- Net Income of $0.11 Per Share Before Charges Related to Early Debt Retirement
- 49.9 Million Shares Repurchased – 15% of Total Outstanding Shares at June 30, 2011
- New Share Repurchase Authority of $200 Million Approved by Board
- Parent Company Debt Reduced by $711 Million – Recourse Debt Cut in Half
- Loan Growth of $334 Million at CapitalSource Bank (+8% over 2Q) on Funded Production of $619 Million
CHEVY CHASE, Md., Oct. 27, 2011 (GLOBE NEWSWIRE) -- CapitalSource Inc. (NYSE:CSE) today announced financial results for the third quarter of 2011. The Company reported a net loss for the quarter of $81 million or $0.26 per diluted share, compared to net income of $17 million or $0.05 per diluted share in the prior quarter. Net income in the third quarter of 2010 was $78 million or $0.24 per diluted share, which included a carry-back tax benefit of $37 million or $0.11 per diluted share. The loss in the quarter was driven by a one-time charge of $114 million or $0.37 per share resulting from the early retirement of debt. Excluding that one-time charge, net income for the quarter was $0.11 per diluted share.
"Last quarter we announced our intention to aggressively return excess Parent Company capital to shareholders. We certainly achieved that objective during the third quarter - repurchasing nearly 50 million shares of our common stock, or roughly 15% of the total outstanding shares at June 30, 2011, at an average purchase price of $6.19 per share," said John K. Delaney, CapitalSource Executive Chairman. "Through September 30, we had utilized approximately $319 million of our $385 million buy back authority. As a result, our Board has increased the authorized repurchase level by $200 million."
"Funded loan production was particularly strong in the quarter. Loan growth so far this year of $688 million at CapitalSource Bank, on new funded loan production of approximately $1.8 billion, represents 18% growth year-to-date. It is clear, therefore, that we can expect loan growth for the full year in excess of 20%," said James J. Pieczynski, CapitalSource Co CEO. "Growth in the quarter was broad-based with the largest concentrations in technology cash flow, healthcare real estate, equipment finance, general real estate and multifamily. We have been actively hiring across our entire lending platform and we are attracting highly talented professionals, which underscores the momentum we are experiencing."
"CapitalSource Bank had another solid quarter, with net interest income increasing by 2% over the prior period; total assets up 3% to $6.5 billion; fully taxed return on average assets of 1.55%; net interest margin at 4.94%; deposit growth of 2%; and risk-based capital and leverage ratios remained exceptionally strong at 18.1% and 13.5% respectively," said Tad Lowrey, CapitalSource Bank President and CEO. "Credit metrics were also significantly improved in the quarter. In particular, non-accrual loans declined by 51% and total non-performing assets dropped to 1.78% of total assets compared to 3.73% in the second quarter."
"Our successful tender during September for the 12.75% Senior Secured Notes, which included a $78 million prepayment premium, caused a net loss in the quarter but will save the Company approximately $108 million in cash interest payments through July of 2014. Adjusting for the one-time loss associated with debt prepayment, net income for the quarter was $0.11 per share compared to $0.05 per share in the prior quarter," said Donald F. Cole, CapitalSource CFO. "We utilized over $1 billion of available liquidity during the quarter to redeem the Senior Secured Notes, repurchase our 2011 convertible debentures and 30% of the 2012 convertibles puttable next July, and for share repurchases. We reduced our recourse debt by over 50%, continuing the rapid de-levering of the Parent Company balance sheet, yet finished the quarter with unrestricted cash at the Parent of $252 million."
CAPITALSOURCE BANK SEGMENT
This segment includes our commercial lending and banking business activities in CapitalSource Bank.
Third Quarter 2011 Highlights
-
Net Income was $25 million, a decrease of $3 million from the prior quarter primarily due to higher loan loss provision, partially offset by gains on the sale of loans and securities and lower REO charges.
-
Loan Growth was $334 million, resulting in an 8% net increase in the total loan portfolio balance. Funded loan production was $619 million during the quarter compared to $543 million in the prior quarter.
-
Net Interest Margin for the quarter was 4.94%, a decrease of 13 basis points from the prior quarter due primarily to lower loan discount accretion resulting from reduced loan prepayment volume.
-
Capital – The risk-based capital ratio declined 54 basis points to 18.13% while the Tier 1 leverage ratio increased three basis points to 13.50%.
- Credit Quality - Loan loss provision was $14 million for the quarter, compared to a reversal of $1 million in the prior quarter. Net charge-offs were $4 million in the quarter, compared to $23 million in the prior quarter. Non-accrual loans decreased to $108 million or 2.37% of loans at quarter end, compared to $220 million or 5.23% of loans at the end of the prior quarter. The allowance for loan losses increased to $119 million or 2.62% of loans at quarter end, compared to $109 million or 2.58% of loans at the end of the prior quarter.
Third Quarter 2011 Details
Interest Income was $92 million, an increase of $2 million (2%) from the prior quarter primarily due to growth in interest-earning assets.
| Quarter Ended | |||||||
| 9/30/11 vs. 6/30/11 | 9/30/11 vs. 9/30/10 | ||||||
| Net Income | 9/30/11 | 6/30/11 | 9/30/10 | $ | % | $ | % |
| ($ in thousands) | |||||||
| Interest income | $ 92,173 | $ 90,490 | $ 86,212 | $ 1,683 | 2% | $ 5,961 | 7% |
| Interest expense | 15,982 | 15,612 | 16,024 | (370) | (2) | 42 | -- |
| Provision for loan losses | 13,725 | (1,331) | 14,552 | (15,056) | (1,131) | 827 | 6 |
| Operating expenses | 33,664 | 32,594 | 28,597 | (1,070) | (3) | (5,067) | (18) |
| Other income | 12,933 | 3,000 | 7,148 | 9,933 | 331 | 5,785 | 81 |
| Income tax expense (benefit) | 16,513 | 18,840 | (2,707) | 2,327 | 12 | (19,220) | (710) |
| Net income | 25,222 | 27,775 | 36,894 | (2,553) | (9) | (11,672) | (32) |
| Quarter Ended | ||||||
| 09/30/2011 | 06/30/2011 | |||||
| Net Interest Margin | Average Balance | Interest Income/Expense | Average Yield/Cost | Average Balance | Interest Income/Expense | Average Yield/Cost |
| ($ in thousands) | ||||||
| Total loans | $ 4,192,610 | $ 79,346 | 7.51% | $ 3,943,136 | $ 78,488 | 7.98% |
| Investment securities | 1,581,170 | 12,499 | 3.14 | 1,553,432 | 11,599 | 2.99 |
| Cash and other interest earning assets | 350,143 | 328 | 0.37 | 428,701 | 403 | 0.38 |
| Total interest-earning assets | 6,123,923 | 92,173 | 5.97 | 5,925,269 | 90,490 | 6.13 |
| Deposits | 4,833,941 | 13,422 | 1.10 | 4,738,233 | 13,398 | 1.13 |
| Borrowings | 506,413 | 2,560 | 2.01 | 426,484 | 2,214 | 2.08 |
| Total interest-bearing liabilities | $ 5,340,354 | 15,982 | 1.19 | $ 5,164,717 | 15,612 | 1.21 |
| Net interest spread | $ 76,191 | 4.78% | $ 74,878 | 4.92% | ||
| Net interest margin | 4.94% | 5.07% | ||||
Cash and Investments decreased by $193 million to $1.7 billion as excess liquidity was deployed to fund new loans in the quarter. The portfolio yield at quarter end remained unchanged at 2.45%.
| Cash and Investments | 09/30/2011 | 06/30/2011 | ||||
| ($ in thousands) | Book Value | Yield | Duration (Years) | Book Value | Yield | Duration (Years) |
| Cash and cash equivalents | 247,114 | 0.38% | -- | $ 382,065 | 0.29% | 0.1 |
| Agency callable notes | 114,972 | 2.10% | 5.1 | 124,984 | 2.01% | 4.6 |
| Agency debt | 44,776 | 1.56% | 0.8 | 55,918 | 2.11% | 1.0 |
| Agency MBS | 1,119,741 | 2.57% | 2.8 | 1,110,767 | 2.69% | 3.4 |
| Non-agency MBS | 78,187 | 4.24% | 1.5 | 87,558 | 4.39% | 1.9 |
| CMBS | 102,651 | 3.93% | 2.6 | 136,250 | 4.50% | 2.5 |
| Corporate debt | 4,998 | 3.04% | 0.2 | 4,998 | 3.04% | 0.4 |
| Asset-back securities | 16,734 | 11.80% | 1.0 | 18,874 | 11.69% | 1.1 |
| U.S. Treasury and agency securities | 19,109 | 2.77% | 6.4 | 19,796 | 2.99% | 6.2 |
| 1,748,282 | 2.45% | 2.5 | 1,941,210 | 2.45% | 2.6 | |
Total Loans Held for Investment and Loans Held for Sale increased $334 million (8.0%) from the prior quarter as detailed below:
| Quarter Ended | |||
| Loan Roll Forward | 9/30/2011 | 06/30/2011 | 9/30/2010 |
| ($ in thousands) | |||
| Beginning balance | $ 4,202,073 | $ 4,012,819 | $ 3,474,029 |
| New fundings | 619,276 | 542,728 | 405,444 |
| Loans | |||
| Principal repayments | (144,375) | (326,884) | (122,405) |
| Sales | (108,494) | -- | (2,968) |
| Transfers to foreclosed assets | (1,438) | (3,270) | -- |
| Charge-offs | (3,965) | (23,320) | (48,108) |
| Intercompany sales | (26,880) | -- | -- |
| Ending balance | $ 4,536,197 | $ 4,202,073 | $ 3,705,992 |
| Quarter Ended | |||
| Loan Portfolio Mix | 9/30/2011 | 06/30/2011 | 9/30/2010 |
| ($ in thousands) | |||
| Cash flow | $ 1,261,317 | $ 1,052,187 | $ 1,000,612 |
| Multifamily | 785,728 | 726,582 | 256,010 |
| General asset-based | 576,480 | 592,712 | 565,059 |
| General commercial real estate | 662,227 | 729,316 | 959,154 |
| Healthcare real estate | 563,316 | 463,460 | 506,721 |
| Equipment finance | 316,758 | 283,494 | 46,842 |
| Healthcare asset-based | 203,369 | 195,479 | 243,290 |
| Small business | 167,002 | 158,843 | 128,304 |
| Total | $ 4,536,197 | $ 4,202,073 | $ 3,705,992 |
Deposits were $4.9 billion at quarter end, an increase of $100 million (2%) from the end of the prior quarter. The weighted average interest rate on deposits declined 5 basis points to 1.08% at the end of the quarter.
FHLB Borrowings were $540 million, an increase of $60 million from the end of the prior quarter. FHLB borrowings are used primarily for interest rate risk management and short-term funding purposes. As of September 30, 2011, the weighted average rate of FHLB borrowings was 1.87%, compared to 1.99% at the end of the prior quarter, and the remaining maturities were unchanged at 3.2 years.
Allowance for Loan Losses was $119 million or 2.62% of the loan portfolio, an increase of $10 million from the end of the prior quarter.
| Quarter Ended | ||||
| Allowance for Loan Losses | 9/30/2011 | |||
| ($ in thousands) | General | Specific | Total | % Loans |
| Beginning balance | $ 107,311 | $ 1,281 | $ 108,592 | |
| Provision for loan losses | 1,605 | 12,120 | 13,725 | |
| Charge-offs, net | -- | (3,633) | (3,633) | |
| Ending balance | $ 108,916 | $ 9,768 | $ 118,684 | 2.62% |
| Quarter Ended | ||||
| 6/30/2011 | ||||
| General | Specific | Total | % Loans | |
| Beginning balance | $ 130,214 | $ 2,756 | $ 132,970 | |
| Provision for loan losses | (22,903) | 21,572 | (1,331) | |
| Charge-offs, net | -- | (23,047) | (23,047) | |
| Ending balance | $ 107,311 | $ 1,281 | $ 108,592 | 2.58% |
Non-performing Assets were $117 million, a decrease of $121 million (51%) from the prior quarter primarily due to the sale of one large real estate loan with a book value of $107 million which was sold at a gain of $4.2 million.
| Non-performing Assets | 9/30/2011 | 6/30/2011 | ||
| Loan Balance | % of Total Assets | Loan Balance | % of Total Assets | |
| ($ in thousands) | ||||
| Non-accrual loans - current | $ 85,172 | 1.30% | $ 183,593 | 2.88% |
| Non-accrual loans - delinquent 30-89 days | 465 | 0.01 | 1,266 | 0.02 |
| Non-accrual loans - delinquent 90+ days | 21,935 | 0.33 | 34,802 | 0.55 |
| Total non-accrual loans | 107,572 | 1.64% | 219,661 | 3.45% |
| Accruing loans - delinquent 90+ days | -- | -- | 136 | -- |
| REO | 9,222 | 0.14 | 17,807 | 0.28 |
| Total non-performing assets | $ 116,794 | 1.78% | $ 237,604 | 3.73% |
Accruing Troubled Debt Restructurings remained unchanged at $36 million. In addition, there were $70 million of TDRs which were on non-accrual, though current as to payment status, at quarter end (included in the "Non-accrual loans – current" line in the table above).
Operating Expenses were $34 million, an increase of $1 million from the prior quarter, including $11 million for loan referral fees paid to the Parent which was unchanged from the prior quarter.
Other Income was $13 million, an increase of $10 million from the prior quarter. Other income included a $5.8 million gain on the sale of loans and investments in the quarter.
Income Tax Expense was $16.5 million for the quarter, reflecting a 40% tax rate.
OTHER COMMERCIAL FINANCE SEGMENT
This segment includes the CapitalSource Inc. loan portfolio and other business activities at the Parent Company.
Net Loss was $107 million, compared to a loss of $8 million in the prior quarter, primarily due to charges related to extinguishment of debt including the 12.75% Senior Secured Notes and the 7.25% convertible debentures puttable in July 2012.
Interest Income was $29 million, a decrease of $12 million from the prior quarter primarily due to a declining loan balance and a reduction in loan yield.
Unrestricted Cash was $252 million, a decrease of $956 million from the prior quarter primarily due to share repurchases and debt retirement.
Total Loans Held for Investment and Loans Held for Sale decreased by $113 million from the prior quarter as detailed below:
| Quarter Ended | |||
| Loan Roll Forward | 9/30/2011 | 06/30/2011 | 9/30/2010 |
| ($ in thousands) | |||
| Beginning balance | $ 1,399,910 | $ 2,072,904 | $ 4,198,676 |
| New fundings | -- | -- | 37,653 |
| Loans | |||
| Principal repayments | (99,410) | (566,085) | (1,251,157) |
| Sales | (16,656) | (34,469) | (16,678) |
| Transfers to foreclosed assets | (77) | (7,538) | (8,984) |
| Charge-offs | (23,417) | (64,902) | (37,795) |
| Intercompany purchases | 26,880 | -- | -- |
| Ending balance | $ 1,287,230 | $ 1,399,910 | $ 2,921,715 |
Allowance for Loan Losses was $90 million, or 6.97% of the loan portfolio, a decline of $1 million from the end of the prior quarter.
| Quarter Ended | ||||
| Allowance for Loan Losses | 9/30/2011 | |||
| ($ in thousands) | General | Specific | Total | % Loans |
| Beginning balance | $ 73,967 | $ 16,579 | $ 90,546 | |
| Provision for loan losses | (3,961) | 25,354 | 21,393 | |
| Charge-offs, net | -- | (22,271) | (22,271) | |
| Ending balance | $ 70,006 | $ 19,662 | $ 89,668 | 6.97% |
| Quarter Ended | ||||
| 6/30/2011 | ||||
| General | Specific | Total | % Loans | |
| Beginning balance | $ 91,873 | $ 58,431 | $ 150,304 | |
| Provision for loan losses | (17,906) | 20,760 | 2,854 | |
| Charge-offs, net | -- | (62,612) | (62,612) | |
| Ending balance | $ 73,967 | $ 16,579 | $ 90,546 | 6.46% |
Non-performing Assets were $247 million, a decline of $80 million (24%) from the prior quarter primarily due to a $31 million decrease in non-accrual loans and a $39 million decrease in accrual loans more than 90 days delinquent, resulting from loan sales and charge-offs. Non-performing assets increased as a percentage of total assets, however, as segment assets declined by over 38% in the quarter due to deleveraging and share repurchases. As of September 30, 2011, 34 loans totaling $96 million were considered impaired and on non-accrual, but were current as to payment status. All collections on those loans are applied to the outstanding principal balance.
| Non-performing Assets | 9/30/2011 | 6/30/2011 | ||
| Loan Balance | % of Total Assets | Loan Balance | % of Total Assets | |
| ($ in thousands) | ||||
| Non-accrual loans - current | $ 96,093 | 5.14% | $ 135,729 | 4.49% |
| Non-accrual loans - delinquent 30-89 days | 6,376 | 0.34 | 756 | 0.02 |
| Non-accrual loans - delinquent 90+ days | 122,774 | 6.56 | 120,149 | 3.98 |
| Total non-accrual loans | 225,243 | 12.04% | 256,634 | 8.49% |
| Accruing loans - delinquent 90+ days | 1,213 | 0.06 | 39,941 | 1.32 |
| REO | 20,761 | 1.12 | 30,624 | 1.01 |
| Total non-performing assets | $ 247,217 | 13.22% | $ 327,199 | 10.82% |
Accruing Troubled Debt Restructurings were $119 million, a decrease of $8 million from the prior quarter. In addition, there were $66 million of TDRs at quarter end which were on non-accrual, though current as to payment status (included in the "Non-accrual loans – current" line in the table above).
Other expense was $87 million for the quarter, compared to other income of $25 million for the prior quarter, primarily due to charges of $114 million related to extinguishment of debt.
CONSOLIDATED
Net Loss was $81 million or $0.26 per diluted share, compared to net income of $17 million, or $0.05 per diluted share, in the prior quarter as detailed below. The net loss is primarily the result of total charges of $114 million related to extinguishment of debt and recorded within Other income (expense).
| Quarter Ended | |||||||
| 9/30/11 vs. 6/30/11 | 9/30/11 vs. 9/30/10 | ||||||
| Net (Loss) Income | 9/30/11 | 6/30/11 | 9/30/10 | $ | % | $ | % |
| ($ in thousands) | |||||||
| Interest income | $ 121,476 | $ 127,425 | $ 153,130 | $ (5,949) | (5) % | $ (31,654) | (21) % |
| Interest expense | 34,488 | 45,807 | 57,908 | 11,319 | 25 | 23,420 | 40 |
| Provision for loan losses | 35,118 | 1,523 | 38,771 | (33,595) | (2,206) | 3,653 | 9 |
| Operating expenses | 52,561 | 55,322 | 54,767 | 2,761 | 5 | 2,206 | 4 |
| Other (expense) income | (91,301) | 9,070 | 40,750 | (100,371) | (1,107) | (132,051) | (324) |
| Income tax (benefit) expense | (11,280) | 17,249 | (35,668) | 28,529 | 165 | (24,388) | (68) |
| Net (loss) income | (80,712) | 16,594 | 78,185 | (97,306) | (586) | (158,897) | (203) |
Interest Income was $121 million, a decrease of $6 million (5%) from the prior quarter primarily due to lower discount and fee accretion from prepayments, as well as reduced income on investments at the Parent Company.
Total Loans Held for Investment and Loans Held for Sale increased $221 million from the prior quarter as detailed below:
| 9/30/2011 | 06/30/2011 | 9/30/2010 | |
| Loan Roll Forward | |||
| ($ in thousands) | |||
| Beginning balance | $ 5,601,983 | $ 6,085,723 | $ 7,672,705 |
| New fundings | 619,276 | 542,728 | 443,097 |
| Loans | |||
| Principal repayments | (243,785) | (892,969) | (1,373,562) |
| Sales | (125,150) | (34,469) | (19,646) |
| Transfers to foreclosed assets | (1,515) | (10,808) | (8,984) |
| Charge-offs | (27,382) | (88,222) | (85,903) |
| Ending balance | $ 5,823,427 | $ 5,601,983 | $ 6,627,707 |
Allowance for Loan Losses was $208 million, or 3.58% of the loan portfolio, compared to $199 million or 3.55% at the end of the prior quarter.
Net Charge-offs were $26 million in the quarter, a decrease of $60 million from the prior quarter. Net charge-offs as a percentage of average loans for the twelve month period ended September 30, 2011 were 4.87%, compared to 5.55% for the twelve month period ended June 30, 2011.
| Quarter Ended | ||||
| Allowance for Loan Losses | 9/30/2011 | |||
| ($ in thousands) | General | Specific | Total | % Loans |
| Beginning balance | $ 181,278 | $ 17,860 | $ 199,138 | |
| Provision for loan losses | (2,356) | 37,474 | 35,118 | |
| Charge-offs, net | -- | (25,904) | (25,904) | |
| Ending balance | $ 178,922 | $ 29,430 | $ 208,352 | 3.58% |
| Quarter Ended | ||||
| 6/30/2011 | ||||
| General | Specific | Total | % Loans | |
| Beginning balance | $ 222,087 | $ 61,187 | $ 283,274 | |
| Provision for loan losses | (40,809) | 42,332 | 1,523 | |
| Charge-offs, net | -- | (85,659) | (85,659) | |
| Ending balance | $ 181,278 | $ 17,860 | $ 199,138 | 3.55% |
Non-performing Assets were $364 million, a decline of $201 million (36%) from the prior quarter primarily due to a $143 million decrease in non-accrual loans. As of September 30, 2011, 50 loans totaling $181 million were considered impaired and on non-accrual but were current as to payment status. All collections on those loans are applied to the outstanding principal balance.
| Non-performing Assets | 9/30/2011 | 6/30/2011 | |||
| Loan Balance | % of Total Assets | Loan Balance | % of Total Assets | ||
| ($ in thousands) | |||||
| Non-accrual loans - current | $ 181,265 | 2.17% | $ 319,322 | 3.43% | |
| Non-accrual loans - delinquent 30-89 days | 6,841 | 0.08 | 2,022 | 0.02 | |
| Non-accrual loans - delinquent 90+ days | 144,709 | 1.73 | 154,951 | 1.66 | |
| Total non-accrual loans | 332,815 | 3.98% | 476,295 | 5.11% | |
| Accruing loans - delinquent 90+ days | 1,213 | 0.01 | 40,077 | 0.43 | |
| REO | 29,983 | 0.36 | 48,431 | 0.52 | |
| Total non-performing assets | $ 364,011 | 4.35% | $ 564,803 | 6.06% | |
Accruing Troubled Debt Restructurings were $155 million, a decrease of $8 million from the prior quarter. In addition, there were $136 million of TDRs which were on non-accrual, but current as to payment status, at quarter end (included in the "Non-accrual loans – current" line in the table above).
Operating Expenses were $53 million, a decrease of $3 million from the prior quarter as detailed below:
| Quarter Ended | ||
| Operating Expenses | 9/30/2011 | 6/30/2011 |
| ($ in thousands) | ||
| Compensation and benefits | $ 31,047 | $ 29,098 |
| Professional fees | 5,824 | 10,914 |
| Other operating expenses | 15,690 | 15,310 |
| Total operating expenses | $ 52,561 | $ 55,322 |
Income Tax Benefit was $11.3 million for the quarter, primarily related to the reversal of a portion of the valuation allowance related to the deferred tax assets at CapitalSource Bank which occurred as a result of the consolidated loss in the quarter.
Valuation Allowance related to the Company's deferred tax assets at quarter end was $474 million, an increase of $37 million from the end of the prior quarter. The net deferred tax asset at quarter end after subtracting the valuation allowance was $40 million, a decrease of $7 million from the prior quarter. The valuation allowance is a non-cash accounting charge which will exist until there is sufficient positive evidence to support its reduction or reversal.
Book Value Per Share was $6.19 at the end of the quarter, a decrease of $0.34 from the end of the prior quarter. Total shareholders' equity was $1.7 billion at the end of the quarter, a decrease of $404 million from the prior quarter primarily due to share repurchases and the net loss in the quarter.
Share Repurchases during the quarter totaled 49.9 million shares or 15% of outstanding shares at June 30, 2011, at a total cost of $308.6 million and an average purchase price of $6.19 per share. As of September 30, 2011, the remaining authority for share repurchases was $66 million. Subsequent to quarter end, the CapitalSource Board increased that authority by $200 million, raising the total authorization to $585 million. The Company previously announced its intention to return excess Parent Company capital to shareholders and this increased authorization represents the next phase of share repurchases consistent with that goal.
Any share repurchases made pursuant to our stock repurchase program, including the increased authorization announced today will be made through open market purchases or privately negotiated transactions from time to time until December 2012 – two years from initiation of the program in December 2010. 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.
Average Diluted Shares Outstanding were 306.5 million shares for the quarter, compared to 327.1 million shares for the prior quarter. Total outstanding shares at September 30, 2011 were 275.8 million.
Quarterly Cash Dividend of $0.01 per common share was paid on September 30, 2011 to common shareholders of record on September 16, 2011.
Conference Call Details
A conference call to discuss the results will be hosted on Thursday, October 27, 2011 at 5:30 p.m. EDT. 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 9:00 p.m. EDT October 27, 2011through January 27, 2012.
CapitalSource Bank will file its Consolidated Reports of Condition and Income for A Bank With Domestic Offices Only FFIEC 041, for the quarter ended September 30, 2011 (the Call Report) with the Federal Deposit Insurance Corporation (FDIC) on or before October 30, 2011. The Call Report may be found on the FDIC website at http://cdr.ffiec.gov/Public/ following filing by CapitalSource Bank and posting by the FDIC.
About CapitalSource
CapitalSource Inc. (NYSE:CSE) is a commercial lender that provides financial products to small and middle market businesses nationwide and offers depository products and services in southern and central California through its wholly owned subsidiary CapitalSource Bank. As of September 30, 2011, CapitalSource had total assets of $8.4 billion and $4.9 billion in deposits. Visit www.capitalsource.com for more information.
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 improving credit trends, return of excess capital at the Parent Company to shareholders, pace of repurchases under our existing share buyback program, and our expectations regarding loan growth at CapitalSource Bank, 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: continued or worsening credit losses, charge-offs, reserves and delinquencies; changes in economic or market conditions or investment or lending opportunities; competitive and other market pressures on product pricing and services; reduced demand for our services; drawdown of unfunded commitments substantially in excess of historical drawings; the success and timing of other business strategies and asset sales; lower than anticipated liquidity ; and other factors described in CapitalSource's 2010 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 Third Quarter 2011 – Financial Supplement
Table of Contents
- Consolidated Balance Sheets
- Consolidated Statements of Income
- Segment Balance Sheets
- Segment Statements of Income
- Selected Financial Data
| CapitalSource Inc. | ||
| Consolidated Balance Sheets | ||
| ($ in thousands) | ||
| September 30, | December 31, | |
| 2011 | 2010 | |
| (Unaudited) | ||
| ASSETS | ||
| Cash and cash equivalents | $ 496,844 | $ 820,450 |
| Restricted cash | 50,138 | 128,586 |
| Investment securities: | ||
| Available-for-sale, at fair value | 1,457,426 | 1,522,911 |
| Held-to-maturity, at amortized cost | 102,651 | 184,473 |
| Total investment securities | 1,560,077 | 1,707,384 |
| Loans: | ||
| Loans held for sale | 32,837 | 205,334 |
| Loans held for investment | 5,790,590 | 6,152,876 |
| Less deferred loan fees and discounts | (68,421) | (106,438) |
| Less allowance for loan losses | (208,352) | (329,122) |
| Loans held for investment, net | 5,513,817 | 5,717,316 |
| Total loans | 5,546,654 | 5,922,650 |
| Interest receivable | 39,266 | 57,393 |
| Other investments | 57,883 | 71,889 |
| Goodwill | 173,135 | 173,135 |
| Other assets | 435,425 | 563,920 |
| Total assets | $ 8,359,422 | $ 9,445,407 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Liabilities: | ||
| Deposits | $ 4,885,831 | $ 4,621,273 |
| Credit facilities | -- | 67,508 |
| Term debt | 347,744 | 979,254 |
| Other borrowings | 1,151,557 | 1,375,884 |
| Other liabilities | 268,105 | 347,546 |
| Total liabilities | 6,653,237 | 7,391,465 |
| Shareholders' equity: | ||
| Preferred stock (50,000,000 shares authorized; no shares outstanding) | -- | -- |
| Common stock ($0.01 par value, 1,200,000,000 shares authorized; 275,786,277 and 323,225,355 shares issued and outstanding, respectively) | 2,758 | 3,232 |
| Additional paid-in capital | 3,612,593 | 3,911,341 |
| Accumulated deficit | (1,940,991) | (1,870,572) |
| Accumulated other comprehensive income, net | 31,825 | 9,941 |
| Total shareholders' equity | 1,706,185 | 2,053,942 |
| Total liabilities and shareholders' equity | $ 8,359,422 | $ 9,445,407 |
| CapitalSource Inc. | ||||||
| Consolidated Statements of Income | ||||||
| (Unaudited) | ||||||
| ($ in thousands, except per share data) | ||||||
| Three Months Ended | Nine Months Ended | |||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||
| 2011 | 2011 | 2010 | 2011 | 2010 | ||
| Net interest income: | (Unaudited) | (Unaudited) | ||||
| Interest income: | ||||||
| Loans | $ 107,161 | $ 113,647 | $ 138,220 | $ 344,308 | $ 443,267 | |
| Investment securities | 13,635 | 12,688 | 14,608 | 44,675 | 44,818 | |
| Other | 680 | 1,090 | 302 | 2,070 | 1,179 | |
| Total interest income | 121,476 | 127,425 | 153,130 | 391,053 | 489,264 | |
| Interest expense: | ||||||
| Deposits | 13,422 | 13,398 | 14,490 | 40,203 | 46,127 | |
| Borrowings | 21,066 | 32,409 | 43,418 | 86,844 | 137,539 | |
| Total interest expense | 34,488 | 45,807 | 57,908 | 127,047 | 183,666 | |
| Net interest income | 86,988 | 81,618 | 95,222 | 264,006 | 305,598 | |
| Provision for loan losses | 35,118 | 1,523 | 38,771 | 81,450 | 282,973 | |
| Net interest income after provision for loan losses | 51,870 | 80,095 | 56,451 | 182,556 | 22,625 | |
|
|
||||||
| Operating expenses: | ||||||
| Compensation and benefits | 31,047 | 29,098 | 28,565 | 90,524 | 92,171 | |
| Professional fees | 5,824 | 10,914 | 8,792 | 23,926 | 27,659 | |
| Other administrative expenses | 15,690 | 15,310 | 17,410 | 47,694 | 51,733 | |
| Total operating expenses | 52,561 | 55,322 | 54,767 | 162,144 | 171,563 | |
|
|
||||||
| Other (expense) income : | ||||||
| Gain on investments, net | 19,141 | 8,725 | 29,943 | 51,381 | 46,279 | |
| Loss on derivatives | (2,113) | (271) | (1,968) | (4,262) | (9,919) | |
| (Loss) gain on extinguishment of debt | (113,679) | -- | -- | (113,679) | 1,096 | |
| Net expense of real estate owned and other foreclosed assets | (12,098) | (10,355) | (7,372) | (32,626) | (91,039) | |
| Other income, net | 17,448 | 10,971 | 20,147 | 34,946 | 37,252 | |
| Total other (expense) income | (91,301) | 9,070 | 40,750 | (64,240) | (16,331) | |
|
|
||||||
| Net (loss) income from continuing operations before income taxes | (91,992) | 33,843 | 42,434 | (43,828) | (165,269) | |
| Income tax (benefit) expense | (11,280) | 17,249 | (35,668) | 17,131 | (18,836) | |
| Net (loss) income from continuing operations | (80,712) | 16,594 | 78,102 | (60,959) | (146,433) | |
| Net income from discontinued operations, net of taxes | -- | -- | -- | -- | 9,489 | |
| Net gain from sale of discontinued operations, net of taxes | -- | -- | -- | -- | 21,696 | |
| Net (loss) income | (80,712) | 16,594 | 78,102 | (60,959) | (115,248) | |
| Net loss attributable to noncontrolling interests | -- | -- | (83) | -- | (83) | |
| Net (loss) income attributable to CapitalSource Inc | $ (80,712) | $ 16,594 | 78,185 | $ (60,959) | $ (115,165) | |
|
|
||||||
| Basic (loss) income per share: | ||||||
| From continuing operations | $ (0.26) | $ 0.05 | $ 0.24 | $ (0.19) | $ (0.46) | |
| From discontinued operations | $ -- | $ -- | $ -- | $ -- | $ 0.10 | |
| Net (loss) income per share | $ (0.26) | $ 0.05 | $ 0.24 | $ (0.19) | $ (0.36) | |
| Diluted (loss) income per share: | ||||||
| From continuing operations | $ (0.26) | $ 0.05 | $ 0.24 | $ (0.19) | $ (0.46) | |
| From discontinued operations | $ -- | $ -- | $ -- | $ -- | $ 0.10 | |
| Net (loss) income per share | $ (0.26) | $ 0.05 | $ 0.24 | $ (0.19) | $ (0.36) | |
| Average shares outstanding: | ||||||
| Basic | 306,535,063 | 320,426,484 | 321,070,479 | 315,719,413 | 320,723,068 | |
| Diluted | 306,535,063 | 327,087,717 | 325,337,737 | 315,719,412 | 320,723,068 | |
|
|
||||||
| Dividends declared per share | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.03 | $ 0.03 | |
| CapitalSource Inc. | |||||||||||
| Segment Balance Sheets | |||||||||||
| (Unaudited) | |||||||||||
| ($ in thousands) | |||||||||||
| September 30, 2011 | June 30, 2011 | ||||||||||
| CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | ||||
| ASSETS | |||||||||||
|
|
|||||||||||
| Cash and cash equivalents and restricted cash | $ 247,114 | $ 299,868 | $ -- | $ 546,982 | $ 382,065 | $ 1,300,457 | $ -- | $ 1,682,522 | |||
| Investment securities: | |||||||||||
| Available-for-sale | 1,434,094 | 23,332 | -- | 1,457,426 | 1,447,826 | 24,917 | -- | 1,472,743 | |||
| Held-to-maturity | 102,651 | -- | -- | 102,651 | 136,250 | -- | -- | 136,250 | |||
| Loans | 4,486,637 | 1,264,676 | 3,693 | 5,755,006 | 4,146,466 | 1,374,776 | 3,150 | 5,524,392 | |||
| Allowance for loan losses | (118,684) | (89,668) | -- | (208,352) | (108,592) | (90,546) | -- | (199,138) | |||
| Loans, net of allowance for loan losses | 4,367,953 | 1,175,008 | 3,693 | 5,546,654 | 4,037,874 | 1,284,230 | 3,150 | 5,325,254 | |||
| Receivables due from affiliates | 1,321 | 16,658 | (17,979) | -- | 1,230 | 51,798 | (53,028) | -- | |||
| Other assets | 394,586 | 355,742 | (44,619) | 705,709 | 366,561 | 363,082 | (31,468) | 698,175 | |||
| Total assets | $ 6,547,719 | $ 1,870,608 | $ (58,905) | $ 8,359,422 | $ 6,371,806 | $ 3,024,484 | $ (81,346) | $ 9,314,944 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
|
|
|||||||||||
| Liabilities: | |||||||||||
| Deposits | $ 4,885,831 | $ -- | $ -- | $ 4,885,831 | $ 4,785,790 | $ -- | $ -- | $ 4,785,790 | |||
| Borrowings | 540,000 | 959,301 | -- | 1,499,301 | 480,000 | 1,669,893 | -- | 2,149,893 | |||
| Balance due to affiliates | 16,658 | 1,321 | (17,979) | -- | 51,798 | 1,230 | (53,028) | -- | |||
| Other liabilities | 77,606 | 237,670 | (47,171) | 268,105 | 59,220 | 243,445 | (33,754) | 268,911 | |||
| Total liabilities | 5,520,095 | 1,198,292 | (65,150) | 6,653,237 | 5,376,808 | 1,914,568 | (86,782) | 7,204,594 | |||
|
|
|||||||||||
| Shareholders' equity: | |||||||||||
| Common stock | 921,000 | 2,758 | (921,000) | 2,758 | 921,000 | 3,232 | (921,000) | 3,232 | |||
| Additional paid-in capital/retained earnings/deficit | 85,278 | 637,733 | 948,591 | 1,671,602 | 59,041 | 1,059,986 | 941,393 | 2,060,420 | |||
| Accumulated other comprehensive income, net | 21,346 | 31,825 | (21,346) | 31,825 | 14,957 | 46,698 | (14,957) | 46,698 | |||
| Total shareholders' equity | 1,027,624 | 672,316 | 6,245 | 1,706,185 | 994,998 | 1,109,916 | 5,436 | 2,110,350 | |||
|
|
|||||||||||
| Total liabilities and shareholders' equity | $ 6,547,719 | $ 1,870,608 | $ (58,905) | $ 8,359,422 | $ 6,371,806 | $ 3,024,484 | $ (81,346) | $ 9,314,944 | |||
|
|
|||||||||||
| Book value per outstanding share | $ 3.73 | $ 2.44 | $ 0.02 | $ 6.19 | $ 3.08 | $ 3.43 | $ 0.02 | $ 6.53 | |||
| CapitalSource Inc. | ||||||||
| Segment Statements of Income | ||||||||
| (Unaudited) | ||||||||
| ($ in thousands) | ||||||||
| Three Months Ended September 30, 2011 | Three Months Ended June 30, 2011 | |||||||
| Net interest income: | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED |
| Interest income | $ 92,173 | $ 28,653 | $ 650 | $ 121,476 | $ 90,490 | $ 40,701 | $ (3,766) | $ 127,425 |
| Interest expense | 15,982 | 18,506 | -- | 34,488 | 15,612 | 30,195 | -- | 45,807 |
| Net interest income | 76,191 | 10,147 | 650 | 86,988 | 74,878 | 10,506 | (3,766) | 81,618 |
| Provision for loan losses | 13,725 | 21,393 | -- | 35,118 | (1,331) | 2,854 | -- | 1,523 |
| Net interest income (loss) after provision for loan losses | 62,466 | (11,246) | 650 | 51,870 | 76,209 | 7,652 | (3,766) | 80,095 |
| Compensation and benefits | 13,185 | 19,197 | (1,335) | 31,047 | 11,926 | 17,759 | (587) | 29,098 |
| Professional fees | 1,798 | 4,026 | -- | 5,824 | 449 | 10,465 | -- | 10,914 |
| Other operating expenses | 18,681 | 12,978 | (15,969) | 15,690 | 20,219 | 13,452 | (18,361) | 15,310 |
| Total operating expenses | 33,664 | 36,201 | (17,304) | 52,561 | 32,594 | 41,676 | (18,948) | 55,322 |
| Total other income (expense) | 12,933 | (87,089) | (17,145) | (91,301) | 3,000 | 24,751 | (18,681) | 9,070 |
| Net income (loss) before income taxes | 41,735 | (134,536) | 809 | (91,992) | 46,615 | (9,273) | (3,499) | 33,843 |
| Income tax expense (benefit) | 16,513 | (27,793) | -- | (11,280) | 18,840 | (1,591) | -- | 17,249 |
| Net income (loss) | $ 25,222 | $ (106,743) | $ 809 | $ (80,712) | $ 27,775 | $ (7,682) | $ (3,499) | $ 16,594 |
| Nine Months Ended September 30, 2011 | Nine Months Ended September 30, 2010 | |||||||
| Net interest income: | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED |
| Interest income | $ 274,467 | $ 116,968 | $ (382) | $ 391,053 | $ 246,592 | $ 249,411 | $ (6,739) | $ 489,264 |
| Interest expense | 46,804 | 80,243 | -- | 127,047 | 49,756 | 133,910 | -- | 183,666 |
| Net interest income | 227,663 | 36,725 | (382) | 264,006 | 196,836 | 115,501 | (6,739) | 305,598 |
| Provision for loan losses | 23,636 | 57,814 | -- | 81,450 | 107,350 | 175,623 | -- | 282,973 |
| Net interest income (loss) after provision for loan losses | 204,027 | (21,089) | (382) | 182,556 | 89,486 | (60,122) | (6,739) | 22,625 |
| Compensation and benefits | 36,819 | 56,458 | (2,753) | 90,524 | 32,805 | 59,366 | -- | 92,171 |
| Professional fees | 2,611 | 21,315 | -- | 23,926 | 1,458 | 26,201 | -- | 27,659 |
| Other operating expenses | 59,769 | 41,430 | (53,505) | 47,694 | 47,917 | 46,127 | (42,311) | 51,733 |
| Total operating expenses | 99,199 | 119,203 | (56,258) | 162,144 | 82,180 | 131,694 | (42,311) | 171,563 |
| Total other income (expense) | 18,898 | (29,984) | (53,154) | (64,240) | 22,374 | 3,294 | (41,999) | (16,331) |
| Net income (loss) from continuing operations before income taxes | 123,726 | (170,276) | 2,722 | (43,828) | 29,680 | (188,522) | (6,427) | (165,269) |
| Income tax expense (benefit) | 38,448 | (21,317) | -- | 17,131 | (5,226) | (13,610) | -- | (18,836) |
| Net income (loss) from continuing operations | $ 85,278 | $ (148,959) | $ 2,722 | $ (60,959) | $ 34,906 | $ (174,912) | $ (6,427) | $ (146,433) |
| CapitalSource Inc. | |||||
| Selected Financial Data | |||||
|
(Unaudited) |
|||||
| Three Months Ended | Nine Months Ended | ||||
| September 30, | June 30, | September 30 | September 30, | September 30, | |
| 2011 | 2011 | 2010 | 2011 | 2010 | |
| CapitalSource Bank Segment: | |||||
| Performance ratios: | |||||
| Return on average assets | 1.55% | 1.78% | 2.50% | 1.82% | 0.81% |
| Return on average equity | 9.90% | 11.46% | 16.43% | 11.71% | 5.36% |
| Yield on average interest earning assets | 5.97% | 6.13% | 6.10% | 6.19% | 5.91% |
| Cost of interest bearing liabilities | 1.19% | 1.21% | 1.30% | 1.21% | 1.38% |
| Deposits | 1.10% | 1.13% | 1.26% | 1.13% | 1.35% |
| Borrowings | 2.01% | 2.08% | 1.93% | 2.02% | 1.89% |
| Borrowing spread | 0.98% | 1.01% | 1.01% | 0.99% | 1.10% |
| Net interest margin | 4.94% | 5.07% | 4.97% | 5.14% | 4.72% |
| Operating expenses as a percentage of average total assets | 2.07% | 2.09% | 1.94% | 2.12% | 1.90% |
| Core lending spread | 7.30% | 7.78% | 7.51% | 7.67% | 7.38% |
| Loan yield | 7.51% | 7.98% | 7.80% | 7.89% | 7.66% |
| Capital ratios: | |||||
| Tier 1 leverage | 13.50% | 13.47% | 13.03% | 13.50% | 13.03% |
| Total risk-based capital | 18.13% | 18.67% | 18.26% | 18.13% | 18.26% |
| Tangible common equity to tangible assets | 13.40% | 13.26% | 12.85% | 13.40% | 12.85% |
| Average balances ($ in thousands): | |||||
| Average loans | $ 4,192,610 | $ 3,943,136 | $ 3,550,818 | $ 3,977,519 | $ 3,288,021 |
| Average assets | 6,464,975 | 6,261,685 | 5,857,253 | 6,259,099 | 5,796,290 |
| Average interest earning assets | 6,123,923 | 5,925,269 | 5,603,442 | 5,925,633 | 5,574,073 |
| Average deposits | 4,833,941 | 4,738,233 | 4,579,727 | 4,749,229 | 4,579,658 |
| Average borrowings | 506,413 | 426,484 | 315,228 | 435,879 | 256,330 |
| Average equity | 1,010,782 | 972,310 | 891,114 | 973,461 | 870,988 |
| Other Commercial Finance Segment: | |||||
| Performance ratios: | |||||
| Return on average assets | (16.79%) | (1.00%) | 4.36% | (6.70%) | (3.90%) |
| Return on average equity | (41.11%) | (2.78%) | 15.95% | (18.29%) | (16.75%) |
| Yield on average interest earning assets | 5.67% | 6.30% | 8.05% | 6.56% | 7.38% |
| Cost of interest bearing liabilities | 5.70% | 6.89% | 6.55% | 6.51% | 5.11% |
| Borrowing spread | 5.49% | 6.69% | 6.26% | 6.29% | 4.83% |
| Net interest margin | 2.01% | 1.63% | 3.21% | 2.06% | 3.42% |
| Operating expenses as a percentage of average total assets | 5.69% | 5.43% | 4.06% | 5.36% | 3.57% |
| Core lending spread | 8.37% | 9.71% | 8.32% | 8.35% | 7.55% |
| Loan yield | 8.58% | 9.91% | 8.61% | 8.57% | 7.83% |
| Leverage ratios: | |||||
| Total debt to equity (as of period end) | 1.43x | 1.50x | 1.87x | 1.43x | 1.87x |
| Equity to total assets (as of period end) | 35.94% | 36.70% | 31.91% | 35.94% | 31.91% |
| Average balances ($ in thousands): | |||||
| Average loans | $ 1,256,049 | $ 1,575,555 | $ 3,204,263 | $ 1,717,145 | $ 4,243,451 |
| Average assets | 2,522,401 | 3,077,378 | 3,987,312 | 2,972,692 | 4,926,964 |
| Average interest earning assets | 2,003,654 | 2,592,896 | 3,438,987 | 2,385,213 | 4,520,528 |
| Average borrowings | 1,288,807 | 1,758,963 | 2,535,383 | 1,647,602 | 3,503,504 |
| Average equity | 1,030,100 | 1,108,506 | 1,090,838 | 1,089,019 | 1,145,662 |
| Consolidated CapitalSource Inc.: (1) | |||||
| Performance ratios: | |||||
| Return on average assets | (3.59%) | 0.72% | 3.17% | (0.89%) | (1.45%) |
| Return on average equity | (15.65%) | 3.19% | 15.84% | (3.94%) | (7.72%) |
| Yield on average interest earning assets | 5.93% | 6.00% | 6.74% | 6.29% | 6.49% |
| Cost of interest bearing liabilities | 2.06% | 2.65% | 3.09% | 2.49% | 2.94% |
| Borrowing spread | 1.85% | 2.45% | 2.80% | 2.27% | 2.66% |
| Net interest margin | 4.24% | 3.84% | 4.19% | 4.25% | 4.06% |
| Operating expenses as a percentage of average total assets | 2.34% | 2.39% | 2.22% | 2.36% | 2.16% |
| Leverage ratios: | |||||
| Total debt to equity (as of period end) | 3.74x | 3.29x | 3.44x | 3.74x | 3.44x |
| Equity to total assets (as of period end) | 20.41% | 22.66% | 21.66% | 20.41% | 21.66% |
| Tangible common equity to tangible assets | 18.71% | 21.17% | 20.20% | 18.71% | 20.20% |
| Average balances ($ in thousands): | |||||
| Average loans | 5,451,395 | 5,524,326 | 6,730,019 | 5,698,155 | 7,508,530 |
| Average assets | 8,924,852 | 9,289,804 | 9,775,893 | 9,176,704 | 10,641,042 |
| Average interest earning assets | 8,130,313 | 8,523,800 | 9,017,367 | 8,314,338 | 10,071,659 |
| Average borrowings | 1,795,220 | 2,185,447 | 2,850,611 | 2,083,481 | 3,759,834 |
| Average deposits | 4,833,941 | 4,738,233 | 4,579,727 | 4,749,229 | 4,579,658 |
| Average equity | 2,045,996 | 2,088,562 | 1,958,206 | 2,068,085 | 1,994,768 |
| (1) Applicable ratios have been calculated on a continuing operations basis. | |||||
| CapitalSource Inc. | ||||||||||
| Credit Quality Data | ||||||||||
| (Unaudited) | ||||||||||
| September 30, 2011 | June 30, 2011 | March 31, 2011 | December 31, 2010 | September 30, 2010 | ||||||
| Loans 30-89 days contractually delinquent: | ||||||||||
| As a % of total loans(1) | 0.27% | 0.07% | 0.77% | 0.44% | 0.86% | |||||
| Loans 30-89 days contractually delinquent | $ 15.7 | $ 3.9 | $ 46.6 | $ 27.8 | $ 56.8 | |||||
| Loans 90 or more days contractually delinquent: | ||||||||||
| As a % of total loans | 2.51% | 3.48% | 4.64% | 5.03% | 5.47% | |||||
| Loans 90 or more days contractually delinquent | $ 145.9 | $ 195.0 | $ 282.4 | $ 319.7 | $ 362.6 | |||||
| Loans on non-accrual:(2) | ||||||||||
| As a % of total loans | 5.72% | 8.50% | 9.03% | 10.99% | 11.89% | |||||
| Loans on non-accrual | $ 332.8 | $ 476.3 | $ 549.4 | $ 698.7 | $ 787.9 | |||||
| Impaired loans:(3) | ||||||||||
| As a % of total loans | 7.93% | 8.69% | 12.17% | 14.65% | 14.75% | |||||
| Impaired loans | $ 461.8 | $ 486.6 | $ 740.6 | $ 931.2 | $ 977.5 | |||||
| Allowance for loan losses: | ||||||||||
| As a % of total loans | 3.58% | 3.55% | 4.65% | 5.17% | 5.94% | |||||
| Allowance for loan losses | $ 208.4 | $ 199.1 | $ 283.3 | $ 329.1 | $ 393.6 | |||||
| Net charge offs (last twelve months): | ||||||||||
| As a % of total average loans | 4.87% | 5.55% | 5.78% | 5.78% | 6.78% | |||||
| Net charge offs (last twelve months) | $ 290.8 | $ 350.5 | $ 397.6 | $ 426.5 | $ 535.6 | |||||
| (1) Includes loans held for investment and loans held for sale. Excludes deferred loan fees and discounts and the allowance for loan losses. | ||||||||||
| (2) Includes loans with an aggregate principal balance of $144.7 million, $155.0 million, $235.3 million, $270.5 million, and $354.3 million as of September 30, 2011, June 30, 2011, March 31, 2011, December 31, 2010, and September 30, 2010, 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 $3.1 million, $118.7 million, $11.5 million, $14.7 million, and $37.5 million as of September 30, 2011, June 30, 2011, March 31, 2011, December 31, 2010, and September 30, 2010, respectively. | ||||||||||
| (3) Includes loans with an aggregate principal balance of $142.8 million, $153.3 million, $243.8 million, $265.3 million, and $340.0 million as of September30 2011, June 30, 2011, March 31, 2011, December 31, 2010, and September 30, 2010, respectively, that were also classified as loans 90 or more days contractually delinquent, and loans with an aggregate principal balance of $329.7 million, $357.6 million, $549.4 million, $684.1 million, and $787.9 million as of September 30, 2011, June 30, 2011, March 31, 2011, December 31, 2010, and September 30, 2010, respectively, that were also classified as loans on non-accrual status. | ||||||||||