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NewStar Reports 26% Loan Growth for 2013

February 13, 2014, 07:23 AM
Filed Under: Corporate Earnings

NewStar Financial reported consolidated net income of $6.4 million for the fourth quarter of 2013. Net income excluding the results of the Arlington Fund, a consolidated variable interest entity ("VIE"), was $6.2 million. These results compare to net income of $6.4 million in the third quarter of 2013 and $6.2 million in the fourth quarter of 2012. Operating income before income taxes was $9.4 million for the fourth quarter of 2013 compared to $9.9 million in the third quarter of 2013 and $10.3 million in the fourth quarter of 2012.

The company also reported that consolidated net income for 2013 increased to $24.6 million compared to $24.0 million in 2012. Net income excluding the results of the Arlington Fund was $24.3 million for 2013.

Performance Highlights:

  • Loan Growth - Loans outstanding were $2.37 billion, up 15% from the prior quarter and 26% for the full year.
  • New Loan Volume - New funded loan volume was $549 million, including a portfolio purchase, in the fourth quarter and $1.3 billion for the year, up 26% from 2012.
  • Credit Costs - Provision for credit losses were consistent with the prior quarter and down $2.9 million, or 23%, for the full year.
  • Asset Quality - NPAs increased to 3.6% of loans from 2.7% for the prior quarter, but were down from 4.8% of loans at December 31, 2012.
  • Revenue - Risk-adjusted revenue1 was up slightly from the prior quarter and 4% higher for the year due to an increase in fee revenue and lower credit costs.
  • Net Interest Margin - Margin widened slightly to 3.41% for the fourth quarter from 3.35% in the prior quarter, but narrowed to 3.90% from 4.34% for the year as improvement in portfolio yield was more than offset by higher cost of funds and leverage.

 "I am pleased to report that we finished the year with another quarter of solid operating results highlighted by strong loan growth and consistent earnings. Origination volume increased to $1.3 billion for the year and net loan growth was 26%. Earnings for the year increased nearly 3%," said Tim Conway, NewStar's Chairman and Chief Executive Officer. "We also continued to make significant progress on other key objectives through the year, including re-levering the balance sheet, launching a new managed credit fund, and significantly reducing NPAs," he added. "On the funding side, we completed several milestone transactions, increasing balance sheet leverage to 3.2x and received a BB- rating from S&P. Our stock has also performed well as the market continues to recognize the value of asset origination platforms like NewStar," he concluded.

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