Terms

Series

5.625% Non-Cumulative Perpetual Preferred Stock, Series B

Liquidation Preference

$25.00

Coupon Rate

5.625%

Rate Type

Fixed

Annual Dividend

$1.41

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

December 15, 2024

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness And Other Non-Equity Obligations Of Cit Group Inc. And Its Subsidiaries, Any Future Capital Stock Of Cit Group Inc. Expressly Stated To Be Senior To Series B Preferred Stock (Subject To 2/3 Holder Vote); Pari Passu With: Cit Group Inc. Fixed-To-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, Any Future Parity Preferred Stock Of Cit Group Inc.; Senior To: Cit Group Inc. Common Stock, Any Future Junior Capital Stock Of Cit Group Inc.

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Shares Offered

8,000,000

Prospectus Summary

CIT Group Inc., a Delaware bank holding company, is offering 8,000,000 shares of its 5.625% Non-Cumulative Perpetual Preferred Stock, Series B (NYSE: CITPRB), with a $25.00 liquidation preference and a fixed annual dividend rate of 5.625% ($1.40625 per share, or approximately $0.3516 per quarter), payable on March 15, June 15, September 15, and December 15, beginning March 15, 2020. The stock is optionally redeemable at $25.00 per share on any dividend payment date on or after December 15, 2024. Critically, dividends are non-cumulative: if the board does not declare a dividend for any period, that payment is permanently forfeited and holders have no claim to it, meaning income investors bear real interruption risk with no make-whole mechanism. As a holding company obligation, the Series B Preferred Stock is structurally subordinated to all debt and depositor claims at CIT Bank, N.A. and other subsidiaries — CIT Group relies on upstream dividends from its bank subsidiary, which are subject to regulatory limitation. Within CIT Group's own capital stack, Series B ranks senior to common stock and junior-designated equity, pari passu with the existing Series A Fixed-to-Floating Rate Preferred Stock, and junior to any future expressly senior preferred (requiring a two-thirds holder vote to issue). All existing and future indebtedness (~$45.4 billion in total liabilities as of September 30, 2019) ranks ahead. The regulatory capital call provision allows CIT to redeem the entire issue within 90 days — but not partially — if it determines in good faith that the shares no longer qualify as Tier 1 capital under Federal Reserve rules, subject to Federal Reserve approval; this creates reinvestment risk if regulatory capital rules change adversely. At a $25.00 offering price, the Series B Preferred Stock yields exactly 5.625% per annum. Dividends are expected to qualify as ordinary dividends eligible for the corporate dividends-received deduction (DRD) and potentially for the qualified dividend income (QDI) preferential rate for individual U.S. holders, though this depends on CIT having sufficient current or accumulated earnings and profits in each taxable year. The dividend stopper is triggered if CIT fails to pay full dividends on Series B for any completed period — at that point, CIT cannot pay dividends on common stock or redeem/repurchase any junior or parity stock (including Series A) until Series B is made current; because dividends are non-cumulative, however, the stopper lifts once Series B dividends resume without any obligation to pay missed amounts.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If CIT has not paid full dividends on the Series B Preferred Stock for the most recent dividend period, it is blocked from paying dividends on or repurchasing common stock or any other junior securities, and from repurchasing parity preferred stock (including Series A); conversely, if any future senior preferred stock exists and its dividends are not paid in full, CIT may be blocked from paying dividends on the Series B Preferred Stock.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 73 (Strong)