Education Lending Group, Inc. (EDLG)
Transaction Overview
CIT Group Inc.
Exhibit 99.3
Forward Looking Statement and Notice to Investors
Certain statements made in this presentation that are not historical facts may constitute "forward-looking"
statements under the Private Securities Litigation Reform Act of 1995, including those that are signified by
words such as "anticipate", "believe", "expect", "estimate", and similar expressions. These forward-looking
statements reflect the current views of CIT and its management and are subject to risks, uncertainties,
and changes in circumstances. CIT's actual results or performance may differ materially from those
expressed in, or implied by, such forward-looking statements. Factors that could affect actual results and
performance include, but are not limited to, potential changes in interest rates, competitive factors and
general economic conditions, changes in funding markets, industry cycles and trends, uncertainties
associated with risk management, changes in government guarantee programs or regulations, and other
factors described in our Form 10-K for the year ended December 31, 2003 and our Form 10-Q for the
quarter ended September 30, 2004. CIT does not undertake to update any forward-looking statements.
This presentation does not constitute an offer to purchase nor a solicitation of an offer to sell any
securities. The tender offer for the outstanding shares of Education Lending Group common stock
described in this announcement has not commenced. Any offers to purchase or solicitation of offers to sell
will be made only pursuant to a tender offer statement and a solicitation and recommendation statement
filed with the Securities and Exchange Commission. The tender offer statement (including an offer to
purchase, a letter of transmittal and other offer documents) and the solicitation/recommendation
statement will contain important information and should be read carefully before any decision is made
with respect to the tender offer. Those materials will be made available to all stockholders of Education
Lending Group at no expense to them. In addition, all of those materials (and all other offer documents
filed with the SEC) will be available at no charge on the SEC's web site (http://www.sec.gov).
1
Introduction
Education finance is a fast growing, non-cyclical industry that
compliments CIT’s diverse businesses
EDLG represents an attractive entry platform into education finance
Independent for-profit education finance company
$4.0bn portfolio
$1.5bn of annual originations
Business model compatible with CIT Specialty Finance competencies
Transaction is consistent with strategy of redeploying available capital
into higher growth businesses with favorable risk return profiles
2
Overview of EDLG
Headquartered in San Diego, CA with 226
employees
Founded in 1999 by Robert deRose,
Chairman and CEO
Fourth largest FFELP consolidation loan
originator
The Company historically originated
primarily through marketing partners, the
largest of which, FinancialAid.com, it
acquired in October 2004
The Company has grown its school
origination channel and began servicing its
originations
The Company markets under the brand
name Student Loan Xpress and is on the
preferred lender list at almost 600 schools
Company overview
Portfolio by geography
FL 4.1%
MI 3.6%
NJ 3.1%
GA 3.0%
WI 3.0%
IL 4.4%
WA 2.8%
VA 2.6%
MN 2.6%
MA 2.6%
Other 32.7%
TX 5.1%
PA 5.3%
OH 4.5%
CA 12.8%
NY 7.8%
Portfolio by average balance ($ thousands)
3
Portfolio Quality
$4 billion of Federal Family Education Loan Program (FFELP) loans
FFELP loans are at least 98% government guaranteed
Holders of FFELP loans are guaranteed a minimum yield
$13 million of private student loans
Private loans bear no federal guarantee but are not dischargeable in
bankruptcy
EDLG’s favorable charge-off history reflects high credit quality
Annual charge-offs less than 5 bps
Average default rates of EDLG’s university list is below the
national average
Cohort default rates of originating schools (%)
4.37
Total (1,268 schools)
4.34
Top 100
3.94
Top 25
3.60%
Top 10
National cohort default rates (%)
5.2
2002
5.4
2001
5.9
2000
5.6%
1999
4
Management
EDLG’s management team is highly regarded within the industry
Average 15+ years of industry experience
Proven track record
Management enthusiastic about joining CIT
Operated within Specialty Finance to leverage existing competencies
Credit management
Servicing and systems infrastructure
Government sponsored program knowledge (SBA)
Executive Officers
Age
Position
Name
52
President and CEO of Education Loan Servicing Corp.
David Harmon
50
President and CEO of Student Loan Xpress
Fabrizio Balestri
EVP, Secretary, and General Counsel
EVP and CFO
President, COO and Director
Chairman of the Board and CEO
56
Douglas Feist
44
James Clark
53
Michael Shaut
57
Robert deRose
5
What makes the student loan market interesting?
Sizeable and growing market
$330bn spent annually on postsecondary education, growing at twice the rate
of inflation
Approximately $50bn is federal student loans, growing at 11.5% per year
Approximately $12bn is private student loans, growing at 26% per year
Population growth trends provide for long term market growth predictability
Source: Department of Education
Cost of education ($000)
Source: Department of Education
Note: Excludes consolidation volume
Federal student loan origination volume ($bn)
6
Strategic Benefits
Non-cyclical business
generating predictable
earnings stream
Government guaranty
lowers risk profile
High quality assets
create additional
liquidity
Well defined growth
prospects
Business model
compatible with other
Specialty Finance
business lines
Operating synergies exist
(servicing and systems
infrastructure)
Potential cross-sell
opportunities
Financial Rationale
Operating Rationale
7
Financial Overview
Transaction Summary
Tender offer to purchase all outstanding EDLG shares
$19.05 per share
23% premium to recent trading levels
Indicated transaction value of $381 million
100% cash purchase
$269 million goodwill
Assumption of existing secured debt
Transaction is expected to close Q1 2005
Earnings neutral in 2005, accretive thereafter
9
Capital And Funding Implications
Modest capital requirements given high quality assets
Required consolidated capitalization levels (tangible equity/managed
assets) decline as a result of lower risk profile
Student Loan ABS market is mature and highly liquid
Because of the quality of the assets, issuers can fund these loans in the asset-
backed securitization market with advance rates in excess of 100%
No tranche has ever been downgraded
CIT will continue to utilize the ABS market as a core funding source for
these assets
6%
Private loans
2%
Government guarantee loans (FFELP)
Risk adjusted capital requirements
10
Key Financial Metrics
Modeling low double digits
30%
Asset Growth
Comments
EDLG
Metric
Returns
Equity premium reduces ROE and inflates ROTE
Operating ROE meets 15%+ hurdle today
Low risk assets yield lower returns
Target mid-40’s
Efficiencies achieved through scale and CIT’s processing
expertise
Government guarantee results in minimal losses
Guaranteed minimum yield
Matched-funded
Not Meaningful
ROE & ROTE
50 bps
ROA
75%
Efficiency Ratio
< 5 bps
Credit Losses
100-150 bps
Risk Adjusted Margin
~
~
~
~
~
~
11
Summary
The Education Finance market has attractive growth and risk
characteristics
EDLG offers an excellent entry platform
Well positioned, scalable business
Compatible business model/approach
The transaction provides compelling strategic benefits
Diversification into another predictable and non-cyclical, flow business
Attractive growth prospects in a low risk market
Adds meaningful depth to CIT’s consumer business with cross-sell opportunities
High credit quality assets generating attractive risk-adjusted returns
12