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CIT Update March 2012 Important Notices
This presentation contains forward-looking statements within the meaning of applicable federal securities laws that are based upon our current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. The words “expect,” “anticipate,” “estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,” “project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,” “pursue,” “commence,” “seek,” “may,” “would,” “could,” “should,” “believe,” “potential,” “continue,” or the negative of any of those words or similar expressions is intended to identify forward-looking statements. All statements contained in this presentation, other than statements of historical fact, including without limitation, statements about our plans, strategies, prospects and expectations regarding future events and our financial performance, are forward-looking statements that involve certain risks and uncertainties. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results, and our actual results may differ materially. Important factors that could cause our actual results to be materially differen t from our expecttitations ildinclude, among others, therikisk that CIT is unsuccessflful inrefin ing and implementing its strategy and business plan, the risk that CIT is unable to react to and address key business and regulatory issues, the risk that CIT is delayed in transitioning certain business platforms to CIT Bank and may not succeed in developing a stable, long-term source of funding, and the risk that CIT continues to be subject to liquidity constraints and higher funding costs. Further, there is a risk that the valuations resulting from our fresh start accounting analyy,sis, which are inherently uncertain, will differ siggynificantly from the actual values realized, due to the complexity of the valuation process, the degree of judgment required, and changes in market conditions and economic environment. We describe these and other risks that could affect our results in Item 1A, “Risk Factors,” of our latest Annual Report on Form 10-K filed with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on the forward-looking statements contained in this presentation. These forward-looking statements speak only as of the date on which the statements were made. CIT undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except where expressly required by law.
ThispresentationistobeusedsolelyaspartofCITmanagement's continuing investor communications program. This presentation shall not constitute an offer or solicitation in connection with any securities. Contents
Slide # CIT OVERVIEW 3-4 BUSINESS UPDATES 5
•Corporate Finance 6
•Trade Finance 7
•Transportation Finance 8 •Vendor Finance 9 PRIORITIES AND PROGRESS 10-13 FINANCIAL TRENDS 14-19 FUNDING PROGRESS 20-25 KEY MESSAGES 26 CONTACTS 27 ®
CIT Overview CIT – A Unique Franchise and Investment Opportunity
Bank Holding Company with 100+ Years Experience
Commercial Lending & Leasing Specialist
Focus on Small and Mid-Sized Businesses
Generate High Yielding Assets
Global Servicing Capabilities
Solid Capital and Liquidity Profile
3 Overview 2011 Highlights
Increased commercial loan and lease volume each quarter Grew commercial assets in the fourth quarter Grew Commercial Recaptured market share in small and middle-market lending Origination Platform Entered adjacent markets Equipment finance & commercial real estate
Improved portfolio quality Sold over $3.5 billion of non-core or low yielding assets Improved economic margin Improved Economic Profitability Maintained strong asset yields Reduced average borrowing cost to 4.2% at 12/31/11 (1) Reduced operating expenses
Transferred SBL and US Vendor Finance platforms into CIT Bank Expanded Role of CIT Bank All commercial units originating business in the Bank 72% of 2011 US volume originated by CIT Bank Launched internet deposit platform
Significant progress building out risk and control functions Cease & Desist Orders on CIT Bank lifted April 2011 Improved BHC Capabilities Substantial progress toward satisfying requirements of Written Agreement with Federal Reserve Board of NY (FRBNY)
(1) Proforma for redemption of all remaining Series A notes and $4.75 billion of debt issuance in Q1 2012 as well as announced redemption of all 7% Series C 2015 notes in April 2012. Overview 5 ®
Business Updates Providing Financial Solutions to Small and Middle Market Companies
(1) Corporate Lending, leasing, advisory and other Finance and Leasing Assets financial services to small and middle Finance market companies Total $34 Billion
(In Billions) Trade Factoring, lending, receivables management and trade finance to Finance companies in retail supply chain Consumer Corporate $6 Finance $7 Transportation Lending, leasing and advisory services to the transportation industry, principally Finance aerospace and rail Vendor Finance $5 Transportation Vendor Financing and leasing solutions to manufacturers and distributors around Finance Trade Finance the globe $13 Finance $2
Liquidating pool of largely government- Consumer guaranteed student loans
(1) Finance and Leasing assets include loans, operating lease equipment and assets held for sale; data as of 12/31/2011 Business Updates 5 Corporate Finance
Focus
Corporate Finance provides lending, leasing and other financial and advisory services to the small business and middle market sectors Focused on specific industries: Commercial Real Estate, Communications, Energy, Entertainment, Healthcare, Industrials, Technology, Restaurants and Retail
Update / Strategy
$$$4 billion committed and $2.7 billion funded volume in 2011 (both up ~150%) ~80% of 2011 US volume originated by CIT Bank Portfolio qqyuality much im proved; non-accrual loans down ~60% Re-entered equipment finance and commercial real estate markets Expanding ABL focus beyond traditional receivables/inventory Refining sponsor coverage model Increasing focus on agency roles
Business Updates 6 Trade Finance
Focus
Largest Factor in the US PidditttiProvide credit protection, accoun ts rece iblivable managemen t&tt & asset- based lending to consumer product companies selling to retailers Core industries include apparel, textiles, footwear, furniture, home furnishings, house wares and consumer electronics Also o ffer asset -bdlbased loans an dlttfditdthtdd letters of credit and other trade products/services
UdtUpdate /Stt/ Strategy
Client base stabilized; focused on recapturing share Commission rates and portfolio quality reflect health of retail sector Re-focus international strategy around capturing trade flows into the US Expand smaller (ie more profitable) client base Transition platform to CIT Bank
Business Updates 7 Transportation Finance
Focus
Global aerospace and North American railcar and defense industries
Own ~300 a ircra ft an d 100K+ ra ilcars
Young fleets and strong order book
Diverse client base with a broad spread of risk
Update / Strategy
Equipment utilization strong; lease rates stable in air, improved in rail
2012 air order book fully placed; rail orders 96% placed
Expand business air and lending operations
Emphasize relationships with quality lessors
Further diversify funding sources
Business Updates 8 Vendor Finance
Focus
Large and diverse customer base with ~1,900 active vendor partners, including global manufacturers & local resellers , and 400K end-user customers Equipment financing and full product lifecycle value-added services Leader in managed services and utility based programs Global franchise with volume fairly evenly split US and international
Update / Strategy
Volume up 11% from 2010 (~30% excluding platform sales) Transferred US platform to CIT Bank in October 2011 CIT Bank originated 97% of 4Q US volume Increased penetration into existing relationships Selectively expand industry focus Capitalize on international growth opportunities (Asia & Latin America) Continue to access lower cost funding across the globe
Business Updates 9 ®
Priorities and Progress Expanding CIT Bank Capabilities
($ In Billions) Asset Growth and Diversification: 12/31/11 12/31/09
Commercial Portfolio $3.9 $1.5 Sequential quarterly increases in volume Consumer Portfolio $2.2 $5.5 Originated 72% of US volume in 2011
Deposits – Broker $5.4 $5.1 US Corporate Finance, SBL and Vendor Deposits – Other (1) $0.7 $0.0 Finance platforms are in CIT Bank
Funding Capacity: Cash & Investments $2.5 $2.0 Well-capitalized and liquid
Tier One Leverage Ratio 25% 16% Launched internet deposit platform BankonCIT.com in October 2011 Employees 640 78 Deposit growth to reflect asset growth
(1) Includes primarily institutional and retail (internet) deposits 10 Priorities and Progress Focused International Growth Strategy
Over $12 Billion of International Assets Geographic Split (1) Segment Split Canada $2.6B Transportation Finance $8.7B Europe $3.0B Vendor Finance $2.6B Latin America $1.8B Corporate Finance $1.0B Asia / Pacific $3.3B Other $1.7B
Growth Regions: Asia (China), Latin America (Brazil/Mexico), Europe
BiBusiness Focus:
- Transportation Finance – Continue to meet growing global demand for operating leases - Vendor Finance – Scale existing platform organically and thru possible acquisitions - Corporate Finance – Focus on growing the Canadian and UK operations/portfolios - Trade Finance – Concentrate on capturing trade flows into the US Diversify local funding options including expanding local banking capabilities Serving our clients in over 50 countries across the globe
(1) Based on obligor location at 12/31/11
Priorities and Progress 11 Disciplined Approach to Corporate Development
Leverage our core commercial competencies and expertise
Client service Credit adjudication Industryyp expertise Collateral management Market presence Collections Bank funding
Focus on existing or complementary product lines
Corporate Finance (ABL, CRE, Healthcare, Energy Transportation Finance (Aerospace and Rail) Vendor Finance Small Business Lending Retail Deposits
Meet financial objectives within a reasonable period of time
Asset classes with multiple funding alternatives, including bank funding
12 Priorities and Progress Natural Progression in Business Priorities
2010 - 2011 2012
Accelerate Growth and Hire and Retain Key Personnel Business Development IititiInitiatives
Restructure and Refine Business Model Improve Profitability While Maintaining Financial Strength
Develop and Implement Plan to Reduce Funding Costs
Advance Transformation of Advance Risk Management, Funding Profile Compliance and Control Fuuctosnctions
Continue to Enhance Internal Controls and Regulatory Rebuild Business Activity Relationships
Priorities and Progress 13 ®
Financial Trends 2011 Financial Results Reflect Strategic Priorities
GAAP pre-tax income of $190 million includes:
− $528 million of costs related to the early retirement of debt
− $417 million of net FSA accretion (excluding debt related acceleration expenses)
− Consistent growth in PTI excluding FSA and costs associated with accelerated debt prepayment
Operating results reflect: Pre-tax Income / (Loss) $500 $455
− Sequential volume increases $400 $324 $300 − Lower funding costs $231 $200 − Improved credit metrics $103 $87 $100 $71 − Lower operating expenses $-
$(100)
$(200) $(176 ) $(300)
$(400) $(399) $(500) 1H '10 2H '10 1H '11 2H '11
Excluding FSA and Debt Repay GAAP
Financial Trends 14 Increasing New Business Volume and Reaching Inflection Point in Assets
(()In Billions) CilVldAtCommercial Volume and Assets
$40 $3.5
$35 $2.9 $3.0
$30 $2.5 $25 $1.9 $2.0 $1.7 $20 $1.5 ercial Assets
$1.3 $1.5 ded Volume mm $15 $1.1 nn
$1.0 Fu $0.9 Com $1.0 $10
$5 $0.5
$0 $0. 0 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011
Funded Volume Commercial Assets
Strong commercial volume in 2011
Total funded volume of $7.8 billion (up ~70% YOY)
Lending and leasing volume up in all commercial segments
Asset growth mitigated by non-core asset sales, BHC portfolio collections and consumer run–off
Commercial assets grew in 4Q 2011 for the first time since 2009
Financial Trends 15 Solid Yields on New Business
Average New Segment Comments Business Yields
• Overall yields are fairly stable Corporate Finance ~6% • Retail ABL pressured • Cash-flow loans steady
• Strong utilization in Air and Rail Transportation Finance ~12% • Air lease rates flat to down slightly
• Rail lease rates Vend continuing to improve Finanor • Overall yields$4.5 cerelatively stable Vendor Finance ~10% B Trade • Yields vary greatlyFinance by program/geography/credit
~50 bps • Commission rates have normalized Trade Finance (commissions) • Reflect improved credit environment for retailers
Financial Trends 16 Lower Funding Costs Driving Improvement in “Economic” Net Finance Margin (1,2)
“Economic” Net Finance Margin 2.50%
2.07% 2.00%
1.58% 1.50% 1.41% 1.40%
0.96% 1.00% 0. 72% 0. 74% 0.58% 0.50%
0.00% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 GAAP NFM 4.68% 4.34% 3.49% 3.08% 2.14% 0.70% 2.19% 1.14%
GAAP net finance margin volatile due to impacts from Fresh Start Accounting
Economic net finance margin trending favorably
Portfolio yields have been fairly stable
Funding costs have declined as we have eliminated high-cost debt
4Q sequential increase reflects ~30 bps improvement in funding costs and higher interest recoveries
(1) Net finance margin equals net interest income plus rent on operating leases minus depreciation as a percentage of average earning assets (2) Economic net finance margin excludes FSA impacts and impacts from accelerated debt repayments Financial Trends 17 Improved Credit Metrics
(In Millions) $2,500 5.00%
$2,052 $2,025 $1,912 $2,000 4.00%
$1,618 ns ss aa $1,500 3.00% $1,306
$1,062 $1,000 $914 2.00% Net charge - off on – accrual lo $702 NN
$500 1.00%
$0 0.00% 3/31/10 6/30/10 9/30/10 12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 Non-accrual loans Net Charge-offs Credit metrics near historic lows with strong portfolio quality across segments
Non-accrual loans down 65% since March 2010
Improved customer credits
Proactive portfolio management
2H 2011 net charge-offs averaged ~ 65 bps
Below long -term target expectations
Benefiting from continued recoveries
Financial Trends 18 Increased Reserves and Coverage
(In Millions) $500 2. 50%
$426 $416 $424 $415 $403 $408 $400 2.00% $357 eivables % % eivables cc $300 1.50%
$214
Reserves $ Reserves $200 1.00% as Finance Re ss
$100 0.50% Reserve
$0 0.00% 3/31/10 6/30/10 9/30/10 12/31/10 3/31/11 6/30/11 9/30/11 12/31/11
Reserves $ Reserves %
Added over $400 million of loan loss reserves post – emergence
~$60 million of non-accretable loan discount remaining
Total allowance for loan losses is ~2.0% of finance receivables
Commercial reserves are ~ 2. 7%of% of commercial finance receivables
Financial Trends 19 ®
Funding Progress Evolution to a Balanced Funding Model
HISTORIC FUNDING PROFORMA FUNDING (1) LONG TERM TARGET
Deposits
Unsecured 25‐35% Deposits Unsecured 35‐45% Unsecured Secured
Secured
Secured 25‐35%
Foundation of longgygy term liability strategy includes balanced fundin g model
Hybrid funding model to facilitate the path back to investment grade ratings
Bias towards a higher mix of deposits vs. capital markets funding
(1) Data as of December 31, 2011 and pro forma for redemption of all remaining Series A notes and $4.75 billion of debt issuance in Q1 2012 as well as announced redemption of all Series C 2015 notes in April 2012. Funding Progress 20 Significant Progress on Liability Management Strategy (1)
Accessing Cost-Efficient Funding
- Executed over $13.5 billion of aggregate new financings since January 2010
- Multiple markets and geographies including corporate bond, bank and ABS markets
- Recently issued $4.75 billion of debt - $1. 5 billion maturing in 2015 at 4 . 75% - $1.5 billion maturing in 2018 at 5.25% - $1.75 billion maturing in 2019 at 5.50%
Dramatic Reduction In High Cost Debt
- Including Q1 2012 Series A redemptions and announced Q2 2012 Series C redemptions, will have eliminated or refinanced approximately $23.5 billion of high cost debt since beginning of 2010
- Includes ALL first lien debt, 7.00% Series A ,10.25% Series B and 7.00% Series C 2015 notes
Eliminating Restrictive Debt Covenants and Unencumbering the Balance Sheet.
- Amended terms of Series A debt via consent solicitation to more closely resemble investment grade covenants
- Exchanged $8.8 billion of Series A debt into Series C debt
- Bank Revolver and Series C debt are now unsecured following repayment of Series A debt in March 2012
(1) Funding progress includes redemption of all remaining Series A Notes and $4.75 billion of debt issuance in Q1 2012 as well as announced redemption of all 7% Series C 2015 notes in April 2012. Funding Progress 21 Extended Liquidity Horizon and Improved Debt Composition
BHC Maturity at Dec-2009 (1) BHC Maturity Maturity at at Dec Dec-2011 (1)(3) 9,000 9,000
8,000 8,000 1st Lien Term Loan 7,000 7,000 Revolver* 6,000 6,000 Series A 5,000 Ms) 5,000 MM Series B 4,000 (US$ 4,000 Other Debt 3,000 3,000 Unsecured 2,000 2,000
1,000 1,000
- - 2011 2012 2013 2014 2015 2016 2017 2018 2019+ 2011 2012 2013 2014 2015 2016 2017 2018 2019+ * Denotes total commitment amount under the Revolver
Funding Mix at Dec-2009 CIT Funding Mix at Dec-2011 (3) 1st Lien Term Loan
Revolver 10% 14% Series A 20%
Series B 45% 30% Unsecured
Other Debt 35% 41% Securitizations and other 1% Asset‐Based Borrowings Deposits 4% Weighted Average Interest Rate (2): 5.97% Weighted Average Interest Rate (2)(3): 4.19% (1) BHC maturity profiles exclude securitizations and secured debt that is primarily repaid with pledged collateral cash flows. (2) Excludes all FSA adjustments and amortization of fees and expenses. (3) Figures are pro forma for redemption of all remaining Series A notes in Q1 2012, $3.25 billion secured offering in February 2012 (now unsecured), $1.5 billion unsecured offering in March 2012 and redemption of $1.6 billion 7% Series C notes in April 2012. Funding Progress 22 Opportunity for Further Improvement
(In $ Millions) Senior Unsecured Debt
Maturity New Issuance Exchanged Date Amount (1) Coupon Amount (1) Coupon
2014 1,300 5.25% ------2015 1,500 4.75% ------2016 ------3, 095 700%7.00% 2017 ------4,116 7.00% 2018 2,200 5.69% ------2019 1, 750 5. 50% ------Total 6,750 5.35% 7,211 7.00%
Refinancing opportunity
Weighted Average Coupon Rate 6.20%
(1) Amounts reflect principal outstanding; proforma for $4.75 billion of debt issuance in Q1 2012 and announced redemption of all 7% Series C 2015 notes in April 2012.
Funding Progress 23 Capital Position is Strong ($US MM)
Capital ratios well above regulatory commitments and economic requirements
CIT CIT BankPeers (1) Tier 1 Capital 19% 37% 10-15%
Total Capital 20% 38% 13-18% Leverage Ratio 19% 25% 9-14%
Economic capital allocation framework
(2) - Implemented January 2011 Capital Allocations by Segment
- HlitiHolistic v iew o fikf risk: Corporate Finance 12% - Asset - Model Trade Finance 9% - Credit - Operational Transportation Finance 15%
- Interest Rate - FX&otherFX & other Vendor Finance 10%
- “Excess” capital held at corporate Consumer 6%
- Ongoing review/refinement of models Total Requirement (inc Corporate) ~12%
(1) Peers consist of a mix of regional banks, BHC’s and specialty finance companies sourced from publically available filings and Bloomberg as of 9/30/2011 (2) Capital expressed as a percentage of risk-weighted assets and is subject to change Funding Progress 24 Path to Improving Credit Ratings
S&P Ratings DBRS Ratings Moody's Ratings Counterparty Ratings (long-term/short-term) BB- / B BB (low) / R-4 B1 Bank Credit Facility BB- BB (high) Ba3 Outlook/Trend Stable Positive Stable FOCUS AREAS: PROGRESS / STATUS Improve Profitability • Franchise remains strong: volume growth, competitive positioning and agency roles • Adjusted net finance margin substantially improved since emergence • Dec line in marg ina l fun ding cos ts dr iven by Ban k fun ding / lia bility managemen t ac tions Improve Financial • Demonstrated access to cost efficient funding Flexibility • Substantial alleviation of covenant restrictions with redemption of 2014 Series A notes • Collateral on Revolver / Series C debt “fell-away” with full repayment of Series A debt
Improve Asset Quality • Non-accrual loans down substantially since emergence • Net charge-offs stabilized Expand Role of Bank • Successful transfer of SBL and Vendor Platforms • Major US origination platforms now situated in CIT Bank • Launched internet deposit platform in October 2011 Resolution of the Written • Management believes it has made substantial progress in satisfying requirements of Agreement with FRBNY the Written Agreement • Communicating closely with FRBNY, which is in the process of reviewing and validating the remaining open items
Funding Progress 25 Key Messages
Strong commercial franchises
Significant progress positioning the company to achieve long-term targets
- Increased focus on asset growth
- Liabilityygg restructuring continuing
Bank growth and diversification strategy is well underway
- Major US originations platforms are situated at CIT Bank
- Expansion and diversification of funding with launch of Internet deposit platform
Strong balance sheet with solid liquidity, reserves and capital
26 CIT Investor Relations - Key Contacts
Ken Brause Executive Vice President 212-771-9650 [email protected]
Steve Klimas Senior Vice President 973-535-3769 [email protected]
Bhavin Shah Director 973-597-2603 [email protected]
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