CapitalSource Loan Loss, Reserves Lead To 1Q Loss

CHEVY CHASE, Md. (AP) — CapitalSource Inc., a commercial lender to middle-market businesses, said Thursday it fell to a first-quarter loss as it wrote off loan losses, set aside cash to cover additional troubled loans and converted some debt.

The company reported a loss of $104.3 million, or 36 cents per share, compared with profit of $5.2 million, or 2 cents a share, a year ago.

Analysts surveyed by Thomson Reuters had expected a loss of 25 cents per share, on average.

CapitalSource's shares fell 7 percent, or 28 cents, to $3.62 in afternoon trading.

For the quarter, the company recorded $124 million in net charge-offs for loans written off as not being repaid, a decrease of $60 million compared with the fourth quarter.

CapitalSource's provision for loan losses shrank to $155 million from $445 million in the prior quarter.

Also, the company recorded a $16 million loss on investments for the latest quarter, and a $700,000 loss on credit derivatives.