CIT Group said yesterday its second-quarter earnings fell to $48.1 million, or 12 cents a share, from $352.1 million, or $1.76 a share, largely because of losses related to the sale of its home lending business.
As part of its internal restructuring, the New York-based commercial finance company has abandoned the mortgage finance business. In early July, CIT closed on the sale of its home lending business and manufactured housing portfolio.
"We will continue to take actions to right-size the company to enhance profitability," CIT's chief executive, Jeff Peek, said in a statement. "To that end, the sale of our home lending business, which negatively impacted our earnings and overshadowed the performance of our core commercial business, has eliminated a major area of risk and uncertainty from our portfolio,"
CIT said income from continuing operations comparisons to the prior quarter reflect losses on asset sales completed for liquidity purposes and other related charges in both quarters, though the first quarter results were dampened to a greater degree.
The company said second-quarter results include $9.2 million in pretax losses ($5.6 million after tax) relating to asset sales and $19.5 million in pretax securitization impairment charges ($11.9 million after tax) that were triggered by liquidity considerations. The prior quarter included pretax charges of $112.5 million and $33.2 million ($69.5 million and $20.1 million after tax) related to asset sales and securitization impairments. The prior quarter also included a $148.1 million pretax charge ($89.5 million after tax) relating to the discontinuation of CIT's commercial paper hedging program.
Shares of CIT surged 18% to $8.57 midday Thursday.