Euro AFSA: Amsterdam. April 26, 2006

Transcription

1 Euro AFSA: Amsterdam April 26, 2006

2 Notices Forward Looking Statements Certain statements made in this presentation 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,. CIT does not undertake to update any forward-looking statements. Non-GAAP Financial Measures The data provided in this presentation have been modified from our previously reported periodic data, including but not limited to, exclusion of certain non-core transactions and non-recurring events, because management believes that the data presented herein better reflects core operating results. As such, the data may vary from comparable data reported in CIT s forms 10-K and 10-Q. This presentation includes certain non-gaap financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission. Any references to non-gaap financial measures are intended to provide additional information and insight into CIT's financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP and may be different from or inconsistent with non-gaap financial measures used by other companies. For a reconciliation of these non-gaap measures to GAAP and a list of the transactions and events excluded from the data herein, please refer to the appendix within this presentation or access the reconciliations through CIT's Investor Relations website at investor.relations@cit.com. Data as of or for the period ended March 31, 2006 unless otherwise noted. 2

3 Overview Leading global finance company with $65 billion of managed assets Commercial Finance ($34 billion) Trade Finance Corporate Finance Transportation Finance Specialty Finance ($31 billion) Vendor Finance Consumer / Small Business Lending Client Focus Life Cycle Financing Disciplined Underwriting Seasoned Leadership Long standing customer relationships Full product and service offering Cash flow and collateral expertise Broad and deep management team 3

4 Broad and Diverse Portfolio Industry Geography Other* 16% Construction Wholesale 3% 3% Consumer Other 3% Healthcare 4% 5% Transportation 6% Services 10% Home Lending 15% 13% Manufacturing 12% Commercial Air 11% International 21% Southwest 10% Southeast 14% 17% 19% Northeast 19% West Education Lending Retail Midwest *No other collateral type or industry served greater than 3% Data as of December 31, 4

5 Expanding International Presence North America: All Segments Asia Pacific: Aerospace Corporate Finance Vendor Finance Trade Finance Latin America: Aerospace Vendor Finance Europe: Aerospace Corporate Finance Vendor Finance Trade Finance Current Markets Potential New Markets South Pacific: Aerospace Vendor Finance Servicing customers in over 26 countries 5

6 Global Capabilities Gaining Traction International Portfolio Assets Canada - $3.4B Integrated country strategy across all CIT Businesses Other Latin America South Pacific 9% 6% 7% 29% Canada Europe - $4.6B Centralized servicing center in Dublin Integrated CitiCapital Western European acquisition Obtained UK Bank License Acquired factoring platform in Germany Asia Pacific 10% Asia Pacific - $1.2B Largest foreign owned leasing company in China Opened Hong Kong office Europe 39% South Pacific - $0.7B Market leading wholesale & retail financing Latin America - $1.0B Key player in major economies Data as of December 31, 6

7 Reduced Sensitivity to the Commercial Cycle Managed Asset Composition $17B $65B 6% 8% 28% 10% Consumer / SBL 13% 31% 31% 20% 10% 15% 11% 16% Vendor Finance Trade Finance Corporate Finance Equipment Finance Transportation Finance 1995 Q

8 What are we focused on today? 8

9 Expanding Our Core Strengths Asset Generation Credit Adjudication Yes Balance Sheet Lending No Fee Based Opportunity Whole Loan Sales Syndication Advisory Services 9

10 2006 Growth Drivers Aerospace Healthcare Asset Generation Communications, Media & Entertainment Global Sponsor Finance International Student Loan Xpress Fee Generation Global Insurance Restructuring Strategic Advisory Services Syndications 10

11 Strategy Gaining Traction Loan and Lease Volume ($ Billions) Non-spread Revenue ($ Millions) 26% growth % growth 1,

12 Performance Update Q1 Metric Q1 Q1 2006* Variance Volume $5.7B $8.7B Record originations, up 53% Managed Assets $58.8B $65.5B Record asset levels, increased 11% Revenue $640M $707M Increased 10% Net Income $210M $231M Increased 10% EPS $0.98 $1.13 Increased 15% ROE 13.6% 14.2% Increased 60 basis points *Q includes stock option expense which decreased EPS $0.03 and ROE by 40 basis points 12

13 Credit Statistics at Cyclical Lows Credit Losses 1.92% 1.77% 1.26% 1.58% 0.71% 0.83% 1.17% 0.91% 0.73% 0.60% 0.37% Q1 '06 Core Liquidating, Telecom and Argentina Owned Delinquency 60+ days Non-Performing Assets 2.98% 3.90% 3.63% 2.16% 1.73% 1.71% 1.76% 2.47% 3.24% 3.93% 2.16% 1.54% 1.18% 1.16% 12/00 12/01 12/02 12/03 12/04 12/05 Q1 '06 12/00 12/01 12/02 12/03 12/04 12/05 Q1 '06 Non-Accrual Repo Liquidating 13

14 Supporting Our Growth Investing in technology to maximize the customer relationship Salesforce.com (customer relationship database) Credit adjudication and risk analysis software Web-based applications Re-directing investment from back-end to front-end 2004 Longer Term 70% 30% 65% 35% 50% 50% Front-end Back-end 14

15 Commitment to Strong Balance Sheet Cash and Equivalents Cash balance is ample Maintain a minimum balance of $500 million Dec-02 Dec-03 Dec-04 Dec-05 Q1 '06 Loan Loss Reserve to Net Charge-offs Reserves reflect risk Strong coverage ratios Dec-02 Dec-03 Dec 04 Dec-05 Q1 '06 Tangible Capital Base Capital supports asset base 9.7% Tangible Capital to Managed Assets verses 9.0% requirement Dec-02 Dec-03 Dec-04 Dec-05 Q1 '06 15

16 Capital and Liquidity Management

17 Corporate Ratings Short Term Long Term Outlook Moody s P-1 A2 Stable S&P A-1 A Stable Fitch F1 A Stable DBRS R-1 Low A Stable Commitment to Strong Debt Ratings 17

18 Disciplined Capital Allocation ($ billions) 8 $0.5 billion excess capital 7 6 SBL SLX $ Rail Home Lending Trade Finance Corporate Finance Required $6.9 Actual $7.4 2 Aerospace 1 0 Vendor Finance Business Goodwill Capital Capital 18

19 Strong Tangible Capital Generation ROTE 17%+ less Dividends 15% to 20% equals Capital Generation >13%+ More Than Supports Organic Asset Growth Opportunistic Acquisitions 19

20 Funding Diversity CIT takes great care in ensuring depth and diversity of its funding sources We have dramatically expanded and diversified our funding composition US Cons. ABS 17% December 31, 1998 December 31, Int'l MTN's 1% US ABS CP 2% US MTN 53% Int'l Globals/MT N's 7% Private Placements 4% US Cons. ABS 9% US ABS CP 5% US MTN 20% US CP 27% US Comm. ABS 4% Int'l ABS CP 3% US Retail 4% Intl CP 2% US CP 8% US Globals 34% 20

21 Expanding the Role of CIT Bank Historic Prospective Industrial bank Broaden focus Facilitates originations Standard documentation Used for many diverse vendor programs Vendor assets A funding source Target 10% of CIT funding Potential access to Federal Home Loan Bank Home and Student loans Chartered in 2000 Grow to $2 billion in

22 Strong Liquidity Commercial Paper / Total Debt Alternate Liquidity* / Short Term Debt 15% 13% 11% 11% 9% < 15% 68% 89% 107% 110% 125% 100% Q1 '06 Target Q1 '06 Target *Alternate Liquidity includes available bank facilities, asset backed conduit facilities and cash 22

23 Effective Matched Funding Assets Funding (after swaps) Amount Portfolio Term Amount Portfolio Term Floating $26B 51% 3.2 years $26B Debt 56% 4.3 years Fixed $26B 49% 2.8 years $20B Debt 44% 3.4 years $6B Equity Risk Metrics* Margin at Risk Value at Risk After-tax impact of $15 million (liability sensitive) After-tax impact of $51 million (asset sensitive) *Sensitivity to immediate 100 basis point rate increase Data as of December 31, 23

24 Stable Margin In All Rate Environments 10% 8% 6% 3 month LIBOR 4% 2% 0% Q1 '06 Risk Adjusted Margin

25 2006 Funding Plan Unsecured Term Issuance ($ billions) 2006 Sources ($ billions) $13 $13 $15 $6 Growth $3 $2 $1 $9 Maturities $ Plan Deposits U.S. Retail U.S. Institutional International Secured Issuance: $ 4-6 billion No significant change in planned commercial paper issuance 25

26 In Summary Balanced franchise Diverse pool of high quality assets Clearly defined business strategies Well capitalized balance sheet Capital levels exceed requirements Internal capital generation supports growth Diverse funding model Deep access to unsecured & ABS markets Taking 20% of funding outside US Robust liquidity position Commercial paper <15% of debt 12 months aggregate alternative liquidity Solid loan loss reserves Ample coverage Strong credit metrics Disciplined management team Broad experience and proven success Committed to all stakeholders 26

27 Appendix 27

28 Corporate History CIT went public and was listed on NYSE. The company had 600 employees and assets of $44.7 MM RCA acquired CIT 1984 Albert R. Gamper, Jr., named Chairman and CEO of CIT. Dai-Ichi Kangyo Bank acquired an additional 20% of CIT from Chemical Bank 1989 CIT launched a 20% IPO to acquire from DKB its option to purchase the 20% interest owned by Chase Manhattan. CIT again listed on the NYSE ( CIT ) CIT acquired Newcourt Credit July 2000 Tyco International acquired CIT July 2002 Jeff Peek named President & CEO October 2004 Jeff Peek named Chairman & CEO CIT founded as Commercial Credit and Investment Company by Henry Ittleson in St. Louis 1924 CIT Financial Corporation, company s industrial financing entity, was incorporated 1980 Manufacturers Hanover purchased CIT from RCA Dai-Ichi Kangyo Bank acquired 60% of CIT from Manufacturers Hanover 1997 Chemical Bank merged with Chase Manhattan. CIT ownership was 80% by DKB and 20% by Chase Manhattan 1999 Successful CIT secondary stock offering reduced DKB s stake to approximately 44%, with balance of shares held publicly CIT was added to the S&P 500 Index June 2001 CIT completed 100% initial public offering (NYSE: CIT) July 2004 CIT was added to the S&P 500 Index January 28

29 Board of Directors Board Member Jeffery M. Peek Member Since 2003 Independent Directors Audit Board Committees Compensation Nominating & Governance Thomas H. Kean 2002 Chair Peter J. Tobin 2002 Lead Chair William M. Freeman 2003 Marianne Miller Parrs 2003 John R. Ryan 2003 Chair Lois M. Van Deusen 2003 Gary Butler 2004 Timothy M. Ring Seymour Sternberg 29

30 Executive Leadership Jeffrey M. Peek Chairman & CEO Joined CIT September 2003 Thomas B. Hallman Vice Chairman Specialty Finance Joined CIT in 1995 Joseph M. Leone Vice Chairman Chief Financial Officer Joined CIT in 1983 Lawrence A. Marsiello Vice Chairman Chief Credit Officer Joined CIT in 1974 Walter J. Owens EVP & Chief Sales and Marketing Officer Joined CIT March Frederick E. Wolfert Vice Chairman Commercial Finance Joined CIT September 2004 Vendor Finance Consumer/Small Business Lending Treasury Accounting Tax Investor Relations M&A Information Technology Corporate Credit Risk Management Sales Marketing Trade Finance Corporate Finance Transportation Finance Seasoned, balanced management team 30

31 Home Lending Overview 15+ years lending to the sub-prime market Disciplined and focused strategy Efficient and flexible platform Proven credit performance through all cycles Generates attractive returns Provides additional benefits to CIT Complements Vendor Finance Predictable earnings stream Liquid assets 31

32 Home Lending Portfolio Demographics 12/31/99 12/31/03 12/31/05 Borrower characteristics: FICO Debt to income 37% 38% 40% Length of employment Length of residence Loan characteristics: Loan size $61K $87K $118K % Fixed 86% 72% 43% Loan to Value 77% 80% 81% Re-evaluated Loan to Value at 7/31/05 72% 32

33 Student Loan Xpress Business Highlights Government guaranteed FFELP collateral Ninth largest FFELP consolidation loan originator Sixteenth largest FFELP Stafford/PLUS loan originator Seasoned senior management team with 15+ years average experience Preferred Lender at just over 1,000 schools Product acceptance at additional 1,300 schools Business Update Increased loan volume 67% versus prior quarter Accretive ahead of forecast On target to achieve return requirements Added over 400 new schools to preferred lender list since the acquisition Initiated in-house origination/servicing of Stafford and PLUS loans Portfolio* 12/31/05 Volume ($ millions)* 2,709 Consolidation Loans Other Guaranteed Loans $4,669 $569 1,568 Private Loans $30 Portfolio ($MM) $5, *Data as of December 31, School Channel Direct Channel 33

34 Commercial Aerospace Portfolio Statistics Portfolio Composition Category Grouping % Net Investment Aircraft Body type Manufacturer Narrow Intermediate Wide Other Boeing Airbus Other 73.8% 22.6% 3.0% 0.5% 42.1% 57.4% 0.5% Operating Leases Leveraged Leases Loans Tax-Op. Leveraged Leases Capital Leases $ millions 5, % 91.7% 2.4% 3.4% 1.5% 1.1% Number % 88.2% 2.4% 6.1% 2.4% 0.9% Geographic diversity Europe Asia Pacific North America Latin America Africa / Middle East 38.0% 26.5% 19.7% 11.0% 4.8% Year 6, % Remaining Order Book Amt ($B) Number % Placed Weighted average age Years Aircraft on the ground Planes Top exposure Millions Top US exposure Millions Total $

35 Topical Updates Aerospace Attractive and modern fleet Broad spread of risk (93 commercial clients in 41 countries) Returns on new deliveries comfortably exceed hurdle rates Improved market demographics Auto Approximately 1% of portfolio assets are linked to the auto industry Less than $100 million of direct exposure to auto manufacturers Hedged approximately 25% of direct exposure in 2004 Calpine Corporation Participated in financing of 6 power facilities Collateral and cash flows support the carrying value in all but 1 facility, a $60 million investment in a leveraged lease Placed that facility on non-accrual at year-end Facility included in reserve analysis Hurricanes: Katrina and Rita Approximately $600 million of portfolio assets in FEMA designated areas Established a $35 million reserve in Charged-off $3 million against the reserve in Q Believe the reserve for hurricane losses is ample 35

36 Non-Core Items Item Description P&L Line Item Group Impact on Income Pre-Tax After-Tax EPS Impact Q4 Q4 Gain on call of PINEs debt Loss on venture capital investments Gain on redemption of debt Other revenue Corporate Corporate 50.4 (60.5) 31.2 (37.5) 0.15 (0.17) 2004 Q1 Gain on call of PINEs debt Gain on redemption of debt Corporate Q4 Q4 Q4 Release of telecom reserves (Loss) on venture capital investments (Loss) on sale of manufactured housing Provision for credit losses Other revenue Other revenue Corporate Corporate Specialty Finance 43.3 (14.0) (15.7) 26.8 (8.7) (9.3) 0.12 (0.04) (0.04) Q1 Gain on Restatement of select derivative transactions Other revenue Corporate Q2 Q2 Q2 Gain on sale of business aircraft Provision for restructuring Gain on Restatement of select derivative transactions Other revenue Provision for restructuring Other revenue Commercial Finance Corporate Corporate 22.0 (25.2) (16.5) (0.08) 0.13 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Reserves for hurricanes Katrina and Rita Retained interest impairment from hurricanes Katrina and Rita Gain on sale of real estate investment (Loss) on sale of commercial and business aircraft (Loss) on sale of manufactured housing Release of international tax reserves Loss on Restatement of select derivative transactions Provision for credit losses Other revenue Other revenue Other revenue Other revenue Provision for income taxes Other revenue Corporate Corporate Corporate Commercial Finance Specialty Finance Commercial Finance Corporate (35.9) (6.8) (86.6) (20.0) 0.0 (14.3) (23.3) (4.4) 69.7 (52.9) (11.9) 17.6 (8.1) (0.11) (0.02) 0.34 (0.25) (0.06) 0.08 (0.04) Q4 Q4 Q4 Q4 Gain on sale of micro-ticket leasing point of sale unit Early termination fee on NYC lease / Legal Settlement Loss on select derivative transactions Reversal of deferred tax liability Other revenue Operating expenses Other revenue Provision for income taxes Specialty Finance Corporate Corporate Commercial 44.3 (11.0) (22.7) (6.7) (12.9) (0.03) (0.06) Q1 Q1 Provision for restructuring Tax adjustment on planned NOL utilization Provision for restructuring Provision for income taxes Corporate Corporate (11.1) 0.0 (7.4) 6.5 (0.04)

37 Non-GAAP Reconciliation March 31, December 31, March 31, 2006 Managed assets (1) : Finance receivables $ 46,841.3 $ 44,294.5 $ 41,180.1 Operating lease equipment, net 10, , ,313.1 Financing and leasing assets held for sale 1, , ,481.3 Equity and venture capital investments (included in other assets) Total financing and leasing portfolio assets 58, , ,076.3 Securitized assets 6, , ,716.6 Managed assets $ 65,502.5 $ 62,866.4 $ 58,792.9 Earning assets (2) : Total financing and leasing portfolio assets $ 58,589.4 $ 55,580.7 $ 51,076.3 Credit balances of factoring clients (4,048.9) (4,187.8) (4,269.8) Earning assets $ 54,540.5 $ 51,392.9 $ 46,806.5 Total tangible stockholders' equity (3) : Total common stockholders' equity $ 6,704.9 $ 6,462.7 $ 6,335.2 Less: Other comprehensive (income) loss relating to derivative financial instruments (60.4) (27.6) (20.3) Unrealized gain on securitization investments (13.1) (17.0) (7.7) Goodwill and intangible assets (1,013.5) (1,011.5) (906.4) Tangible common stockholders' equity 5, , ,400.8 Preferred stock Preferred capital securities Total tangible stockholders' equity $ 6,369.5 $ 6,158.6 $ 5,654.1 Non-GAAP financial measures disclosed by management are meant to provide additional information and insight relative to trends in the business to investors and, in certain cases, to present financial information as measured by rating agencies and other users of financial information. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-gaap financial measures used by other companies. 37

38 Financial Statements Balance Sheet March 31, December 31, 2006 ASSETS Financing and leasing assets: Finance receivables $ 46,841.3 $ 44,294.5 Reserve for credit losses (620.3) (621.7) Net finance receivables 46, ,672.8 Operating lease equipment, net 10, ,635.7 Financing and leasing assets held for sale 1, ,620.3 Cash and cash equivalents 2, ,658.6 Retained interests in securitizations and other investments 1, ,152.7 Goodwill and intangible assets, net 1, ,011.5 Other assets 2, ,635.0 Total Assets $ 64,730.5 $ 63,386.6 LIABILITIES AND STOCKHOLDERS' EQUITY Debt: Commercial paper $ 4,282.3 $ 5,225.0 Deposits Variable-rate senior unsecured notes 17, ,485.1 Fixed-rate senior unsecured notes 22, ,591.7 Non-recourse secured borrowings - student lending 3, ,048.8 Preferred capital securities Total debt 49, ,864.5 Credit balances of factoring clients 4, ,187.8 Accrued liabilities and payables 4, ,321.8 Total Liabilities 57, ,374.1 Minority interest Stockholders' Equity: Preferred stock Common stock Paid-in capital 10, ,632.9 Accumulated deficit (3,502.7) (3,691.4) Accumulated other comprehensive loss Less: Treasury stock, at cost (584.6) (596.1) Total Common Stockholders' Equity 6, ,462.7 Total Stockholders' Equity 7, ,962.7 Total Liabilities and Stockholders' Equity $ 64,730.5 $ 63,386.6 Income Statement Quarters Ended March 31, December 31, March 31, 2006 Finance income $ 1,294.6 $ 1,232.8 $ 1,028.0 Interest expense Net finance income Depreciation on operating lease equipment Net finance margin Provision for credit losses Net finance margin after provision for credit losses Other revenue Operating margin Salaries and general operating expenses Provision for restructuring Income before provision for income taxes Provision for income taxes (101.3) (106.9) (137.6) Minority interest, after tax (0.8) (0.5) (0.9) Net income before preferred stock dividends Preferred stock dividends (7.7) (7.5) - Net income available to common stockholders $ $ $ Earnings per common share Basic earnings per share $ 1.15 $ 1.24 $ 1.08 Diluted earnings per share $ 1.12 $ 1.21 $ 1.06 Number of shares - basic (thousands) 199, , ,656 Number of shares - diluted (thousands) 204, , ,090 38