CIT Reports Third Quarter Results

Business Wire, Oct 17, 2007

Credit Quality

* Net charge-offs as a percentage of average finance receivables were 0.46% (excluding home lending and student lending), up slightly from last quarter due to higher losses in the other consumer portfolios in the Consumer segment and flat with a year ago.

* 60 day owned delinquencies were 1.34% (excluding home lending and student lending), up from last quarter, primarily in Corporate Finance and international Vendor Finance, and flat with a year ago.

* Non-performing assets were 1.03% (excluding home lending and student lending), up from last quarter and down from last year.

* The percentages in the three preceding items exclude home lending and student lending, both the credit metric as well as the asset base.

* Net charge-offs in the home lending portfolio were $55.5 million, up from $38.4 million last quarter and $18.5 million last year. Home lending net charge-offs were not included in third quarter 2007 net charge-offs as losses on these receivables are reflected as a change in our LOCOM adjustment for the quarter.

* Reserves for credit losses increased $27 million from June 30, 2007. Excluding specific reserves, U.S. Government guaranteed student loans and home loans, the reserve was 1.20% of finance receivables, down slightly from last quarter reflecting seasonal growth in factoring and essentially flat with last year.

Expenses

* Salaries and general operating expenses were down 3% from last quarter and up 5% from a year ago. Lower headcount, legal fees, advertising and variable compensation accruals were offset by higher expenses related to the acquisition of a mergers and acquisition advisory firm. The increase from last year primarily relates to costs associated with various acquisitions, partially offset by expense reduction initiatives.

* The provision for severance and real estate exit activities totaled $42 million, which included provisions for the elimination of approximately 600 positions, primarily in our home lending business. Approximately 400 of these positions were eliminated in the third quarter, with the remaining scheduled to terminate in the fourth quarter.

* Employee headcount totaled approximately 7,010 at September 30, 2007, down from 7,310 last quarter and 7,200 a year ago.

Income Tax Provision

* The third quarter results included a $95.6 million tax benefit on a $133.3 million pretax loss.

* Excluding the home lending adjustment, the third quarter effective tax rate approximated 25%. On a go-forward basis, the annual effective tax rate is anticipated to approximate 27%.

Volume and Assets

* Origination volume for the quarter, excluding factoring and home lending, was $8.6 billion, down from $9.4 billion last quarter and $9.0 billion a year ago. Solid new business volume in Transportation Finance and Vendor Finance was offset by lower Corporate Finance originations, reflecting the sale of the construction business and softer market conditions. The decline from last year is due to the construction business sale and lower healthcare volumes.