CIT Group Inc. PILLAR 3 REGULATORY CAPITAL DISCLOSURES UPDATED For the quarterly period ended December 31, 2015 2015 10-K PILLAR 3 PAGE DESCRIPTION REQUIREMENT REFERENCE OVERVIEW Organization .............................................................. 112 Business Segments ................................................... 194-195 Indemnification Assets .............................................. 119 Capital Requirements ................................................ 93 SCOPE OF APPLICATION Basis of Consolidation ............................................... 112 Transfer of Funds or Capital Restrictions .................. 13, 14, 160, 161 CAPITAL STRUCTURE Regulatory Capital Tiers ............................................ 176 CAPITAL ADEQUACY Capital Management ................................................. 92-93 Risk-Based Capital Ratios ......................................... 176 CAPITAL CONSERVATION Required Ratios ......................................................... 10 BUFFER Capital Return............................................................ 93 CREDIT RISK Risk Management ..................................................... 82-83 Policy: 1. Past Due and Nonaccrual Status ....................... 116 2. Returning Loans to Accrual Status ..................... 115 3. Impaired Loans ................................................... 141-143 4. Allowance for Loan and Lease Losses .............. 115-116 5. Charging Off Uncollectible Amounts .................. 117 Changes in Allowance for Loan and Lease Losses .. 147 Maturities of Loans .................................................... 73 COUNTERPARTY Counterparty Risk Management ................................ 83 CREDIT RISK Collateral: Finance Receivables ................................ 143 Collateral: Derivative Financial Instruments .............. 122 Collateral: Credit Derivatives ..................................... 90 Derivative Financial Instruments ............................... 163 Cash Collateral .......................................................... 164 SECURITIZATION Variable Interest Entities ........................................... 161-162 Investments ............................................................... 118 EQUITY EXPOSURES Evaluation of Investments .......................................... 117-118 Type of Investments .................................................. 152 Gains (Losses) .......................................................... 178 INTEREST RATE RISK Risk Management ..................................................... 83-85 OVERVIEW ORGANIZATION and (4) Non-Strategic Portfolios (NSP). Portions of the operations of the acquired OneWest Bank CIT Group Inc., together with its subsidiaries are included in the NAB segment (previously (collectively “CIT” or the “Company”), has North American Commercial Finance) and in provided financial solutions to its clients since its LCM a new segment. The activities in NAB formation in 1908. The Company provides related to OneWest Bank are included in financing, leasing and advisory services Commercial Real Estate, Commercial Banking principally to middle market companies in a wide and Consumer Banking. The Company also variety of industries primarily in North America, created a new segment, LCM, which includes and equipment financing and leasing solutions consumer loans that were acquired by OneWest to the transportation industry worldwide. CIT Bank from the FDIC and that CIT may be became a bank holding company (“BHC”) in reimbursed for a portion of future losses under December 2008 and a financial holding the terms of a loss sharing agreement with the company (“FHC”) in July 2013. Through its bank FDIC. The addition of OneWest Bank in subsidiary, CIT Bank, N.A., CIT provides a full segment reporting did not affect CIT’s historical range of commercial and consumer banking and consolidated results of operations. related services to customers through 70 branches located in southern California and its With the announced changes to CIT online bank, bankoncit.com. management, along with the Company’s exploration of alternatives for the commercial Effective as of August 3, 2015, CIT Group Inc. aerospace business, the Company expects to (“CIT”) acquired IMB HoldCo LLC (“IMB”), the further refine our segment reporting effective parent company of OneWest Bank, National January 1, 2016. Association, a national bank (“OneWest Bank”). CIT Bank, a Utah-state chartered bank and a TIF offers secured lending and leasing products wholly owned subsidiary of CIT, merged with to midsize and larger companies across the and into OneWest Bank (the “OneWest aerospace, rail and maritime industries. The Transaction”), with OneWest Bank surviving as segment’s international finance division, which a wholly owned subsidiary of CIT with the name includes corporate lending and equipment CIT Bank, National Association (“CIT Bank, financing businesses in China, was transferred N.A.” or “CIT Bank”). See Note 2 — Acquisitions to AHFS. Revenues generated by TIF include and Disposition Activities for details. rents collected on leased assets, interest on loans, fees, and gains from assets sold. CIT is regulated by the Board of Governors of the Federal Reserve System (“FRB”) and the NAB provides a range of lending, leasing and Federal Reserve Bank of New York (“FRBNY”) deposit products, as well as ancillary products under the U.S. Bank Holding Company Act of and services, including factoring, cash 1956. CIT Bank, N.A. is regulated by the Office management and advisory services, to small of the Comptroller of the Currency, U.S. and medium-sized companies and consumers in Department of the Treasury (“OCC”). Prior to the the U.S. and in Canada. The segment’s Canada OneWest Transaction, CIT Bank was regulated business was transferred to AHFS. Lending by the Federal Deposit Insurance Corporation products include revolving lines of credit and (“FDIC”) and the Utah Department of Financial term loans and, depending on the nature and Institutions (“UDFI”). quality of the collateral, may be referred to as asset-based loans or cash flow loans. These are BUSINESS SEGMENTS primarily composed of senior secured loans collateralized by accounts receivable, inventory, Effective upon completion of the OneWest machinery & equipment, real estate, and Transaction, CIT manages its business and intangibles, to finance the various needs of our reports financial results in four operating customers, such as working capital, plant segments: (1) Transportation & International expansion, acquisitions and recapitalizations. Finance (TIF); (2) North America Banking Loans are originated through direct relationships (NAB); (3) Legacy Consumer Mortgages (LCM); with borrowers or through relationships with 3 private equity sponsors. The commercial sharing agreements with the FDIC. The loss banking group also originates qualified Small sharing agreements generally require CIT Bank, Business Administration (“SBA”) 504 and 7(a) N.A. to obtain FDIC approval prior to transferring loans. Revenues generated by or selling loans and related indemnification assets. Eligible losses are submitted to the FDIC NAB include interest earned on loans, rents for reimbursement when a qualifying loss event collected on leased assets, fees and other occurs (e.g., loan modifications, charge-off of revenue from banking and leasing activities and loan balance or liquidation of collateral). capital markets transactions, and commissions Reimbursements approved by the FDIC are earned on factoring and related activities. usually received within 60 days of submission. NAB, through its 70 branches and on-line The IndyMac transaction encompassed multiple channel, also offers deposits and lending to loss sharing agreements that provided borrowers who are buying or refinancing homes protection from certain losses related to and custom loan products tailored to the clients’ purchased SFR loans and reverse mortgage financial needs. Products include checking, proprietary loans. In addition, CIT is party to the savings, certificates of deposit, residential FDIC agreement to indemnify OneWest Bank, mortgage loans, and investment advisory subject to certain requirements and limitations, services. Consumer Banking also includes a for third party claims from the Government private banking group that offers banking Sponsored Enterprises (“GSEs” or “Agencies”) services to high net worth individuals. related to IndyMac selling representations and warranties, as well as liabilities arising from the LCM holds the reverse mortgage and SFR acts or omissions (including, without limitation, mortgage portfolios acquired in the OneWest breaches of servicer obligations) of IndyMac as Transaction. Certain of these assets and related servicer. receivables include loss sharing arrangements with the FDIC, which will continue to reimburse The loss sharing arrangements related to the CIT Bank, N.A. for certain losses realized due to First Federal and La Jolla transactions also foreclosure, short-sale, charge-offs or a provide protection from certain losses related to restructuring of a single family residential certain purchased assets, specifically the SFR mortgage loan pursuant to an agreed upon loan loans. modification framework. All of the loss sharing agreements are NSP holds portfolios that we no longer accounted for as indemnification assets and considered strategic, which had all been sold as were initially recognized at estimated fair value of December 31, 2015. The Company