CIT Group Inc (DEL) (CIT)

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CIT Group Inc. (CIT)

Q3 2010 Earnings Call

October 26, 2010 08:00 am ET

Executives

Ken Brause - Head, Investor Relations

John Thain - Chairman & CEO

Scott Parker - CFO

Analysts

David Hochstim - Buckingham Research

Brad Ball - Evercore

Sameer Gokhale - KBW

Bruce Harting - Barclays

Henry Coffey - Sterne, Agee

Mike Taiano - Sandler O'Neill

Mike Turner - Compass Point

Chris Brendler - Stifel Nicolaus

Presentation

Operator

Good morning ladies and gentlemen and welcome to CIT’s third quarter 2010 earnings conference call. My name is Caitlyn and I will be your operator today. Participating in today’s call are John Thain, Chairman and Chief Executive Officer; Scott Parker, Chief Financial Officer; and Ken Brause, Head of Investor Relations.

At this time all participants are in a listen-only mode. There will be a question-and-answer session, later in the call. Please limit yourself to one question and a follow-up. (Operator Instructions). As a reminder, this conference call is being recorded for replay purposes.

I would now like to turn the call over to Ken Brause. Please proceed, sir.

Ken Brause

Thank you Caitlyn and good morning everyone and welcome to CIT’s third quarter 2010 earnings conference call. Our call today will be hosted by John Thain, our Chairman and CEO; and Scott Parker our CFO. Following our formal remarks we will have a Q&A session. As said we expect you limit yourself to one question and a follow-up and then return to the queue if you have additional questions. We will do our best to answer as many questions as possible in the time we have this morning.

Elements of this call are forward-looking in nature and may involve risks, uncertainties and contingencies that may cause actual results to differ materially from those anticipated. Any forward-looking statements relates only to the time and date of this call. We disclaim any duty to update these statements based on new information, future events or otherwise. For information about risk factors relating to the business, please refer to our 2009 Form 10-K that was filed with the SEC in March.

Any references to certain non-GAAP financial measures are meant to provide meaningful insights and are reconciled with GAAP in the press release. For more information on CIT, please visit our website at ww.cit.com and now I’d like to turn the call over to John Thain.

John Thain

Thank you, Ken. Good morning everyone and thank you for joining the call. I am going to make a few opening comments and then turn the call over to Scott Parker, our Chief Financial Officer. I am pleased to report our third consecutive profitable quarter with net income of $131.5 million. We continue to make steady progress on our key priorities, our management team is almost complete now. We have one last person going through the regulatory approval process and I am very happy with how our team is working together.

As you have seen in the press, we made further progress on our debt structure. We have either repaid or refinanced our entire $7.5 billion of first lien debt and we have announced the redemption of 1.4 billion of our 10.25 Series B second lien debt. And I know Scott will talk a little bit more about this later.

We have continued to optimize our portfolio with $1.5 billion of non core and non-strategic asset sales and we are beginning to build our new business pipeline and our trade finance business, our volumes were up to $7 billion in the quarter. On the vendor finance side, we originated over $500 million of new business in the quarter and our corporate finance segment, our lender to small and middle market companies we committed over $400 million of new volume and we funded over $300 million.

In the transportation sector, we delivered 6 new airplanes in the quarter and we have all of our next 12 month deliveries already leased. We also improved our rail car utilization to 94%.

On the CIT bank side, almost all of our US corporate finance loans were originated by the bank. Our US Lenovo program, our new vendor finance program for Lenovo is been originated in the bank and we originated one transportation loan to a US airline in the bank. We are making progress on our written agreement with the Federal Reserve. We continue to focus on expenses which I think you can see in the quarterly results and we've continued to strengthen our capital base.

Our book value is over $44 a share, our Q1 capital is over 18% and our credit metrics are stabilizing which Scott will also talk more about. So all of which is working to restore the confidence in CIT as a lender to small and middle market companies and with over 100 years of expertise and asset base funding I think we are on the right track. With that I will turn it over to Scott.

Scott Parker

Thank you John and good morning everyone. I am pleased to be discussing another quarter characterized by strong GAAP earnings and improved operating trends. Before I get into the quarter’s results, I want to spend a minute on the prior period revisions as my comparative statements will be again to revise figures.

As part of the management’s review or the financial statements we identified several immaterial errors in the first and second quarters largely related to the application of fresh start accounting. Accordingly adjusting entries were made and this release reflects to revise results of the first and second quarter of the year.

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