The board of directors of CIT Group Inc . ( CIT ) recently
announced a repurchase authorization of shares worth up to $200
million. The buyback program is expected to be completed by the end
of 2013.CIT GROUP (CIT): Free Stock Analysis ReportEURONET WORLDWD (EEFT): Free Stock Analysis
ReportFLEETCOR TECH (FLT): Free Stock Analysis ReportFINANCIAL ENGIN (FNGN): Free Stock Analysis
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This comes on the back of the termination of CIT's agreement with
the Federal Reserve Bank of New York (FRBNY).
In Aug 2009, CIT had entered into a Written Agreement with the
FRBNY. As per the agreement, CIT was restricted from declaring
dividends without the prior written approval of the FRBNY.
Moreover, CIT was prohibited from buying back shares and redeeming
stock. Therefore, any capital deployment activity by the company
required governmental approval.
CIT was combating the financial crisis and deteriorating liquidity
position at the time of entering into the agreement with the FRBNY.
The worsening financial environment prompted the company to file
for bankruptcy protection in Nov 2009.
CIT filed pre-packaged voluntary petitions for relief under
Chapter 11 of the U.S. Bankruptcy Code. The bankruptcy filing was
due to various reasons that included failure to realize some of the
benefits of becoming a bank holding company (BHC), accelerating
client credit line draw activity, deteriorating portfolio
performance and debt rating downgrades. These factors have led to
the worsening of the company's stressed liquidity position.
However, CIT emerged from bankruptcy in Dec 2009, pursuant to the
Modified Second Amended Prepackaged Reorganization Plan.
In recent times, CIT's capital and financial position has
improved. The company has been actively involved in capital
restructuring activities through repayment and refinancing of
Moreover, CIT's Tier 1 capital ratio stood at 20.0%, total capital
ratio at 21.3% and leverage ratio at 19.4% as of Mar 31, 2013.
Further, as of Mar 31, 2013, the company's cash and deposits with
banks stood at $2.8 billion. This reflects CIT's strong capital and
All these factors prompted CIT to engage in share buybacks. This
step is expected to boost investors' confidence in the stock.
CIT currently carries a Zacks Rank #3 (Hold). Some better
performing stocks include FleetCor Technologies,
Inc . ( FLT
) with a Zacks Rank #1 (Strong Buy) and Euronet Worldwide
Inc . ( EEFT ) and
Financial Engines, Inc . ( FNGN ) with a Zacks
Rank #2 (Buy).