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Wing Finance and Real Estate Financial Services Powered By Docstoc
					             Mike Neal

GE Commercial Finance Overview
“This document contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected
future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by
their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the
behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including dispositions; future integration of acquired businesses; future
financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries;
unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business,
competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do
not undertake to update our forward-looking statements.”




Winning formula…
                                                      Massive origination front-end
                                                         • 8,500+ resources
                                                         • “Growth as a process”

     + Deep domain expertise
        • Healthcare, Energy, Media, Aircraft, Real Estate, etc.

     + Global footprint, yet <2% global share
        • Lots of room for growth

     + Experienced, disciplined risk management and capital allocation
        • Spread of risk, secured

     + Operationally advantaged, productive business
        • Asset management, capital markets, lean Six Sigma


                                  Consistent earnings growth with high returns


                                                                                                                                                GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 2
  Senior leadership team –
  Deep industry and GE experience
                   Tremendous depth in
                     financial services                                       • 15 years avg. GE experience, 66%
                                                          56%                   in multiple GE businesses
                             >20 years
                           avg. experience                                    • Lots of exposure and interaction
                                                                                  – Capital Board – monthly
                                    28%                                           – CEC - quarterly
                                                                                  – Session C – 2x/yr.
               16%
                                                                              • 1,000+ executive level pipeline
                                                                              • Local knowledge/expertise
             0-10 yrs.            11-20 yrs.        21-30+ yrs.                   – 80% of European business
                                                                                    leadership from Europe
                    • Deep domain expertise
                    • Weathered many cycles

                                   Deep team executing the business model


                                                                                                            GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 3




  Building blocks of growth
  ($ in billions)                                                                                                                    ~$6.6B
                                                                                                                                Katrina

                                                                  18%                                      SARS       Airline
                                                                                                                    Bankruptcy
                                                                  CAGR             European        War
                                                                                   Slowdown
                                                                               Asia        9/11
                                                                            Currency     Recession
                                                                              Crisis
                                                                   U.S. Growth
                                         Japan
                                        Recession
                   Recession
            $0.5
Verticals
      CF

             '90     '91    '92     '93      '94    '95    '96    '97    '98      '99   '00      '01     '02        '03   '04     '05     '06E

     US Equip Finance             + Fleet Leasing           + European Equip Finance          + HFS vertical                + Floor planning
     Structured Finance           + UK Equip Finance        + Corporate lending               + French RE platform          + Trucking vertical
     Real Estate                  + Aviation                + Europe factoring                + Franchise finance           + Asia expansion
     Lending                      + Energy                  + Japan leasing                   + Originate to sell           + Inventory finance



                    Consistent growth through good and bad economic times


                                                                                                            GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 4
Strong net income and asset growth
($ in billions)
                           Commercial Finance (excl. Verticals)
                        Assets                                  Net income
                                                                                                 ~25%
                                ~$225B                                                            ROE
                                                                               ~$5.1B

                        14%
                         14%
                        CAGR
                        CAGR                                     18%
                                                                  18%
                                                                 CAGR
                                                                 CAGR


                  $59
                                                              $1.0


                  '96            '06E                          '96                 '06E

     Consistent accretive growth through good and bad economic times


                                                                        GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 5




Business model delivers through
economic cycles
                         More                                          Less

                                        Supply of capital
                                           in market
                   Approach                                          Approach
    • Selective on-book asset growth                      • Originate to hold… grow
    • Higher off-book volume                                on-book assets
    • Originate to sell                                   • Cheaper acquisitions
    • More fees                                           • More spread


                                           Double digit
                                         income growth

           Consistent growth through good and bad economic times


                                                                        GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 6
1H’06 financial performance
              Assets                            Net income

                                                       24%
                                                       24%
                  +28%
                  11%
                  11%                                          $2.2B
                          $206B
       $186B                                   $1.8B




          1H'05           1H'06                1H'05            1H'06

     Strong on book asset growth… consistent net income growth


                                                          GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 7




Creating value… expanding returns
Return on Equity (ROE)                               Key drivers
                                                       • Spreads
                                                       • Losses
                  ~25%
                             Margin expansion          • Fees
                                              3.7%
                             & product mix             • Capital markets
   19.5%                                               • Product leverage
                                                       • Exit non-performing




                                                       • Simplification
                             Cost out        1.8%      • Sourcing
                                                       • Lean Six Sigma

    '04            '06E
                                            ~5.5%



                                                          GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 8
 Simplification
 ($ in millions)
                      G&A expense %
                   average served assets                     Simplification dynamics

            1.26%
                                           $300MM+/year    • Leaner organizations grow
                                            productivity
                       1.16%                                 faster…
                                1.04%                         – More front-ends, fewer
                                                0.91%           support organizations

                                                           • Flexibility to re-invest in
                                                             direct origination

                                                           • More competitive business
                                                             model

             '04        '05         '06E         '07E      • 180 basis point increase in
Front-end                                                    business ROE since 2004
investment 1,344       1,622    1,850            2,050
Productivity 225        265         335          390


                                                                          GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 9




 Risk strategy
                                                           3,000+ experienced risk & asset
                                                           professionals globally
                      Experienced
                                                           Seasoned risk leadership with 20+
                         global                            years average experience including
                       resources                           2 major recessions

                                                           Rigorous governance policies
                                                           & procedures
   Effective                                Diversified
  governance                                 portfolio     Well diversified portfolio… broad
    process                                                spread of risk

                                                           Senior and secured financings
                                                           in collaterals we know
                      Disciplined                          Conservative asset residuals & strong
                     underwriting                          asset management

                                                           Six Sigma process rigor applied to
                                                           manage and track key risk drivers

                      Maintaining disciplines through all cycles


                                                                         GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 10
Managing funding and spread risk
   Commercial Finance assets                               Global treasury operations
      Latin                                                Matched funding – eliminate all
     America                Europe
                                                           but credit risk
 Canada     3%
                          23%
              6%                                                • Currency

                                            Asia &              • Term/duration
                                    8%      Australia
                                                                • Rate (fixed vs. float)

                                                           Centralized
                   60%                                          • No speculative trading
   USA
                                                                • Not profit center
                                                                • No trading for own account


                           Conservative funding process


                                                                                 GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 11




Financing margins & interest rates
       Match funding                                                Stable loss adjusted
  mitigates non-credit risk                                          financing margins
          Fixed rate product
                                                        8.00%
 10%                            Revenue
 8%
                                          Financing
 6%
                                          “spread”
                                                                               Risk adjusted CV
 4%                        Borrowing
 2%
                              cost
 0%                                                     5.00%
                                                                   2Q’04           2Q’05                 2Q’06

         Floating rate product
                                                        6.00%
 10%
                                Revenue
 8%

 6%                                 Financing           3.00%
 4%                                 “spread”                                     US commercial paper
                            Borrowing
 2%
                               cost
 0%                                                     0.00%
          1          2          3                                  2Q’04          2Q’05                  2Q’06


                         Risk adjusted pricing drives margin


                                                                                 GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 12
   Commercial portfolio
     2Q ’06
                               Collateral                                                  Industry

                           Other
                                                                                    Specialty Retail
       Corporate Jets                             Real Estate                                                Business Services
                                7%                                                         9%           7%
       Franchise                            17%
                          4%                                                                                          Healthcare
                     4%
  Healthcare                                                                                                     6%
  Equipment     5%
                                                                            17%                                             Hotels
                                                                                                                      5%
Transportation                                                  A/R +       Real Estate
Equipment     5%                                                                                                         4%
                                                                                                                               Auto
                                                        15%
                                                                Inventory
                                                                                                                         3% Machinery
  Fleet        6%                                                                                                              Equipment
 Vehicles                                                                                                                3% Tech.
                                                                                 Other (44)                                    Hardware
                                                                                                                       3%
                                                                               Less than 2%                                 Trucking
                  10%                         14%                                                                 3%
                                                                                                                2%   Chemical
      Dealer                                          FF&E/Other                  28%                         2%   Consumer Services
                               13%                                                                           2%
      Inventory                                                                                            2%     Diversified Fin.
                                                      Equipment                                          2%     Food & Beverage
                                                                                                       2%
                                                                                                               Construction
                               Cash Flow                                                                   Building Products
                                                                                                       Construction Material


                               Diversified across industries and collaterals


                                                                                                   GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 13




   Commercial portfolio
     2Q ’06

                                                                                  Over $500MM, 6 accounts:
                                                                                        – Broadcast Media, Real
                                                                                          Estate, Technology
                                                       Over $500MM                        Hardware
                                            1.6% $300MM - $500MM
                                            2.1%
                                             2.2% $200MM - $300MM                 $300MM-$500MM, 15 accounts:
            78.1%                            6.4% $100MM - $200MM                       - Broadcast Media,
            less than                                                                     Automotive, Steel, Real
             $50MM                                                                        Estate
                                           9.5%
                                                      $50MM - $100MM
                                                                                  $200MM-300MM, 23 accounts:
                                                                                        – Real Estate, Business
                                                                                          Services


                                       Small holds, broad spread of risks


                                                                                                   GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 14
Disciplined underwriting results in
lower losses
                 ’00 – ’06 average
       (As a % of average outstandings)                       Direct control vs. participations
1.40                                                            • Individual deals on discrete collateral
1.20
                                                              Secured deals to mid-market
1.00                                       Top 100 banks        • No illusions about credit quality of
                                         historical average       customers
0.80
                                                                • Focus on assets with low
0.60                                         Top 100 banks*
                                                                  economic/technological obsolescence
0.40
                                                 CF           Core cultural incentive to recover
0.20
                                                              investments
0.00                                                            • Underwrite assuming workout
       '01     '02         '03   '04   '05     2Q'06            • Evaluate multiple exit strategies
*Source: Federal Reserve


                      Work out mentality starts at deal underwriting


                                                                                    GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 15




Consistent approach to risk
management
       Experienced risk & asset professionals globally

       Rigorous governance policies & procedures

       Senior and secured financings in collaterals we know

       Well diversified portfolio… broad spread of risk

       Conservative asset residuals & strong asset management

       Process rigor… to manage and track risk


                                                                                    GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 16
Lots of room for growth with great
platforms Franchise
                            position               Markets we compete in
           Real
           Estate          Lead position
                             globally
                                            2%
                           Lead position   Share    Americas        Europe
           Capital                                   ~$6T
           Solutions         globally                                ~$5T
                                                                                       0.8%
                                                                                       Share
           Corporate   Lead position
           Financial                                           Asia
                       Mid-market US                           ~$4T
           Services
                                                                           0.3%
                       Lead positions -                                    Share
           Verticals     Healthcare,                  <2% share of
                       Energy, Aviation
                                                      $15T market

          Despite leading businesses, small in huge markets


                                                               GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 17




               Driving growth
                       1     Driving domain expertise
                       2     Global go-to-market
                       3     Enterprise Selling
    Grow
  front-end            4     Originate to sell
  capability

                       5     Commercial excellence



                                                               GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 18
1 Driving domain expertise

                                                Verticals
     Healthcare    Global Media &                                                                         Energy
                                    Transportation   Construction                     Aviation
      Financial   Communications                                       Government                        Financial
                                       Services        Finance                        Services
      Services                                                                                           Services




        GE             NBC                                                                                  GE
                                                                                     GE Aviation
     Healthcare      Universal                                                                            Energy




       Industries and customers we understand
    Strategy:                                                       Benefits:
    • Utilize unique domain knowledge                               • Grow intimate customer knowledge
    • Integrated commercial team                                    • Unified face to customer
    • Bring full product basket to customer base                    • Integrated solutions



                                                                                       GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 19




3 Global “Enterprise Selling”

                                                            Deployment – “see more”
                                                            • 2,300 initial accounts increasing to 4,200
  Enterprise approach
                                                            • 50 client managers increasing to 90+
• Single point of contact to all                            • Regional staffing – RM’s, risk and customer
  CF products                                                 service

• Leveraging 8,500+ front-end                               • Leveraging existing backroom
  across Commercial Finance
                                                            Process changes – “close more”
• Driving loyalty – streamlined
  process                                                   • Sales – deep knowledge of finite accounts
                                                            • Risk – delegate & delayer
                                                            • Documentation – simplify, “one-CF”
                                                            • Pricing – control for returns & relationship
                                                            • Customer service – dedicated “wing to wing”



                                                                                       GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 20
3 Enterprise Selling
Volume                                $30B+
                                                                Key success
($ in billions)                    incremental
                                  volume ’07-’09    Customers love it!
                              ~$12B

                        49%
                        49%
                                                    Seeing more
                  $8B                                • $5B in new product opportunities
                                                     • 60% of customers w/ 2+ product
                                                       opportunities

                                                    Winning more
                                                     • $10B in volume YTD

                  '05          '06E
                                                     • 50% volume increase
Vol $MM / rep $66             $240+

                         Customer acceptance… great progress


                                                                       GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 21




4 Originate to Sell
                                                            Volume $B
                                                                                           ~$400MM
                                                                                              NI
                                                                                       ~$42B
                                                                29%
                                                                 29%
 1 Drive organic growth
 •                                                              CAGR
                                                                CAGR


 2 Reduce risk
 •                                                 $15B

        – Credit & collateral exposure

                                                   '02    '03    '04        '05         '06E
 3 Enhanced ROE
 •
                                                     Sell through securitization,
        – Fees, other people’s capital               syndications & whole asset sales
                                                     200+ dedicated professionals
 4 Alternate funding source
 •                                                   Integrated with front-end
                                                     Global capability



                                                                       GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 22
5 Continue to build out front-end
    Front-end resources
                          ~8,500            +   NPS
                                                                                                                                                                                       Lots of rigor,
                                                                                                                                                                                      every business
             14%
              14%                                                                                                                                                                        engaged
             CAGR
             CAGR                                • Higher share of wallet
 ~5,000
                                                 • Customer loyalty
                                                 • Understanding customer needs



  '02                     '06E              +   Deployment
                                                                                                                                                                                                Every rep
                                                                                                                                                                                               has detailed
                                                 • Build around customer                                                                                                                       volume plan
          Total volume
                                                 • World-class training
                         ~$268B
                                                 • Lots of comp leverage
             48%
              48%
             CAGR
             CAGR
  $56B                                      +   Originate to sell
                                                                                                                                                                                              Continue
                                                                                                                                                                                             developing
                                                 • Securitizations                                                                                                                           more outlets

                                                 • Syndications
  '02                     '06E
                    Continue to expand proven model


                                                                                                                              GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 23




Unique business positioned for
continuous growth
                                                           Powerful growth
 Small global              Bigger, smarter           initiatives and disciplined
 market share            front-end resources              risk management
                                                       1 Driving domain expertise

                                                                                   Verticals
                                                                              2 Global go-to-market approach


                              ~8,500
                                                         Healthcare    Global Media &                                                                 Energy
                                                                                        Transportation   Construction                 Aviation
                                                          Financial
                                                          Services
                                                                      Communications By product
                                                                                         Services                                  Nordic
                                                                                                          US, Canada, UK, France,Services
                                                                                                           Finance Government                        Financial
                                                                                                                                                     Services

                                                                                     One CF          Asia, Germany, Italy, Spain, Mexico

                                                                                                                      “Enterprise Selling”
                                                                                                            3 Global Poland, Czech, Hungary, Turkey, Thailand
                                                                                     One GE (follow the GE footprint)




                    +                           +
                                                             GE            NBC                                                                          GE
                                                                                                                                     GE Aviation
                                                         Healthcare      Universal                                                                    Energy


                                                                              Americas - $2.4B*                          Europe - $1.3B*                Asia & Australia - $0.6B*
                                                           Industries and customers we understand                                                                            – “see more”
                                                                                                                                                               Deployment $4T Market
                                                                                                         $6T Market
                                                                                                                                    4 Originate to Sell increasing to 4,200
                                                                                                                                             $5T Market




                            front-end
                                                                                                         ~2.0% share                         ~0.8% share                      ~0.3% share
                                                                                                                                              • 2,300 initial accounts
                                                         Strategy:                                             Enterprise Approach
                                                                                                                 Benefits:
                                                                                                                                                                 • 50 client managers increasing to 90+ Volume $B
                                                         •Utilize unique domain knowledge                           • Unified face to customer
                                                                                                           • Single point of contact to all CF                   • Regional staffing - RM’s, risk and customer                                   ~$400MM
                                                         •Integrated Commercial team                                                                                                                                                                NI
                                                                                                                • Grow
                                                                                                             products intimate customer knowledge
                                                                                                                                                                 5 Continue to build out front end
                                                                                                                                                                   service
                                                                                                                                                                                                                                               ~$42B
                                                         •Bring full product basket to customer base • Increased domain knowledge                       • Leveraging Existing Backroom             29%
                                                                                                  • Leveraging 8,500+ front end organic growth
                                                                                                                         1 Drive
                                                                                                                         •                                                                         29%
                                                                                                                                                                                                  CAGR
                                                                                                                                                                                                   CAGR
                                                                                                    across Commercial Finance                                   Front-end resources
                                                                                                                                                        Process changes – “close more”
                                                                             * 2005 Net Income    • Driving loyalty – streamlinedSA Mtg_Sept 2006 Intro_Neal 19
                                                                                                    process              2 GE Reduce risk
                                                                                                                         •
                                                                                                                              CFPA1229                                            ~8,500
                                                                                                                                                                                   $15B                                        +     NPS
                                                                                                                                                                                                                                                                               Lots of rigor,
                                                                                                                                                                                                                                                                              every business




                            resources
                                                                                                                                                                        knowledge of finite accounts
                                                                                                                                                        • Sales – deep 14%
                                                                                                                                                                        14%                                                                                                      engaged
                                                                                                                                                                                                                                      • Higher share of wallet
                                                                                             Global NI share from <25% in 1999 to collateral exposureCAGR delayer
                                                                                                                                                            today
                                                                                                                                 – Credit & >50%~5,000– delegate &
                                                                                                                                                        • Risk
                                                                                                                                                                       CAGR
                                                                                                                                                                                                                                      • Customer loyalty
                                                                                                                                                                 • Documentation – simplify, “one-CF”                                 • Understanding customer needs
                                                                                                                                                                                            '02    '03                   '04         '05        '06E
                                                                                                                                     3 Enhanced ROE •GEPricing – control Intro_Neal 20 & relationship
                                                                                                                                     •                 CFPA1229 SA Mtg_Sept 2006 for returns




          GECF
                                                                                                                                                                                          Sell through securitization
                                                                                                                                                             • Customer service – dedicated “wing to wing”
                                                                                                                                             – Fees, other people’s capital
                                                                                                                                                                '02                    '06E                 Deployment
                                                                                                                                                                                          syndications & whole assets          +                                                 Every Rep
                                                                                                                                                                                                                                                                                has detailed
                                                                                                                                                                                                                                      • Build around customer                   Volume plan
                                                                                                                                                                         Total Volume              200+ dedicated professionals training
                                                                                                                                     4 Alternate funding source                                                      • World-class
                                                                                                                                     •                                                      ~$268B
                                                                                                                                                                                                   Integrated with front end comp leverage

          1.1%
                                                                                                                                                                                                                      • Lots of
                                                                                                                                                                                        GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 21
                                                                                                                                                                              48%
                                                                                                                                                                               48%
                                                                                                                                                                              CAGR
                                                                                                                                                                              CAGR                 Global capability
                                                                                                                                                                  $56B                                                         +     Originate to sell
                                                                                                                                                                                                                                                                                 Continue
                                                                                                                                                                                                                                                                                developing
                                                                                                                                                                                                                                      • Securitizations                         more outlets

                                                                                                                                                                   '02                         '06E                                   • Syndications
                                                                                                                                                                                                                            GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 23



                                                                                                                                                                                       Continue to expand proven model


                                                                                                                                                                                                                                                                GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 24




                                   Winning formula


                                                                                                                              GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 24
Agenda
 Jeff Malehorn     Driving domain expertise
 Rich Laxer        Global go-to-market – Europe
 John Flannery     Global go-to-market – Asia
 Michael Gaudino   Corporate Finance
 Michael Pralle    Real Estate
 Jayne Day
 Paul Bossidy      Capital Solutions

 Outlook

                                       GE CFPA1229 SA Mtg_Sept 2006 Intro_Neal 25

				
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