CIT Group Inc. (NYSE: CIT) is weighing spinning off its aircraft-leasing business as the commercial lender seeks to simplify operations and focus more on the U.S., Chief Executive Officer John Thain said.
"We are exploring lots of different structures," Thain, 60, said Tuesday on a conference after reporting third-quarter results. "I would not rule out, because of complexity, a spin."
The company said last month it intends to sell lending operations in Canada and China and explore strategic options for its $10 billion Commercial Air unit that manages a fleet of more than 350 aircraft. Thain said Tuesday that regulations and long delivery lead times from airplane manufacturers were hampering growth, and that selling the business was still a possibility.
"We wanted to be able to grow the business faster than we were able to inside the current regulatory structure," Thain said. "We're not getting the correct valuation for that business in our share price."
In October, General Electric Co. (NYSE: GE) announced plans to sell its corporate aircraft financing portfolio to Blacktsone Group LP's (NYSE: BX) Global Jet Capital.
Third-quarter net income climbed 35 percent to $693.1 million, or $3.61 a share, as loans and deposits increased with the acquisition of OneWest Bank Group, New York-based CIT said in a statement. Excluding a tax benefit, profit was 80 cents a share, compared with the 72-cent average estimate of 19 analysts surveyed by Bloomberg.
CIT slid 2.9 percent to $41.93 at 12:02 p.m. in New York, extending its decline for the year to 12 percent.
The lender's $3.4 billion takeover of Pasadena, California- based OneWest was approved by regulators in August, giving the firm access to cheaper funding through retail deposits. Thain said he expects CIT will be required next year to undergo the annual Federal Reserve stress tests as the OneWest acquisition boosted capital levels. That shouldn't affect CIT's ability to repurchase stock or pay dividends, he said.
"Because it's a first time for us, it won't be quite the same as for everybody else," Thain said. "It's not quite the same public process as the biggest institutions go through."
Thain, who rebuilt CIT after the financial crisis, said in October that he'll step down as CEO at the end of March while remaining chairman. He said his job at the lender was "kind of done" and he hoped to retire to spend more time with his granddaughter. Ellen Alemany, a director at the bank, will succeed him as CEO.