This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

NewStar Reports Fourth Quarter 2012 Net Income Of $6.2 Million, Or $0.12 Per Diluted Share

References to "operating expenses, excluding non-cash equity compensation" mean operating expenses as determined under GAAP, excluding compensation expense related to restricted stock grants and option grants. GAAP requires that these items be included in operating expenses. NewStar management uses "operating expenses, excluding non-cash equity compensation" to make operational and investment decisions, and NewStar believes that they provide useful information to investors in their evaluation of our financial performance and condition. Excluding the financial results and expenses incurred in connection with the compensation expense related to restricted stock grants and option grants eliminates unique amounts that make it difficult to assess our core performance and compare our period‑over‑period results. A reconciliation of operating expenses, excluding non-cash equity compensation to operating expenses is included on pages 11 and 12 of this release. 

1 Risk-adjusted revenue is a non-GAAP measure calculated as the sum of net interest income after provision for credit losses and non-interest income. See "Non-GAAP Measurements" at the end of this press release and page 12 for reconciliation of non-GAAP to GAAP measurements.

2 Operating expenses excluding non-cash equity compensation is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and page 12 for reconciliation of non-GAAP to GAAP measurements.

3 Efficiency ratio excluding non-cash equity compensation is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and page 12 for reconciliation of non-GAAP to GAAP measurements.

       
       
NewStar Financial, Inc.      
Consolidated Balance Sheets      
(unaudited)      
 
       
  December 31, September 30, December 31,
($ in thousands) 2012 2012 2011
Assets:      
       
Cash and cash equivalents $ 27,212 $ 34,176 $ 18,468
Restricted cash  208,667  151,387  83,815
Investments in debt securities, available-for-sale  21,127  20,803  17,817
Loans held-for-sale, net  51,602  48,534  38,278
Loans and leases, net  1,720,789  1,761,391  1,699,187
Deferred financing costs, net  19,064  12,405  11,997
Interest receivable  9,003  8,917  9,857
Property and equipment, net  433  520  740
Deferred income taxes, net  42,463  46,436  47,902
Income tax receivable  4,311  --  293
Other assets  52,399  23,907  18,029
Total assets  $2,157,070 $ 2,108,476 $ 1,946,383
       
Liabilities:      
       
Credit facilities $ 229,941  $ 396,318 $ 214,711
Term debt  1,221,764  1,009,953  1,073,105
Repurchase agreements  30,583  40,778  64,868
Accrued interest payable  3,330  3,177  2,853
Accounts payable  404  228  430
Income tax payable  --  2,452  --
Other liabilities  76,231  68,934  26,654
Total liabilities  1,562,253  1,521,840  1,382,621
Total stockholders' equity  594,817  586,636  563,762
Total liabilities and stockholders' equity $ 2,157,070 $ 2,108,476  $ 1,946,383
       
       
NewStar Financial, Inc.      
Consolidated Statements of Operations      
(unaudited)      
 
       
  Three Months Ended
  December 31, September 30, December 31,
($ in thousands, except per share amounts) 2012 2012 2011
Net interest income:      
Interest income  $ 33,000 $ 30,812 $ 30,877
Interest expense  8,984  9,074  7,371
Net interest income  24,016  21,738  23,506
Provision for credit losses  5,899  3,712  4,314
Net interest income after provision for credit losses  18,117  18,026  19,192
       
Non-interest income:      
Fee income  1,221  1,074  1,563
Asset management income  796  718  684
Gain (loss) on derivatives  (57)  (57)  (35)
Gain on sale of loans  753  --  --
Other income (loss)  1,082  1,451  (318)
Total non-interest income  3,795  3,186  1,894
Operating expenses:      
Compensation and benefits  8,038  7,832  7,823
General and administrative expenses  3,531  2,843  3,245
Total operating expenses  11,569  10,675  11,068
Income before income taxes  10,343  10,537  10,018
Income tax expense  4,131  4,471  3,650
Net income $ 6,212 $ 6,066 $ 6,368
       
Net income per share:      
Basic $ 0.13 $ 0.13 $ 0.13
Diluted $ 0.12 $ 0.11 $ 0.12
       
Weighted average shares outstanding:      
Basic  47,407,192  47,379,468  47,442,907
Diluted  52,975,040  52,921,668  52,166,449
     
     
NewStar Financial, Inc.    
Consolidated Statements of Operations    
(unaudited)    
 
     
  Year Ended December 31,
($ in thousands, except per share amounts) 2012 2011
Net interest income:    
Interest income  $ 123,945 $ 115,680
Interest expense  35,591  34,953
Net interest income  88,354  80,727
Provision for credit losses  12,651  17,312
Net interest income after provision for credit losses  75,703  63,415
     
Non-interest income:    
Fee income  4,619  3,070
Asset management income  2,984  2,635
Gain (loss) on derivatives  (315)  242
Gain on sale of loans  335  128
Other income (loss)  3,948  (2,008)
Total non-interest income  11,571  4,067
Operating expenses:    
Compensation and benefits  31,139  30,144
General and administrative expenses  15,158  13,787
Total operating expenses  46,297  43,931
Income before income taxes  40,977  23,551
Income tax expense  17,000  9,403
Net income $ 23,977 $ 14,148
     
Net income per share:    
Basic  $ 0.51 $ 0.29
Diluted $ 0.45 $ 0.27
     
Weighted average shares outstanding:    
Basic  47,370,095  48,106,032
Diluted  52,733,552  52,925,924
       
       
NewStar Financial, Inc.      
Selected Financial Data      
(unaudited)      
 
       
  Three Months Ended
  December 31, September 30, December 31,
($ in thousands) 2012 2012 2011
Performance Ratios:      
Return on average assets  1.17%  1.16%  1.32%
Return on average equity  4.18  4.15  4.50
Net interest margin, before provision  4.58  4.22  4.77
Efficiency ratio  41.71  42.95  43.57
Portfolio yield  6.88  6.45  6.61
       
Credit Quality Ratios:      
Delinquent loan rate for loans 60 days or more past due (at period end)  3.49%  3.48%  5.34%
Delinquent loan rate for accruing loans 60 days or more past due (at period end)  1.17  1.14  0.46
Non-accrual loan rate (at period end)  4.05  4.43  5.61
Non-performing asset rate (at period end)  4.77  5.13  5.61
Annualized net charge off rate (end of period loans)  3.38  (0.07)  2.89
Annualized net charge off rate (average period loans)  3.23  (0.06)  2.89
Allowance for credit losses ratio (at period end)  2.78  3.21  3.52
       
Capital and Leverage Ratios:      
Equity to assets  27.58%  27.82%  28.96%
Debt to equity  2.49x  2.47x  2.40x
Book value per share  $ 12.06  $ 11.87  $ 11.42
       
Average Balances:      
Loans and other debt products, gross  $ 1,904,385  $ 1,896,862  $ 1,852,525
Interest earning assets  2,086,945  2,051,456  1,954,471
Total assets  2,113,375  2,072,051  1,916,742
Interest bearing liabilities  1,430,521  1,416,689  1,328,051
Equity  591,570  580,934  561,825
       
Allowance for credit loss activity:      
Balance as of beginning of period  $ 59,351  $ 55,334  $ 73,038
General provision for credit losses  (1,952)  (899)  3,918
Specific provision for credit losses  7,851  4,611  396
Net (charge offs) recoveries  (15,286)  305  (13,240)
Balance as of end of period  $ 49,964  $ 59,351  $ 64,112
       
Supplemental Data (at period end):      
Investments in debt securities, gross  $ 25,298  $ 25,298  $ 25,298
Loans held-for-sale, gross  52,120  49,015  38,837
Loans held-for-investment, gross  1,796,845  1,848,318  1,820,193
Loans and investments in debt securities, gross  1,874,263  1,922,631  1,884,328
Unused lines of credit  245,483  256,696  252,288
Standby letters of credit  4,497  6,398  6,462
Total funding commitments  $ 2,124,243  $ 2,185,725  $ 2,143,078
       
Loan portfolio  $ 1,874,263  $ 1,922,631  $ 1,884,328
Loans owned by NewStar Credit Opportunities Fund  559,328  515,164  517,596
Managed loan portfolio  $ 2,433,591  $ 2,437,795  $ 2,401,924
       
Loans held-for-sale, gross  $ 52,120  $ 49,015  $ 38,837
Loans held-for-investment, gross  1,796,845  1,848,318  1,820,193
Total loans, gross  1,848,965  1,897,333  1,859,030
Deferred fees, net  (26,938)  (28,556)  (57,865)
Allowance for loan losses - general  (19,423)  (21,190)  (23,022)
Allowance for loan losses - specific  (30,213)  (37,662)  (40,678)
Total loans, net  $ 1,772,391  $ 1,809,925  $ 1,737,465
     
     
NewStar Financial, Inc.    
Selected Financial Data    
(unaudited)    
 
     
  Year Ended December 31,
($ in thousands) 2012 2011
Performance Ratios:    
Return on average assets  1.17%  0.75%
Return on average equity  4.14  2.52
Net interest margin, before provision  4.34  4.28
Efficiency ratio  46.46  51.81
Portfolio yield  6.54  6.50
     
Credit Quality Ratios:    
Annualized net charge off rate (end of period loans)  1.49  2.09
Annualized net charge off rate (average period loans)  1.43  2.15
     
Average Balances:    
Loans and other debt products, gross  $ 1,893,571  $ 1,776,195
Interest earning assets  2,036,526  1,886,165
Total assets  2,051,565  1,885,407
Interest bearing liabilities  1,414,967  1,286,256
Equity  579,083  560,617
     
Allowance for credit loss activity:    
Balance as of beginning of period  $ 64,112  $ 84,781
General provision for credit losses  (4,002)  (1,470)
Specific provision for credit losses  16,653  18,782
Net charge offs  (26,799)  (37,981)
Balance as of end of period  $ 49,964  $ 64,112
       
       
NewStar Financial, Inc.      
Non-GAAP Data      
(unaudited)      
 
       
  Adjusted
  Three Months Ended
  December 31, September 30, December 31,
($ in thousands) 2012 2012 2011
Performance Ratios:      
Efficiency ratio  35.03%  36.09%  35.00%
       
Consolidated Statement of Operations Adjustments(1):      
Operating expenses  $ 11,569  $ 10,675  $ 11,068
Less: non-cash equity compensation expense (2)  1,827  1,680  2,179
Adjusted operating expenses  $ 9,742  $ 8,995  $ 8,889
       
(1) Adjustments are pre-tax.      
(2) Non-cash compensation charge related to restricted stock grants and option grants.     
       
  Three Months Ended
  December 31, September 30, December 31,
  2012 2012 2011
Risk-adjusted revenue      
Net interest income after provision for credit losses  $ 18,117  $ 18,026  $ 19,192
Non-interest income (loss)  3,795  3,186  1,894
Risk-adjusted revenue  $ 21,912  $ 21,212  $ 21,086
     
     
NewStar Financial, Inc.    
Non-GAAP Data    
(unaudited)    
 
     
  Adjusted
  Year Ended
  December 31, December 31,
($ in thousands) 2012 2011
Performance Ratios:    
Efficiency ratio  39.14%  41.29%
     
Consolidated Statement of Operations Adjustments(1):    
Operating expenses  $ 46,297  $ 43,931
Less: non-cash equity compensation expense (2)  7,190  8,919
Adjusted operating expenses  $ 39,107  $ 35,012
     
(1) Adjustments are pre-tax.    
(2) Non-cash compensation charge related to restricted stock grants and option grants.   
             
             
NewStar Financial, Inc.            
Portfolio Data            
(unaudited)            
 
             
($ in thousands) December 31, 2012 September 30, 2012 December 31, 2011
             
Portfolio Data:            
First mortgage $ 177,462  9.5% $ 205,207  10.7%  $ 252,927  13.4%
Senior secured asset-based  201,219  10.7  199,247  10.4  114,585  6.1
Senior secured cash flow  1,448,182  77.3  1,465,568  76.2  1,439,181  76.4
Other  47,400  2.5  52,609  2.7  77,635  4.1
Total  $ 1,874,263  100.0%  $ 1,922,631  100.0%  $ 1,884,328  100.0%
             
Leveraged Finance $ 1,499,833  80.0%  $ 1,520,601  79.1% $ 1,501,175  79.7%
Business Credit  196,952  10.5  196,824  10.2  111,772  5.9
Real Estate  177,478  9.5  205,206  10.7  271,381  14.4
Total  $ 1,874,263  100.0%  $ 1,922,631  100.0% $ 1,884,328  100.0%
CONTACT: Colleen M. Banse
         500 Boylston St., Suite 1250
         Boston, MA 02116
         P. 617.848.2502
         F. 617.848.4390
         cbanse@newstarfin.com
         
         Brian J. Fischesser
         500 Boylston St., Suite 1250
         Boston, MA 02116
         P. 617.848.2512
         F. 617.848.4398
         bfischesser@newstarfin.com

company logo

4 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs