Funding

1. Funding What our industry needs for a sustainable recovery… Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

2. Optimism and Liquidity are not the same thing! Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

3. CIBC World Markets Royal Bank of Canada GE Capital CIT MCAP National Leasing Group Foss National Leasing Leasemaster (JPLM) ADD Capital Blue Chip Leasing TAO Honda Finance Canada GMACFS Ford Credit Somerville National Centre For Spatial Economics DBRS S&P Clubb Finance PayNet CFLA Thanks the Following: Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

4. Today's Agenda • Consequences of a weakened Commercial Finance Industry for Canadian Business and for the Canadian Economy • The Canadian Credit Crisis and the impact on the Vehicle and Equipment Finance Industry • What is needed to maintain the health of the industry • Status of Available Sources of Funding • Long Term Supply Stability – Market Must Stabilize Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

5. Canadian Business CreditSource: 2008 Federal Budget- Minister of Finance • Business Credit Outstandingin 2007 • Cumulative Change in Business Credit Since August 2008 Billions of dollars Billions of dollars Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

6. Effective Flow of Capital to Canadian Business is critical to the economic recovery • Independent and Captive Finance Companies are effective at “push” strategies for deploying capital to SME’s • Bank Lessors traditionally use a “Pull” strategy • The combination of both strategies optimizes the amount of funding provided to main street Canada • Without all channels the economic recovery will likely stall Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

7. Industry Canada Small Business Quarterly, August 2009 • Small businesses accounted for 97.8 percent of employer establishments (in Canada) • Small businesses are defined as having fewer than 100 employees, medium-sized businesses having 100 to 499 employees and large businesses having 500 or more employees • There are 2,314,563 businesses that fit this category Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

8. Domestic Bank Lessors Foreign Bank Lessor Wells Fargo, B of A Key International Lease and Finance Co.’s GE Capital, DLL, CIT CSI, ARI, PHH Domestic Independents NLG, MCAP, Equirex Foss, JPLM, Jim Pattison, TransportAction Captive Vehicle Finance Ford, GMACFS Honda, Toyota, Nissan, VW, Mercedes, BMW Captive Equipment Dell, Cisco, Pitney Bowes, IBM CAT, John Deere, CNH Floor Planning Clubb Finance Multiple Distribution ChannelsCritical to optimizing amount of available capital Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

9. Canadian Bankers AssociationAugust 2009, Pre Budget Consultations – Submission to the House of Commons Standing Committee on Finance • “In the fall of 2008, just as the global financing market were at their most fragile, Canadian bank lending to businesses accelerated as other sources of financing contracted. Despite the fact that banks were increasing their share of the business financing market, they were not able to fill the credit gap completely.” Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

10. Finance Companies Small/Medium Independent Equipment Small/Medium Independent Vehicle Large Non Bank Consumer Vehicle Retail Fleet Vehicles Funding Sources Bank Sponsored Conduits Life Insurance Companies Non-Bank Conduits Export Development Canada (EDC) Interviews Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

11. Why funding is still constrained! The Paradigm Shift is still in process Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

12. The return of the “Dinosaurs” Banks Depositors Direct originators with placement capabilities Institutional Investors Commercial Finance Borrowers Pension funds Sovereign wealth funds Foreign pension funds The “Shadow Banking” Era SIVs Depositors Commercial Finance Borrowers Asset backed securities Institutional Investors Conduits Pension funds Warehouse Lines Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

13. Current OpinionTEC (Canadian CEO Organization) Anderson Economic Report August 2009. • A major concern with sustained recovery forecasts is whether they adequately incorporate the collapse in securitized credit flows and the longer-term implications of a U.S. balance sheet recession. Econometric forecasting models using time series data over the last 60 years do not know how to deal with these issues. In these models, if you keep interest rates low enough for long enough, you will get a “V-shaped” economic recovery. • It (the Bank of Canada) finds that the level of its FCI is now above its 10-year average, implying that credit conditions have returned to normal. We find this hard to believe and are worried that the Bank of Canada is underestimating the problems in financial markets. Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

14. Current Sentiment • Wholesale funding and debt securitization is still basically shut-down on both sides of the border. Toxic collateralized debt obligations (CDO’s) are still toxic. The financial system still has serious design flaws left over from creative financing. The shadow banking system is not working and it supplied over half of the credit growth in the U.S. (and a large part in Canada) over the past decade. Large corporations can access the debt markets but small and medium-sized businesses are finding their access to credit reduced. Commercial real estate borrowers facing debt repayments are unable to roll-over debt. Households and firms will continue to emphasize debt minimization. The next decade will not see a return of leveraged growth. It will take years for credit flows to return to normal. • TEC (Canadian CEO Organization) Anderson Economic Report August 2009. Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

15. ~ C$32 Bil Defaulted Nonbank ABCP Subject to Montreal Restructuring Process Outstanding Commercial Paper – CanadaPermission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Prior to Dec. 2007, Canadian ABCP not rated by Standard & Poor’s ABCP Bil. C$ Non-ABCP Note: Data for 2009 as of June 30th. Source: Bank of Canada Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

16. General Status of Funding Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

17. Lost Funding Capacity Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

18. General Status of Funding • Portfolio Sales: Buyers are looking for deep discounts. Sellers are those in need of cash • Warehouse Lines: Independent Commercial Finance is still nervous about bank commitment to maintaining or increasing warehouse facilities without a demonstrated growth in take out capacity (ABCP/ABS) • Bank Term Debt: Available to existing clients often with strong pricing but restrictive terms Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

19. Private Securitization • Small and Medium sized vehicle and equipment lessors have utilized the leverage and pricing of this product to build significant market share. • The insurance companies funding this program have continued to support existing clients but the insurance industry is under significant strain and it has impacted terms and supply. Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

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21. Spread Changes Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

22. Private Securitization • Fewer Players Expecting Greater Performance • Credit Box has Tightened • Greater monitoring • Pricing beginning to Stabilize • Support for Existing Clients Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

23. ABCP and ABS Market • New Realities • Global Liquidity Standard-A Limited Resource • More Bond Ratings • Greater Transparency • Much Greater Fees and Administration Expense • Higher Pricing • Term more Popular than CP Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

24. 2007 ABCP Market • Largest Funding Component of the Canadian Commercial Paper Market • 50% of the non-government short-term debt market • 21 Conduit Sponsors – 65 multi-seller ABCP Programs • No Rating Downgrades Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

25. Current OpinionStandard and Poor’s Ratings Digest August 17, 2009“Canadian Finance Companies are Tapping Foreign ABCP Conduits” • “Domestic funding for Canadian ABCP has become more difficult to obtain. The decline which began in Mid 2007, is evident in the Bank of Canada’s monthly data. The decline continued even after the completion of the nonbank ABCP restructuring in January 2009.” Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

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27. Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

28. Current Supply vs. Future Demand • Access to supply now favors banks as a result of government support • ABCP and ABS markets remain inadequate • Loss of Non Bank Sponsored ABCP and ABS appears permanent. • Diversity of Distribution is “at risk” Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

29. Secured Credit Facility • Intention and Commitment Strong • September 17th Revisions Show Potential • Success Needs to Be Measured by Flow of Funds • Most Domestic Commercial Finance Companies are still ineligible and are now at a greater disadvantage. • Curious Hidden Message …

30. Why Ignatieff on the Cover?

31. Revisions to Secured Credit Facility Program • Risk of Refinancing at Bullet Eliminated (True Match Financing of Cash Flows). • Ability to customize documentation. • Eligible Assets Expanded • Standby Servicer • Pricing and Allocation Process Amended.

32. Multiple Distribution ChannelsCritical to optimizing amount of available capital Domestic Bank Lessors Foreign Bank Lessor Wells Fargo, B of A Key International Lease and Finance Co.’s GE Capital, DLL, CIT CSI, ARI, PHH Domestic Independents NLG, MCAP, Equirex Foss, JPLM, Jim Pattison, TransportAction Captive Vehicle Finance Ford, GMACFS Honda, Toyota, Nissan, VW, Mercedes, BMW Captive Equipment Dell, Cisco, Pitney Bowes, IBM CAT, John Deere, CNH Floor Planning Clubb Finance Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

33. ABN AMRO IRWIN Commercial Finance KEY Equipment Finance GE Capital National City Capital CITI Leasing Canada CIT GMAC Chrysler CoActiv Domestic Finance Companies Insulate From Risk of Global Exits

34. Issues Remain • Domestic Canadian Finance Companies are now at a major disadvantage. • Available business credit and the disparity of terms need to be closely monitored. • No clear replacement for non-bank sponsored ABS and ABCP sales exists.

35. Export Development Canada • Mandate has been expanded to flow to greater number of companies • Finance Companies need to justify an “Export” related Financing Need • Existing Relationship with Chartered Banks has enabled flow of funds • No Structure to flow funding to Non-Banks Capacity for Economic Recovery CFLA 2009 Annual Conference - Ottawa

36. The Bottom Line • Domestic Independent Finance Companies Are At an Artificially Steep Disadvantage • Diverse Distribution Channels are critical to getting funding to Main Street • Vehicle and Equipment ABS and ABCP are fundamentally sound but buyers remain scarce. • Fear is still driving the market. Secured Credit Facility will help restore ABCP and ABS supply and terms.