Published on

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide


  1. 1. Lehman Brothers 11th Annual Financial Services Conference Jeffrey M. Peek Chairman & Chief Executive Officer London, England May 20, 2008
  2. 2. Lehman Brothers 11th Annual Financial Services Conference Jeffrey M. Peek Chairman & Chief Executive Officer London, England May 20, 2008 Notices Forward Looking Statements Certain statements made in these presentations that are not historical facts may constitute “forward- looking” statements under the Private Securities Litigation Reform Act of 1995, including those that are signified by words such as “anticipate”, “believe”, “expect”, “estimate”, “target”, and similar expressions. These forward-looking statements reflect the current views of CIT and its management and are subject to risks, uncertainties, and changes in circumstances. CIT’s actual results or performance may differ materially from those expressed in, or implied by, such forward-looking statements. Factors that could affect actual results and performance include, but are not limited to, potential changes in interest rates, competitive factors and general economic conditions, changes in funding markets, industry cycles and trends, uncertainties associated with risk management, risks associated with residual value of leased equipment, and other factors described in our Form 10-K for the year ended December 31, 2007 and Form 10-Q for the quarter ended March 31, 2008 filings. CIT does not undertake to update any forward- looking statements. This presentation is derived from CIT’s publicly available information and is to be used solely as part of CIT management’s continuing investor communications program. This presentation has not been prepared in connection with, and should not be used in connection with, any offering of securities by CIT. For the sale of any securities by CIT you are directed to rely only upon the offering document for those particular securities. Data as of or for the period ended March 31, 2008 unless otherwise noted. 2 1
  3. 3. Agenda Business Update Focus Areas Funding & Liquidity Long-Term Model 3 Leading Provider of “Capital” For the Middle Market Global brand, market leader & long-standing relationships Franchise Broad-based revenues and spread of risk Diversity Engrained culture and solid commercial performance Credit Quality Strong base and disciplined management Capital Solid commercial returns Profitability Experienced management Governance 4 2
  4. 4. Business Model: Deliver Earnings Through All Cycles Weak Economy Strong Economy Competitors enter, Competitors exit, margin decline offset pricing improves, by lower credit costs credit costs rise Performance Improves Performance Improves Increased originations Factoring (credit protection) Robust secondary market Restructuring / DIP Equipment Utilization Distressed Debt Mergers and Acquisitions Lease Renewals 5 Taking Actions to Manage Profitability and Liquidity Corporate Transportation Trade Vendor Finance Finance Finance Finance • Increased • Strong demand for • Global demand interest in 3rd loans for new aircraft • Pockets of Market party providers softness in retail Environment • Demand for rail sales and credit • Disrupted • Reduced sales cars stable (ex syndication market volumes housing-related) • Improving • Placed air orders • Extending • Increasing pricing Profitability commissions through 2010 leases Actions • Managing retail • Strengthening • Extended rail • Driving credits covenant packages lease terms efficiencies • Prioritizing liquidity • Establishing • Utilizing secured • Prioritizing Liquidity to key accounts secured facilities facility liquidity to JV’s and top Actions • CIT Bank • Executing aircraft accounts originating loans sales 6 3
  5. 5. Commercial Segments Continue to Perform Lending, leasing and other financial and advisory Corporate $25B Managed Assets services to middle market companies, with a focus on 8% ROE1 Finance specific industries Trade Factoring, lending, receivables management and $7B Managed Assets trade finance to companies in retail supply chain Finance 16% ROE Transportation Lending, leasing and advisory services to the $14B Managed Assets transportation industry, principally aerospace and rail Finance 20% ROE Vendor Financing and leasing solutions to manufacturers and $16B Managed Assets distributors around the globe 6% ROE2 Finance 1Q08 Commercial Results3 EPS: $0.82 ROE: 12.1% As of or for the 3 months ended 3/31/2008. 1. Excludes pretax charge of $118M on assets held for sale related to an agreement to sell $4.6B of asset-based loans and commitments 7 2. Excludes pretax impairment charge of $33M related to the 2007 sale of our Dell Financial Services joint venture equity interest 3. Including unallocated Corporate Expenses Efficiency Initiatives Underway Total Expenses ($M) Reducing headcount − 500 positions eliminated in first quarter − Largest impact on Vendor Finance, Corporate $1,479 Finance & Shared Services − Additional reduction of 150 positions in Student Lending in second quarter $1,383 Target Streamlining functions & eliminating duplicate efforts $100M 1 Expense − Consolidating underwriting and portfolio Reduction management across similar businesses − Further off-shoring of non-critical functions Manage discretionary spend − Reducing advertising, T&E and professional 2006 2007 2008 services 1. Represents annualized expense reduction 8 4
  6. 6. Commercial Credit Quality Credit Losses ($M) $466 $234 1.75% $174 $127 $120 $67 0.82% 0.56% 0.36% 0.63% 0.32% 2003 2004 2005 2006 2007 Q108 Net Charge-offs % of AFR Non-Performing Assets Delinquency 60+ Days $700 $707 $520 $612 $478 $527 $362 $444 $433 $316 $307 $402 1.68% 1.87% 1.90% 1.70% 1.46% 1.47% 1.32% 1.23% 1.22% 1.15% 0.87% 1.01% 2003 2004 2005 2006 2007 Q108 2003 2004 2005 2006 2007 Q108 % of FR Delinquent Repo % of FR Non-Accrual Owned portfolio statistics: excludes Consumer and Home Lending segments 9 Limited Exposure to Some Current Areas of Focus Reliance on highly engineered financial products Investments in third-party originated CLOs or CDOs No Commitments to fund under conduit facilities/ SIV’s Large leveraged buyout obligations Exposure to airlines that recently shutdown Commercial real estate exposure Construction industry exposure Minimal Unsecured exposure Coverage from monoline insurers Trucking industry exposure 10 5
  7. 7. Prudent Consumer Liquidation Strategy Student Lending Home Lending Wrote-off all goodwill and Collect on $9.4B of contractual intangibles Q4 2007 balances with a carrying value of Ceased all student loan originations $8.7B and $0.4B of reserves in April 2008 Improved servicing processes − $20M restructuring charge − Refined staffing model − Servicing existing obligations: Enhanced Analytics − Servicing platform unaffected − Aggressively manage REO portfolio ~$200M of commitments remain − $12.6B portfolio composition: Evaluate reserve adequacy quarterly and provision accordingly $11.9B government guaranteed − $ 0.7B private student loans − Mitigate risk and maximize liquidity 11 Home Lending Exposure & Risk Transfer $9.8 B Repo $.15 B Assets $. 7 B $0.3B Repo Discount $. 4 B Discount & Valuation $8.5 B Reserves Reserve for $6.6 B Credit Loss Receivables $1.9 B Held for Notes Investment Retained $9.4 B Economic Risk Analysis: Receivables / Repo (CB) $3.2B* $4.7 B AAA Securitization assets 1.9 Notes Total $5.1 Sold Less: Discount & Reserves (1.2) Maximum Exposure $3.9B Carrying Value “Mortgages Capital Allocated to Segment ~$1.0B Contractual Balance Less Reserve Securitized” 3/31/2008 12 * Contractual balance (CB) of $9.8B less $6.6B securitized. 6
  8. 8. Multi-Faceted Approach to Funding – Steady Progress Maintain ample cash balances Execute planned asset sales Bolster Near-term Liquidity Continue to source secured financings Manage asset originations / use CIT Bank Execute public asset-backed transactions Monitor term debt market opportunities Return to Public Markets Commence pay-down of bank facilities Return to commercial paper market Reduce reliance on wholesale funding Expand deposit base Solidify Long-Term Model Explore funding partner Enhance credit ratings 13 Proven Liquidity Into 2009 2008 – Significant Sources & Uses of Cash Sources Uses Available cash at 3/31 $8.4B* Debt Maturities: Available ABS facilities at 3/31 1.9 Commercial paper $1.3B Capital raise - common 1.0 Bank borrowings 2.1 Capital raise - preferred 0.6 Unsecured term debt 8.1 Asset-based loan sale 1.4 Deposits 0.9 Aircraft sales 0.5 Aircraft purchases 1.5 Deposit issuance 0.9 Total sources $14.7B Total uses $13.9B • Base case analysis assuming no further liquidity actions taken in 2008, flat assets (excluding agreed upon sales) and no unsecured debt issuance • ABL and aircraft sales progressing as planned – expected closings Q2 • High degree of confidence in ability to resume deposit issuance from CIT Bank * $10.3 billion cash on balance sheet less $1.9 billion restricted cash and non-immediately liquid cash amounts 14 7
  9. 9. Significant Additional Liquidity Sources Identified Asset Sale / Secured Unsecured Potential Liquidity Source Liquidation Financing Financing Ongoing liquidation of the home lending & consumer portfolios X Rail business under strategic review X Middle-market and syndicated loans being studied for possible X X sale/securitization Considering ECA financing for new aircraft; secondary market X X demand remains strong for existing fleet Maintain Vendor and Corporate Finance securitization programs X Grow deposits in CIT Bank X Opportunistic term debt issuance X Additional $8-$12 Billion $8- 15 Maintaining a Strong Capital Base Total Capital1 ($ in Millions) 10,000 ~$9,680 $8,401 $7,949 8,000 $7,215 $6,310 6,000 $5,650 4,000 2,000 0 2 2003 2004 2005 2006 2007 Q1 08 Proforma Common Equity Non-common equity Tangible Capital 10.4% 10.7% 9.8% 9.4% 8.8% 10.2% to Managed Assets Issued $750 million of junior subordinated debt and $690 million of convertible “equity units” in 2007 Issued $1.0 billion of common equity and $575 million of convertible preferred stock April 2008 1. Capital = common stock + preferred stock + mandatory convertible +junior subordinated securities 16 2. Based on March 31, 2008 data adjusted for the April 2008 capital raises 8
  10. 10. Expected 2008 Consolidated Financial Trends Q2-Q4 2008 Metric Q1 2008 Comments Expected vs Q1 • Increased cash balance • Reduced leverage Finance Margin 2.35% Flat – Down slightly • Cost to re-enter market • Stable commercial losses Commercial: $98 Commercial: Flat • HL provisions down slightly Loss Provisions Consumer: $367 Consumer: Down • SL provisions down • Modest fee increase $174 million Flat – Up slightly Other Income • Asset sale/syndication (incl. $33 million charge) (excl. Q1 charge) • Restructuring realization Operating Expenses $318 million Flat – Down slightly • Ongoing management • Asset sales Managed Assets $84 billion Down • Origination management 17 Vision for the Future Capital Structure Business Demographics Balanced funding model Commercial finance company focused on the middle market Increased use of deposits Higher levels of capital Quality portfolio, broad spread of risk Strong investment grade ratings Diverse revenue streams Dividend aligned with capital generation Global franchise Financial Model Single-digit asset growth Double-digit revenue growth Premium Valuation Double-digit return on equity 18 9
  11. 11. Building a Strong Foundation for a Second Century of Growth Sustainable Performance & Returns Leading commercial finance provider to the middle-market Global Operations Diverse Portfolio Broad-Based Revenues Deep Industry Expertise Disciplined Credit Culture with 100 years of success Long-Standing Relationships 19 20 10
  12. 12. Diverse and Quality Portfolio Balanced Portfolio1 Secured Commercial Lender1 (% Financing and Leasing Assets) (% Commercial Exposure Secured by:) Communications Unsecured <1% Consumer Other Wholesale 3% 2% 2% Transportation 4% Other2 Healthcare 5% 18% Cash Flow Services 21% 6% Asset Financings Student Lending Factoring Retail 45% 16% 9% 10% Equipment Commercial Air 24% Manufacturing 11% Home 13% Lending 11% Risk Mitigation Expanded into non-cyclical industries Building international franchises Growing fee based services Established asset management vehicles Managing capital in more cyclical industries Expanded risk management capabilities 1. As of industry served greater than 3% * No other March 31, 2008. 21 2. No other industry served greater than 2%. Broad Spread of Economic Risk Initiatives 26% of Portfolio Assets Outside US Europe Non-US Owned Portfolio • Expanded Dublin Servicing Center for Vendor ~$21 Billion • Acquired vendor business in U.K. and Germany South Pacific • Integrated Factoring platform in Germany 6% • Expanding global relationship with Microsoft Latin America • Leveraging tax efficient Dublin structure for Aerospace Canada 11% • Expanded UK leveraged finance team 23% Canada Other 9% • Full suite of commercial products and services • Expanding middle-market corporate finance team Asia Pacific Europe 10% Asia Pacific 42% • Opened new centralized servicing center in Shanghai • Servicing Aerospace through Singapore • Largest foreign owned leasing company in China Middle East • Doubled number of aircraft in the region As of March 31, 2008. 22 11
  13. 13. Reducing Level of Unfunded Credit Commitments At March 31 Unfunded Commitments $11 billion Vendor Lines1 $(2 billion) Lines2 Unavailable $(2 billion) Net Commitments $7 billion • Planned sale of $1.4 billion of asset-based loans and $3.2 billion of unfunded commitments further reduces exposure • Diverse portfolio spread among numerous clients, sectors and geographies • Many commitments are CIT’s participation in broadly syndicated loans or asset based, ie. client must post collateral to draw 1. Requires asset purchase by customer and needs approval confirmation by CIT. 23 2. Based upon covenants and asset availability Investment Grade Debt Ratings Agency Short Term Long Term Outlook / Watch Moody’s P-2 A3 Negative S&P A-2 A- Negative Fitch F2 A- Negative DBRS R-1 Low A Negative 24 12
  14. 14. Q1 2008 Financings • $2.7B Asset backed issuance at weighted average cost of ~LIBOR+100 to 125 bps $2.2B on balance sheet - Rail, Middle Market Loans, Student Loans, Trade Receivables − $0.5B off balance sheet - Vendor − • $0.6B Unsecured term retail notes at weighted average coupon of ~6.75% • $7.3B bank borrowings at weighted average cost of ~LIBOR+50 bps No MAC Clause; only financial covenant is maintenance of $4B minimum net worth − Staggered Maturities: − $2.1B October 2008 $2.1B April 2010 $2.1B April 2009 $1.1B December 2011 25 CIT Bank Funding Platform • Industrial bank chartered in 2000 and located in Utah • Significant level of under deployed cash remains in the Bank following Home Lending exit • Attractively priced deposits remain outstanding WAC of 5.5% WAM of 15 months • Meaningful incremental funding capacity available in wholesale CD market. For new deposits: • The brokered deposit market is deep and recognized by financial institutions as a stable source of funding $249 billion market1 Over 3,000 banks active in the market1 Current market turbulence has produced a flight to quality sentiment, resulting in greater investor demand1 26 1. Source: Merrill Lynch Update: The Brokered CD Market and Industrial Banks, April 2008 13
  15. 15. Recent Capital Offerings Supports All Aspects of Liquidity Plan Deal Terms Re-access the capital markets Common Equity Leverage market window Amount1 $1 billion Enhance bondholder confidence Shares 94 million Bolster the capital base Price $11.00 Maintain balance sheet strength Convertible Preferred Provide cushion against potential Amount1 $575 million loss Dividend Yield 8.75% Fortify liquidity position Conversion Price $12.65 Increase operating flexibility Liquidation Value $50.00 Facilitate return to unsecured debt Ticker Symbol CITprC markets 1. Includes partial exercise of underwriters purchase option for common shares and full exercise of underwriters option for preferred 27 shares. Solid Capital Position ($ billions) 10 9 $1.2 8 Consumer (2%) 7 Home Lending Total Pro-forma (11%) 6 Required Actual Vendor Finance (8%) $8.6 $9.7 5 Trade Finance (11%) 4 Transportation Finance 3 (12%) 2 Corporate Finance 1 (10%) 0 Business Goodwill Capital1,2 Capital1 Requirements 1. Capital = common stock + preferred stock + mandatory convertible +junior subordinated securities 28 2. Based on March 31, 2008 data adjusted for the April 2008 capital raises 14
  16. 16. 2007: Commercial Earnings Offset by Consumer/Home Lend Loss Managed Assets (%) Net Income ($M) $1.3B Trade Finance $164 Trade Finance 9% Transportation Finance $271 16% Transportation Finance Vendor Finance1 $410 73% 19% Vendor Finance $453 Corporate Finance2 $0 $(275) Consumer Corporate Finance 29% $(989) Home Lending 15% Consumer 27% 12% Home Lending $(1.3B) As of or for the full year ending December 31, 2007; Net Income excludes Corporate and Other net loss of $145 million. 1. Includes impact from 2 acquisitions and sales of ownership interest in Dell JV and systems leasing business 29 2. Includes impact from sale of construction business 1Q08 Results: Commercial Franchise Continues to Deliver Net Income • Uninterrupted service to key customers EPS ROE / (Loss) • Healthy levels of new business volume Net loss – reported $(257M) $ (1.35) -15.8% • Significant levels of unencumbered assets Home lending and (249M) (1.30) consumer segments • Broad based operating expense reductions * Noteworthy items (166M) (0.87) • Continued strength in credit quality Commercial results, • Market leadership positions intact $ 157M $ 0.82 12.1% including corporate * Noteworthy items include: $118M pre-tax lower of cost or market adjustment $33M pre-tax retained interest impairment charge $148M pre-tax mark to market charge on terminated hedges $69M pre-tax charge for severance and restructuring 30 15
  17. 17. Corporate Finance Return on Risk Adjusted Capital 14.6% 18.3% 13.6% 13.4% 13.7% 2007* 2003 2004 2005 2006 2008 Priorities / Outlook Market Environment Continued focus on improving yield and Continued disruption in the leveraged loan structure market; more pronounced in larger transactions as opposed to the middle market Build on long-standing client relationships Loan syndication market likely to remain Invest in focus industries – Healthcare, challenged through mid-year 2008 Commercial & Industrial, Communications, Media & Entertainment, and Energy Trend towards “originate & hold” & club deals Enhance penetration in advisory products Significant improvement in yields and structure and services by leveraging recent on new originations acquisition Increased opportunities in distressed debt and Streamline credit and operations platforms restructuring * Includes $240M pre-tax gain on sale of U.S. Construction Portfolio 31 Benefits of CIT’s Middle Market Focus Private Equity M&A Volume and Number of Deals Large Cap Middle Market $16,000 70 $200,000 40 $180,000 $14,000 35 60 $160,000 $12,000 30 50 Deal Value ($mm) $140,000 Deal Value ($mm) $10,000 25 $120,000 # of Deals # of Deals 40 $100,000 20 $8,000 30 $80,000 15 $6,000 $60,000 20 10 $4,000 $40,000 5 10 $2,000 $20,000 $0 0 $0 0 J06 F MAM J J A S O N D J07 F MAM J J A S O ND J06 F M A M J J A S O N D J07 F M A M J J A S O N D Deal Value (US$mm) # of Deals Deal Value (US$mm) # of Deals CIT Delivers Integrated Value Proposition To Key Customer Relationships Lender M&A Advisor Lender M&A Advisor $128,000,000 Senior Secured Credit Facilities were provided for a portfolio company of the acquisition of by has been acquired by a group led by October Sole Lead 2007 Arranger and Sole Bookrunner 33 32 16
  18. 18. Transportation Finance Return on Risk Adjusted Capital 18.4% 16.3% 9.2% 7.1% 7.0% 2003 2004 2005 2006 2007 2008 Priorities / Outlook Market Environment Optimize aircraft portfolio given strong order Favorable global aerospace trends continue: book and market demand Demand for air travel remains strong, Continue build-out of global Business Air particularly emerging markets initiatives Supply / demand balance favors lessors Bring corporate finance solutions to with strong order books transportation customers Unprecedented commitments for future Actively manage railcar renewals and deliveries deliveries to optimize utilization North American rail leasing remains solid 33 Attractive Transportation Fleet Air Portfolio – Geographic Mix Rail Portfolio – Car Type Under Middle East/Africa 15% 10% North Flat Oth Latin America Ta er America nk Coal Europe Asia Box Covered Pacific Go nd ola s Total Fleet: 289 Planes Total Fleet: 100K Cars Number of accounts 104 Wtd Average Age ~6 years Wtd Average Age: ~6 Years Current Utilization: 95% Current Utilization: 100% 2008 New Deliveries: ~8K Cars 2008 New Deliveries: 23 Planes 2008 Lease Expiration: ~18% 2008 Lease Expiration: ~10% As of March 31, 2008 34 17
  19. 19. Trade Finance Return on Risk Adjusted Capital 17.9% 18.7% 19.8% 18.3% 17.8% 2003 2004 2005 2006 2007 2008 Priorities / Outlook Market Environment Macroeconomic trends point to Improve efficiency of global factoring potentially weaker retail trends platform Less favorable retail environment Implement cross-geography solutions increases value of factoring Carefully monitor credit environment and Stable competitive landscape in the US refine risk-based pricing strategy Market evolving in Europe and Asia Expect increase in factoring commissions Global trading flows likely to become more important (e.g. Asian exports) 35 Vendor Finance Return on Risk Adjusted Capital 27.0% 26.7% 23.6% 22.6% 21.4% 2007* 2003 2004 2005 2006 Market Environment 2008 Priorities / Outlook Growth in certain sectors (e.g. Improve efficiency globally, including technology, health care) and non-US businesses acquired in 2007 geographies Mitigate impact from sale of Dell JV Continued shift towards large, global Expand existing global relationships; providers focus on margins Services and software becoming more Reduce administrative delinquencies prevalent in addition to equipment Trend towards divestiture of captives by large manufacturers 36 * Includes $268M pre-tax gain on sales of CIT’s interest in its Dell Financial Services JV and of its U.S. Systems Leasing Portfolio 18
  20. 20. Vendor Finance Competitive Positioning is Very Strong Key Attributes Captives Banks Independents Organization alignment to support vendors Global reach Limited Limited Limited Risk management expertise Limited Residual management Limited Limited Specialized products and Limited structures Balance sheet / Limited syndication capabilities 37 Home Lending Portfolio Summary Financial Statements Receivables Repo Total Contractual Balance (CB) $9.4 $0.3 $9.8 Valuation Reserves & Discounts 0.7 0.1 0.8 Receivable Carrying Value 8.7 0.2 8.9 Loan Loss Reserves 0.4 --- 0.4 Total Discount & Reserves $1.1 $0.1 $1.2 Discount & Reserves as % of CB ~12% ~45% ~13% Economic Risk Third Party CIT Total Securitization Investments $4.7 $1.9* $6.6 Other Receivables & Assets --- 3.2 3.2 Total Gross Assets $4.7 $5.1 $9.8 Discount & Reserves as % of CIT Risk ~25% CIT also has approximately $1.0 billion of capital allocated to the Home Lending Segment * CIT holds subordinated interests in the securitization transactions 38 At March 31, 2008; Dollar amounts in billions 19
  21. 21. Home Lending – Cumulative Charges Unpaid Principal Balance (UPB) at 6/30/2007 $11.3 B Valuation Loan Loss Total Charges Provisions Charges Q2 07 765 0 765 Q3 07 466 0 466 Q4 07 42 256 298 Q1 08 23 218 241 Total 1,296 474 1,770 Cumulative charges as a percentage of 6/30/07 UPB ~16% 39 CIT Investor Relations - Key Contacts Ken Brause Executive Vice President 212-771-9650 ken.brause@cit.com Steve Klimas Senior Vice President 973-535-3769 steve.klimas@cit.com Bhavin Shah Assistant Vice President 973-597-2603 bhavin.shah@cit.com 40 20
  22. 22. 1
  23. 23. Global Headquarters 505 Fifth Avenue New York, NY 10017 212-771-0505 www.cit.com Global Commercial Finance Overview CIT (NYSE: CIT), a leading global commercial finance company, provides a comprehensive set of financial products and services to clients in more than 50 countries around the world. A leader in middle market financing, CIT has more than $80 billion in managed assets and provides financial solutions for more than half of the Fortune 1000. Our diversified business platform serves more than one million clients in more than 30 industries. We serve a wide variety of industries including manufacturing, transportation, retailing, wholesaling, healthcare, communications, technology, energy, real estate, financial sponsor and various service-related industries. Each business has industry alignment and focuses on specific sectors, products and markets with portfolios diversified by client and geography. Our century of growth has been fueled by an unyielding focus on meeting our client’s financial needs and is balanced by our deep credit and risk management culture. The CIT brand platform, Capital Redefined, articulates CIT International our value proposition of providing our customers with the relationship, intellectual and financial capital to yield infinite possibilities. Founded in 1908, CIT has offices in more than 50 locations throughout North America, CIT is celebrating its Centennial throughout 2008. Europe, Latin America and Asia Pacific. Financial Performance 2003 2004 2005 2006 2007 Net Income $567m $754m $936m $1,016m ($111m)* Diluted EPS $2.66 $3.50 $4.44 $5.00 ($0.58)* Dividends Per Share $0.48 $0.52 $0.61 $0.80 $1.00 10.9% 13.2% 15.1% 15.0% (1.6%)* Return on Equity * Reflects a $1.3 billion net loss from our Home Lending and consumer business. citnet.cit.comlivfileMerrill_Consultants18_US_FactsheetsCIT GROUP INCCIT Group Inc_#4508.indd Revenue $9.0 $8.6 8.0 Debt Ratings $6.9 7.0 Commercial Senior $5.8 Paper Unsecured Debt 6.0 ($ in billions) $4.6 $4.7 DBRS R-1L A 5.0 Fitch Ratings F1 A 4.0 Moody’s Investors P-2 A3 3.0 A-2 A- Standard & Poor’s 2.0 The credit ratings stated above are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating. As of 03/31/08. 1.0 0.0 2003 2004 2005 2006 2007 4/8/2008 6:39:42 P, Curt Ritter,4508 1 Finance Income Rental Income Other Income 1 Includes fees, commissions, asset gains and other income. Contacts Investor Relations: Media Relations: Ken Brause C. Curtis Ritter Executive Vice President Director of External Communications & Media Relations 212-771-9650 212-461-7711 Ken.Brause@cit.com Curt.Ritter@cit.com
  24. 24. US: Canada: 1 CIT Drive 207 Queen’s Quay West Livingston, NJ 07039 Toronto, ON M5J 1A7 973-740-5000 Canada 416-507-2400 UK: China: Peninsular House 36 Monument Street 18F, No. 500 Fushan Road London EC3R 8LJ, UK UC Tower, Pudong, 44-207-411-4800 Shanghai, 200122, PRC 86-21-6160-2288 Ireland: CIT House Blackrock Business Park, Carysfort Avenue, Blackrock Co. Dublin, Ireland 353-1-279-6295 Commercial Segments Asset Composition1 Corporate Finance Managed Assets by Segment Walter Owens, President Provides lending, leasing and other financial and advisory services to Trade Finance 9% middle market companies, with a focus on specific industries, including Home Lending Corporate Finance healthcare, financial sponsors, energy, communications, media and 12% 29% entertainment. Trade Finance John Daly, President Provides factoring, lending, credit protection, receivables management Consumer and other trade finance services to companies that sell into retail 15% channels of distribution. Transportation Finance Vendor Finance Transportation Finance 19% 16% Jeff Knittel, President Provides lending, leasing, and advisory services to the transportation Portfolio Assets by Industry industry, principally aerospace and rail. Vendor Finance Wholesaling 3% Communications Transportation Kris Snow, Co-President 2% 4% 2 Other Terry Kelleher, Co-President Healthcare 18% 6% Provides innovative customer financing and leasing solutions that Service support global, regional and local manufacturers and distributors in industries 7% technology, office products, diversified industries, telecommunications 3 and healthcare. Student lending 15% Retail Products Services 9% Asset based loans Financial risk management Commercial Secured lines of credit Asset management and Manufacturing airlines servicing 13% 11% Leases - operating, capital Home 4 lending and leveraged Merger and acquisition 12% advisory services Vendor finance programs Portfolio Assets by Geography Debt restructuring Import and export financing Credit protection Debtor-in-posession / France Mexico turnaround financing Accounts receivable collection 1% 1% Australia All other countries Acquisition and expansion Commercial real estate 1% 8% financing advisory services Germany 2% China Project financing Debt underwriting and 2% syndication England Small business loans 5% Insurance Letters of credit / trade Canada 6% acceptances Capital markets structuring US 74% Estimate as of 12/31/07. 1 No industry greater than 3%. 2 Ceased originating all student loans in 2008. 3 Securities and investment banking services offered through CIT Capital Securities LLC, an affiliate of CIT. Ceased originating residential mortgages in 2007. 4 © 2008 CIT Group Inc., CIT and the CIT logo are registered service marks of CIT Group Inc. 03/08
  25. 25. FOR IMMEDIATE RELEASE CIT REPORTS FIRST QUARTER RESULTS; SIGNIFICANT PROGRESS ON LIQUIDITY PLAN First Quarter Net Loss of $257 Million, $1.35 per share Commercial Businesses earn $0.82 per share excluding Noteworthy Items Credit Loss Reserves Strengthened Quarterly Dividend Reduced to $0.10 per share NEW YORK – April 17, 2008 – CIT Group Inc. (NYSE: CIT) today announced a series of actions that demonstrate significant progress on the plans it announced on March 20, 2008 to improve its liquidity position. These actions include: • Agreeing to sell $4.6 billion of asset-based loan commitments, of which $1.4 billion is currently drawn; • Agreeing to sell $770 million of aircraft at a gain of approximately 10%, of which $300 million closed in the first quarter; • Identifying another $2.0 billion of loan assets that will be either used for a secured financing or sold during the second quarter; • Funding $335 million of first quarter commercial loan originations through CIT Bank; • Engaging financial advisors to explore various capital raising initiatives, including the possible issuance of equity securities, and to evaluate strategic alternatives for the Company’s $4 billion rail leasing business; and • The declaration by the Board of Directors of a $0.10 per share quarterly dividend payable on May 30, 2008 to shareholders of record on May 15, 2008. The combination of these actions, in addition to existing cash balances, materially enhances the Company’s liquidity and significantly advances its plan to reduce the size of the balance sheet. The Company reported a net loss of $257.2 million, or $1.35 per share, for the first quarter of 2008. Commercial segment earnings were more than offset by a combined net loss in our home lending and consumer lending segments, a non-cash charge related to terminated hedges, and severance costs. Net income was $200.6 million, or $1.01 of diluted earnings per share, for the comparable 2007 quarter. “The prolonged and pervasive dislocation in the capital markets continued to present significant challenges for the financial services sector,” said Jeffrey M. Peek, Chairman and CEO. “CIT’s core commercial businesses performed well against this turbulent backdrop, with particularly strong results in Transportation and Trade Finance. Our overall loss for the quarter was driven largely by our liquidating consumer businesses. Given the need to continue to bolster our balance sheet and preserve capital, the Board of Directors has made the prudent but difficult decision to reduce the quarterly common stock dividend by 60% to $0.10 per share. “The liquidity actions we announced today, coupled with the quality and breadth of our portfolio, provide us with increased flexibility to carry out future asset dispositions and evaluate funding and capital raising alternatives in a judicious manner. As we look ahead, it’s clear we will operate a smaller, more nimble company that is competitively positioned to take advantage of both economic contractions and 1
  26. 26. expansions. We are a recognized leader in the commercial middle market and remain committed to providing intellectual and financial capital to our customers.” The following table breaks down our reported results between our ongoing commercial businesses, liquidating consumer segments, and other noteworthy items: Net Income / (Loss) EPS ROE Net loss - reported results $ (257.2) $ (1.35) -15.8% Home lending and consumer segments (248.5) (1.30) Noteworthy items (165.6) (0.87) Commercial results, including corporate $ 156.9 $ 0.82 12.1% Net income for Commercial Segments and Corporate was $156.9 million, down from $267.9 million in the prior year quarter and $368.8 million last quarter, reflecting lower finance margins, lower other income and higher credit costs. The noteworthy items in the table above are comprised of the following: • A lower of cost or market valuation allowance pretax charge of $117.5 million (decrease to EPS of $0.36) on assets held for sale in the Corporate Finance segment, reflecting the agreement to sell $4.6 billion of asset-based lending commitments of which $1.4 billion represents funded receivables that were classified as held for sale at March 31, 2008; • A $33 million pretax impairment charge (decrease to EPS of $0.11), that should have been recorded concurrently with the 2007 fourth quarter sale of our Dell Financial Services joint venture equity interest, reflecting the repricing of debt cost underlying a securitization conduit vehicle in the Vendor Finance segment; the charge relates to the fourth quarter financial statements, as it was triggered by the buy out of CIT’s joint venture equity in the fourth quarter of 2007; • A pre-tax charge, in Corporate and other, of approximately $148 million related to losses on swaps that hedged the now inactive commercial paper program (decrease to EPS of $0.47) and were previously recorded in Other Comprehensive Income. An offsetting pre-tax gain of approximately $140 million on the termination of a corresponding amount of swaps with essentially offsetting economics was deferred and will be amortized over the remaining life of those terminated swaps; • Pre-tax charges of $69 million, primarily reflecting costs associated with severance and termination expenses related to approximately 500 employees in corporate and other (decrease to EPS of $0.22); and • Tax benefits of approximately $56 million relating to applying the projected annual effective tax rate for 2008, including the projected income mix between international and domestic operations (increase to EPS of $0.29). 2
  27. 27. The loss of $248.5 million in the Home Lending and Consumer Segments was primarily driven by $270 million in reserve building during the quarter ($150 million for Home Lending, $120 million for Student Lending), reflecting continued deterioration in the home lending markets and seasoning of the home lending portfolio and reserves for private (non-government guaranteed) loans, principally to students of a pilot training school that filed bankruptcy during the quarter. Consolidated Financial Highlights: Liquidity, Funding and Capitalization • The Company has taken significant actions to bolster its liquidity position. We agreed in April to sell $4.6 billion of asset based loans and related commitments ($1.4 billion of loans and $3.2 billion of commitments). We also have agreements to sell $770 million of aircraft, of which $300 million closed in the first quarter. An additional $2.0 billion in assets have been identified to be financed or sold. Finally, the Company is exploring the potential sale of its $4.0 billion railcar leasing business. • Our total cash position increased to $10.3 billion at quarter end, from $6.8 billion at December 31, 2007. This cash includes $7.0 billion of immediately available cash, $1.4 billion of cash and short-term investments at our Utah bank, $0.6 billion of other cash balances, and $1.3 billion of restricted cash (largely related to securitization transactions). • During the quarter, we raised approximately $10.6 billion of financing including $7.3 billion from our bank lines, $2.7 billion of asset-backed financing and $0.6 billion of unsecured retail notes. Asset-backed financing, secured by rail assets, middle-market loans, trade finance receivables, student loans and mortgages, included $2.2 billion of on-balance sheet secured borrowings and $0.5 billion of off-balance sheet securitization transactions. • Principal uses of cash during the quarter included $1.5 billion to pay maturing commercial paper, $1.6 billion to pay maturing debt, $1.7 billion to fund portfolio growth and a $1.0 billion reduction in credit balances to factoring clients. • We had approximately $50 billion of unencumbered portfolio assets at March 31, 2008, essentially unchanged from December 31, 2007. • Outstanding commercial paper declined from $2.8 billion at December 2007 to $1.3 billion at March 31, 2008 due to our suspension of the Company’s commercial paper program. • The ratio of total tangible equity to managed assets at March 31, 2008 declined to 8.33% from 8.82% last quarter and is currently below our target of 8.50%. The Company’s announced liquidity actions are designed to strengthen the ratio to well above our target. • In addition, the Company may use the proceeds of any offering of common equity to facilitate the payment of quarterly dividends of approximately $8.0 million on the Company's Series A and Series B preferred stock in June. Net Finance Revenue • Net finance revenue was down 11% from last quarter and 10% from last year primarily reflecting lower interest rates and higher borrowing costs. Average earning assets increased 1% over the prior quarter and 9% over last year. • Net finance revenue as a percentage of average earning assets was 2.35%, down from 2.67% last quarter and 2.83% last year, as interest expense reflected the widening of CIT credit spreads and the cost of maintaining excess cash balances. The net finance revenue comparisons also reflected lower rates of lease renewals on certain operating leases and higher levels of non-accrual assets. 3