CIT Group Inc. at

Bank of America Lynch Banking

and Conference November 13, 2012

9:40 a.m.

The following transcript has been provided by a third-party transcription service for informational purposes only. CIT expressly disclaims any responsibility for the accuracy of this transcription. CORPORATE PARTICIPANTS:

Ken Bruce; BofA Merrill Lynch; Analyst ; CIT Group Inc.;CEO Scott Parker; CIT Group Inc.;CFO

Ken Bruce: Getting situated before the next presentation, please remember, we are in election season still. So we have a little bit of a polling question for audience participation. So this question, what are you most interested in seeing from CIT? One, a clearer earnings picture; two, improved credit rating; three, validated capital plan; four, consolidation? And we've got one other question so please log in your response.

And the second question, at what tangible capital level do you expect CIT to operate normally? One, 10% to 12%; two, 12% to 14%; three, 14% to 16%; and four, 16% to 18%? One vote only.

Okay, well, I would like to welcome you all to the CIT presentation this morning. As most of you know, CIT is a leading commercial finance company and holding company that is active in middle-market lending, Transportation Finance, Corporate Finance, Trade Finance, and Vendor Finance. The Company has gone through a fairly momentous financial and operational transformation over the past few years having repaid or refinanced [$31 billion] (Company corrected after the conference call) in high-cost debt, improved its funding, and restarted its asset generation franchise.

Here to provide an update on CIT, its recent performance, and latest strategies, is Chief Executive Officer, John Thain, and Chief Financial Officer, Scott Parker.

John Thain: Good morning, everyone, both here and on the webcast. I would like to thank Bank of America and Ken for inviting us this morning.

For our agenda this morning, Scott and I will walk you through three broad topics. First, I will give you an overview of CIT, what we have accomplished over the past 2 1/2 years and our priorities for going forward from here.

Second, I will review each of our core commercial businesses and the strategy that we have to win in our businesses and to grow. And then finally Scott will provide a financial update and will focus on our progress towards meeting our financial targets.

So now all of you can speed read this quickly and we will get on to the presentation.

At our Investor Day in June, the leaders of each of our businesses discussed the strengths of their respective franchises. I believe that we have good businesses with good leaders with a lot of knowledge in their business segment and we are growing our businesses prudently.

We have achieved several strategic milestones. In less than three years, we have eliminated or refinanced $31 billion of legacy debt and materially reduced our cost of funds by about 270 basis points. Our commercial assets have grown over the past four consecutive quarters and are now up 10% from a year ago. And we continue to expand our Bank, which now has over $11 billion of assets and, as of last week, over $4 billion of Internet deposits.

Our financial position is very strong. Liquidity to total assets of 20%. We have loan loss reserves of about $400 million, which is over 2% of our commercial finance receivables, and our Tier 1 and Total capital ratios are around 17%. Underneath all of the FSA noise relating to our debt restructuring, our profitability metrics are improving and Scott will elaborate on this.

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I would like to give you a quick overview of CIT for those of you who may not be as familiar with us. We are a 100-year-old Company founded in 1908 and became a in 2008. We are a commercial lender in the small and middle sized business space. One of the attractions of our business is that we generate high yielding assets and we protect ourselves against credit risk with collateral. Our servicing capability is another differentiating characteristic in a number of our asset classes and it's one of the other ways that we compete. Finally, as I mentioned, we have both strong capital and strong liquidity.

I often get asked, why did I join CIT? What did I need to do when I first arrived here in 2010? This slide summarizes the priorities I set out when I joined and what we have been able to accomplish over the last 2 1/2 years.

First, we built out a very talented executive team both on the business side and on the infrastructure side. While the business leaders have remained relatively stable, I essentially needed to rebuild most of the corporate infrastructure including Scott and most of our finance team.

We needed to restructure the balance sheet, both on the asset side and the liability side. On the asset side, we've sold over $10 billion of non-core assets and we focused on our core lines of business and commercial assets are now -- have been growing over the last four quarters.

We needed to reduce our funding costs. When I joined, our most senior debt paid LIBOR plus 10 with a 3% floor. It's a little difficult for a commercial finance company to make money with 13% debt. We have now repaid or refinanced all $31 billion of our legacy high-cost debt and as I've said before, we brought our funding costs down about 270 basis points.

We have built out risk management, credit risk, compliance, control, and internal audit infrastructure. These are all areas that were important to resolving our Written Agreement but also they are important to how we want to run our business for the long-term. And on the subject of the Written Agreement, I wish I had an update but we are still waiting for an answer from the Fed.

In 2010, CIT Bank had less than $1.5 billion of commercial loans and under $5 billion of deposits which were almost all brokered CDs. Today we are originating almost all of our U.S. loans and leases in the Bank, our commercial assets in the Bank are over $7 billion, and we have $8.6 billion of deposits, more than half of which are from our Internet Bank. Our goal going forward is to have almost all of our U.S. business originated in the Bank.

We have made this progress in a challenging economic environment. Our view is that the U.S. economy is growing but it's growing slowly. And we do business across most of the rest of the world. We are seeing slowing growth in other parts of the world, particularly in Europe. Even in those faster growing parts of the world like Brazil and China, we have seen slower rates of growth than we saw six to 12 months ago.

So while we are growing and as I said, our commercial portfolio is up 10% from a year ago, the slower economic growth in the world as well as macro challenges such as the low interest rate environment and excessive market liquidity do create headwinds for us in the timing of achieving our asset growth targets.

So we are also focused on meeting our profitability targets and we have adjusted our near-term priorities to continue to make progress towards those profitability targets, and Scott will talk more about that.

Our priorities for the rest of the year and into 2013 are very simple. We are focused on growing our core businesses and I will discuss how we are going to grow volume in each of our businesses. We will focus on reducing our operating expenses in order to meet our possibility targets. And as Scott mentioned on our third-quarter earnings call, we are looking to reduce our quarterly run rate of expenses by $15 million to $20 million a quarter over the course of 2013 and Scott will go into more details on that in his part of the talk.

Then we are going to continue to focus on making our Bank a bigger part of CIT and originating virtually all of our U.S. assets in CIT Bank.

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So this is a slide that shows you our businesses. We have $34 billion in loans and leases. Our Corporate Finance business is a leading lender into the middle market where we make both asset-based and cash flow loans.

In Trade Finance, we are the leading factor in the United States and we help finance companies primarily in the retail sector.

In Transportation Finance, we are a leading lessor of airplanes globally and rail cars in North America and we also provide financing to related industries.

We are a top global provider of Vendor Finance where we provide financing to small and middle market companies for their essential use equipment; largely office and telecom equipment.

Then finally, we do have a Consumer segment which consists of a portfolio of government guaranteed student loans which we are running off or selling.

I am often asked what differentiates us from other commercial lenders and how do we compete with the big ? There are several factors. First, we have very long-term client relationships. We have clients that have been with CIT 20, 30 years especially in our Trade business and our Vendor business. Second, we understand our clients' businesses. We have specialty industry groups with deep understanding and market knowledge of those industries. Third, we tend to deal with more complex and complicated financings. Our deals tend to be somewhat smaller than what the big banks will look at and our financings require a considerable amount of structuring related to the industry and the collateral. We are very customer and client-focused and we pride ourselves on delivering on our commitments in a timely manner. Then finally, we have a high-quality servicing and portfolio management team. So now let me go through each of the businesses.

Our Corporate Finance business lends to small and middle market companies. It is primarily a U.S. business although we do some business in Canada and in Europe. We tend to have a balance between our asset-based or other secured lending and cash flow loans although even in the case of cash flow lending, we still tend to get some form of collateral.

We are focused on growing our deal pipeline and getting more agency roles. We have had six consecutive quarters with over $1 billion of committed volume. For the first nine months of this year, we have provided financing to more than 160 middle market companies and we are building out some other product offerings. We re-entered the equipment finance market and we started or re-entered the commercial real estate market with a new team, both of which where we are seeing good growth and good opportunities.

I mentioned the importance of industry specialization in this business, so these are our industry specialties. First, general industrial, where we finance chemical companies, manufacturing companies and distribution companies. Energy, which is a high-growth business where we provide financing in the value chain from drill bits to light switches and includes power, oil field services, oil and gas production, transmission, and storage.

Retail and restaurants, we leverage our long-term expertise in providing retailers and restaurant chains with innovative financing solutions. Healthcare, we cover healthcare service industries, medical technology companies, and pharmaceuticals.

Communications, information services and technology, where we target providers of value-added voice, data, and video services. Entertainment, sports and gaming where we provide financings for film and television production, sports teams and franchises and Native American casinos.

Lastly commercial real estate, where we focus on moderate risk, first lien secured transactions primarily in the East Coast or in what I will call 24-hour cities.

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Moving to the Trade Finance business, we're the leading factor in North America and we have an experienced management team with an extensive retail credit database. Our focus today is on winning back clients. This business was negatively impacted by the restructuring but we've stabilized our client base and are now focused on recapturing lost clients and getting new ones.

We are also focused on capturing more of the international trade flows, primarily those that come from Asia. I was recently in our L.A. office that focuses specifically on this business.

We are also focused on trying to expand the factoring business beyond our core area of apparel. Today apparel comprises just over half of our factored volume and you can see there's room for growth in other industries as we focus on finding new opportunities.

Our Transportation business is our largest segment today and we have leading positions in both the air and rail leasing markets. Our value proposition revolves around maintaining an attractive fleet with strong utilization and the ability to navigate through market cycles. Our focus today is to maintain our leadership position in the leasing market while prudently growing our loan portfolio, which would be levered into the CIT Bank.

Our core leasing businesses are supplemented by our Transportation lending and our business air activities and we announced this morning that we are entering the maritime financing business. We have hired an industry expert, Svein Engh, and he will lead a small group as we enter into maritime financing, starting with secured lending against cargo vessels and related equipment.

Our Commercial Air portfolio continues to perform well, which is a testament to our strong asset management capabilities and the relationships we have with both the manufacturers and the operators. We lend or lease against 340 airplanes across over 100 clients in more than 50 countries. It is a very diversified business and most of it is outside of the United States. Utilization is a key driver here and we make sure we continually rebalance our portfolio to ensure our utilization rates remain high.

Our order book gives us baseline growth and allows us to have the latest technology for our customers. We have placed nearly all of our forward deliveries over the next 12 months in our order book. While there has been some pressure on lease rates for certain aircraft types, the diversity of our portfolio and order book translates into attractive new business terms for our business overall.

The Rail Leasing business has been showing favorable overall industry trends and we are proactively placing new orders that improve our competitive position. Utilization rates have improved and lease rates have improved. We placed $1.8 billion in new orders across four different car types which are to be delivered through 2014. These car types are primarily tank cars and hoppers which are used in the energy industry and we expect the demand for these types of cars to be very strong over the foreseeable future. We expect CIT Bank to take delivery of almost all of these railcars.

Our Vendor Finance business provides solutions mostly to small businesses and middle market companies as well as some larger enterprises. We lend to businesses across all industries. We lend against what I will call essential use type of equipment; so telephones, computers and copiers, which are the backbone of any company.

We are a global player. We have a presence in five regions -- the U.S., Canada, Europe, Latin America and Asia, and with scalable operations. Our business is split roughly 50-50 between the U.S. and internationally with all of the U.S. originations going into CIT Bank. Today we are focused on prudent growth opportunities in the U.S. and abroad particularly in regions like China and Brazil.

We are often asked how can we compete in this business and how do we grow it? Our business model leverages our Vendor partners' presence in the marketplace. These partners include companies such as Lenovo, , Ricoh and Avaya and we recently launched an online program around the Google Chromebook. We establish financing programs and services with our Vendor partners, which may

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be a manufacturer, a distributor or a reseller. Then our partners present our financing program at the point-of-sale. This is a very efficient way for us to reach the end customer while also providing innovative solutions and products to our clients.

This slide shows you our success in generating new business. The bars show quarterly loan and lease volume broken out between assets originated by CIT Bank and other volume and then air deliveries on the top, which tend to be more variable quarter to quarter based on the timing of the deliveries in our order book.

Our funded volume is up 33% year-to-date versus the same period in 2011 and we have had four consecutive quarters of at least $2 billion of net new funded volume. So as you can see from the blue line, our overall commercial assets have grown sequentially in each of the last four quarters.

Before I wrap up, I would like to give you an update on our progress with CIT Bank. CIT Bank has made good steady progress over the past 18 months. In the third quarter of this year, over 96% of our U.S. originations were funded in the Bank. We recently celebrated the one-year anniversary of our Internet Bank and in one year, we raised $4 billion of Internet deposits from this channel.

Assets have grown from $7 billion to almost $12 billion and that's during the period of time where we sold $3 billion of student loans.

We remain focused on developing a diverse sustainable funding platform in CIT Bank. We will continue to use the broker deposit market because it gives us a source of longer-term funding to supplement the other source of deposits. Just to give you an example, in the third quarter, we issued $140 million of brokered CDs with a weighted average rate of 2.35% and a term of 7.7 years. So good, cheap longer- term funding.

Also in the quarter we issued $550 million of Internet CDs with a weighted average rate of 1.3% and a term of 1.7 years. We also had additions of over $800 million into savings accounts.

So our goal is to further diversify the funding mix. We're working towards the launch of custody and retirement accounts in the Internet Bank and we are also working on developing commercial deposit and transaction capabilities to leverage our existing relationships with small and middle sized businesses.

Finally, we get the question sometimes about our branch strategy. We don't expect to be a primarily retail branch-based institution but branches are another way to diversify the deposit base and increase core deposits. Our focus is on small and middle market businesses and some branches could help us serve that client base. The most likely scenario is a thin network of financial centers in strategic locations.

So to wrap up, we are focusing on growing our core businesses and adding assets. We see good opportunities to do that across each of our commercial businesses. We are focused on reducing operating expenses in order to improve our profitability and get closer to our long-term targets. And finally, we will continue to become more Bank-centric. We will grow our Bank assets as nearly all of our U.S. originations are now in the Bank and we'll also focus on growing and diversifying our deposit funding channels for the Bank.

Now I will turn it over to Scott.

Scott Parker: Thank you, John and good morning everyone. Our core business trends continue to improve. Commercial assets are growing, as John mentioned, our economic finance margin is improving and our credit metrics remain stable. We've made good progress over the past year in many areas.

Our financial metrics are strong. Commercial financing and leasing assets are up 10% over the year even after selling about $2 billion of nonaccrual and other non-core commercial assets. Our cash and short- term investments have remained relatively flat. We paid down the remaining high-cost debt. At the end of

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the quarter, we had $1.4 billion of availability under our committed revolver and we continue to shift originations to CIT Bank.

We have accomplished all this while maintaining overall liquidity about 20% of assets. Our capital levels remain strong and reflect almost $2 billion in charges to earnings from the accelerated FSA debt discount and other costs related to the extinguishment of the $31 billion of high-cost debt.

We continue to make measured progress towards our profitability targets. Net margin improved as a result of our liability initiatives and we expect additional improvements this quarter from our debt actions last quarter.

Our current focus is to maintain portfolio yields while lowering our cost of funding by originating more assets with deposits. Credit metrics are near cyclical lows and we continue to maintain disciplined credit underwriting practices. Core non-spread revenue has been impacted by reduced asset levels in the current market environment. We do see some opportunities to improve our fee income but the biggest levers will come from an increase in M&A activity and syndication fees.

Finally, we plan to reach our operating expense targets with a combination of operating leverage from the growth in average earning assets as well as cost reductions. Our third-quarter adjusted pretax income was about 2% return on assets with most of the metrics at the low end of our target range.

We have included in the handouts to help you reconcile our reported results for this adjusted number. As such, we are positioned to achieve these targets.

You've seen this graph many times before. I think it provides a good illustration of how our GAAP reported results have been impacted by FSA while our operating results, which exclude all FSA and debt extinguishments costs, have improved.

Now with the FSA discount from the high-cost debt behind us, we expect our reported GAAP results and operating results to converge with less variability in 2013.

I would like to provide you a framework of how to think about the remaining FSA balances. There are really three components left. With respect to the first two, the impact from the loan FSA will show up in interest income and on the secured debt it will show up through interest expense; but we think those will largely offset each other on a quarterly basis.

We are exploring opportunities to sell the remaining student loans we have in held for sale and that may accelerate some of these FSA balances.

The third item and the largest relates to the discount on our operating lease equipment which will reduce depreciation levels over the next 15 years or so by about $40 million to $50 million per quarter and accrete into earnings. Also we have some other offsetting accounting items related to our Vendor European portfolio that is in held for sale that increases our yield and decreases our non-spread revenue. This impact will continue until the portfolio is sold in the second half of 2013 and I broke that out in the appendix page.

I know it has been challenging over the last few years to really understand our profitability and reported results given the FSA impacts. As we enter 2013, our financial results we hope will be much easier to analyze and I don't know about you, but John and I are relieved that hopefully we won't have to talk a lot about FSA next year.

Here is a chart we show in regard to the two components of our economic finance margin, portfolio yield and cost of funds. As you see, our portfolio yields have been holding steady for the past few quarters. We are seeing improvements in our rail lease rates which are offsetting some of the pockets of pricing pressure in the other part of the portfolio that we mentioned on the earnings call.

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We've had significant improvement in the cost of funds over the last few years and expect an additional 40 basis points improvement from the third-quarter debt actions. Going forward, funding cost improvements will mainly be driven by the increase in assets funded by deposits.

Our reported margin has been impacted by FSA, as we've talked about, and therefore we really don't think that's a meaningful metric with respect to evaluating our underlying operating trends. That said, we've really been focused and talk about the economic margin which is showed here which removes all the impacts of FSA. We continue to drive this in a positive direction with some quarterly variability and mainly has been driven by the actions on the liability side.

This is one of our favorite charts that shows what we have done on the funding side over the last 2 1/2 years. If you look at the top bars, John mentioned what we came out of the restructuring with, and you see we've been able to extend our liquidity horizon and reduce our annual maturities going forward. At this point, we really have no noticeable maturities until 2015 and even then they are very manageable. So this provides us a lot of flexibility in regard to accessing the capital markets.

Our funding mix has also improved. John mentioned what we have been doing on CIT Bank. Deposits now represent about 28% of our funding as of the third quarter. We are moving closer to the target we have around 35% to 45%. Now again, this is not a hard target so depending on the portion of business that we originate in the Bank, this target could increase over time.

Most importantly as John mentioned, we have significantly reduced our weighted average cost of funding by over 270 basis points.

Our credit team has made tremendous progress maintaining CIT's credit culture. This has been evidenced by our credit metrics, which have really been driven by our portfolio actions, disciplined new business underwriting and also a little bit of benefit from the economic environment the last few years. You see that our charge-offs and nonaccrual assets have come down significantly from last year but we do believe we are near a cyclical low. These numbers are well below the targets we have laid out.

On non-spread revenue, a lot of questions on the earnings call about this, it's really been elevated in the last couple of quarters due to some of the portfolio optimization efforts we have had. Specifically we have had a lot of gain on sales from selling some of those nonstrategic assets as well as recoveries on pre- emergence charge-offs rolled through other income.

Our core non-spread revenue, which we break out here, has been pretty stable at about 100 basis points of average earning assets. In the current environment, we see some opportunities from the following areas.

In our Trade Finance business, it's really two things. One, higher volume or higher commission rates. We continue to focus on growing our client base and diversifying our sectors, as John mentioned.

On the Vendor Finance side, it really comes from the end of lease asset management and realizations as well as some servicing-related fees.

Transportation Finance, we have normal portfolio risk management where we move assets into held for sale and sell those for many reasons so those gain on sales we believe are part of our core operating business.

As we mentioned in Corporate Finance, as we achieve broader agency roles, this will provide additional fee-related benefits to us. Over time, as I mentioned, the biggest driver or lever that we have for non- spread revenue will come from increased M&A and syndication fees.

I wanted to provide a little bit of a framework in regard to how we are thinking about operating expense. As I mentioned, we expect to see operating leverage as we grow our average earning assets, which has

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been declining since 2009. In addition, we did mention that we are rolling out some expense initiatives to achieve that target.

The roadmap we have is to get to this reduction of $15 million to $20 million run rate and it will be phased in during 2013. I am just going to mention where the savings are going to come through and also some of the categories in regard to our reported numbers.

If you look at our back-office synergies and enhancement processes, we've had a big investment in the infrastructure, as John mentioned, and we are really looking to capture the efficiencies from that investment.

We also continue to look at subscaled offices and product lines and we will make decisions based on what we see in regard to future profitability. On the professional services side, we have really been building out our risk infrastructure as well as our capital planning processes and we don't expect that to continue into 2013. We did modify some of our employee benefit plans which will reduce employee costs going forward.

Lastly, with all prudence, we are going to continue to look at all of our vendor contracts and see if there's opportunities to renegotiate and reduce our costs. Some of the actions we are going to take in the fourth quarter, we do anticipate a restructuring charge similar to the third quarter.

Now around capital, which was one of the questions that Ken had up there. We do talk a little bit about that. As we've mentioned before, our target 13% total capital ratio is based on risk weighted assets which does include off-balance-sheet items such as our aircraft delivery book as well as unfunded commitments in Corporate Finance, which is the difference between reported book and our risk weighted assets. The primary focus right now, as John laid out, is really to grow assets that generate the target returns we have for the business.

On the capital generation side, as reported GAAP earnings improve, that will continue to build capital. However, when we look at how we deploy that capital depending on the mix of those assets, that could impact our overall RWA. So again if we're in a position where we have excess capital, we need to determine during 2013 how best to return that to our shareholders.

As we've mentioned before, we still plan on submitting our capital plan in January with a modest capital return in that.

So in summary, hopefully John and I have laid out the progress we have made towards the profitability targets and growing the business. We think our business franchise remains strong. We have leading market positions in the key areas that we focus and we have strong customer relationships. We continue to grow our commercial assets. We have improved our funding costs by eliminating the high-cost debt, improving our debt profile, and growing our deposits.

And in the Bank, we have continued to grow both the assets and the liability side and we will continue to focus on more deposits. Finally, we have a strong balance sheet.

With that, it looks like we might have a couple minutes for Q&A.

Q&A Ken Bruce: Do we have the polling results? Alright. Well I guess that's not a surprise. We must have mostly analysts in the audience. And then on the second question, so it looks like 46%, half of you want cleaner earnings picture. I'm in that camp.

And then the second question. So it looks like people believe your 13% story.

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Well I guess maybe just kick questions off and then we've got a microphone that can go around in the audience. When we talk to the commercial lenders, we see that there is increasing pressure on pricing, increasing pressure on structure, and this probably applies mostly to the commercial finance segment, but are you seeing that within CIT? Are there certain areas that you can defend margins better than others given some of the platform nature of your businesses?

John Thain: So we both talk about this a lot. The answer is in some places, we are seeing this pricing pressure. Remember a lot of our businesses, the banks really don't compete with us in. Our Transportation business, we don't compete with the banks. Our Vendor business for the most part, we don't compete with the banks. But in our core Corporate Finance business, we do see some pricing pressure. We started to see it in the ABL kind of plain vanilla space where the banks are able to compete in that business. And so we simply migrate a little bit away from the plain vanilla into the more complicated stuff, which is what we are really good at anyway.

Then in the Corporate Finance cash flow business, there has been a little bit of pricing pressure but it's been pretty immune to the bigger banks because the deals tend to be smaller and they still depend a lot on the relationships, so I would say that where we're starting to see a little bit of pressure, it hasn't really impacted the business so much and you can see that from our review. Scott, do you want to add anything?

Scott Parker: No, I think that's good.

Ken Bruce: Questions in the audience?

Unidentified Audience Member: Can you talk about your capability to generate U.S. taxable income in 2013, start using a little bit of your NOLs? Then I have a second question as well.

Scott Parker: I think if you look at our 10-Q that we just put out last week, we do put in the tax section where we were on an estimated taxable position in the U.S., which was near zero. It's still a little bit negative so our hope would be as we have continued to drive down our cost of funds as well as some of the other things we mentioned on the cost side, that will trend to the positive sometime in 2013.

Unidentified Audience Member: Okay, just a follow-up. Can you talk about the strategic fit you see for each of the different businesses in terms of the synergies you can sort of bring having sort of very different broad products and different customer sets?

John Thain: Sure, there are more synergies in some of the businesses than in others. As you say, what is CIT really good at? CIT is good at lending to generally lower credit quality companies with collateral, so we lend against assets. That is true in our factoring business, where we are lending against receivables, all the way up to our aircraft and rail cars, where we are lending or leasing long dated assets.

I think that the synergies are better in our Corporate Finance business and our Vendor Finance business where we are lending to companies in the middle market space where we can also provide the financing for their computer equipment, telephone equipment and copiers. I also think that there's opportunities to cross sell our bank, which is one of the reasons why we want to have the commercial deposit taking capabilities and cash management capabilities because a lot of companies that we lend money to would keep deposits at our bank if we could do that.

So those businesses where we are dealing with the middle market companies I think have the best synergies.

Unidentified Audience Member: On the Internet deposits, can you just talk a little bit about in a higher interest-rate environment how do you expect the depositors to behave, what else you need to do to ensure that over the long run you can continue to grow it as you need to?

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Scott Parker: I would say that since we haven't experienced that, as we said, we have been in this for about the last year, so we are building that customer experience and also some of the term stickiness about how customers react to different product offerings and different rates. I think we have been very successful so far on our one-year anniversary renewal process.

But I think it's all a matter of providing a good customer experience, having multiple products to be able to fill out what a customer is looking for, and also for us, we have to focus on a certain demographic and target that given the size that we are versus some of the larger financial banks and money center banks.

Ken Bruce: I have another question. So you had nicely introduced the maritime finance business and I would hope that you might be willing to basically scope that out a little bit better for us. It's not an area that I am particularly familiar with, so what the market opportunity is, how you think that will manifest itself in the next couple of years?

John Thain: The strategy is a little bit the same as in getting into the commercial real estate business and into the equipment finance business, so it's an expertise of lending against assets. The person we hired just started so we are in the process of developing our business strategy there, but I think there is a lot of opportunity right now in that space. There's a lot of bank portfolios that banks are trying to liquidate. Having the expertise to provide financing against maritime assets, I think is going to be very attractive to us.

And I think if we can just like in our commercial real estate business and in our equipment finance business, if we are generating $300 million to $500 million of assets over the course of the next year, that would be good for us.

Ken Bruce: Are these 10%, 15% type deals similar to the Transportation and Finance business today?

John Thain: We will target them to get mid-teen returns on our equities.

Ken Bruce: I can't let this go without asking one more question around capital. But as I look at CIT and we model the earnings over the next couple of years, it would seem to us that there's close to $2 billion in potential excess capital as that one pie chart that Scott showed.

Without necessarily pinning you down, is that number in the ballpark? I mean that's 25% of your market cap that potentially could be coming back to shareholders in some form.

Scott Parker: I think as we've talked about, I think it's a matter of what our asset base and risk-weighted assets are at that point in time. So if you look at it I think currently that's kind of the position, but I think the big constraint for us as you know, Ken, is the process that we have to go through on the capital plan and how that has played out for others in the industry and making sure that we have a well thought out, very well documented rationale for what we think our capital level should be. And what's the impact on the severe stresses or adverse stresses that will be coming out in the next week or so.

So it's one where we need to put the capital to work and in the event then we have to go through a process to get that back, so there are two focuses we have.

Ken Bruce: Is there any sense that those that can opine on your capital from the regulator standpoint would agree with the audience that 13% is kind of the right range? And is there any way to get a sense as to how they think about this in the longer term?

Scott Parker: The way we think about it is we've laid out before our economic capital, so one of the things that when John and I got here, the 13% was set before we got here. We went through an extensive economic capital analysis by the management team. That comes out to around 12%. So it's supported on two different paths.

CIT Group Inc. at Bank of America Merrill Lynch Banking and Financial Services Conference 11/13/12 9:40 a.m. 10

So I think it is representative and if you look at some of the more pure play companies like a GE Capital and look at their kind of capital base, it is not too far off for the type of business we do.

Ken Bruce: Great. Well, thank you very much for your time this morning, gentlemen. I appreciate it and enjoy the rest of your day.

Scott Parker: Thank you.

John Thain: Thank you all.

CIT Group Inc. at Bank of America Merrill Lynch Banking and Financial Services Conference 11/13/12 9:40 a.m. 11