Daily News: January 30, 2013

CapitalSource Swings to FY Profit Helped by Tax Benefit

CapitalSource reported net income for the fourth quarter 2012 of $47 million compared to net income of $9 million in the fourth quarter of 2011. Net income for the full year 2012 was $491 million compared to a net loss of $52 million for the full year 2011. Consolidated results for 2012 were helped by a tax benefit of $370 million and a provision charge that was $54 million lower than the previous year. 2011 results included an extinguishment of debt charge of $119 million.

Highlights excerpted from the news release follow:

  • The company said its Capital Source Bank segment loans and leases increased $441 million sequentially to $5.8 billion at quarter end, up almost 19% from year-end 2011 as funded loan and lease production of $843 million, compared to $623 million in the prior quarter and $665 million in the same quarter in 2011.

  • The bank’s loan loss provision was $1.4 million, compared to $3.9 million in the fourth quarter 2011. The provision was positively impacted by recoveries of $8.1 million due to the resolution of previously charged off amounts.

  • The equipment finance component of the bank’s asset-based loan and lease portfolio ended the year at $609 million, up 38% from $442 million at end of the same year-ago quarter.

    “The fourth quarter concluded a year of substantial achievement on key financial metrics and important progress on our principal strategic objectives, including growing CapitalSource Bank, returning excess
    capital to shareholders, reversing a substantial portion of our deferred tax asset valuation allowance and significantly improving and stabilizing the overall credit profile of our loan portfolio,” said James J. Pieczynski, CapitalSource CEO.

    “Looking ahead to 2013, we expect to achieve bank holding company status for the parent and conversion to a state bank commercial charter for the Bank by year end,” said Tad Lowrey, CapitalSource chairman and CEO. Though the full economic benefit will not be evident until the first quarter of 2013, we successfully redeployed $296 million of excess liquidity at the Bank to fund a substantial portion of fourth quarter loan growth, which will provide a head start for 2013 earnings,” added Lowrey.

    To read the CapitalSource news release: click here.