CIT Reports Third Quarter Results; Continued Progress on Liquidity Initiatives

Business Wire, Oct 16, 2008

* Receivables at CIT Bank grew approximately $475 million during the quarter to $2.0 billion.

* The Company has a $33 million receivable due from Lehman Brothers Special Financing Inc. stemming from the termination of derivative transactions, which we are monitoring for collectability. We have no other direct exposure to Lehman Brothers entities.

Share Count

* Average common shares outstanding increased to 285.5 million from 264.4 million at the end of June 2008 due to the full quarter impact of the issuance of 91 million common shares in April.

* Given our current income levels and stock price, the earnings per share and other per share calculations do not include the potential dilutive effects of outstanding convertible preferred stock (convertible into 45.5 million common shares) and other potentially dilutive securities.

Segment Results:

Corporate Finance

* Total net revenues (the sum of net finance revenue and other income) decreased 2% from last quarter on a smaller average asset base and lower other income, including fewer gains from equipment sales.

* Net finance revenue as a percentage of average earning assets increased approximately 10 basis points from last quarter as portfolio yield improvement outpaced increased interest expense.

* New business volume ($1.5 billion) declined 16% from last quarter, reflecting market conditions and management of new origination volumes. The current quarter volume includes approximately $600 million of loans originated by CIT Bank.

* Net charge-offs increased over the prior quarter reflecting a charge taken to foreclose on a real estate loan that has been transferred to repossessed assets. Non-performing assets increased from last quarter, reflecting the deteriorating economic environment.

* Return on risk-adjusted capital of 6% declined from 9% in the prior quarter, primarily reflecting the increase in credit costs and lower other income.

Transportation Finance

* Total net revenues were down from last quarter, primarily driven by fewer asset sales, in both aerospace and rail. Our commercial aircraft portfolio continued to be fully utilized, including one aircraft with a memorandum of intent pending final lease negotiations. Rail utilization remained solid at 96% including customer commitments to lease (flat with last quarter).

* Net finance revenue as a percentage of average earning assets after depreciation was down from last quarter on lower operating lease margins, primarily in rail.

* Volume was down from last quarter as we took delivery of fewer aircraft.

* Credit quality remained strong, with continued net recoveries and low levels of delinquencies and non-performing assets.

* Return on risk-adjusted capital was 16% compared to 21% last quarter.

Trade Finance

* Total net revenues were up 12% from last quarter as seasonally higher volume resulted in higher factoring commissions.

* Net finance revenue as a percentage of average earning assets increased modestly.

* Most of the increase in net charge-offs over last quarter relates to one retailer in bankruptcy. Both delinquencies and non-performing assets were down as a percentage of receivables.