***Extra Edition---- CIT loss, BofA to buy Countrywide***
CIT will lose between $125 MM & $135MM
- An increase in reserves for credit losses of approximately $300 million, predominantly related to the Company's held-for-investment home lending portfolio. This additional provision for credit losses is expected to reduce net income by approximately $190 million.
- A loss of approximately $40 million pre-tax, $25 million after-tax, on home lending receivables held-for-sale at September 30, 2007 reflecting the previously disclosed disposition of certain receivables during the quarter and a lower-of-cost-or-market adjustment on the remainder. Home lending receivables held-for-sale at December 31, 2007 are expected to be approximately $350 million.
- A pre-tax gain in our Vendor Finance business of $270 million ($160 million after-tax) on the previously disclosed sales of CIT's interest in its Dell Financial Services joint venture and of its U.S. Systems Leasing business. Both of these transactions closed as anticipated in December.
- The write-off of all goodwill and intangibles related to the Company's student lending business acquired in 2005, which is expected to reduce net income by approximately $300 million, but have no impact on either tangible book value or capital ratios. This non-cash charge is necessitated by recent decreases in market valuations for student lending businesses, and lower profit expectations for this business as a result of higher funding costs (both secured and unsecured).
- The combination of these items would be a net reduction to fourth quarter earnings of approximately $355 million after-tax, or $1.87 per share, resulting in an anticipated net loss for the quarter of $125 million to $135 million, or $0.65-$0.70 per share. Additionally, the Company strengthened its capital and liquidity positions and will report:
- An improvement in the Tangible Equity to Managed Assets Ratio, which is expected to be approximately 8.8%, up from 7.7% at September 30, 2007 and above its 8.5% target.
- Cash and committed liquidity in excess of $15.5 billion, representing over 120% of the total of commercial paper outstanding and 2008 unsecured debt maturities.
The Company will release its consolidated fourth quarter and full year 2007 results at approximately 7:00 A.M. on January 17, 2008 and will host a conference call to discuss the results at 9:00 A.M. on that date. Additional information about the Company and the upcoming call can be found in the Investor Relations section of the CIT website at www.cit.com .
Full AP story