Daily News: August 2, 2012

NewStar Financial YTD Earnings More Than Double


NewStar Financial reported second-quarter 2012 net income of $5.6 million compared to net income of $3.4 million in the second quarter of 2011 and $6.1 million in the prior quarter. Earnings were negatively impacted by a $2.1 million net charge related to a settlement of litigation in connection with an impaired real estate loan. Excluding this charge, net income would have been $6.8 million in the second quarter.

For the six-month period ended June 30, 2012, net income was $11.7 million, up from $4.4 million or 168% higher compared to the same period in 2011. The company noted that its provision charge of $3 million was down from $8.6 million for the same period a year earlier.

NewStar said total new funded loan origination volume was $205 million in the second quarter compared to $241 million in the prior quarter and $250 million in the second quarter of the prior year. Lower volumes reflected weaker demand for acquisition financing from financial sponsors amid a slowdown in M&A activity. Asset-based lending and equipment finance businesses originated $38 million in the second quarter, or 21% of new loan volume retained on the balance sheet.

The managed loan portfolio decreased slightly to $2.4 billion as of June 30, 2012 from nearly $2.5 billion at March 31, 2012 as loan runoff from scheduled amortization and prepayments of existing loans offset new loan origination.

Tim Conway, NewStar’s chairman and chief executive officer said, “Origination highlights included strong growth in our asset-based lending business which largely offset higher than expected prepayments in our leveraged finance portfolio.” Conway added, “Although our earnings were impacted by the charge related to the settlement of litigation, our overall results were strong and I continue to be optimistic about the second half of the year as we continue to meet our customers’ needs and improve returns.”

To read the full NewStar Financial news release, click here.