NewStar Financial reported net income of $6.1 million for the third quarter of 2012. These results compare to net income of $3.4 million in the third quarter of 2011 and $5.6 million in the prior quarter. Income before income taxes (pre-tax income) was $10.5 million for the third quarter of 2012. That compares to $5.9 million in the third quarter of 2011 and $9.7 million in the prior quarter.

"I am pleased to report another solid quarter highlighted by an 8% increase in earnings and a $0.18 increase to book value," said Tim Conway, NewStar's Chairman and Chief Executive Officer. "Although weaker than expected loan demand and M&A activity slowed our pace of new loan origination in the quarter, I am happy with our overall strong results," he added. "I also remain optimistic that we will have a strong finish to the year as we are already experiencing a significant pick-up in activity that we expect to continue through year-end," he concluded.

Managed and Owned Loan Portfolios

• Total new funded loan origination volume was approximately $180 million in the third quarter compared to $205 million in the prior quarter and $190 million in the third quarter of the prior year. Lower volumes reflected weaker demand for acquisition financing from financial sponsors amid a slowdown in M&A activity and overall business investment.
• The managed loan portfolio remained steady at $2.4 billion as of September 30, 2012 approximately equal to June 30, 2012 as new funded loan origination offset loan run-off from scheduled amortization and prepayments of existing loans.
• The owned portfolio also remained stable at $1.9 billion as of September 30, 2012 as new funded loan origination offset the impact of run-off from scheduled amortization and prepayments of existing loans. Real Estate loans decreased by 3%, while our Business Credit and Leveraged Finance loan portfolios increased by 8% and 0.4%, respectively.
• Assets managed for third party institutional investors increased by 3% in the third quarter to approximately $515 million at September 30, 2012 compared to $498 million at June 30, 2012 due primarily to new funded loan origination.
• Asset-based lending and equipment finance businesses originated $23 million in the third quarter, or nearly 20% of new loan volume retained on the balance sheet.
• The owned loan portfolio remained balanced across industry sectors and highly diversified by issuer. As of September 30, 2012, no outstanding borrowings by a single obligor represented more than 1.4% of total loans outstanding, and the ten largest obligors comprised approximately 9.7% of the loan portfolio.

NewStar Financial is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle market. The company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The company targets 'hold' positions of up to $35 million and selectively underwrites or arranges larger transactions for syndication to other lenders.

Read the full NewStar Financial earnings press release.