Key lender CIT posts $1.68B loss, threatens bankruptcy

NEW YORK -- Commercial lenderCIT Group said Monday in a regulatory filing that it lost $1.68 billion in the second quarter, and again warned it might have to file for bankruptcy protection if it fails to restructure its business.

CIT lost $4.30 a share during the quarter ended June 30. In the same quarter last year, CIT lost $2.08 billion, or $7.88 a share, due to a $2.55 billion charge from discontinued operations.

CIT's loss from continuing operations during the most recent quarter totaled $1.62 billion, compared with earnings from continuing operations during the year-ago period of $47.9 million.

Analysts polled by Thomson Reuters, on average, forecast a loss of $1.95 per share for the latest quarter.

In its quarterly report to the Securities and Exchange Commission, CIT said there is still "substantial doubt" about its ability to continue operating.

Just last month, CIT was bailed out with a $3 billion loan from some of its largest bondholders as it faced a cash crunch. It also launched an offer to repurchase $1 billion in outstanding debt that was successfully completed Monday, helping to stave off a potential bankruptcy filing.

Despite the completion of the tender offer, CIT is still facing some challenges. It could continue to struggle with liquidity issues as more debt is due to mature next year.

CIT Group, one of the nation's largest lenders to small and midsize businesses, has been devastated by the downturn in the credit markets and is trying to restructure its operations to remain in business. CIT used to rely heavily on cheap, short-term debt to fund its operations — a type of funding that essentially evaporated during the credit crisis last year.

With weak credit markets and concerns about its survival, CIT's borrowing costs have begun to outpace the money it generates from lending. CIT recorded a negative net interest revenue of $19.1 million during the second quarter, compared with positive revenue of $169.8 million a year ago.