CapitalSource Posts Wider Loss On Reserve Buildup

CHEVY CHASE, Md. (AP) — Commercial Lender CapitalSource Inc. on Monday posted a third-quarter loss, reversing a year-ago profit, as it set aside more money to cover bad loans and saw a much bigger loss in its investments.

For the three months ended Sept. 30, the company lost $274.2 million, or 87 cents per share, compared with a profit of $13.7 million, or 5 cents per share, in the year-ago period.

The per-share results reflect 5 percent more shares outstanding in the recent quarter, which had the effect of narrowing the per share loss.

Analysts polled by Thomson Reuters, on average, expected a loss of 26 cents per share.

CapitalSource, which operates three segments, including a bank, a commercial finance unit and a health care lease unit, increased its provision for loan losses by 9 percent. It set aside $221.4 million to cover loans that may go bad, up from $203.8 million last year. The increase reflected higher provisions it its commercial lending segment, the company said.

Net interest income fell 5 percent to $188.5 million from $197.5 million in the 2008 quarter. Fee income edged up to $25.3 million from $24.9 million.