CIT’s Online Bank Doesn’t Exactly Knock It Out of the Park
Last October, CIT Inc., a troubled, if massive financial services conglomerate, decided it would get hip and launch an online bank at www.bankoncit.com. So far, the performance has been so-so.
Yesterday, CIT disclosed that the bank has generated about $600 million of deposits since its launch. In the bank’s view, that’s a positive number. John A. Thain, CIT’s chairman and CEO, was asked yesterday during an earnings call whether the $600 million run rate would continue, or even go higher. His response:
Well, I think the way to think about it is it did just start in October, and so there is a certain amount of getting up to speed and a certain amount of just education in terms of getting our name out into the marketplace. I think we said before that the — we believe that we can raise substantial amounts of deposits on the Internet, and you can look at some of our other competitors who have done that in the multibillions of dollars. When we have as much cash as we do have in the bank, as well as the student loans, there’s not much pressure for us to try to push to raise too many more deposits right at the moment.
Deposits at the bank are costing CIT 160 basis points with an average term of three years, which isn’t bad. But CIT’s progress so far does not come close to the king of all online banks, Ally. Granted Ally started from a greater base, because it had long operated a consumer bank as GMAC. When Ally rebranded in early 2009, it had $23.9 billion of deposits, a good portion of which were brokered. By the end of 3Q11, that amount hit $44.3 billion. (Ally’s fourth quarter 2011 earnings will be released within the next few days.)
Is it fair to compare CIT to Ally? Maybe not because of the GMAC Bank legacy. However, the $600 million of deposits, while a large number (heck, I don’t have $600 million), represents not even a measurable slice of the online banking deposit mark, as well as CIT’s potential share. Stay tuned, folks.
