CIT » Topics » Net Finance Revenue, After Provision for Credit Losses,

This excerpt taken from the CIT 10-Q filed Nov 10, 2008.
Net Finance Revenue, After Provision for Credit Losses, (dollars in millions)

  Quarters Ended
  Nine Months Ended
  September 30,
2008
June 30,
2008
September 30,
2007
September 30,
2008
  September 30,
2007

Net finance revenue $ 349.9   $ 382.0   $ 418.4   $ 1,101.4   $ 1,222.4  
Provision for credit losses   (210.3 )   (152.2 )   (63.9 )   (609.2 )   (112.4 )
 
 
 
 
 
 
Net finance revenue after credit provision   139.6     229.8     354.5     492.2     1,110.0  
Valuation allowance for assets held for sale       13.6         (103.9 )   (22.5 )
 
 
 
 
 
 
Net revenue, after credit provision and
valuation allowance
$ 139.6   $ 243.4   $ 354.5   $ 388.3   $ 1,087.5  
 
 
 
 
 
 
As a % of AEA:                              
Net finance revenue   2.20 %   2.34 %   2.74 %   2.27 %   2.73 %
Provision for credit losses   (1.32 )%   (0.93 )%   (0.42 )%   (1.25 )%   (0.25 )%
Valuation allowance for assets held for sale       0.08 %       (0.21 )%   (0.05 )%
 
 
 
 
 
 
Net revenue, after credit provision and
valuation allowance
  0.88 %   1.49 %   2.32 %   0.81 %   2.43 %
 
 
 
 
 
 
Average Earnings Asset (“AEA”) $ 63,742.6   $ 65,184.2   $ 61,036.8   $ 64,594.6   $ 59,619.5  
 
 
 
 
 
 

Total net finance revenue, after credit provision, declined from prior year periods, due to lower net finance revenue, as previously discussed, and due to higher provision for credit losses, resulting from increased charge-offs and reserve building. See Reserve for Credit Losses section for further discussion on net charge-offs and reserve building.


NET FINANCE REVENUE, AFTER CREDIT PROVISION AND VALUATION ALLOWANCE

Net finance revenue, after credit provision and valuation allowances, was down from the prior year. The valuation allowance recorded during 2008 reflected an adjustment (to reduce receivables held for sale to the lower of cost or market) to asset-based loans sold in conjunction with liquidity initiatives in the Corporate Finance segment. We transferred approximately $1.4 billion of receivables from held for investment during the first quarter, which were substantially sold by the end of the third quarter.


OTHER INCOME

Other income as a percentage of total net revenue (net finance revenue plus other income) was 29% and 30% for the quarter and nine months ended September 30, 2008, versus 40% and 47% in the prior year periods. Excluding the impairment charge discussed below and the gain on sale of construction portfolio in the prior year, the nine month percentage was 32%, down from 41% in the prior year, principally due to lower syndication fees and receivable sales gains. The components of other income are as follows:


This excerpt taken from the CIT 10-Q filed Aug 11, 2008.
Net Finance Revenue, After Provision for Credit Losses, (dollars in millions)

  Quarters Ended June 30,
  Six Months Ended June 30,
  2008
2007
  2008
2007
Net finance revenue $ 382.0   $ 421.7   $ 751.5   $ 804.0  
Provision for credit losses   (152.2 )   (12.6 )   (398.9 )   (48.5 )
 
 
 
 
 
Net finance revenue after credit provision   229.8     409.1     352.6     755.5  
Valuation allowance for receivables held for sale   13.6     (22.5 )   (103.9 )   (22.5 )
 
 
 
 
 
Net finance revenue, after credit provision and valuation allowance $ 243.4   $ 386.6   $ 248.7   $ 733.0  
 
 
 
 
 
As a % of AEA:                        
Net finance revenue   2.34 %   2.78 %   2.31 %   2.72 %
Provision for credit losses   (0.93 )%   (0.08 )%   (1.23 )%   (0.16 )%
Valuation allowance for receivables held for sale   0.08 %   (0.15 )%   (0.32 )%   (0.08 )%
 
 
 
 
 
Net finance revenue, after credit provision and valuation allowance   1.49 %   2.55 %   0.76 %   2.48 %
 
 
 
 
 
Average Earnings Asset (“AEA”) $ 65,184.2   $ 60,759.4   $ 64,996.4   $ 59,151.0  
 
 
 
 
 

Total net finance revenue, after credit provision, declined from prior year periods, due to lower net finance revenue, as previously discussed, and due to higher provision for credit losses, resulting from increased charge-offs and reserve building. See Reserve for Credit Losses section for further discussion on net charge-offs and reserve building.

40 CIT GROUP INC



NET FINANCE REVENUE, AFTER CREDIT PROVISION AND VALUATION ALLOWANCE

Net finance revenue, after credit provision and valuation allowances, was down from the prior year. The valuation allowance recorded during 2008 reflected an adjustment (to reduce receivables held for sale to the lower of cost or market) to the asset-based loans in the Corporate Finance segment. We transferred approximately $1.4 billion of receivables from held for investment during the first quarter, and sold approximately $1.2 billion of this amount by the end of the second quarter.


OTHER INCOME

Other income for the quarter as a percentage of total net revenue (net finance revenue plus other income) was 29% and 31% for the quarter and six months ended June 30, 2008, versus 54% and 50% in the prior year periods. Excluding the impairment charge discussed below and the gain on sale of construction portfolio in the prior year, the current quarter percentage was 31%, down from 39% in the prior year and 34% for the six month period versus 42% in the prior year, principally due to lower syndication fees and receivable sales gains. The components of other income are as follows:


This excerpt taken from the CIT 10-Q filed May 12, 2008.
Net Finance Revenue, After Provision for Credit Losses for the Quarters Ended March 31, (dollars in millions)

  2008
2007
Net finance revenue $     433.3   $     479.9  
Provision for credit losses 464.5   71.1  
 
 
 
Net finance revenue after credit provision $     (31.2 ) $     408.8  
 
 
 
As a % of AEA:        
Net finance revenue 2.35 % 2.83 %
Provision for credit losses 2.52 % 0.42 %
 
 
 
Net revenue, after credit provision -0.17 % 2.41 %
 
 
 
Average Earnings Asset (“AEA”) $73,869.5   $67,920.9  
 
 
 

Total net revenue, after credit provision was a deficit in 2008 and declined from the prior year quarter and last quarter due to increased charge-offs and reserve building in the consumer businesses, and the margin compression discussed earlier.


NET FINANCE REVENUE, AFTER CREDIT PROVISION AND VALUATION ALLOWANCE

Net finance revenue, after credit provision and valuation allowances, was down from the prior year quarter and last quarter. The valuation allowance recorded during the current quarter (to reduce receivables held for sale to the lower of cost or market) reflected (1) $117.5 million adjustment to the asset-based loans in the Corporate Finance segment as we transferred approximately $1.4 billion of receivables from held for investment in anticipation of sales and (2) $23 million on the home lending receivables (manufactured housing), that were transferred to the held for investment portfolio, because marketing activities have ceased.

  Item 2: Management’s Discussion and Analysis and Item 3: Quantitative and Qualitative Disclosures about Market Risk 35



OTHER INCOME

Other income for the quarter as a percentage of total net revenue (net finance revenue plus other income) was 32% (excluding the impairment charge discussed below) versus 29% last quarter (excluding significant gains from the sale of our interest in a joint venture and a systems leasing business) and down from 41% in the 2007 first quarter, principally due to lower syndication fees and receivable sales gains. The components of other income are as follows:


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