NewStar Financial (NEWS) Misses Q2 EPS by 6c

NewStar Financial (NASDAQ: NEWS) reported Q2 EPS of $0.10, $0.06 worse than the analyst estimate of $0.16. Revenue for the quarter came in at $20.2 million versus the consensus estimate of $17.07 million.

• Acquisition – Completed previously announced acquisition of Fifth Street CLO Management LLC on July 20, 2017, adding approximately $726 million of AUM.
• Investment Activity – New funded, middle-market credit investments totaled $460 million in the second quarter, up from $330 million last quarter and compared to $476 million in the same quarter last year.
• Managed Assets – Managed loans and credit investments at the end of the quarter decreased slightly from the prior quarter to $6.5 billion due to the amortization and redemption of older managed CLOs issued in 2006 and 2007, which was partly offset by growth in loans held-for-sale and investments in debt securities issued by managed funds to comply with risk retention requirements.
• Net Interest Margin – The margin increased to 1.56% for the second quarter from 1.45% in the prior quarter due to a combination of rising index rates, higher deferred loan fee amortization and an increase in loans as a percentage of earning assets.
• Revenue – Total revenue1 in the second quarter was consistent with the prior quarter at $20.2 million as higher net interest income, asset management fees and a gain on the sale of equity interests offset a decrease in fee income from capital markets activities and higher negative mark-to-market adjustments on loans held at fair value.
• Credit – Credit costs decreased $3.5 million from the prior period to $2.7 million due primarily to lower specific provision expense, while net charge-offs increased by $2.0 million from the prior period to $7.5 million in the second quarter.
• Expenses – Operating expenses decreased by $1.3 million, or 11.5%, from the prior period to $10.3 million as the company achieved planned cost saving targets.
• Capital Management – Returned approximately $7.3 million to stockholders in the second quarter through share repurchases and dividends. Book value per share increased to $15.40 as of June 30, 2017, up $0.19 from the end of the prior quarter.
• Quarterly Dividend – Board of Directors declared a quarterly dividend of $0.02 per share of common stock payable on September 15, 2017 to shareholders of record on August 29, 2017.

For earnings history and earnings-related data on NewStar Financial (NEWS) click here.

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