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8-K - FORM 8-K FILING DOCUMENT - CAPITALSOURCE INC | document.htm |
EXHIBIT 99.1
CapitalSource Reports Fourth Quarter and Full Year 2012 Results
- Fourth Quarter Net Income of $47 Million or $0.22 Per Share
- 19% Annual Loan Growth at CapitalSource Bank Following 4Q Loan Production of $843 Million
- Net Interest Margin at CapitalSource Bank of 4.84% in 4Q
- 8 Million Shares Repurchased in 4Q - Outstanding Shares Reduced by 35% Since December 2010
- $104 Million Special Dividend Paid in December 2012 ($0.50 Per Share) Increased Total Capital Returned to Shareholders to $919 Million Since December 2010
LOS ANGELES, Jan. 29, 2013 (GLOBE NEWSWIRE) -- CapitalSource Inc. (NYSE:CSE) today announced financial results for the fourth quarter of 2012. The Company reported net income for the quarter of $47 million or $0.22 per diluted share, which included $0.06 per diluted share of non-recurring tax benefits, compared to net income of $31 million or $0.14 per diluted share in the prior quarter and net income of $9 million or $0.03 per diluted share in the fourth quarter of 2011. Net income for the full year 2012 was $491 million or $2.13 per diluted share, compared to a net loss of $52 million or $0.17 per diluted share for the full year 2011.
"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. "Our return of capital initiative continued in the fourth quarter, with payment of a $0.50 per share special dividend in December and eight million additional shares repurchased. Since December of 2010 we have returned over $900 million to shareholders in the form of dividends and share repurchases, while retiring 35% of our outstanding shares," concluded Pieczynski.
"We had another solid quarter at CapitalSource Bank to close out 2012: 4Q loan growth of $441 million (8%) resulted in annual growth of 19%, our net interest margin was 4.84% for the quarter and return on assets was 1.8%," said Tad Lowrey, CapitalSource Bank Chairman and CEO. "Pre-tax income for the full year was up 21% over the prior year. Total assets and deposits each increased by 9% and our credit profile improved significantly, as evidenced by total nonperforming assets of just 64 basis points at year-end. 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," added Lowrey.
"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. We enter the new year with a very strong balance sheet, on both a consolidated and Bank only basis - with high capital levels, growing earnings, a solid credit profile and substantial capacity to continue returning excess Parent capital to shareholders," said John Bogler, CapitalSource CFO. "Strong Parent cash flow supported our capital management activities in the fourth quarter. We were able to return nearly $170 million to shareholders via dividends and share repurchases and still had unrestricted cash at the Parent of $117 million at quarter end."
CAPITALSOURCE BANK SEGMENT
This segment includes our commercial lending and banking business activities in CapitalSource Bank.
Fourth Quarter 2012 Highlights
- Net Income was $34 million, unchanged from the prior quarter.
- Loans and Leases increased $441 million as funded loan and lease production of $843 million, compared to $623 million in the prior quarter, raised full year loan growth to $909 million. Total loans and leases were $5.8 billion at quarter end, an increase of 19% since December 31, 2011.
- Net Interest Margin was 4.84%, a decrease of 13 basis points from the prior quarter, primarily due to lower yields on average balances for new loans and investments. Loan yield declined 15 bps in the quarter, but was partially offset by an increase in the average loan balance of $111 million. The full impact of the strong loan growth in 4Q will not be evident until 1Q'13, as a significant portion of the loan production occurred near year end.
- Capital - The Tier 1 leverage ratio increased 24 basis points to 13.06%, while the total risk-based capital ratio decreased 19 basis points to 16.50% due to loan growth, funded in large part by liquid investments, which resulted in a shift in asset mix from lower risk weighted liquid assets to higher risk-weighted loans.
- Credit Quality - Loan loss provision was $1.4 million, compared to $0.3 million in the prior quarter. The provision was positively impacted by recoveries of $8.1 million due to the resolution of previously charged off amounts, compared to $4.9 million of recoveries in the prior quarter. Net charge-offs were $1.0 million in the quarter, compared to $3.6 million in the prior quarter. Non-accrual loans decreased to $42 million or 0.74% of loans at quarter end, compared to $64 million or 1.21% of loans at the end of the prior quarter. Non-performing assets declined by $23 million to $47 million or 0.64% of total assets. The allowance for loan and lease losses was $99 million or 1.76% of loans at quarter end, compared to $98 million or 1.89% of loans at the end of the prior quarter.
Fourth Quarter Details
Quarter Ended | |||||||
12/31/12 vs 09/30/12 | 12/31/12 vs 12/31/11 | ||||||
12/31/2012 | 9/30/2012 | 12/31/2011 | $ | % | $ | % | |
($ in thousands) | |||||||
Interest income | $98,544 | $99,807 | $94,497 | $(1,263) | (1)% | $4,047 | 4% |
Interest expense | 15,122 | 15,521 | 15,998 | 399 | 3 | 876 | 5 |
Provision for loan losses | 1,447 | 273 | 3,903 | (1,174) | (430) | 2,456 | 63 |
Non-interest income | 18,243 | 13,585 | 13,743 | 4,658 | 34 | 4,500 | 33 |
Non-interest expense | 44,262 | 39,964 | 41,455 | (4,298) | (11) | (2,807) | (7) |
Income tax expense | 22,008 | 23,782 | 19,548 | 1,774 | 7 | (2,460) | (13) |
Net income | 33,948 | 33,852 | 27,336 | 96 | — | 6,612 | 24 |
Net Interest Margin was 4.84%, a decrease of 13 basis points from the prior quarter. Interest income was $99 million, a decrease of $1 million from the prior quarter primarily due to lower investment yield. NIM for the full year 2012 was 4.97%. Net interest income was $83 million, a decrease of $1 million from the prior quarter.
Quarter Ended | ||||||
12/31/2012 | 9/30/2012 | |||||
Net Interest Margin |
Average Balance |
Interest Income/Expense |
Average Yield/Cost |
Average Balance |
Interest Income/Expense |
Average Yield/Cost |
($ in thousands) | ||||||
Loans | 5,342,683 | 91,328 | 6.80%(1) | 5,231,242 | 91,367 | 6.95% |
Investment securities | 1,191,851 | 6,770 | 2.26 | 1,206,868 | 8,123 | 2.68 |
Cash and other interest-earning assets | 324,703 | 446 | 0.55 | 314,439 | 317 | 0.40 |
Total interest-earning assets | 6,859,237 | 98,544 | 5.72 | 6,752,549 | 99,807 | 5.88 |
Deposits | 5,557,241 | 12,366 | 0.89 | 5,469,501 | 12,738 | 0.93 |
Borrowings | 597,772 | 2,756 | 1.83 | 597,674 | 2,783 | 1.85 |
Total interest-bearing liabilities | 6,155,013 | 15,122 | 0.98 | 6,067,175 | 15,521 | 1.02 |
Net interest income / spread | 83,422 | 4.74% | 84,286 | 4.86% | ||
Net interest margin | 4.84% | 4.97% | ||||
(1) Loan yield for the quarter included 51 basis points of fee and discount accretion, compared to 70 basis points in the prior quarter |
Non-interest Expense was $44 million, an increase of $4 million from the prior quarter. Operating expenses were $41 million, an increase of $4 million from the prior quarter due primarily to year-end incentive compensation accruals and a return to more normal servicing expense levels compared to the prior quarter.
Income Tax Expense was $22 million for the quarter, compared to $24 million in the prior quarter. The effective tax rate for the quarter was 39% compared to 41% in the prior quarter.
Cash and Investments decreased by $296 million to $1.4 billion as available liquidity was redeployed to fund net loan growth. The portfolio yield at quarter end increased 20 basis points to 2.21%, primarily due to a lower mix of cash and cash equivalents, partially offset by lower yields on our investment portfolio.
Cash and Investments | 12/31/2012 | 9/30/2012 | ||||
($ in thousands) |
Balance |
Yield |
Duration (Years) |
Balance |
Yield |
Duration (Years) |
Cash and cash equivalents and restricted cash | 230,305 | 0.17% | 0.0 | 508,862 | 0.26% | -- |
Agency callable notes | 5,008 | 2.48% | 2.8 | 5,031 | 2.50% | 3.1 |
Agency debt | — | — | 0.0 | 23,359 | 1.90% | 0.1 |
Agency MBS | 978,513 | 2.32% | 2.7 | 966,856 | 2.51% | 2.6 |
Non-agency MBS | 41,347 | 4.21% | 2.1 | 45,396 | 4.26% | 2.0 |
CMBS | 108,233 | 4.00% | 1.9 | 108,066 | 4.00% | 2.1 |
Asset-backed securities | 9,592 | 11.19% | 0.8 | 10,985 | 11.22% | 0.9 |
U.S. Treasury and agency securities | 18,315 | 2.38% | 6.0 | 18,296 | 2.56% | 6.1 |
1,391,313 | 2.21% | 2.2 | 1,686,851 | 2.01% | 1.8 |
Loans and Leases increased $441 million (8.2%) from the prior quarter. For the full year 2012, loans and leases increased $909 million (18.6%) as detailed below.
Quarter Ended | |||
Loan and Lease Roll Forward(1) | 12/31/2012 | 9/30/2012 | 12/31/2011 |
($ in thousands) | |||
Beginning balance | 5,362,665 | 5,338,673 | 4,551,561 |
New fundings | 843,208 | 623,445 | 664,819 |
Existing loans and leases | |||
Principal repayments, net | (381,240) | (535,047) | (296,289) |
Leased equipment depreciation | (3,036) | (2,307) | (2,012) |
Transfers to held for sale, net | — | (13,260) | (100,611) |
Loan sales | (15,810) | (44,285) | (6,411) |
Transfers to foreclosed assets | (1,120) | (932) | (849) |
Net charge-offs | (977) | (3,622) | (27,937) |
Loans purchased from the Parent | — | — | 112,021 |
Ending balance | 5,803,690 | 5,362,665 | 4,894,292 |
(1) Includes operating leases and equity investments related to operating leases which are included in other assets and other investments, respectively, on our balance sheet |
Quarter Ended | |||
Loan and Lease Portfolio Detail | 12/31/2012 | 9/30/2012 | 12/31/2011 |
($ in thousands) | |||
Healthcare Asset Based | 159,143 | 155,444 | 213,047 |
Equipment Finance(1) | 609,350 | 561,607 | 441,773 |
Lender Finance & Timeshare | 844,776 | 763,144 | 750,667 |
Insurance Premium Finance | 17,236 | 11,083 | — |
Other Asset Based | 63,501 | 46,060 | 44,970 |
Total Asset Based | 1,694,006 | 1,537,338 | 1,450,457 |
General Cash Flow | 187,637 | 216,213 | 239,944 |
Technology Cash Flow | 612,892 | 595,689 | 448,971 |
Healthcare Cash Flow | 377,694 | 300,210 | 286,057 |
Security Cash Flow | 306,134 | 272,531 | 306,533 |
Professional Practice | 176,480 | 158,608 | 110,240 |
Total Cash Flow | 1,660,837 | 1,543,251 | 1,391,745 |
General Commercial Real Estate | 634,561 | 670,994 | 476,407 |
Multi Family | 903,048 | 867,654 | 856,494 |
Healthcare Real Estate | 671,060 | 519,042 | 554,645 |
Small Business | 240,178 | 224,386 | 164,544 |
Total Real Estate | 2,448,847 | 2,282,076 | 2,052,090 |
Total | 5,803,690 | 5,362,665 | 4,894,292 |
(1) Includes $137 million of operating leases and related equity investments as of December 31, 2012 and $102 million as of September 30, 2012, which are included in other assets and other investments, respectively, on our balance sheet |
Deposits were $5.6 billion at quarter end, an increase of $44 million from the prior quarter. The weighted average interest rate on total deposits declined 4 basis points to 0.87% at quarter end. The weighted average rate of new and renewing time deposits in the quarter was 0.84%, compared to 0.86% in the prior quarter.
FHLB Borrowings were $595 million, a decrease of $5 million from the prior quarter. The weighted average rate of FHLB borrowings was 1.80% as of December 31, 2012, compared to 1.81% at the end of the prior quarter and the average remaining maturity was 3.2 years, compared to 3.4 years at the end of the prior quarter.
Allowance for Loan and Lease Losses was $99 million or 1.76% of the loan portfolio, an increase of $0.5 million from the prior quarter as detailed below.
Quarter Ended | ||||
Allowance for Loan and Lease Losses | 12/31/2012 | |||
($ in thousands) | General | Specific | Total | % Loans |
Beginning balance | 90,154 | 8,281 | 98,435 | |
Provision / (Release) | 6,919 | (5,472) | 1,447 | |
Charge-offs, net | — | (977) | (977) | |
Ending balance | 97,073 | 1,832 | 98,905 | 1.76% |
Quarter Ended | ||||
9/30/2012 | ||||
General | Specific | Total | % Loans | |
Beginning balance | 87,912 | 13,872 | 101,784 | |
Provision / (Release) | 2,242 | (1,969) | 273 | |
Charge-offs, net | — | (3,622) | (3,622) | |
Ending balance | 90,154 | 8,281 | 98,435 | 1.89% |
Non-performing Assets were $47 million or 0.64% of total assets, a decrease of $23 million (33%) from the prior quarter and a decrease of $80 million (63%) from one year ago. Non-accrual loans were $42 million, a decrease of $22 million (35%) from the prior quarter and a decrease of $79 million (65%) from one year ago.
Non-performing Assets | 12/31/2012 | 9/30/2012 | ||
Balance | % of Total Assets | Balance | % of Total Assets | |
($ in thousands) | ||||
Non-accrual loans - current | 15,477 | 0.21% | 26,836 | 0.37% |
Non-accrual loans - delinquent 30-89 days | 20,210 | 0.27 | 29,948 | 0.41 |
Non-accrual loans - delinquent 90+ days | 6,330 | 0.09 | 7,462 | 0.10 |
Total non-accrual loans | 42,017 | 0.57 | 64,246 | 0.88 |
REO | 5,135 | 0.07 | 6,050 | 0.08 |
Total non-performing assets | 47,152 | 0.64% | 70,296 | 0.96% |
Troubled Debt Restructurings were $46 million, a decrease of $20 million (30%) from the prior quarter. For the full year 2012, TDRs declined $47 million (51%). TDRs on accrual status decreased to $15 million from $20 million in the prior quarter. Non-accruing TDRs were $31 million (included in the "Non-accrual loans" in the table above), $12 million of which were current as to payment status, compared to $16 million in the prior quarter.
OTHER COMMERCIAL FINANCE SEGMENT
This segment includes the CapitalSource Inc. loan portfolio and other business activities at the Parent Company.
Fourth Quarter 2012 Details
Net Income was $14 million, compared to a net loss of $2 million in the prior quarter. On a pretax basis, earnings increased $9 million due to higher investment income and lower REO related expenses as summarized below.
Quarter Ended | |||||||
12/31/12 vs. 9/30/12 | 12/31/12 vs. 12/31/11 | ||||||
12/31/2012 | 9/30/2012 | 12/31/2011 | $ | % | $ | % | |
($ in thousands) | |||||||
Interest income | 16,050 | 16,899 | 24,088 | (849) | (5)% | (8,038) | (33)% |
Interest expense | 3,750 | 3,992 | 6,965 | 242 | 6 | 3,215 | 46 |
Provision for loan losses | 7,428 | 8,686 | 7,632 | 1,258 | 14 | 204 | 3 |
Non-interest income | 7,998 | 1,439 | 22,372 | 6,559 | 456 | (14,374) | (64) |
Non-interest expense | 11,118 | 13,037 | 49,886 | 1,919 | 15 | 38,768 | 78 |
Income tax (benefit) expense | (11,857) | (5,779) | 263 | 6,078 | 105 | 12,120 | 4,608 |
Net income (loss) | 13,609 | (1,598) | (18,286) | 15,207 | 952 | 31,895 | 174 |
Interest Income was $16 million, a decrease of $1 million from the prior quarter due primarily to a lower average loan balance. Interest income for the full year 2012 declined by $62 million (44%) as total loans declined by 46% over the period.
Non-interest Income was $8 million compared to $1.4 million in the prior quarter. The current quarter included a $1.5 million gain on the sale of loans and gains of $6.7 million on the sale of equity investments and dividend income on equity investments. The equity investments on the Parent Company balance sheet which produced capital gains and dividends in the fourth quarter are legacy assets and any future gains or dividends are not predictable.
Non-interest Expense was $11 million, compared to $13 million in the prior quarter. Operating expenses were $12 million, an increase of $1 million from the prior quarter due primarily to higher professional fees. Non-operating expenses resulted in income of $1 million, a net expense decrease of $3 million from the prior quarter, due to $4.3 million of gains on the sale of foreclosed assets.
Unrestricted Cash at quarter end was $117 million, a decrease of $39 million from the prior quarter. The largest sources of cash were loan sales and principal collections of $138 million related to non-securitized loans. The principal uses of cash in the quarter were share repurchases totaling $61 million and a special dividend totaling $104 million.
Loans decreased by $161 million from the prior quarter as detailed below. The securitized loan balance was $355 million, a decrease of $56 million from the prior quarter. The non-securitized loan balance was $171 million, a decrease of $105 million from the prior quarter. For the full year 2012, loans decreased by $445 million (46%).
Quarter Ended | |||
Loan and Lease Roll Forward | 12/31/2012 | 9/30/2012 | 12/31/2011 |
($ in thousands) | |||
Beginning balance | 687,576 | 801,127 | 1,284,101 |
Existing loans and leases | |||
Principal repayments, net | (58,285) | (46,939) | (97,348) |
Transfers to held for sale, net | (22,698) | (39,930) | (62,932) |
Loan sales | (63,019) | (14,616) | — |
Transfers to foreclosed assets | — | — | (1,880) |
Net charge-offs | (17,255) | (12,066) | (38,319) |
Intercompany sales | — | — | (112,021) |
Ending balance | 526,319 | 687,576 | 971,601 |
Allowance for Loan and Lease Losses was $18 million, or 3.53% of the loan portfolio, a decline of $10 million from the prior quarter primarily due to charge-offs as detailed below.
Quarter Ended | ||||
Allowance for Loan and Lease Losses | 12/31/2012 | |||
($ in thousands) | General | Specific | Total | % Loans |
Beginning balance | 16,663 | 11,532 | 28,195 | |
(Release) / Provision | (2,946) | 10,374 | 7,428 | |
Charge-offs, net | — | (17,255) | (17,255) | |
Ending balance | 13,717 | 4,651 | 18,368 | 3.53% |
Quarter Ended | ||||
9/30/2012 | ||||
General | Specific | Total | % Loans | |
Beginning balance | 24,647 | 6,928 | 31,575 | |
(Release) / Provision | (7,984) | 16,670 | 8,686 | |
Charge-offs, net | — | (12,066) | (12,066) | |
Ending balance | 16,663 | 11,532 | 28,195 | 4.15% |
Non-performing Assets were $83 million, a decline of $26 million (24%) from the prior quarter due to declines in both non-accruals and REO as detailed below. For the full year 2012, non-performing assets declined $101 million (55%). As of December 31, 2012, $46 million of non-accrual loans were current as to payment status. All collections on those loans are applied to the outstanding principal balance.
Non-performing Assets | 12/31/2012 | 9/30/2012 | ||
Balance | % of Total Assets | Balance | % of Total Assets | |
($ in thousands) | ||||
Non-accrual loans current | 46,304 | 3.89% | 60,576 | 4.31% |
Non-accrual loans - delinquent 30-89 days | 56 | — | 58 | — |
Non-accrual loans - delinquent 90+ days | 35,002 | 2.95 | 38,085 | 2.70 |
Total non-accrual loans | 81,362 | 6.84 | 98,719 | 7.01 |
Accruing loans - delinquent 90+ days | -- | -- | -- | -- |
REO | 1,844 | 0.15 | 10,264 | 0.73 |
Total non-performing assets | 83,206 | 6.99% | 108,983 | 7.74% |
Troubled Debt Restructurings were $101 million, a decrease of $53 million from the prior quarter. For the full year 2012, TDRs declined $116 million (53%). TDRs on accrual status decreased by $41 million to $68 million. Non-accruing TDRs were $33 million (included in the "Non-accrual loans" in the table above), though $21 million were current as to payment status compared to $30 million in the prior quarter.
CONSOLIDATED
Fourth Quarter 2012 Details
Net Income was $47 million or $0.22 per diluted share, which included $0.06 per diluted share of non-recurring tax benefits, compared to net income of $31 million or $0.14 per diluted share in the prior quarter as detailed below. Pre-tax income was $58 million compared to $49 million in the prior quarter.
Quarter Ended | |||||||
12/31/12 vs. 9/30/12 | 12/31/12 vs. 12/31/11 | ||||||
12/31/2012 | 9/30/2012 | 12/31/2011 | $ | % | $ | % | |
($ in thousands) | |||||||
Interest income | 114,921 | 115,234 | 119,337 | (313) | — | (4,416) | (4)% |
Interest expense | 18,872 | 19,513 | 22,963 | 641 | 3 | 4,091 | 18 |
Provision for loan and lease losses | 8,875 | 8,959 | 11,535 | 84 | 1 | 2,660 | 23 |
Non-interest income | 20,549 | 9,297 | 16,315 | 11,252 | 121 | 4,234 | 26 |
Non-interest expense | 49,423 | 47,009 | 72,407 | (2,414) | (5) | 22,984 | 32 |
Income tax expense | 11,224 | 18,003 | 19,811 | 6,779 | 38 | 8,587 | 43 |
Net income | 47,076 | 31,047 | 8,936 | 16,029 | 52 | 38,140 | 427 |
Interest Income was $115 million, unchanged from the prior quarter. Interest income for the full year 2012 was $468 million, compared to $510 million in 2011.
Net Interest Margin was 5.00%, an increase of 1 basis point from the prior quarter due primarily to recovery of non-accrual interest. Net interest income was $96 million, unchanged from the prior quarter. Net interest income for the full year increased 8% to $389 million, compared to $360 million in 2011.
Non-interest Income was $21 million compared to $9 million in the prior quarter. The current quarter included a $2.5 million gain on the sale of loans and $6.7 million of gains on the sale of equity investments and dividend income on equity investments. The equity investments on the Company's balance sheet which produced capital gains and dividends in the fourth quarter are legacy assets and any future gains or dividends are not predictable.
Non-Interest Expense was $49 million, an increase of $2 million from the prior quarter as detailed below. Total operating expenses were $47 million, compared to $42 million in the prior quarter due to higher incentive compensation expense and professional fees. Non-operating expenses were $3 million, compared to $5 million in the prior quarter due to $4.3 million of non-recurring gains on the sale of foreclosed assets. For the full year 2012, total operating expenses declined $25.6 million (12%) to $186 million.
Quarter Ended | |||
Non-Interest Expense | 12/31/2012 | 9/30/2012 | % Change |
($ in thousands) | |||
Compensation and benefits | $28,083 | $25,523 | (10)% |
Professional fees | 3,656 | 2,469 | (48) |
Occupancy expenses | 3,438 | 3,422 | — |
FDIC fees and assessments | 1,538 | 1,507 | (2) |
General depreciation and amortization | 1,398 | 1,330 | (5) |
Other administrative expenses | 8,608 | 7,660 | (12) |
Total operating expenses | 46,721 | 41,911 | (11) |
Leased equipment depreciation | 3,036 | 2,307 | (32) |
Expense of real estate owned and other foreclosed assets, net | 211 | 2,308 | 91 |
Other non-interest expense, net | (545) | 483 | 213 |
Total non-interest expense | $49,423 | $47,009 | (5)% |
Loans and Leases increased $280 million from the prior quarter as detailed below. For the full year loans and leases increased by $464 million (8%).
Quarter Ended | |||
Loan and Lease Roll Forward (1) | 12/31/2012 | 9/30/2012 | 12/31/2011 |
($ in thousands) | |||
Beginning balance | 6,050,241 | 6,139,800 | 5,835,662 |
New fundings | 843,208 | 623,445 | 664,819 |
Existing loans and leases | |||
Principal repayments, net | (439,525) | (581,985) | (393,637) |
Leased equipment depreciation | (3,036) | (2,307) | (2,012) |
Transfers to held for sale, net | (22,698) | (53,190) | (163,543) |
Loan sales | (78,829) | (58,902) | (6,411) |
Transfers to foreclosed assets | (1,120) | (932) | (2,729) |
Net charge-offs | (18,232) | (15,688) | (66,256) |
Ending balance | 6,330,009 | 6,050,241 | 5,865,893 |
(1) Includes operating leases and equity investments related to operating leases which are included in Other Assets and Other Investments on our balance sheet |
Allowance for Loan and Lease Losses was $117 million, or 1.91% of the loan portfolio, compared to $127 million, or 2.15% at the end of the prior quarter.
Net Charge-offs were $18 million, an increase of $3 million from the prior quarter. Net charge-offs as a percentage of average loans for the twelve month period ended December 31, 2012 were 1.27%, compared to 2.09% for the twelve month period ended September 30, 2012 and 4.62% for the period ending December 31, 2011.
Quarter Ended | ||||
Allowance for Loan and Lease Losses | 12/31/2012 | |||
($ in thousands) | General | Specific | Total | % Loans |
Beginning balance | 106,817 | 19,813 | 126,630 | |
Provision | 3,973 | 4,902 | 8,875 | |
Charge-offs, net | — | (18,232) | (18,232) | |
Ending balance | 110,790 | 6,483 | 117,273 | 1.91% |
Quarter Ended | ||||
9/30/2012 | ||||
General | Specific | Total | % Loans | |
Beginning balance | 112,559 | 20,800 | 133,359 | |
(Release) / Provision | (5,742) | 14,701 | 8,959 | |
Charge-offs, net | — | (15,688) | (15,688) | |
Ending balance | 106,817 | 19,813 | 126,630 | 2.15% |
Non-performing Assets were $130 million, a decline of $49 million (27%) from the prior quarter primarily due to a $40 million decrease in non-accrual loans. For the full year 2012, non-performing assets declined $181 million (58%). As of December 31, 2012, $62 million of non-accrual loans were current as to payment status. All collections on those loans are applied to the outstanding principal balance.
Non-performing Assets | 12/31/2012 | 9/30/2012 | ||
Balance | % of Total Assets | Balance | % of Total Assets | |
($ in thousands) | ||||
Non-accrual loans - current | 61,781 | 0.72% | 87,412 | 1.00% |
Non-accrual loans - delinquent 30-89 days | 20,266 | 0.24 | 30,006 | 0.35 |
Non-accrual loans - delinquent 90+ days | 41,332 | 0.48 | 45,547 | 0.53 |
Total non-accrual loans | 123,379 | 1.44 | 162,965 | 1.88 |
Accruing loans - delinquent 90+ days | -- | -- | -- | -- |
REO | 6,979 | 0.08 | 16,314 | 0.19 |
Total non-performing assets | 130,358 | 1.52% | 179,279 | 2.07% |
Troubled Debt Restructurings were $147 million, a decrease of $72 million from the prior quarter. For the full year 2012, TDRs declined $163 million (53%). TDRs on accrual status decreased by $46 million to $83 million. Non-accruing TDRs were $64 million (included in the "Non-accrual loans" in the table above), though $33 million were current as to payment status, compared to $46 million in the prior quarter.
Valuation Allowance related to the Company's deferred tax assets was $129 million, a decrease of $30 million from the end of the prior quarter, primarily due to changes in DTA balances for which we maintain a full valuation allowance. The net deferred tax asset at quarter end after subtracting the valuation allowance was $362 million, a decrease of $9 million from the prior quarter.
Consolidated GAAP Tax Expense was $11 million, which equates to an effective tax rate of 19.3%. The reduction from a more normalized rate of 40-41% was caused primarily by adjustments to the tax valuation allowance for actual and expected use of capital loss carry forwards, a true-up of prior quarter state taxes in connection with the annual process for revising state apportionment factors, and a reduction in the state FIN 48 liability.
Book Value Per Share was $7.75 at the end of the quarter, a decrease of $0.34 from the end of the prior quarter due primarily to the special dividend of $0.50 per share paid partially offset by net income. Total shareholders' equity was $1.6 billion at the end of the quarter, including intangible assets of $173 million, which was a decrease of $118 million or $0.34 per share from the prior quarter.
Tangible Book Value Per Share was $6.93 at the end of the quarter, a decrease of $0.36 from the end of the prior quarter due primarily to the special dividend of $0.50 per share partially offset by net income.
Average Diluted Shares Outstanding were 213.5 million shares for the quarter, compared to 226.4 million shares for the prior quarter. Average diluted shares for the full year 2012 were 230.2 million. Total outstanding shares at December 31, 2012 were 209.6 million.
Share Repurchases during the quarter totaled 8 million shares at a total cost of $61 million. Total share repurchases during 2012 were $343 million. Since December 2010 through December 31, 2012, the Company repurchased 120.9 million shares, at an average purchase price of $6.53 per share, resulting in a net reduction in outstanding shares of 35%. The remaining authority for share repurchases under the Board approved share buyback program as of December 31, 2012 was $226.4 million.
Any share repurchases made pursuant to the Company's stock repurchase program will be made through open market purchases or privately negotiated transactions from time to time until December 2013. The amount and exact timing of any repurchases will depend upon market conditions and other factors. There are no assurances the Company will repurchase any shares during the period and the plan may be suspended or discontinued at any time.
Quarterly Cash Dividend of $0.01 per common share was paid on December 26, 2012 to common shareholders of record on December 20, 2012.
Special Cash Dividend of $0.50 per common share was paid on December 26, 2012 to common shareholders of record on December 20, 2012.
Conference Call Details
A conference call to discuss the Company's fourth quarter and full year 2012 results will be hosted on Tuesday, January 29, 2013 at 2:30 p.m. PST / 5:30 p.m. EST. Interested parties may access the call via webcast on the Investor Relations section of the CapitalSource web site at http://ir.capitalsource.com. An audio replay will also be available on the website from approximately 5:00 p.m. PST / 8:00 p.m. EST January 29, 2013 through July 30, 2013.
CapitalSource Bank Call Report
CapitalSource Bank will file its Consolidated Reports of Condition and Income for a Bank With Domestic Offices Only-FFIEC 041, for the quarter ended December 31, 2012 (the Call Report) with the Federal Deposit Insurance Corporation (FDIC) on January 30, 2013. The Call Report will subsequently be posted by the FDIC on its website at http://cdr.ffiec.gov/Public/.
About CapitalSource
CapitalSource Inc. (NYSE:CSE), through its wholly owned subsidiary CapitalSource Bank, makes commercial loans to small and middle-market businesses nationwide and offers depository products and services in 21 retail branches in southern and central California. CapitalSource, headquartered in Los Angeles, CA, had total assets of $8.5 billion and total deposits of $5.6 billion as of December 31, 2012. For more information, visit www.capitalsource.com.
Forward Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, strategies, goals, and projections and including statements about our expectations regarding converting CapitalSource Bank's charter to a commercial charter, all which are subject to numerous assumptions, risks, and uncertainties. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words 'anticipate,' 'assume,' 'intend,' 'believe,' 'expect,' 'estimate,' 'forecast,' 'plan,' 'position,' 'project,' 'will,' 'should,' 'would,' 'seek,' 'continue,' 'outlook,' 'look forward,' and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding preliminary and future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including without limitation: we may not receive the regulatory approvals needed to become a bank holding company within our expected timeframe or at all and alternative approaches to charter conversion may be unavailable or may not succeed; and other factors described in CapitalSource's 2011 Annual Report on Form 10-K and documents subsequently filed by CapitalSource with the Securities and Exchange Commission. All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law.
CapitalSource Fourth Quarter 2012 - Financial Supplement | ||
CapitalSource Inc. | ||
Consolidated Balance Sheets | ||
($ in thousands) | ||
December 31, | ||
2012 | 2011 | |
(Unaudited) | ||
ASSETS | ||
Cash and cash equivalents | $178,880 | $231,701 |
Interest-bearing deposits in other banks | 110,208 | 186,868 |
Other short-term investments | 9,998 | 39,979 |
Restricted cash | 104,044 | 65,484 |
Investment securities: | ||
Available-for-sale, at fair value | 1,079,025 | 1,188,002 |
Held-to-maturity, at amortized cost | 108,233 | 111,706 |
Total investment securities | 1,187,258 | 1,299,708 |
Loans held for sale | 22,719 | 193,021 |
Loans held for investment | 6,192,858 | 5,758,990 |
Less deferred loan fees and discounts | (53,628) | (68,843) |
Total loans held for investment | 6,139,230 | 5,690,147 |
Less allowance for loan and lease losses | (117,273) | (153,631) |
Total loans held for investment, net | 6,021,957 | 5,536,516 |
Interest receivable | 29,112 | 38,796 |
Other investments | 60,363 | 81,245 |
Goodwill | 173,135 | 173,135 |
Deferred tax asset, net | 362,283 | 45,445 |
Other assets | 289,048 | 408,170 |
Total assets | $8,549,005 | $8,300,068 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Liabilities: | ||
Deposits | 5,579,270 | 5,124,995 |
Term debt | 177,188 | 309,394 |
Other borrowings | 1,005,738 | 1,015,099 |
Other liabilities | 161,637 | 275,434 |
Total liabilities | 6,923,833 | 6,724,922 |
Shareholders' equity: | ||
Preferred stock (50,000,000 shares authorized; no shares outstanding) | — | — |
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 209,551,674 and 256,112,205 shares issued and outstanding, respectively) | 2,096 | 2,561 |
Additional paid-in capital | 3,157,533 | 3,487,911 |
Accumulated deficit | (1,559,107) | (1,934,732) |
Accumulated other comprehensive income, net | 24,650 | 19,406 |
Total shareholders' equity | 1,625,172 | 1,575,146 |
Total liabilities and shareholders' equity | 8,549,005 | 8,300,068 |
CapitalSource Fourth Quarter 2012 - Financial Supplement | |||||
CapitalSource Inc. | |||||
Consolidated Statements of Comprehensive Income | |||||
(Unaudited) | |||||
($ in thousands, except per share data) | |||||
Three Months Ended | Year Ended | ||||
December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |
Net interest income: | |||||
Interest income: | |||||
Loans and leases | 105,960 | 105,066 | 108,299 | 428,397 | 452,607 |
Investment securities | 8,493 | 9,784 | 10,849 | 38,230 | 55,524 |
Other | 468 | 384 | 189 | 1,587 | 2,259 |
Total interest income | 114,921 | 115,234 | 119,337 | 468,214 | 510,390 |
Interest expense: | |||||
Deposits | 12,366 | 12,738 | 13,406 | 51,035 | 53,609 |
Borrowings | 6,506 | 6,775 | 9,557 | 28,372 | 96,401 |
Total interest expense | 18,872 | 19,513 | 22,963 | 79,407 | 150,010 |
Net interest income | 96,049 | 95,721 | 96,374 | 388,807 | 360,380 |
Provision for loan and lease losses | 8,875 | 8,959 | 11,535 | 39,442 | 92,985 |
Net interest income after provision for loan and lease losses | 87,174 | 86,762 | 84,839 | 349,365 | 267,395 |
Non-interest income: | |||||
Loan fees | 6,662 | 4,174 | 4,799 | 18,561 | 16,234 |
Leased equipment income | 4,298 | 3,299 | 2,774 | 14,113 | 3,748 |
Gain on investments, net | 6,453 | 1,856 | 7,200 | 7,382 | 58,581 |
Loss on derivatives, net | (174) | (978) | (2,551) | (823) | (6,813) |
Other non-interest income, net | 3,310 | 946 | 4,093 | 10,613 | 20,944 |
Total non-interest income | 20,549 | 9,297 | 16,315 | 49,846 | 92,694 |
Non-interest Expense: | |||||
Compensation and benefits | 28,083 | 25,523 | 35,141 | 105,430 | 125,665 |
Professional fees | 3,656 | 2,469 | 7,777 | 12,814 | 31,182 |
Occupancy expenses | 3,438 | 3,422 | 3,817 | 16,840 | 15,480 |
FDIC fees and assessments | 1,538 | 1,507 | 1,385 | 5,957 | 6,091 |
General depreciation and amortizations | 1,398 | 1,330 | 1,596 | 5,934 | 6,879 |
Other administrative expenses | 8,608 | 7,660 | 7,417 | 39,510 | 27,183 |
Total operating expenses | 46,721 | 41,911 | 57,133 | 186,485 | 212,480 |
Leased equipment depreciation | 3,036 | 2,307 | 2,012 | 9,919 | 2,720 |
Expense of real estate owned and other foreclosed assets, net | 211 | 2,308 | 5,223 | 6,790 | 39,347 |
Loss (gain) on extinguishment of debt | — | — | 5,328 | (8,059) | 119,007 |
Other non-interest expense, net | (545) | 483 | 2,711 | (1,453) | 1,616 |
Total non-interest expense | 49,423 | 47,009 | 72,407 | 193,682 | 375,170 |
Net income (loss) before income taxes | 58,300 | 49,050 | 28,747 | 205,529 | (15,081) |
Income tax expense (benefit) | 11,224 | 18,003 | 19,811 | (285,081) | 36,942 |
Net income (loss) | 47,076 | 31,047 | 8,936 | 490,610 | (52,023) |
Other comprehensive income (loss), net of tax | |||||
Unrealized gain (loss) on available-for-sale securities, net of tax | 2,793 | 2,315 | (7,927) | 5,595 | 13,292 |
Unrealized loss on foreign currency translation, net of tax | — | — | (4,492) | (351) | (3,827) |
Other comprehensive income (loss) | 2,793 | 2,315 | (12,419) | 5,244 | 9,465 |
Comprehensive income (loss) | 49,869 | 33,362 | (3,483) | 495,854 | (42,558) |
Net income per share: | |||||
Basic | $ 0.23 | $ 0.14 | $ 0.03 | $ 2.19 | $ (0.17) |
Diluted | $ 0.22 | $ 0.14 | $ 0.03 | $ 2.13 | $ (0.17) |
Average shares outstanding: | |||||
Basic | 208,438,784 | 219,664,637 | 264,836,221 | 223,928,583 | 302,998,615 |
Diluted | 213,482,389 | 226,441,293 | 271,272,855 | 230,154,989 | 302,998,615 |
Dividends declared per share | 0.51 | 0.01 | 0.01 | 0.22 | 0.04 |
CapitalSource Inc. | ||||||||
Segment Balance Sheets | ||||||||
(Unaudited) | ||||||||
($ in thousands) | ||||||||
December 31, 2012 | September 30, 2012 | |||||||
CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | |
ASSETS | ||||||||
Cash and cash equivalents and restricted cash | $ 230,305 | $ 172,825 | $ — | $ 403,130 | $ 508,862 | $ 178,045 | $ — | $ 686,907 |
Investment securities: | ||||||||
Available-for-sale | 1,052,775 | 26,250 | — | 1,079,025 | 1,069,923 | 24,147 | — | 1,094,070 |
Held-to-maturity | 108,233 | — | — | 108,233 | 108,066 | — | — | 108,066 |
Loans | 5,618,810 | 543,325 | (186) | 6,161,949 | 5,259,524 | 720,084 | (513) | 5,979,095 |
Allowance for loan and lease losses | (98,905) | (18,368) | — | (117,273) | (98,435) | (28,195) | — | (126,630) |
Loans, net of allowance for loan and lease losses | 5,519,905 | 524,957 | (186) | 6,044,676 | 5,161,089 | 691,889 | (513) | 5,852,465 |
Receivables due from affiliates | 1,742 | 11,347 | (13,089) | — | 3,755 | 15,622 | (19,377) | — |
Other assets | 458,683 | 454,665 | 593 | 913,941 | 434,258 | 502,540 | (1,005) | 935,793 |
Total assets | $ 7,371,643 | $ 1,190,044 | $ (12,682) | $ 8,549,005 | $ 7,285,953 | $ 1,412,243 | $ (20,895) | $ 8,677,301 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Liabilities: | ||||||||
Deposits | $ 5,579,270 | $ — | $ — | $ 5,579,270 | $ 5,535,482 | $ — | $ — | $ 5,535,482 |
Borrowings | 595,000 | 587,926 | — | 1,182,926 | 600,000 | 613,187 | — | 1,213,187 |
Balance due to affiliates | 11,347 | 1,742 | (13,089) | — | 15,622 | 3,755 | (19,377) | — |
Other liabilities | 85,179 | 78,672 | (2,214) | 161,637 | 69,211 | 120,580 | (4,619) | 185,172 |
Total liabilities | 6,270,796 | 668,340 | (15,303) | 6,923,833 | 6,220,315 | 737,522 | (23,996) | 6,933,841 |
Shareholders' equity: | ||||||||
Common stock | 921,000 | 2,096 | (921,000) | 2,096 | 921,000 | 2,152 | (921,000) | 2,152 |
Additional paid-in capital/retained earnings/deficit | 165,398 | 494,958 | 938,070 | 1,598,426 | 129,197 | 650,712 | 939,542 | 1,719,451 |
Accumulated other comprehensive income, net | 14,449 | 24,650 | (14,449) | 24,650 | 15,441 | 21,857 | (15,441) | 21,857 |
Total shareholders' equity | 1,100,847 | 521,704 | 2,621 | 1,625,172 | 1,065,638 | 674,721 | 3,101 | 1,743,460 |
Total liabilities and shareholders' equity | $ 7,371,643 | $ 1,190,044 | $ (12,682) | $ 8,549,005 | $ 7,285,953 | $ 1,412,243 | $ (20,895) | $ 8,677,301 |
CapitalSource Inc. | ||||||||
Segment Statements of Operations | ||||||||
(Unaudited) | ||||||||
($ in thousands | ||||||||
Three Months Ended December 31, 2012 | Three Months Ended September 30, 2012 | |||||||
Net interest income: | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED |
Interest income: | ||||||||
Loans and leases | $ 91,328 | $ 14,305 | $ 327 | $ 105,960 | $ 91,367 | $ 15,171 | $ (1,472) | $ 105,066 |
Investment securities | 6,770 | 1,723 | — | 8,493 | 8,123 | 1,661 | — | 9,784 |
Other | 446 | 22 | — | 468 | 317 | 67 | — | 384 |
Total interest income | 98,544 | 16,050 | 327 | 114,921 | 99,807 | 16,899 | (1,472) | 115,234 |
Interest expense: | ||||||||
Deposits | 12,366 | — | — | 12,366 | 12,738 | — | — | 12,738 |
Borrowings | 2,756 | 3,750 | — | 6,506 | 2,783 | 3,992 | — | 6,775 |
Total interest expense | 15,122 | 3,750 | — | 18,872 | 15,521 | 3,992 | — | 19,513 |
Net interest income | 83,422 | 12,300 | 327 | 96,049 | 84,286 | 12,907 | (1,472) | 95,721 |
Provision for loan and lease losses | 1,447 | 7,428 | — | 8,875 | 273 | 8,686 | — | 8,959 |
Net interest income after provision for loan and lease losses | 81,975 | 4,872 | 327 | 87,174 | 84,013 | 4,221 | (1,472) | 86,762 |
Non-interest income: | ||||||||
Loan fees | 6,524 | 138 | — | 6,662 | 3,469 | 705 | — | 4,174 |
Leased equipment income | 4,298 | — | — | 4,298 | 3,299 | — | — | 3,299 |
Other non-interest income, net | 7,421 | 7,860 | (5,692) | 9,589 | 6,817 | 734 | (5,727) | 1,824 |
Total non-interest income, net | 18,243 | 7,998 | (5,692) | 20,549 | 13,585 | 1,439 | (5,727) | 9,297 |
Non-interest expense: | ||||||||
Compensation and benefits | 27,599 | 484 | — | 28,083 | 25,254 | 269 | — | 25,523 |
Professional fees | 1,013 | 2,643 | — | 3,656 | 1,404 | 1,065 | — | 2,469 |
Leased equipment depreciation | 3,036 | — | — | 3,036 | 2,307 | — | — | 2,307 |
Expense of real estate owned and other foreclosed assets, net | 835 | (624) | — | 211 | 16 | 2,292 | — | 2,308 |
Other non-interest expense, net | 11,779 | 8,615 | (5,957) | 14,437 | 10,983 | 9,411 | (5,992) | 14,402 |
Total non-interest expense, net | 44,262 | 11,118 | (5,957) | 49,423 | 39,964 | 13,037 | (5,992) | 47,009 |
Net income (loss) before income taxes | 55,956 | 1,752 | 592 | 58,300 | 57,634 | (7,377) | (1,207) | 49,050 |
Income tax expense (benefit) | 22,008 | (11,857) | 1,073 | 11,224 | 23,782 | (5,779) | — | 18,003 |
Net income (loss) | $ 33,948 | $ 13,609 | $ (481) | $ 47,076 | $ 33,852 | $ (1,598) | $ (1,207) | $ 31,047 |
Year Ended December 31, 2012 | Year Ended December 31, 2011 | |||||||
Net interest income: | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED |
Interest income: | ||||||||
Loans and leases | $ 359,233 | $ 72,662 | $ (3,498) | $ 428,397 | $ 319,485 | $ 132,752 | $ 370 | $ 452,607 |
Investment securities | 32,396 | 5,834 | — | 38,230 | 48,359 | 7,165 | — | 55,524 |
Other | 1,454 | 133 | — | 1,587 | 1,120 | 1,139 | — | 2,259 |
Total interest income | 393,083 | 78,629 | (3,498) | 468,214 | 368,964 | 141,056 | 370 | 510,390 |
Interest expense: | ||||||||
Deposits | 51,035 | — | — | 51,035 | 53,609 | — | — | 53,609 |
Borrowings | 11,061 | 17,311 | — | 28,372 | 9,193 | 87,208 | — | 96,401 |
Total interest expense | 62,096 | 17,311 | — | 79,407 | 62,802 | 87,208 | — | 150,010 |
Net interest income | 330,987 | 61,318 | (3,498) | 388,807 | 306,162 | 53,848 | 370 | 360,380 |
Provision for loan and lease losses | 16,192 | 23,250 | — | 39,442 | 27,539 | 65,446 | — | 92,985 |
Net interest income (loss) after provision for loan and lease losses | 314,795 | 38,068 | (3,498) | 349,365 | 278,623 | (11,598) | 370 | 267,395 |
Non-interest income: | ||||||||
Loan fees | 16,089 | 2,472 | — | 18,561 | 8,678 | 7,556 | — | 16,234 |
Leased equipment income | 14,113 | — | — | 14,113 | 3,748 | — | — | 3,748 |
Other non-interest income, net | 30,293 | 12,050 | (25,171) | 17,172 | 29,271 | 116,395 | (72,954) | 72,712 |
Total non-interest income, net | 60,495 | 14,522 | (25,171) | 49,846 | 41,697 | 123,951 | (72,954) | 92,694 |
Non-interest expense: | ||||||||
Compensation and benefits | 102,417 | 3,013 | — | 105,430 | 49,941 | 79,680 | (3,956) | 125,665 |
Professional fees | 5,628 | 7,186 | — | 12,814 | 4,054 | 27,128 | — | 31,182 |
Leased equipment depreciation | 9,919 | — | — | 9,919 | 2,720 | — | — | 2,720 |
Expense of real estate owned and other foreclosed assets, net | 2,169 | 4,621 | — | 6,790 | 12,756 | 26,591 | — | 39,347 |
(Gain) loss on extinguishment of debt | — | (8,059) | — | (8,059) | — | 119,007 | — | 119,007 |
Other non-interest expense, net | 48,436 | 44,583 | (26,231) | 66,788 | 80,239 | 48,246 | (71,236) | 57,249 |
Total non-interest expense, net | 168,569 | 51,344 | (26,231) | 193,682 | 149,710 | 300,652 | (75,192) | 375,170 |
Net income (loss) before income taxes | 206,721 | 1,246 | (2,438) | 205,529 | 170,610 | (188,299) | 2,608 | (15,081) |
Income tax expense (benefit) | 84,055 | (370,209) | 1,073 | (285,081) | 57,996 | (21,054) | — | 36,942 |
Net income (loss) | $ 122,666 | $ 371,455 | $ (3,511) | $ 490,610 | $ 112,614 | $ (167,245) | $ 2,608 | $ (52,023) |
CapitalSource Inc. | |||||
Selected Financial Data | |||||
(Unaudited) | |||||
Three Months Ended | Year Ended | ||||
December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |
CapitalSource Bank Segment: | |||||
Performance ratios: | |||||
Return on average assets | 1.84% | 1.88% | 1.63% | 1.73% | 1.77% |
Return on average equity | 12.53% | 12.75% | 10.38% | 11.73% | 11.36% |
Return on average tangible equity | 14.93% | 15.25% | 12.44% | 14.06% | 13.76% |
Yield on average interest earning assets | 5.72% | 5.88% | 5.96% | 5.90% | 6.13% |
Cost of interest bearing liabilities | 0.98% | 1.02% | 1.16% | 1.04% | 1.19% |
Deposits | 0.89% | 0.93% | 1.07% | 0.95% | 1.11% |
Borrowings | 1.83% | 1.85% | 2.01% | 1.88% | 2.02% |
Net interest spread | 4.74% | 4.86% | 4.80% | 4.86% | 4.94% |
Net interest margin | 4.84% | 4.97% | 4.95% | 4.97% | 5.09% |
Operating expenses as a percentage of average total assets | 2.22% | 2.07% | 2.14% | 2.21% | 2.11% |
Efficiency ratio (1) | 41.32% | 38.83% | 39.43% | 41.10% | 38.88% |
Loan yield | 6.80% | 6.95% | 7.25% | 7.01% | 7.71% |
Capital ratios: | |||||
Tier 1 leverage | 13.06% | 12.82% | 13.61% | 13.06% | 13.61% |
Total risk-based capital | 16.50% | 16.69% | 17.43% | 16.50% | 17.43% |
Tangible common equity to tangible assets | 12.89% | 12.55% | 13.25% | 12.89% | 13.25% |
Average balances ($ in thousands): | |||||
Average loans | $ 5,342,683 | $ 5,231,242 | $ 4,642,500 | $ 5,121,261 | $ 4,145,130 |
Average assets | 7,327,136 | 7,174,140 | 6,643,685 | 7,094,631 | 6,356,036 |
Average interest earning assets | 6,859,237 | 6,752,549 | 6,286,584 | 6,663,700 | 6,016,613 |
Average deposits | 5,557,241 | 5,469,501 | 4,982,956 | 5,400,247 | 4,808,141 |
Average borrowings | 597,772 | 597,674 | 511,957 | 587,301 | 455,055 |
Average equity | 1,077,507 | 1,056,261 | 1,044,969 | 1,045,760 | 991,485 |
Other Commercial Finance Segment: | |||||
Performance ratios: | |||||
Return on average assets | 4.05% | (0.43)% | (4.17)% | 27.14% | (6.28)% |
Return on average equity | 8.65% | (0.86)% | (11.33)% | 65.09% | (17.14)% |
Yield on average interest earning assets | 8.17% | 7.66% | 7.42% | 8.40% | 6.69% |
Cost of interest bearing liabilities | 2.49% | 2.56% | 3.11% | 2.60% | 5.99% |
Net interest spread | 5.68% | 5.10% | 4.31% | 5.80% | 0.70% |
Net interest margin | 6.26% | 5.85% | 5.28% | 6.55% | 2.55% |
Operating expenses as a percentage of average total assets | 3.57% | 2.92% | 9.32% | 4.08% | 7.70% |
Loan yield | 8.41% | 7.91% | 7.60% | 8.75% | 8.38% |
Average balances ($ in thousands): | |||||
Average loans | $ 676,349 | $ 763,361 | $ 1,187,295 | $ 830,316 | $ 1,583,594 |
Average assets | 1,335,561 | 1,477,940 | 1,741,678 | 1,368,522 | 2,662,409 |
Average interest earning assets | 781,428 | 877,722 | 1,287,652 | 935,527 | 2,108,568 |
Average borrowings | 600,328 | 621,371 | 889,659 | 665,937 | 1,456,558 |
Average equity | 625,945 | 742,001 | 640,193 | 570,693 | 975,890 |
Consolidated CapitalSource Inc.: (2) | |||||
Performance ratios: | |||||
Return on average assets | 2.17% | 1.43% | 0.43% | 5.80% | (0.58)% |
Return on average equity | 10.97% | 6.85% | 2.10% | 30.25% | (2.64)% |
Return on average tangible equity | 12.23% | 7.58% | 2.10% | 33.89% | (2.64)% |
Yield on average interest earning assets | 5.98% | 6.01% | 6.25% | 6.16% | 6.28% |
Cost of interest bearing liabilities | 1.11% | 1.16% | 1.43% | 1.19% | 2.23% |
Net interest spread | 4.87% | 4.85% | 4.82% | 4.97% | 4.05% |
Net interest margin | 5.00% | 4.99% | 5.05% | 5.12% | 4.43% |
Efficiency ratio (1) | 41.14% | 40.81% | 58.29% | 43.50% | 47.18% |
Operating expenses as a percentage of average total assets | 2.16% | 1.94% | 2.74% | 2.21% | 2.37% |
Leverage ratios: | |||||
Equity to total assets (as of period end) | 19.01% | 20.09% | 18.98% | 19.01% | 18.98% |
Tangible common equity to tangible assets | 17.33% | 18.47% | 17.23% | 17.33% | 17.23% |
Average balances ($ in thousands): | |||||
Average loans | $ 6,018,343 | $ 5,995,021 | $ 5,833,113 | $ 5,952,699 | $ 5,732,172 |
Average assets | 8,642,344 | 8,648,882 | 8,330,008 | 8,456,527 | 8,963,290 |
Average interest earning assets | 7,639,977 | 7,630,690 | 7,577,554 | 7,600,348 | 8,128,628 |
Average borrowings | 1,198,100 | 1,219,045 | 1,401,616 | 1,253,237 | 1,911,613 |
Average deposits | 5,557,241 | 5,469,501 | 4,982,956 | 5,400,247 | 4,808,141 |
Average equity | 1,706,761 | 1,802,085 | 1,691,123 | 1,621,874 | 1,973,070 |
(1) Efficiency ratio is defined as operating expense (non-interest expense less REO expense, early debt term expense, provision for unfunded commitments and lease depreciation) divided by net interest and non-interest income, less leased equipment depreciation. | |||||
(2) Applicable ratios have been calculated on a continuing operations basis. |
CapitalSource Inc. | |||||
Credit Quality Data | |||||
(Unaudited) | |||||
December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | |
Loans 30-89 days contractually delinquent: | |||||
As a % of total loans(1) | 0.39% | 0.50% | 0.01% | 0.31% | 0.21% |
Loans 30-89 days contractually delinquent | $24.6 | $30.2 | $0.7 | $19.0 | $12.7 |
Loans 90 or more days contractually delinquent: | |||||
As a % of total loans(1) | 0.66% | 0.75% | 1.04% | 1.22% | 1.61% |
Loans 90 or more days contractually delinquent | $41.3 | $45.5 | $63.1 | $73.8 | $95.8 |
Loans on non-accrual:(2) | |||||
As a % of total loans(1) | 1.98% | 2.70% | 3.35% | 3.94% | 4.72% |
Loans on non-accrual | $123.4 | $163.0 | $203.1 | $238.2 | $280.7 |
Impaired loans:(3) | |||||
As a % of total loans(1) | 3.32% | 4.50% | 6.03% | 6.51% | 7.15% |
Impaired loans | $206.1 | $271.2 | $365.7 | $393.4 | $425.3 |
Allowance for loan and lease losses: | |||||
As a % of total loans(4) | 1.91% | 2.15% | 2.23% | 2.61% | 2.70% |
As a % of non-accrual loans | 95.05% | 77.70% | 65.66% | 63.76% | 54.74% |
Allowance for loan and lease losses | $117.3 | $126.6 | $133.4 | $151.9 | $153.6 |
Net charge offs (last twelve months): | |||||
As a % of total average loans | 1.27% | 2.09% | 2.30% | 3.31% | 4.62% |
Net charge offs (last twelve months) | $75.8 | $123.7 | $134.0 | $190.6 | $268.5 |
(1) Includes loans held for investment and loans held for sale. Excludes deferred loan fees and discounts and the allowance for loan and lease losses. | |||||
(2) Includes loans with an aggregate principal balance of $41.3 million, $45.5 million, $63.1 million, $73.7 million, and $90.2 million as of December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012, and December 31, 2011, respectively, that were also classified as loans 90 or more days contractually delinquent. Also includes non-performing loans held for sale that had an aggregate principal balance of $2.4 million, $2.9 million, $3.1 million, and $118.7 million as of December 31, 2012, December 31, 2011, September 30, 2011, and June 30, 2011, respectively. As of September 30, 2012, June 30, 2012 and March 31, 2012 there were no non-performing loans classified as held for sale. | |||||
(3) Includes loans with an aggregate principal balance of $40.3 million, $45.5 million, $63.1 million, $73.7 million, and $94.9 million as of December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012, and December 31, 2011, respectively, that were also classified as loans 90 or more days contractually delinquent, and loans with an aggregate principal balance of $120.9 million, $163.0 million, $203.1 million, $238.2 million, and $277.8 million as of December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012, and December 31, 2011, respectively, that were also classified as loans on non-accrual status. | |||||
(4) Includes loans held for investment and deferred loan fees and discounts. Excludes the allowance for loan and lease losses. |
CONTACT: Investor Relations: Dennis Oakes Senior Vice President, Investor Relations & Corporate Communications (212) 321-7212 doakes@capitalsource.com Media Relations: Michael Weiss Director of Communications (301) 841-2918 mweiss@capitalsource.com