CIT Reports Third Quarter Results; Continued Progress on Liquidity Initiatives

Business Wire, Oct 16, 2008

* Return on risk-adjusted capital increased to 14% from 13% last quarter.

Vendor Finance

* Total net revenues were up from last quarter on higher interest income and lower impairment charges related to retained securitization interests.

* Net finance revenue as a percentage of average earning assets after depreciation was up slightly from last quarter on improved pricing.

* Charge-offs increased approximately $19 million from the prior quarter primarily due to certain previously-acquired receivables for which management revised its outlook with respect to collectability.

* Delinquencies and non-performing asset levels both declined, in amounts and as a percentage of average receivables.

* Total new business volume dropped from the prior quarter, reflecting declines in both the U.S. and Europe, as we managed our asset growth.

* Results include the aforementioned goodwill and intangible impairment charges.

* Return on risk-adjusted capital excluding the goodwill and intangible impairment charges was 2.3%, down from 5.6% last quarter, due to the higher provision for credit losses.

Consumer

* Total net revenues were flat with last quarter.

* Net charge-offs increased from last quarter as the decline in charge-offs in the unsecured consumer loan portfolios was offset by an increase in student loan charge-offs. Delinquencies were up reflecting a modest increase in U.S. government-guaranteed student loans, while non-performing assets were up in the private student loan portfolio.

* Reserves for credit losses were increased by $23 million for the private student loan portfolio.

* We are no longer originating any student loans, but we continue to service our $12.3 billion portfolio, $11.6 billion of which are U.S. government-guaranteed loans.

* Returns were not meaningful for the quarter as the large provision for credit losses resulted in a loss for the segment.

Corporate and Other

* The current quarter includes charges of approximately $45 million of interest costs associated with discontinued operations and a provision for credit losses of $36 million to build reserves.

* During the quarter, approximately $12 million of net interest costs were incurred as a result of maintaining higher than average cash balances for liquidity.

* Corporate and other results for the quarter also include $20.1 million of preferred stock dividends.

Discontinued Operation (Home Lending)

* On July 1, we announced the sale of the home lending business and manufactured housing portfolio. The sale of assets and assumption of debt were completed in early July and we received approximately $1.75 billion of the total $1.8 billion cash consideration. Final payment will be received upon closing the servicing operation sale, which is expected in the first quarter of 2009. We have no residual risk on this transaction outside of normal representations and warranties which have been reserved for as part of the net loss recorded.

* Results for the quarter included the reversal of $43 million of excess accrued transaction costs.