GE Capital
Investor Meeting
March 19, 2009
Caution Concerning Forward-Looking Statements: quot;Results are preliminary and...
GE: safe & secure
                                                Dividends/share           Yield @ today’s price
        ...
GE Capital structure
                                                          General Electric
 Support                  ...
2009 outlook
                               Environment
     • Difficult market with many macro-economic indicators
      ...
GE Capital portfolio
                           GECC
                       2008 Financials
Business                      ...
GE Capital has a strong franchise
  One of the few liquidity sources in 2008                    Estimated U.S. market posi...
Primary questions regarding GE Capital
        Commercial Real Estate
        – What is in our portfolio and what is the c...
Summary of stress testing
($ in billions)
                                         2009       Est. Fed       Est. Fed
    ...
Agenda
 Funding & Liquidity                 Kathy Cassidy – GE Treasurer
 Portfolio & Risk Management         Jim Colica –...
GECS 2009 funding
 • Global debt markets remain difficult for financial sector issuers ...
   strong market demand for Gov...
GECS ’09/’10 Funding plan
($ in billions)                                                                   Comments
     ...
2009 alternate funding
 ($ in billions)
                                                                   CD’s : Distribu...
Capital ratios
        GE Capital Corp. leverage a)                                            GE Capital Corp. TCE/TA rat...
Risk management
 Diversified portfolio – broad spread of risk, managed exposure limits

 Senior secured financings – disci...
Consumer Portfolio (assets)
                                                                                              ...
Commercial Customer Concentrations
                      ($386B)
                          Over $1B
                      ...
Stress testing approach
Bottoms up – asset by asset, business by business
Large commercial exposures over $300MM stressed ...
Commercial portfolio stress testing
     Commercial Loans, Leases                                                         ...
Business reviews



                   37




  Real Estate


                   38




                        19
GE Real Estate … what we do

            Finance purchase of real estate by 3rd parties in
        1
            multiple ...
Rigorous portfolio valuation process
 Detailed source document review
 • 100% lease review, rent rolls, income statement, ...
Primary real estate products
               Debt portfolio: $48B                                      Equity portfolio: $3...
GE Real Estate position in debt markets
         GE Real                         Global RE debt market                    ...
Commercial real estate at GE
            What we typically avoid                                                          ...
Why our delinquencies and losses are
lower than competitors
• Primary driver is product mix
                              ...
Debt maturities risk
                                $6.1B debt maturing in ’09

                                         ...
GE Investor Presentation
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GE Investor Presentation

  1. 1. GE Capital Investor Meeting March 19, 2009 Caution Concerning Forward-Looking Statements: quot;Results are preliminary and unaudited. This document contains “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of U.S. and foreign government programs to restore liquidity and stimulate national and global economies; the impact of conditions in the financial and credit markets on the availability and cost of GE Capital’s funding and on our ability to reduce GE Capital’s asset levels and commercial paper exposure as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the soundness of other financial institutions with which GE Capital does business; the adequacy of our cash flow and earnings and other conditions which may affect our ability to maintain our quarterly dividend at the current level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, network television, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. “This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com.” “In this document, “GE” refers to the Industrial businesses of the Company including GECS on an equity basis. “GE (ex. GECS)” and/or “Industrial” refer to GE excluding Financial Services.” Key messages Running GE to be safe and secure over the long term ‒ Liquidity position is extremely strong ‒ Completed 93% of our 2009 planned long term funding Have sufficient capital and alternatives to weather adverse economic conditions Running GE with intensity ‒ Resizing our cost footprint in a meaningful way ‒ Management team is focused on delivering cash ‒ Continuing to invest/position company for long term growth We expect GE Capital will be profitable in 1Q’09 and 2009 We are committed to GE Capital GE will come out of this cycle a stronger, more focused and competitively advantaged company 2 1
  2. 2. GE: safe & secure Dividends/share Yield @ today’s price 82¢ Reduced dividend … 1 ~4% 40¢ ~$9B in annualized savings 2009 2010 2009 GECC tangible common GECC leverage-a) equity/tangible assets 7:1 ~6:1 ~6.0% Infused equity into 2 4.9% GE Capital 4Q’08 1Q’09E 4Q’08 1Q’09E ’09 long term funding needs GE cash $48B ~$45B $42B ~$41B Strengthened liquidity 3 (a- net of cash and equivalents and with TY’09E Completed 4Q’08 1Q’09E classification of hybrid debt as equity to date 3 Ratings update Concluded rating review with S&P – Detailed GE Capital updates on liquidity, funding, business model, risk assessment & capital levels – Industrial assessment (2009/2010) on revenue, margins & cash flow S&P rated GE & GE Capital at AA+ with a stable outlook: – This rating means “very strong capability to meet its financial commitments” and “rating is unlikely to change in next six months to two years” “The ratings on GE continue to reflect our view of its excellent business risk profile, its significant cash flow and liquidity, its strong corporate governance, and management’s commitment to maintaining a very high credit quality” – S&P, March 12, 2009 4 2
  3. 3. GE Capital structure General Electric Support Company • GE support to ensure GECC 1.1x fixed-charge AA+/Aaa 100% coverage ratio Owns all of • GE TLGP FDIC backstop GE’s financing General Electric • Infused $15B & reduced dividend from GECS assets Capital Services, Inc. • History of capital infusion or dividend 100% reductions when necessary General Electric Capital Corporation Primary GE Issuer/Guarantor Operating businesses AA+/Aaa 100% (Capital Finance) Commercial Energy Consumer Lending & Real Estate Financial GECAS Financing Leasing Services 5 GE Capital overview 6 3
  4. 4. 2009 outlook Environment • Difficult market with many macro-economic indicators still deteriorating • Pockets of increased liquidity for consumers and mid- market businesses • Industry losses continuing • Delinquencies and non-earning assets pressured in both Consumer and Commercial • Very difficult to execute asset sales in today’s market – TALF may help 7 GE Capital business model Financial Services value chain “Factory” “Origination” GE Advantage: “Raw material” GE Advantage: (capital) Low cost Treasury Global position GE Advantage: Risk Asset Mgmt. Brand Competitive cost Domain expertise Talent Tax Pre-crisis competitive position: + Scale ++ Margins and results > banks + FinCo +++ Brand/domain GE Capital has performed for decades Will reposition for long term success 8 4
  5. 5. GE Capital portfolio GECC 2008 Financials Business Domain + expertise Assets Net income Commercial • Entered in the 60’s • ~100% secured loans and leases Loans & Leases $230B $1.7B • Support mid-market customers Real Estate 85 1.2 • Entered in the 70’s • Secured loans against diversified properties - Debt • Own/operate high quality properties - Equity Consumer 183 3.7 • Entered in the 30’s • Store cards and sales finance for retailers - U.S. PLCC • Broad spread of risk - Global • Entered in the 60’s Aviation Services 49 1.2 • GE domain • Broad product set with full life cycle management • Entered in the 80’s Energy Fin. Services 22 0.8 • GE domain • Essential assets; secure cash flows Businesses we know … decades of performance 9 GE Capital: our approach What we do + Senior secured financings + Diversified portfolio + Operate assets … global remarketing capabilities + Underwrite to hold + Restructure/work out problem loans/assets + Small hold positions + Match fund What we don’t do Did not originate CDOs, SIVs, etc. Did not sell credit default insurance Do not trade securities … Minimal MTM in up or down cycles Do not originate mezzanine or high yield debt/bonds 10 5
  6. 6. GE Capital has a strong franchise One of the few liquidity sources in 2008 Estimated U.S. market position • $86B of new financings to global companies, • Middle Market Commercial Lending #1 infrastructure projects and municipalities • Equipment Lending/Leasing #1 • $177B credit extended to global consumers • Middle Market Corporate Finance #1 • Have continued to support virtually all major • Aircraft Financing #1 U.S. airlines and auto companies with • Healthcare Financing #1 financings as they work through cyclical issues • Energy Financing & Project Financing #1 • Leading DIP/Bankruptcy lender for • Fleet Leasing #1 restructuring U.S. companies • Franchise Finance #1 • Global leader in mid-market commercial • Commercial Real Estate Lending Top 3 lending • Dealer Financing #1 • Provided $6B financing to support global • Private Label Credit Cards #1 energy projects Core is strong + competitively advantaged 11 Portfolio strategy Forward Ending net return Core Competitive investment dynamics competencies outlook ’09 outlook ($B) Core $356 Core mid-market • Underwriting +++ lending + leasing 2-5% ROI • Direct origination - Likely fewer FinCo’s Grow • Asset mgmt. intensive - Fewer captives + verticals long term • Re-marketing - Bigger banks • Deep domain GE Banking $64 • Enhance value via ++ European & product development - Strong local franchises Emerging Market 2-4% ROI Enhance • Grow deposit base - Lots of options banks & JV’s value • Operating synergies $80 Restructure Various Consumer • Origination — <2% ROI Restructure/ • Funding advantage - High leverage & Commercial run-off - Tend to compete platforms w/ banks 12 6
  7. 7. Primary questions regarding GE Capital Commercial Real Estate – What is in our portfolio and what is the corresponding risk? What is the risk in U.K. mortgage? What is the risk in Eastern Europe? What is the risk in U.S. Consumer? Losses/Impairments/Reserves – Are our reserves adequate and how do they compare to other banks? Capital – Does GE Capital have enough equity to handle future losses? Other investment securities, associated companies, goodwill We will cover all of these questions today 13 Stress testing approach Bottoms up – asset by asset, business by business Large commercial exposures over $300MM stressed individually Consumer • Mortgages, credit cards, auto and personal loans and sales credit financing – By product, by geography – market specific – Consistent methodology applied across product types globally Commercial • Commercial Real Estate: By market and property type • Commercial Aircraft: Valuation by equipment type • Energy loans and leases: Stress obligor ratings, increase severity, based on outlook • Commercial Loans and Leases: Stress probabilities of default, recovery rates 14 7
  8. 8. Summary of stress testing ($ in billions) 2009 Est. Fed Est. Fed outlook base adverse Capital Finance Pretax pre-provision ~$13.3 ~$11.1 ~$9.2 Credit losses 9.7 11.5 13.7 Net income ~$5 $2.0-2.5 ~$0 2009 macro guidance Avg. U.S. U/E 7.7% 8.4% 8.9% Peak U.S. U/E 8.5% 9.3% 10.1% U.S. GDP (1.8%) (2.0%) (3.3%) Stress assumptions utilize Fed guidance and 3rd party forecasts 15 Key messages GE Capital funding is 93% complete CEE Banks should be profitable even and we have ~$60B capacity under in an adverse stress scenario Federal programs We are operating GE Capital with GE Capital is well capitalized and intensity … Collections >originations, compares favorably to banks lower cost, aggressive risk management GE Capital is a conservative lender … losses should be lower than banks We expect GE Capital will be profitable in 1Q’09 and 2009 Real Estate equity valuation estimates are comparable to other real estate Have sufficient capital alternatives to investors weather adverse economic conditions U.S. Consumer credit losses comparable to similar U.S. bank GE Capital has a profitable vision for portfolio performance the future Adverse stress case losses of global mortgage should be manageable 16 8
  9. 9. Agenda Funding & Liquidity Kathy Cassidy – GE Treasurer Portfolio & Risk Management Jim Colica – GECC Chief Risk Officer Business Reviews & Stress Testing – Real Estate Ron Pressman, Stewart Koenigsberg & Jayne Day – Commercial Lending & Leasing Dan Henson & William Brasser – GECAS Henry Hubschman & Anne Kennelly-Kraky – U.S. Consumer Mark Begor & Ray Duggins – Mortgage Mark Begor & Ray Duggins – European Banks Dmitri Stockton & Denis Hall Break Lunch Operations Update Bill Cary – GECC COO Financial Update Jeff Bornstein – GECC CFO GE Capital Summary & Outlook Mike Neal – GE Vice Chairman & GECC CEO Closing Keith Sherin – GE Vice Chairman & CFO Q&A 17 Funding/Liquidity 18 9
  10. 10. GECS 2009 funding • Global debt markets remain difficult for financial sector issuers ... strong market demand for Government supported funding • 93% long term funding complete ($42B of $45B) … considering early funding of ’10 maturities in ’09 • Issued $5B non-guaranteed debt: 30 yr. USD & GBP • CP balance @ ~$60B as of 2/09 … 100% covered by bank lines • $15B capital infusion in 4Q’08/1Q’09 improves capital ratios … leverage … TCE/TA ratio at top-end of banks • Strong cash and liquidity position 19 GECS funding ($ in billions) $515 ~$485 FIN 46 6 ~$450 ~6 $509 ~5 ~$479 ~$445 LT debt 382 348 320-330 Deposits/CD’s/ 55 81 85-90 Other 72 Comm’l paper 50 40-50 4Q'08 4Q'09E 4Q'10E Bank lines $60 ~$50 ~$50 CP coverage 83% 100%+ 100%+ Cash & equiv. $37 ~$30+ ~$30+ LT debt<1 yr. $69 ~$67 ~$60-$65 20 10
  11. 11. GECS ’09/’10 Funding plan ($ in billions) Comments ’09 ’10 Beginning cash balance 37 ~38 Sources LT debt issuances 93% of ’09 funding complete … lower ’10 planned issuances 32-a) 35-40 … considering early funding of ’10 Alternate funding CD's, Intl. bank deposits & other programs 26 4-9 Business originations/ $205B collections/$180B originations in ’09 25 20-35 collections mgmt. Capital infusion from GE 9 – Total sources 92 60-80 Back-up liquidity Uses Cash / liquid assets LT debt maturities (69) (67) CPFF – unused capacity CP reduction (22) 0-(10) BOE/ECB/BOC facilities Total uses (91) (67)-(77) Bank lines Ending cash balance ~38 ~31-41 (a. Ex-$13B funded in ’08 Strategy : assets, alternate funding, … maintain strong liquidity 21 Government programs Programs GE impact • Capacity of $98B (incl. GE) … pricing @ slight penalty to market Commercial paper • GECC/GECS outstandings matured in February … none outstanding today funding facility • Enables GE to support investor liquidity needs & manage duration … serves as (CPFF) liquidity backstop • GECC capacity of $126B … important for LT debt market & CP market access … program now extended through October 31, 2009 Temporary liquidity • $37B LT debt issued under the program … $3B remaining for ’09 guarantee • Manage ~$25-$35B CP outstandings under TLGP program (TLGP) • ~$50-$60B capacity remaining … option to fund some ’10 maturities in ’09 • Newly announced Fed/Treasury facility … covers AAA ABS for specified assets … Term Asset- currently auto & credit card … may be extended to equipment & CMBS backed securities • $10B+ of PLCC/CDF maturing securitization debt likely eligible loan facility • Potential for increased liquidity for real estate and equipment … may reduce cost of (TALF) securitization funding … continuing to evaluate • New facility in development … initial focus on marketable securities & other MTM Public Private assets … could expand to leveraged loans, real estate, equipment, etc. investment funds • Improved liquidity in these asset classes to help overall market (PPIF) 22 11
  12. 12. 2009 alternate funding ($ in billions) CD’s : Distributed through multiple firms to support asset growth in US banks • Industrial Loan Corporation deposits $17B – Adding 3 complete business platforms to ILC … ~$81 direct origination a) – Originating CD’s to match bank assets profile 20 (~$7B > 1 yr. maturity as of 4Q’08) $55 • Federal Savings Bank deposits $2B – Direct origination of sales finance assets 27 19 International deposits $6B – Drive market share in emerging markets $30 10 Other – Tap large/developed markets 17 U.S. Industrial Loan Corporation French Gov’t program: $1B ’09 target ($0.4B YTD) 15 18 U.S. Federal 1 17 Savings Bank Covered bonds program: 1st issuance by Jul ’09 11 11 International Exploring other asset based funding options 4Q'07 4Q'08 4Q'09E Cost of funding attractive vs. LT debt Transition banks to deposit funding a) Subject to regulatory approval 23 $58.2B bank lines ... ~100% CP coverage ($ in billions) Remaining Term as of 3/11/09 Comments > 4 years • Strong base of $37B lines >1 year $4B • $19.8B up for renewal in Mar-Dec ’09 … phased less than 1 year reduction planned as outstanding CP comes $22B 94% w/ term out down $30B > 3 years but • Expect $10B renewals by June with remaining less than 4 $3-5B during 2H’09 $3B > 1 yr but less than 3 • Support levels not materially impacted by bank consolidation • ~80% lines from Aaa/Aa banks • No MAC clauses • Lines from 64 banks globally • No covenants or rating triggers • Syndicated: $22.9B; Bilateral: $35.3B • Drawn pricing at capped spread over Libor • ~$12B also available to GE parent Liquidity in great shape … on track to meet CP coverage targets with $50B+ bank lines and $30B+ cash 24 12
  13. 13. Capital ratios GE Capital Corp. leverage a) GE Capital Corp. TCE/TA ratio b) 7:1 ~6% 4.9% ~6:1 1.9% d) U.S. Large 4Q’08 4Q’08 1Q’09E 1Q’09E BHC avg. Tangible book Leverage c) 17X 14X GE infused $5.5B cash into GECS 4Q … plan to infuse ~$9.5B into GECS 1Q’09 Leverage commitments ahead of plan … ~6:1 by 1Q’09 TCE/TA ratio at the top end of the banks even if banks convert their TARP preferred equity into common equity (a- net of cash and equivalents and with classification of hybrid debt as equity (b- TCE : Book equity less goodwill & intangibles; TA : Total assets less goodwill & intangibles (c- Total borrowings/equity less goodwill & intangibles (d- As of 4Q’08 excludes TARP equity; Source : Federal Reserve Y9 filings 25 Portfolio overview 26 13
  14. 14. Risk management Diversified portfolio – broad spread of risk, managed exposure limits Senior secured financings – disciplined underwriting to GE “on book” standards – Collaterals GECC knows well – 2 decades of experience Conservative asset residuals – 520 experienced asset managers – market intelligence & redeployment capabilities Significant commitment of people resources – ~16,000 globally – Senior risk officers have over 25 years experience Data-driven analytics – identify & monitor key risks, measure capital & leverage Rigorous process approach – detailed approval authorities, GECC Board reviews Disciplined approach to managing risk 27 GECC Portfolio Total assets ($637B) Geography Other 9% Other Asia Pacific Real Estate $68B 11% U.S. 48% $85B Latin America 2% 11% 13% 27% Europe Consumer 29% $183B 3% Canada Developing Markets $70B 36% Others Poland Commercial 12% 18% Korea 8% Lending & Leasing 7% $230B 3% 5% Brazil GECAS EFS Czech Republic 10% $49B $22B 8% Hungary 6% ~70% of financing activities - Commercial 5% China India 4% 4% Russia 4% ~11% Developing Markets Thailand 17% Turkey Mexico 28 14
  15. 15. Consumer Portfolio (assets) Geography ($183B) Product ($183B) Other Asia Sales Finance JVs North America 6% Eastern 7% 14% Europe 6% 25% 16% Personal Auto 11% 9% Loan Small and Latin 6% 2% Medium America Enterprises 13% ANZ 14% 20% Mortgage 34% Cards 17% Western Europe UK >70% International ~22% in developing markets ~58% of receivables – Prime 29 Commercial Portfolio Diversification Industry sectors ($386B) Collateral type ($386B) Construction Energy Others Hotels Restaurants & A/c Rec and Inv Generation/Distribution Commercial Airlines Leisure 3% 4% 4% 9% 13% 5% Health Care Cash Flow 6% FF&E and Other Equip Energy 10% 12% 6% Automotive 2% Machinery Corporate Jets 3% 2% 24% Real Estate & Equipment Transportation 7% 24% Equipment Comm. Real 4% Estate Healthcare Equipment 3% 2% 4% 32% Franchise 2% 13% Diversified Finance 6% Fleet Vehicles Others Dealer Inventories Business Services Comm. Aircraft 45% less than 6% Diversified portfolio in industry weighting - long-standing GECC 51 industries collateral types 30 15
  16. 16. Commercial Customer Concentrations ($386B) Over $1B Over $1B, 15 accounts: $500MM-$1B 6% Airlines, Class 1 Railroads, Electric 5% $300MM-500MM Utilities, Aircraft Manufacturing, Real 5% Estate $200MM-300MM 4% $500MM-$1B, 27 accounts: Airlines, Automotive, Healthcare, Power $100MM-200MM 8% Generating Projects, Oil & Gas Refining, Cable, Broadcast Media $300MM-$500MM, 44 accounts: 11% 61% Automotive, Airlines, Electric Utilities, $50MM-$100MM Broadcast Media, Healthcare, Technology Equipment Under $50MM 72% of single risk exposures <$100MM Larger exposures secured primarily by essential operating assets 31 Key portfolio risks – 12/2 view (Pre-tax losses - $ in millions) December 2, 2008 outlook Estimated March ’09 Downside case ’09 financial % outlook impact Assets 2009 Assumptions vs. Dec. 2 Impact Assumptions U.S. Consumer 7% • 8.5% unemployment ~$4.2B ~$5.0B 9% unemployment U.K. Mortgage 4% • HPI (17%) 2008 = $600 $800 (20%) HPI • HPI (15%) 2009 Real Estate 14% • Cap rates 50-100 bps. higher $250 $400 +200 bps. highest historical cap rate by - Debt • Cap rates 50-100 bps. higher, $240 $500 asset type - Equity long-term hold GECAS = 7% • Global traffic growth down ~$550 • (3%) traffic decline ~$300 ~2% 2009 (9/11) Economic environment more challenging 32 16
  17. 17. Stress testing approach Bottoms up – asset by asset, business by business Large commercial exposures over $300MM stressed individually Consumer • Mortgages, credit cards, auto and personal loans and sales credit financing – By product, by geography – market specific – Consistent methodology applied across product types globally Commercial • Commercial Real Estate: By market and property type • Commercial Aircraft: Valuation by equipment type • Energy loans and leases: Stress obligor ratings, increase severity, based on outlook • Commercial Loans and Leases: Stress probabilities of default, recovery rates 33 Consumer portfolio stress testing U.S. Non-U.S. Mortgage Key Drivers: Key Drivers: Macro • Unemployment Macro • Home prices • Home equity access • Unemployment Portfolio • Credit quality • Refinancing ability • Credit lines Portfolio • LTV • Loss sharing • Mortgage insurance • Recovery rates • Borrower credit quality • FX movements (Central Europe) Key Assumptions: Fed Base Fed Stress Key Assumptions: Adverse GDP (2.0%) (3.3%) U.K. • 15% HPI decline in ’09 (34% U/E avg. 8.4% 8.9% ’08-’09) U/E peak 9.3% 10.1% • 9% unemployment Debt sale recovery rate: • Additional loss on sale 20-25% Central Europe • 15-30% further devaluation from PLCC 10% to 7.2% 25% to ~6% today’s FX rate based on country Sales Finance 16% to ~6.6% 25% to ~6% • Unemployment up to 13% based on market No benefits assumed from U.S. Stimulus Programs 34 17
  18. 18. Commercial portfolio stress testing Commercial Loans, Leases Real Estate Key Drivers: Key Drivers: Macro • GDP, Unemployment Macro • GDP, Unemployment • Liquidity • Liquidity Portfolio • LTV Portfolio • Senior diversified positions • Property cash flow • Borrower leverage • Borrower leverage • Sector diversification • Cap rates, liquidity • Asset value of collateral Key Assumptions: Key Assumptions: Fed Base Fed Stress Fed Base Fed Stress GDP (2.0%) (3.3%) GDP (2.0%) (3.3%) U/E avg. 8.4% 8.9% U/E avg. 8.4% 8.9% U/E peak 9.3% 10.1% Cap rates Revert to historical median of last 18 years Defaults Increased ~70% from Increased ~100% from Output 2008 levels to ~5% 2008 levels to ~6% PPR model forecasting greater declines in office property cash flows Severity Increased GECC Increased GECC historical severity by historical severity by 35% on average to 50% on average to ~15-30% ~20-35% No benefits assumed from U.S. Stimulus Programs 35 Portfolio overview (as of 4Q’08) GE position vs. banks % of total portfolio • Less Consumer Banks* Asset type GE • No U.S. mortgage, auto or student loans Consumer 30% 64% • More global Commercial 70% 36% • Minimal real estate construction exposure • 46% of portfolio is cross-collateralized with other 1st U.S. 41% 86% mortgages • Operate each owned property U.S. consumer 6% 58% • Underwrite to hold on book - Cards 3% 9% • Minimal junior debts, small hold positions - Mortgage 0% 40% • Global redeployment, remarketing capabilities - Auto 0% 1% • Deep domain expertise in Commercial Air & Power - Student loan 0% 1% Generation - Sales Finance/other 4% 7% • PLCC has smaller average balance, lower loss severity, * Weighted average of top 4 U.S. money center banks retailer loss sharing GE mix different than banks 36 18
  19. 19. Business reviews 37 Real Estate 38 19
  20. 20. GE Real Estate … what we do Finance purchase of real estate by 3rd parties in 1 multiple asset classes, individually and in cross- collateralized portfolios Own, manage and add value to real estate as 2 single assets and portfolios across office, apartment, warehouse, and retail asset classes around the world Provide financing to owner-occupied commercial 3 real estate for small to middle market businesses 39 How we manage risk Rigorous process around market, customers and asset evaluations Semi-annual market evaluations • Global data driven, investment hurdle setting process • Leverage GE portfolio data as well as 3rd party data and analytics Experienced, independent valuation/underwriting teams Local presence … utilizing consistent process globally • Tenant credit analysis • • Detailed lease by lease review … process designed to haircut revenue above historical avg. levels • Valuations generally 90-95% of MAI appraisal values Led by seasoned risk leadership team Over 25 years of experience, on average • Ongoing risk analytics review combined with asset management surveillance Identifies risk trends, concentrations • Allows for proactive risk management measures • Sophisticated tools for easier market analysis and deal assessment Economic/market sensitivities Market data • • Customer relationship management Deal review/approval system • • 40 20
  21. 21. Rigorous portfolio valuation process Detailed source document review • 100% lease review, rent rolls, income statement, GL, etc. • Thorough credit review of major tenants • Review of borrower/partner operating capability and financial strength • Know Your Customer “KYC” Surveys • Perform cash flow audits 3rd party consultant review Process culminates • Environmental survey in roundtable asset • Structural survey (earthquake as needed) valuation review … Market/site analysis all assumptions • Detailed inspection of property and surrounding neighborhood challenged • On-site management and tenant interviews • In depth discussions with brokers, appraisers • Survey competing owner/operators for rents, occupancy and expenses, in addition to public data • Inspection of recent sale comparables Financial modeling • DYNA lease / proprietary models created for DCF valuations 41 Key market risks in 2009/2010 1 Economic fundamentals – Industry transaction volume in 4Q’08 down 80% from 4Q’07 – Rental rates , absorption , vacancies , delinquencies , demand , supply constant – Virtually no new liquidity available … TALF should help … 2nd half may be better 2 Over $500B* of U.S. loans set to mature in 2009, $35B* from CMBS pools – Banks deleveraging – Limited new refinancing capacity in the system 3 Equity valuations – Up to 20% drop in major market rents expected, vacancies up significantly – Values still under downward pressure … our values down ~18% ’07-’08 Challenging environment * Source: Property & Portfolio Research (PPR) 42 21
  22. 22. Primary real estate products Debt portfolio: $48B Equity portfolio: $33B Construction Other RE Other RE 1.5% 6% Office 6% Warehouse Warehouse 23.5% 9% 12% Retail 8% Retail 9% Office 49% Hotel 1% Hotel Mixed 6% 11% Parking 3% Owner-occupied Mixed 19% 3% Apartment Apartment 14% 19% • On balance sheet lending • Well diversified, A-/B+ quality, avg. inv. $10MM, minimal construction risk • Senior secured, first mortgage • Primarily wholly-owned with no 3rd party debt - $29B, • Not a construction lender joint venture investments – $4B • 35 year track record • Hold at historical cost less depreciation … $1.5B annual • Owner-occupied: mid-market credit/single tenant NOI, $1.1B annual depreciation Debt portfolio primarily senior secured first mortgages, no “hung” inventory Equity portfolio is good quality, primarily 100% owned operating real estate Under Fed Reserve adverse stress test, potential total portfolio losses are manageable 43 Debt 44 22
  23. 23. GE Real Estate position in debt markets GE Real Global RE debt market GE $48B Estate $6 trillion* CMBS $62MM 97% CMBS Senior senior 46% cross rated secured/ secured/ collateralized 1st mortgage 1st mortgage CMBS unrated Mezzanine 3% $1.4B Subordinated Equity Senior secured debt • Layer of capital protection if stressed • Real capital committed in junior position/equity • Clear path to exercise remedies and take control of property - We avoid legal jurisdictions where a property owners’ rights are not respected * Source: PPR 45 Debt portfolio Total debt Collateral type dispersion Geographical profile Construction US -CA, 8% Other RE exposure: Other 4% 1.5% Germany 4% 6% Office US-TX, 5% UK 7% Warehouse 23.5% $48B US-FL, 4% 9% Japan 7% Retail US-GA 3% 8% Mexico 8% Hotel US-Oth, 23% 11% Canada 8% Owner- Mixed occupied US/Canada- 3% 19% Owner occupied 19% Apartment Comments 19% Debt structure • Crossed portfolios (46%): a single loan secured by multiple Singles properties in multiple locations. Benefit: loss from a single 32% Owner-occupied property can be offset by excess cash flow and/or value 19% from other assets in the portfolio CMBS bonds • Hotel exposure: 35% acquired at a discount post credit $62MM Sub-debt $1.4B crunch; 54% cross-collateralized; largest loan exposure at 3% Crossed a) $1.1B was 33% LTC at U/W, cash flow up 7% since U/W portfolios and current DSC @ 5.52X 46% • $0.7B construction portfolio: 65% acquired at a discount First mortgage senior secured 97% • Japan/UK/Germany: portfolios acquired at a discount 46 23
  24. 24. Commercial real estate at GE What we typically avoid What we do • Construction lending • Senior secured lending in markets we understand • Value add properties in good locations • Land loans • Mid range office • Affordable middle class apartments • Single family residential development - Avoid luxury • 2nd mortgages • Retail focus grocery/hyper market anchored centers • Mezzanine high yield • Warehouse - Crossed parks w/multi tenant, high CoC • CMBS hold positions – A or B pieces • Opportunistic portfolio acquisitions at discounts • Syndication book, “hung” inventory Commercial RE debt as of Dec ’08 • Malls • Trophy buildings Total O/S ($B) $68.2 $48.0 $112.4 $142.2 • Brownfield sites Other Commercial 64% 65% bought < par • Resorts 72% and 8% crossed 85% 98% w/stabilized Construction, properties • Exited condo conversion early Land and 36% Developer Debt 28% • BRICs 15% 1.5% 1.5% Bank 1 Bank 2 Bank 3 GE 47 Debt portfolio performance Maturity profile* Vintage profile* $B $14.9B 15 $14.4B Europe $11.3B 2.4 $9.2B $9.2B Asia 2.6 10 2.9 $7.0B $6.8B 0.6 $6.1B N. America 9.4 7.8 6.4 5 6.0 <2006 2006 2007 2008 0 55% of ’08 is opportunistic discounted debt purchase '09 '10 '11 Thereafter * Excludes owner-occupied Delinquency/defaults 5.4%* (% of Total O/S) Commercial Banks GE 5% Commercial banks (4Q’08) 3% GE 1.2%/$0.6B 0% Dec-00 Dec-01 Dec-02 'Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 * Source: FFIEC 48 24
  25. 25. Why our delinquencies and losses are lower than competitors • Primary driver is product mix Construction • Construction and development loans & development (C&D) - 32% of banks’ commercial real estate portfolio Banks* GE vs. 1.5% at GE … 65% acquired at opportunistic C&D % portfolio 32% 1.5% discounts - We also generally avoid other higher risk asset C&D charge-offs as classes/structures – 2nd mortgages, mezzanine, malls, % of total charge-offs 83% 0 resorts, condo conversions, etc. • Underwriting rigor/standards/valuations C&D delinquencies 11.4% 3.8% - Independent/in-house risk underwriting C&D delinquencies - Our underwritten valuations are generally 5-10% below % of total delinquencies 66% 4.4% appraisal values • Asset management capabilities Construction and development loans drive bank losses & - Extensive local network … unparalleled delinquencies - Every loan matters *Source: FFIEC Can’t apply banks’ delinquency and loss experience to GE portfolio 49 Maintaining relatively strong performance Debt U.S.: 100 markets LTV Eur: 32 markets Portfolio metrics Loan to value (LTV) <75% 75-90% >90% $5.0 $3.8 $2.4 High DSC 2.0x $3.1 $2.6 $0.9 Medium LTV 74% $0.2 $0.5 - Low $3.6 - - Mexico Not Rated 75-90% Values: $3.1 $0.2 - Japan $12.8B Current re-underwriting, $1.5 $1.2 $0.1 Canada historically 5-10% less <75% $1.7 $2.2 $0.5 Other Mkts. $20.8B than appraisals $2.6 $2.3 $0.4 Hotel/Other RE U.S. $20.8 $12.8 $4.3 Total >90% • Top 10 markets account for 33% of total $4.3B • 15% matures in ’09 Excludes owner-occupied, purchased non-performing loans, tax credits Debt service coverage (DSC) Comments 92% paying current 1.0-1.2 $2.1B mitigated $4.4B - Supported by letters of credit, cash >1.2 <1.0 reserves, guarantees covering at least 12 $30.3B $4.8B months debt service payments $2.7B not mitigated - $1.2B <80% LTV - Fully reserved if not deemed recoverable Excludes owner-occupied 50 25
  26. 26. Debt maturities risk $6.1B debt maturing in ’09 $1.9B $1.9B ’09 maturity components 0.3B Maturing 2009 $6.1B <85% LTV loans likely to meet 2.2B 0.9B $1.3B contractual extension requirements 0.1B … expect all to extend $1.0B Potential refinance, low LTV, 2.3B >85% amortization 0.3B 1.6B LTV >85% LTV loans pose refinancing 1.6B 1.2B risk in current environment 1.0B • $0.6B expected to pay-off <85% 0.7B LTV • $0.5B expected to pay-down • $0.5B expected foreclosures (90%+ of loans with specific reserves or purchase discount) 1Q 2Q 3Q 4Q 51 Owner-occupied mid-market lending Deal size segmentation Geographic concentration Ratings by maturity # of deals $MM by NEA 1800 1,658 1600 1,492 CA #: 7 #: 82 #: 4 #: 8 14% 2009 $: 9 $: 198 $: 1 $: 11 1400 %: 0.1 %: 2.0 %: 0 %: 0.1 TX 1200 Total NEA Remaining 6% $9.7B 1000 #: 7 #: 78 #: 3 #: 2 40% FL 2010 $: 59 $: 132 $: 5 $: 5 6% 800 %: 0.6 %: 1.5 %: 0.1 %: 0.1 NY 600 500 5% 344 400 ONTARIO #: 203 #: 2,618 #: 132 #: 29 4% 2011 $: 674 $: 8,254 $: 339 $: 46 200 QUEBEC 89 23 14 5% & after %: 6.6 %: 85.1 %: 3.5 %: 0.5 AZ 2% 3% 0 WA 2% OH NJ IL GA PA Deal Size/ <$1MM $1-$3MM $3-$5MM $5-$10MM $10-$15MM $15-$20MM >$20MM 2%2%3% 3% 3% NC AAA-A BBB-B CCC-C D Total NEA$0.9B $2.7B $1.9B $2.3B $1.1B $0.4B $0.4B 88% of deals NEA <$5MM Largest concentration = CA 14% 57% of NEA <$5MM Only 4 states >5% concentration Historical delinquency & losses (1988-2008) Stress test comments 4% Delinquency % Losses % EAD Loss/yr ($B) PD LGD ($MM) 4Q’08 outlook 10.5 3.9% 15% 63 Stress case 10.5 5.1% 20% 107 2% 1.5% • Stress PD is 30% higher than Plan PD; reflects 2 notch drop for < B+, 1 notch drop for > BB- • Stress LGD is a 33% increase over 4Q outlook LGD • Stress LGD of 20% requires a 50%+ collateral value loss 0% 1988 1992 1996 2000 2004 2008 given average LTV of 61% Weighted avg. historical delinquency .73% / loss .09%, excludes off-balance sheet Credit underwriting with property collateral 52 26

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