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Imark · 25-04-2009, 19:29

17 gennaio 2008, una Bloomberg di inquadramento postata da Giveme5

CIT Posts Loss on Mortgages, Will Cut 5% of Workforce (Update5)

By David Mildenberg

Jan. 17 (Bloomberg) -- CIT Group Inc., the largest independent commercial finance company in the U.S., reported a fourth-quarter loss because of bad home mortgages and the declining value of its student-loan business.

The $123.2 million loss before preferred dividends, or 69 cents a share, compares with a profit of $266.8 million, or $1.31 a share, a year earlier, the New York-based company said today in a statement. The full-year loss was $81 million, or 58 cents a share, compared with a profit of $1.05 billion in 2006.

Chief Executive Officer Jeffrey Peek stopped originating home mortgages last year to focus on providing loans and advisory services to mid-sized companies. CIT will cut its workforce this year by 5 percent, or about 330 jobs, Peek said today on a conference call.

``We are doing our best to put our home lending behind us,'' Peek said. ``We will retreat to our core.''

The company reduced the workforce by 4.4 percent in the fourth quarter with the sale of a leasing business and ended the year with about 6,700 employees. It will record a $50 million pretax charge in the first quarter for severance and related costs.

CIT fell $1.96, or 8.5 percent, to $21.15 at 4:18 p.m. in New York Stock Exchange composite trading. The shares have dropped 63 percent in the past 12 months.

Past Due

The lender said it had $1.03 billion in home loans on which payments were late by 60 days or more as of Dec. 31, or 9.9 percent of its total unpaid balance. That compares with $538.8 million, or 4.9 percent, a year ago. The highest delinquency rates were in Florida and California, Chief Financial Officer Joseph Leone said on the call.

The student-loan unit, whose practices drew a state investigation, recorded a writedown of $313 million in the quarter. CIT may be preparing to sell the unit, according to Sameer Gokhale, an analyst at KBW Inc. in New York.

CIT raised its reserve for expected loan losses sixfold, to $385.5 million, from the third quarter. Most of the increase was due to a $250 million reserve for home loans because of ``further deterioration in the home lending market.''

Total loan volume, excluding home lending, declined 11 percent to $8.7 billion, with lower student lending offsetting increased commercial activity.

Peek said he expects U.S. economic growth to slow to about 1 percent this year, while avoiding a recession. Credit losses, loans CIT doesn't expect to fully recover, may increase to as much as 0.7 percent of total financings, from about 0.4 percent in 2007, he said.

New Offices

New offices in Ireland and China helped meet the goal of having 25 percent of CIT's assets in faster-growing economies outside the U.S. by the end of 2007, Peek said.

The company had a $268 million pretax gain from the sale of units, including a share of a joint venture with Dell Inc. that provides credit to the Round Rock, Texas-based computer maker's customers.

New York Attorney General Andrew Cuomo has subpoenaed CIT's Student Loan Xpress, among other lenders, over the practice of mailing fake checks or false rebates on loans to entice students to call. Cuomo said in October that such practices may violate state consumer-protection laws and the anti-inducement provisions of the federal Higher Education Act.

In May, Cuomo sued the Dell joint venture, alleging that the companies engaged in deceptive practices such as promising ``no interest'' loans, and then denying about 85 percent of all applicants. Customers were then offered interest rates higher than 16 percent, according to the complaint. Dell has said its practices were ``fair and appropriate.''

Dell, the world's second-biggest personal-computer maker, agreed to buy CIT's 30 percent stake in the venture for $306 million last month.

25-04-2009, 19:29	#2 (permalink)
Imark Utente Senior Data registrazione: Oct 2006 Messaggi: 16,943	17 gennaio 2008, una Bloomberg di inquadramento postata da Giveme5 CIT Posts Loss on Mortgages, Will Cut 5% of Workforce (Update5) By David Mildenberg Jan. 17 (Bloomberg) -- CIT Group Inc., the largest independent commercial finance company in the U.S., reported a fourth-quarter loss because of bad home mortgages and the declining value of its student-loan business. The $123.2 million loss before preferred dividends, or 69 cents a share, compares with a profit of $266.8 million, or $1.31 a share, a year earlier, the New York-based company said today in a statement. The full-year loss was $81 million, or 58 cents a share, compared with a profit of $1.05 billion in 2006. Chief Executive Officer Jeffrey Peek stopped originating home mortgages last year to focus on providing loans and advisory services to mid-sized companies. CIT will cut its workforce this year by 5 percent, or about 330 jobs, Peek said today on a conference call. ``We are doing our best to put our home lending behind us,'' Peek said. ``We will retreat to our core.'' The company reduced the workforce by 4.4 percent in the fourth quarter with the sale of a leasing business and ended the year with about 6,700 employees. It will record a $50 million pretax charge in the first quarter for severance and related costs. CIT fell $1.96, or 8.5 percent, to $21.15 at 4:18 p.m. in New York Stock Exchange composite trading. The shares have dropped 63 percent in the past 12 months. Past Due The lender said it had $1.03 billion in home loans on which payments were late by 60 days or more as of Dec. 31, or 9.9 percent of its total unpaid balance. That compares with $538.8 million, or 4.9 percent, a year ago. The highest delinquency rates were in Florida and California, Chief Financial Officer Joseph Leone said on the call. The student-loan unit, whose practices drew a state investigation, recorded a writedown of $313 million in the quarter. CIT may be preparing to sell the unit, according to Sameer Gokhale, an analyst at KBW Inc. in New York. CIT raised its reserve for expected loan losses sixfold, to $385.5 million, from the third quarter. Most of the increase was due to a $250 million reserve for home loans because of ``further deterioration in the home lending market.'' Total loan volume, excluding home lending, declined 11 percent to $8.7 billion, with lower student lending offsetting increased commercial activity. Peek said he expects U.S. economic growth to slow to about 1 percent this year, while avoiding a recession. Credit losses, loans CIT doesn't expect to fully recover, may increase to as much as 0.7 percent of total financings, from about 0.4 percent in 2007, he said. New Offices New offices in Ireland and China helped meet the goal of having 25 percent of CIT's assets in faster-growing economies outside the U.S. by the end of 2007, Peek said. The company had a $268 million pretax gain from the sale of units, including a share of a joint venture with Dell Inc. that provides credit to the Round Rock, Texas-based computer maker's customers. New York Attorney General Andrew Cuomo has subpoenaed CIT's Student Loan Xpress, among other lenders, over the practice of mailing fake checks or false rebates on loans to entice students to call. Cuomo said in October that such practices may violate state consumer-protection laws and the anti-inducement provisions of the federal Higher Education Act. In May, Cuomo sued the Dell joint venture, alleging that the companies engaged in deceptive practices such as promising ``no interest'' loans, and then denying about 85 percent of all applicants. Customers were then offered interest rates higher than 16 percent, according to the complaint. Dell has said its practices were ``fair and appropriate.'' Dell, the world's second-biggest personal-computer maker, agreed to buy CIT's 30 percent stake in the venture for $306 million last month.