CIT Group Inc. is a financial holding company founded in 1908 headquartered in New York City. The company's name is an abbreviation of an early corporate name, Commercial Investment Trust. It provides financing and leasing capital to customers in over 30 industries. CIT also operates CIT Bank, an FDIC insured bank, its primary bank subsidiary.
The company is ranked #603 on the Fortune 1000 list of the largest American companies and is on the list of largest banks in the United States.
CIT filed for bankruptcy protection on November 1, 2009, and with the consent of its bondholders, emerged from bankruptcy 38 days later, on December 10, 2009.
Current operations
CIT operates two business segments:
Commercial banking
- Provides lending, leasing, and other financial services primarily to small and middle-market companies in certain industries.
- Provides senior secured commercial real estate loans, including construction loans to experienced and well-capitalized real estate developers.
- Provides factoring, secured finance, and receivables management products to companies across the retail supply chain.
- Provides equipment leasing and secured financing to companies in the rail industry.
Consumer banking
- Provides financial services including retail banking, mortgages, Small Business Administration loans.
- Operates CIT Bank, which owns a direct bank.
History
On February 11, 1908, Henry Ittleson founded the Commercial Credit and Investment Company in St. Louis, Missouri.
In 1915, the company moved its headquarters to New York City and renamed itself Commercial Investment Trust and went by the initials of C.I.T. By that time, the company provided financing for wholesale suppliers and producers of consumer goods. The company added automobile financing to its product line in 1916, through an agreement with Studebaker, the first of its kind in the auto industry. During World War I, CIT financed the manufacture of 150 submarine chasers. It also added consumer financing of radios through an agreement with Thomas Edison, Inc. During the Roaring 20s following the war, consumer spending rose dramatically and CIT prospered in its consumer appliance, furniture, and automobile financing groups. In 1924, CIT incorporated in Delaware and listed its stock on the New York Stock Exchange. CIT entered the field of factoring in 1928 and expanded operations into Europe in 1929.
With international tensions rising prior to World War II, CIT closed its German operations in 1934. Arthur O. Dietz succeeded Ittleson as president of the company in 1939. During the war, CIT offered its 2000 employees a month's bonus, life insurance, and a guaranteed job on return if they served in the United States Armed Forces. Between 1947 and 1950, the company's net income rose from $7.3 million to $30.8 million. Ittleson died at age 77 on October 27, 1948.
The company moved into a new building at 650 Madison Avenue in Manhattan in 1957. In 1960, Walter Lundell succeeded Dietz as president of the company. Five years later, in 1959, the company passed $100 billion ($822 billion in recent terms) in financing volume since its founding. The Vietnam War racial turmoil of the 1960s resulted in CIT making changes to its business. In 1969, CIT entered the personal and home equity loan and leasing business and left auto financing. In 1979, restrictive banking rules forced CIT to sell its bank, National Bank of North America. CIT was acquired by RCA Corporation in 1980. RCA promptly sold CIT's four manufacturing businesses: Picker X-Ray, Inc., Gibson Greeting Cards, Inc., All-Steel, Inc. (office furniture), and Raco, Inc. (wall boxes for electric switches and outlets.) The Madison Avenue building was sold in 1982 as the company moved to a newly constructed headquarters facility in Livingston, New Jersey in 1983.
Manufacturers Hanover and Dai-Ichi
In 1984, CIT was sold to Manufacturers Hanover Trust. In 1989, Manufacturers Hanover Trust sold 60% of CIT to Dai-Ichi Kangyo Bank of Japan.
1990s
In 1991, the company acquired Fidelcor Business Credit Corporation, which increased its services to small businesses. In 1992, CIT opened 15 new offices in 7 states.
In 1997, the company raised $850 million in an initial public offering and became a public company.
On November 15, 1999, CIT acquired Toronto-based Newcourt Credit Group in a $4.2 billion transaction, which created one of the largest publicly owned leasing companies. The following year, CIT announced record earnings of $611.6 million, an increase of 57.1% from the prior year, which was largely attributed to the acquisition of Newcourt the year before.
2000s
In 2001, Tyco acquired CIT for $9.2 billion in stock. CIT was renamed as Tyco Capital.
Tyco ran into operating troubles and sold or spun off non-core operations, including CIT. On July 8, 2002, Tyco completed its divestment of its Tyco Capital business through an initial public offering, via the sale of 100% of the common shares in CIT Group Inc.
Relisting
CIT moved its global headquarters back to New York City, opening a new headquarters in 2006 across from the New York Public Library. CIT retained its Livingston campus as its corporate headquarters.
Under the leadership of CEO Jeff Peek, assets at CIT jumped 77% from 2004 to the end of 2007 as it acquired companies in education lending and subprime mortgages. Those acquisitions turned out to be disastrous for the company and in the following eight quarters, CIT reported more than $3 billion in losses.
On July 1, 2008, CIT Group announced that it would sell its home lending division to Lone Star Funds for $1.5 billion in cash and the assumption of $4.4 billion in debt and announced that it would sell its manufactured housing loan portfolio, with a face value of $470 million in loans, to Vanderbilt Mortgage and Finance for approximately $300 million.
Late 2000s financial crisis
In 2008, CIT became a bank holding company in order to receive $2.3 billion in Troubled Asset Relief Program (TARP) funds.
On July 15, 2009, CIT's request for Federal Deposit Insurance Corporation loan guarantees was rejected. At 6:03 PM, the company issued a press release stating that talks of a government bailout were unlikely and that the company had been advised that there was "no appreciable likelihood of additional government support being provided over the near term" and that it was very close to declaring bankruptcy.
On July 19, 2009, the company was rescued in a $3 billion deal via an agreement with the bondholders group, which included Pacific Investment Management Company (PIMCO) and other large bond holders. CIT said it planned a comprehensive restructuring of its liabilities.
Effective July 24, 2009, CIT was replaced in the S&P 500 stock market index by Red Hat.
Bankruptcy
On Sunday, November 1, 2009, CIT Group filed for bankruptcy protection under Chapter 11, Title 11, United States Code.
On December 10, 2009, CIT satisfied all of the conditions required to consummate the prepackaged Plan of Reorganization, which included the cancellation of existing debt and shares and the issuance of new debt and publicly traded shares.
Management changes post-bankruptcy
As part of the reorganization plan, CIT named seven new independent directors. On January 19, 2010, Peter J. Tobin, a member of the board of directors, was named interim Chief Executive Officer, replacing Jeff Peek, who resigned effective January 15, 2010. On February 8, 2010, former Merrill Lynch CEO John Thain was hired as chairman and Chief Executive Officer.
S&P Upgrades
S&P upgraded the firm's ratings to BB- on March 9, 2012, three levels below investment grade. Analysts Brendan Browne and Rian Pressman stated that CIT "has repaid or refinanced a material portion of its high-cost debt, increased deposits, and moved many U.S. originations to its commercial bank subsidiary, CIT Bank".
Acquisition of OneWest Bank
On July 22, 2014, CIT Group announced an agreement to acquire OneWest Bank for $3.4 billion in cash and stock. The California Reinvestment Coalition was concerned about the possibility of the FDIC's loss-sharing agreement with OneWest being transferred to CIT Group and the growth of a bank that is considered too big to fail and so it filed a Freedom of Information Act request in October 2014 seeking information about the amount of money paid out to OneWest's investors under the loss-share agreement and what conversations FDIC staff have had with the leadership of OneWest Bank and CIT Group. On July 21, 2015, the Office of the Comptroller of the Currency and the Federal Reserve approved CIT Group's acquisition of OneWest Bank. The acquisition closed on August 3, 2015.
Resignation of CEO Thain
Effective November 1, 2015, CEO John Thain resigned and was replaced by Ellen Alemany, a member of the board of directors.
On February 19, 2016, Thain resigned as chairman and Ellen Alemany became chairwoman in addition to CEO.
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