-quarter 2019.
Our Viewpoint
CIT Group’s business-streamlining initiatives are impressive. In addition, exemption from annual stress tests will provide the company financial flexibility to some extent. However, steady rise in credit costs might keep hindering its bottom-line performance.
CIT Group Inc. Price, Consensus and EPS Surprise
CIT Group Inc. Price, Consensus and EPS Surprise | CIT Group Inc. Quote
Currently, CIT Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2019 (ended Dec 31) earnings came in at 65 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflected year-over-year growth of 10.2%.
Synovus Financial’s (SNV - Free Report) fourth-quarter earnings of 92 cents per share lagged the Zacks Consensus Estimate of 94 cents. However, the reported figure came in 27.8% higher than the prior-year tally.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>