Troubled CIT Sees Green

CIT, one of the largest lenders to small businesses and franchises, today reported a swing to profit, a net income of $97 million for the quarter ending March 31, 2010. Its CEO says that it is actively working on lowering costs and warming up better with financial regulators.

"We continue to make progress on advancing our key priorities," said John A. Thain, Chairman and Chief Executive Officer. The former Merrill Lynch CEO and now CEO of newly restructured CIT, Thain continues, "We remain focused on reducing our cost of funds, improving our operating efficiencies and charting the optimal path for our commercial businesses. Our return to profitability further strengthens our financial position, which includes strong liquidity and a solid capital base. I am encouraged by the resiliency of our customer relationships, the receptivity of the capital markets, and the business opportunities ahead."

The lending firm filed for bankruptcy in November of last year, a procedure that wiped out much of its obligations to creditors and stockholders.

CIT, a lender to small businesses, is "actively working" on lowering finance costs, Thain said on a Webcast of a discussion of CIT's first-quarter results. To this end, the company committed to prepay $1.5 billion of an expensive loan that is eating into its profitability. The company's chief financial officer, Joseph Leone, said the almost $7 billion of first lien debt outstanding before the new prepayment, eats up about $600 million in pretax earnings. Thain, who took the helm in February, said CIT is "working on improving relations with regulators," which would take time. In the first quarter, CIT improved its preliminary Tier 1 and total capital ratios as part of efforts to win the confidence of regulators. [via Dow Jones Newswires]

CIT's new loan and lease volumes, excluding factoring, declined modestly from the prior quarter to $0.9 billion. Vendor Finance programs began to expand with volume totaling $0.5 billion.

Source: BusinessWire, CNNMoney