UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 6, 2017 (October 6, 2017)
CIT GROUP INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-31369 | 65-1051192 |
| (State or other | (Commission | (IRS Employer |
| jurisdiction of | File Number) | Identification No.) |
| incorporation) |
11 West 42nd Street
New York, New York 10036
(Address of registrant's principal executive office)
Registrant's telephone number, including area code: (212) 461-5200
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
[ ] Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
[ ] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Section 8 – Other Events
Item 8.01 Other Events
On October 6, 2017, CIT Group Inc., a Delaware corporation (the “Company” or “CIT”) issued a press release announcing that CIT Bank, N.A. has agreed to sell Financial Freedom, its reverse mortgage servicing business, which is reported in discontinued operations, and a portfolio of approximately $900 million of reverse mortgage whole loans, including other real estate owned, as of June 30, 2017, which is reported in continuing operations, to an undisclosed buyer (the “Transaction”). The terms of the Transaction have not been disclosed. The Transaction is expected to close in the second quarter of 2018 and is subject to customary closing conditions, including the approval of certain government agencies and the consent of private investors related to the reverse mortgage servicing business. A copy of the press release is attached as Exhibit 99.1 and incorporated herein by reference.
In connection with the Transaction, CIT anticipates it will recognize a pre-tax charge of approximately $40 to $50 million in the third quarter of 2017. At closing, CIT anticipates it will recognize a pre-tax net gain currently estimated to be approximately $25 to $35 million. These amounts are prior to any incremental indemnification liabilities the Company may record. The agreement between the Company and the buyer contains representations and warranties and certain indemnifications to allocate risks between the parties, subject to certain caps and limitations.
Section 9 – Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
Forward-Looking Statements
This Form 8-K contains forward-looking statements within the meaning of applicable federal securities laws that are based upon our current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. The words “expect,” “anticipate,” “estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,” “project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,” “pursue,” “commence,” “seek,” “may,” “would,” “could,” “should,” “believe,” “potential,” “continue,” or the negative of any of those words or similar expressions is intended to identify forward-looking statements. All statements contained in this Form 8-K, other than statements of historical fact, including without limitation, statements about our plans, strategies, prospects and expectations regarding future events and our financial performance, are forward-looking statements that involve certain risks and uncertainties. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results, and our actual results may differ materially. Important factors that could cause our actual results to be materially different from our expectations include, among others, the risk that (i) the Company does not receive regulatory or other consents or approvals on a timely basis or approvals are subject to conditions that are not anticipated, (ii) modifications to the
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terms of the transaction may be required in order to obtain or satisfy such approvals or conditions, (iii) the transaction does not close or there are changes in the anticipated timing for closing the transaction, (iv) there are difficulties, delays or unexpected costs in separating the reverse mortgage business from the consumer banking business of the Company, (v) business disruption during the pendency of or following the transaction, including diversion of management time, (vi) CIT is unsuccessful in implementing its strategy and business plan, (vii) CIT is unable to react to and address key business and regulatory issues, (viii) CIT is unable to achieve the projected revenue growth from its new business initiatives or the projected expense reductions from efficiency improvements, or (ix) CIT becomes subject to liquidity constraints and higher funding costs. We describe these and other risks that could affect our results in Item 1A, “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on the forward-looking statements contained in this Form 8-K. These forward-looking statements speak only as of the date on which the statements were made. CIT undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except where expressly required by law.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CIT GROUP INC. | ||
| (Registrant) | ||
| | ||
| By: | /s/ John Fawcett | |
| John Fawcett | ||
| Executive Vice President & Chief Financial Officer | ||
Dated: October 6, 2017
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Exhibit 99.1
CIT Reaches Agreement to Sell Financial Freedom and Reverse Mortgage Portfolio
Pasadena, Calif. – CIT Bank, N.A., the bank subsidiary of CIT Group Inc. (NYSE: CIT), today announced that it has reached an agreement to sell its reverse mortgage servicing business, Financial Freedom, and its reverse mortgage portfolio to an undisclosed buyer. The transaction includes the sale of mortgage servicing rights and approximately $900 million of reverse mortgage whole loans, including other real estate owned assets as of June 30, 2017. The transaction is expected to close in the second quarter of 2018 and is subject to certain regulatory and investor approvals and other customary closing conditions.
“This transaction marks another step in our plan to simplify CIT,” said Chairwoman and Chief Executive Officer of CIT Ellen R. Alemany. “Throughout this year we have made continued progress in transforming the Company and applying our focus toward maximizing the potential of our commercial banking and deposit franchises, which are the core of our go-forward strategy. We are pleased to have reached this agreement, which will enable CIT to exit the reverse mortgage business.”
Financial Freedom was part of CIT’s acquisition of OneWest Bank in August of 2015 and, since that time, was reported in CIT’s discontinued operations segment. The reverse mortgage portfolio is reported as part of the company’s continuing operations.
CIT was advised by Houlihan Lokey as financial advisor and Sidley Austin as legal advisor.
About CIT
Founded in 1908, CIT (NYSE: CIT) is a financial holding company with more than $50 billion in assets as of June 30, 2017. Its principal bank subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has more than $30 billion of deposits and more than $40 billion of assets. CIT provides financing, leasing, and advisory services principally to middle-market companies and small businesses across a wide variety of industries. It also offers products and services to consumers through its Internet bank franchise and a network of retail branches in Southern California, operating as OneWest Bank, a division of CIT Bank, N.A.
CIT MEDIA RELATIONS:
Gina Proia
212-771-6008
Gina.Proia@cit.com
CIT INVESTOR RELATIONS:
Barbara Callahan
973-740-5058
Barbara.Callahan@cit.com