NewStar Reports Third Quarter Results



 Continued Solid Earnings Generated From Defensive Balance Sheet

 * Earned $7.4 million of adjusted net income in the third quarter,
   or $0.15 of adjusted earnings per diluted share
 * On a GAAP basis, earned $7.6 million of net income in the third
   quarter, or $0.16 of net income per diluted share, increasing book
   value per share to $11.91
 * Continued to capitalize on a favorable lending environment,
   originating $178 million of new loans with conservative credit
   profiles and average yields of greater than 540 bps above LIBOR
 * Extended maturity and received commitment for renewal of existing
   warehouse line with Citi, reducing size from $400 million to
   $300 million
 * Experienced moderate decline in credit performance, reflecting
   increased risks from slowing economic activity and continued
   constraints on credit availability

BOSTON, Nov. 5, 2008 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS), a Boston-based commercial finance company, today reported adjusted net income for the third quarter of 2008 of $7.4 million, or $0.15 per diluted share. On a GAAP basis, the Company reported net income of $7.6 million, or $0.16 per diluted share, which reflected a $1.1 million after-tax non-cash equity compensation expense related to the 2006 IPO, offset by $1.3 million to reflect the tax impact of timing differences related to the recognition of losses on a prior asset sale.

"Adjusted net income" and other non-GAAP financial measures used in this release are defined under "Non-GAAP Financial Measures" on page 4. Reconciliations between GAAP and adjusted (non-GAAP) measures can be found in the attached financial tables.

"In a market environment as uncertain as we have just experienced, I am pleased to report another solid quarter of operating performance and financial results," said Tim Conway, Chairman and Chief Executive Officer. "We continued to benefit from actions taken since the summer of 2007 to position the company defensively with a lower expense base, a liquid balance sheet and a funding platform with appropriate flexibility to support operations through a sustained period of stress in the capital markets. We will continue to manage cautiously to preserve liquidity and protect book value while the risk of prolonged weakness in the macro environment remains elevated."

"NewStar delivered solid financial results in the third quarter led by continued widening in loan spreads, better fee income and strong expense management," said John Kirby Bray, Chief Financial Officer. "The balance sheet continued to reflect conservative leverage with ample liquidity. With a commitment from Citi to renew our warehouse credit facility at $300 million, we will continue to have sufficient funding capacity and financial flexibility to support our planned origination activity."

Funding and Capital


 * NewStar had $683 million of funding capacity, with approximately
   $530 million of available borrowing capacity under its credit
   facilities and existing term debt securitizations (CLOs) as of
   September 30, 2008.
 * Over 70% of loan assets were funded by term debt at attractive,
   locked-in spreads as of September 30, 2008.
 * Total cash and equivalents as of September 30, 2008 were
   $238 million, of which $133 million was unrestricted.
 * Extended maturity of existing warehouse line with Citi and
   received commitment for renewal subject to usual and customary
   conditions.  In connection with the renewal, we will reduce the
   size of the credit facility from $400 million to $300 million.
   Other key terms of Citi's commitment include changes in advance
   rates and pricing at levels that are consistent with terms of
   other recent comparable financing arrangements.

Origination Volume


 * Overall origination volume for the third quarter of 2008 was
   $178 million, of which $133 million was retained on NewStar's
   balance sheet, $42 million was either syndicated or held for sale
   and $3 million was held for sale to the NewStar Credit
   Opportunities Fund (NCOF).
 * Credit spreads and amortizing fees on new loans originated in the
   third quarter continued to improve, with average yields of greater
   than 540 bps above LIBOR, which is an increase of more than 195bps
   from the third quarter of 2007.
 * Corporate lending represented 100% of the new volume in the
   quarter.

Managed and Owned Loan Portfolios


 * Managed loan portfolio was $3.0 billion as of September 30, 2008,
   equal to the level at June 30, 2008, reflecting the net impact of
   $178 million of new origination, which was offset by prepayments
   and scheduled amortization of existing loans. Managed loan
   portfolio was up 14% from $2.6 billion as of September 30, 2007.
 * Assets managed for the NCOF were $570 million at September 30,
   2008, down from $593 million at June 30, 2008 and up 16% from
   $491 million at September 30, 2007.
 * The owned loan portfolio continued to be balanced across industry
   sectors and highly diversified by issuer. As of September 30,
   2008, no single issuer represented more than approximately 1% of
   total assets, excluding loans held-for-sale, and the ten largest
   issuers comprised approximately 10% of the loan portfolio.
 * The composition of the owned loan portfolio continued to reflect a
   focus on senior debt with 95% invested in 1st lien senior secured
   loans and debt investments at September 30, 2008.

Net Interest Income / Margin


 * Net interest income before provision for credit losses was
   $25.0 million for the third quarter of 2008 compared to
   $26.5 million for the second quarter of 2008 and $24.6 million for
   the third quarter of 2007.
 * Net interest margin decreased 27 bps to 3.90% for the third
   quarter of 2008 compared to 4.17% for the second quarter of 2008
   and 4.29% for the third quarter of 2007 due principally to the
   impact of declining LIBOR rates.  The benefit from the timing
   difference between asset and liability repricing tied to LIBOR
   continued to diminish in the third quarter.  The contribution from
   earnings on excess cash also declined due to both the lower rate
   environment, as well as management's decision to limit investments
   of excess cash to lower risk asset classes such as U.S. Treasury
   securities.

Non-Interest Income


 * Non-interest income was $5.5 million for the third quarter of
   2008 compared to $1.6 million for the second quarter of 2008, and
   $(21.8) million for the third quarter of 2007.
 * Adjusted non-interest income, excluding the impact of the
   write-down on the retained residual interest in prior periods, was
   $5.5 million in the third quarter of 2008 compared to $1.9 million
   in the second quarter of 2008 and $6.3 million in the third
   quarter of 2007.
 * Adjusted non-interest income in the third quarter of 2008
   consisted primarily of $1.7 million of asset management income,
   $1.0 million of syndication related revenue recorded in gain on
   sale of loans, $0.7 million gain on rate protection products sold
   to clients, $0.3 million of structuring and placement fees,
   $0.2 million of syndication and agency fees, and $0.2 million of
   amendment fees.

Loan Credit Quality


 * The provision for credit losses was $12.0 million in the third
   quarter of 2008, up from $3.7 million in the second quarter of
   2008.
 * Allowance for credit losses was $44.9 million or 1.87% of loans at
   September 30, 2008, compared to $38.2 million or 1.60% at
   June 30, 2008 and $31.9 million or 1.62% at September 30, 2007.
 * Non-accrual loans consisted of three loans with an aggregate
   outstanding balance of $26.4 million at September 30, 2008
   compared to two loans with an aggregate outstanding balance of
   $10.1 million at June 30, 2008. Additionally, the Company had one
   $7.1 million asset at September 30, 2008 which was other real
   estate owned ("OREO") as a result of a foreclosure on an impaired
   loan.
 * There were no delinquent loans as of September 30, 2008
 * NewStar established $11.5 million specific reserves in the third
   quarter of 2008 compared to $2.7 million in the second quarter of
   2008.
 * NewStar had net charged-offs of $5.3 million or 0.87% of loans on
   an annualized basis in the third quarter of 2008 compared to
   $2.3 million or 0.38% of loans on an annualized basis in the prior
   quarter.

Expenses


 * Operating expenses decreased to $8.5 million in the third quarter
   of 2008 from $13.5 million in the second quarter of 2008,
   reflecting a lower expense base, no severance expense in the third
   quarter and lower compensation expense.

Conference Call and Webcast

NewStar will host a webcast/conference call to discuss the results today at 10:00 am Eastern Time. All interested parties are invited to participate via telephone or webcast, which will be hosted through the Investor Relations section at www.newstarfin.com. Please visit the website to register for the webcast and test your connection prior to the call. You can also access the conference call by dialing 877-681-3377 approximately 5-10 minutes prior to the call. International callers should dial 719-325-4839. All callers should reference "NewStar Financial."

For convenience, an archived replay of the call will be available through November 12, 2008 by dialing 888-203-1112. International callers should call 719-457-0820. For all replays, please use the passcode 4420840. The audio replay will also be available through the Investor Relations section at www.newstarfin.com.

About NewStar Financial

NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing senior secured debt financing for the acquisition or recapitalization of mid-sized companies and commercial real estate. NewStar originates loans directly through a team of experienced, senior bankers organized around key industry and market segments. The Company targets 'hold' positions of up to $20 million and selectively underwrites or arranges larger transactions for syndication to other lenders.

NewStar is headquartered in Boston MA and has regional offices in Darien CT, Chicago IL, San Diego CA, and Charleston SC. For more detailed transaction and contact information please visit www.newstarfin.com.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. As such, they are subject to material risks and uncertainties, including our limited operating history; the fact that we have yet to be profitable; the current dislocation in the credit markets and the general state of the economy; the rapid expansion of our business since inception; our ability to compete effectively in a highly competitive industry; and the impact of federal, state and local laws and regulations that govern non-depository commercial lenders and businesses generally.

More detailed information about these factors is described in NewStar's filings with the Securities and Exchange Commission (the "SEC"), including Item 1A ("Risk Factors") of our 2007 Annual Report on Form 10-K, as supplemented by the Risk Factors contained in our Quarterly Reports on Form 10-Q. NewStar is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. NewStar plans to file its Form 10-Q for the quarter ended September 30, 2008 with the SEC on or before November 10, 2008 and urges its shareholders to refer to that document for more complete information concerning NewStar's financial results.

Non-GAAP Financial Measures

References to "adjusted net income" and "adjusted earnings per share" mean net income or earnings per diluted share, respectively, as determined under GAAP, excluding the following items: i) compensation expense related to restricted stock grants made since our inception as a private company, including equity awards made in connection with the initial public offering; ii) earnings generated from the assets sold in the second quarter of 2007 and the retained residual interest in these assets; and iii) the loss and expenses incurred in connection with the asset sale in the second quarter of 2007 and the change in fair value of the residual interest, including the impact on our effective tax rate. GAAP requires that these items be included in net income. NewStar management uses "adjusted net income" and "adjusted earnings per share" to make operational and investment decisions, and NewStar believes that they provide useful information to investors in their evaluation of our financial performance and condition. Excluding the financial results and expenses incurred in connection with the assets sold during the second quarter of 2007 and the compensation expense related to restricted stock grants made since our inception as a private company, eliminates unique amounts that make it difficult to assess our core performance and compare our period-over-period results. A reconciliation of adjusted net income to net income is included on page 7 of this release.

References to "adjusted net interest margin" mean annualized interest income as determined under GAAP (excluding interest income generated from the assets sold in the second quarter of 2007 and the retained residual interest) less annualized interest expense as determined under GAAP (excluding interest expense incurred from the assets sold in the second quarter of 2007), divided by average interest earning assets (excluding the assets sold in the second quarter of 2007 and the retained residual interest for the period.)

Adjusted return on average assets means adjusted net income divided by average assets for the period excluding the assets sold in the second quarter of 2007 and the retained residual interest. Adjusted return on average equity means adjusted net income divided by average equity for the period. Adjusted efficiency ratio means operating expenses determined in accordance with GAAP less i) compensation expense related to restricted stock grants made since our inception as a private company; ii) earnings generated from the assets sold in the second quarter of 2007 and the retained residual interest; and iii) the loss and expenses incurred in connection with the asset sale in the second quarter of 2007 and the change in fair value of the residual interest. Adjusted cost of funds means adjusted interest expense divided by average interest bearing liabilities for the period and the credit facility funding for the assets sold in the second quarter of 2007. The adjusted ratios exclude unique expenses that make it difficult to assess our core performance and compare our period-over-period results.

A reconciliation of our adjusted financial measures to their GAAP equivalents is included on page 9 of this release. NewStar's adjusted financial measures should not be considered as alternatives to financial measures determined in accordance with GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.


 NewStar Financial, Inc.
 Consolidated Balance Sheets
 (unaudited)
 --------------------------------------------------------------------

                  September 30,   June 30,  December 31, September 30,
 ($ in thousands)     2008         2008         2007         2007
 --------------------------------------------------------------------
 Assets:
 Cash and cash
  equivalents      $   132,853  $   134,017  $    76,155  $    73,420
 Restricted cash       105,231       81,676      115,807      119,572
 Residual interest
  in securitization         --           --          631        3,051
 Investments in
  debt securities,
  available-for-sale     4,166        4,619       35,498       37,636
 Loans held-for-sale    18,562       15,508      112,944      117,528
 Loans, net          2,342,186    2,340,410    2,201,442    1,933,469
 Deferred financing
  costs, net            19,181       19,398       18,399       15,868
 Interest receivable    11,629       11,549       14,120       14,501
 Property and
  equipment, net         1,261        1,412        1,593        1,668
 Deferred income
  taxes, net            29,374       10,987       13,355       11,421
 Income tax
  receivable                --        3,229        4,635       12,355
 Other assets           31,078       34,174       28,186       10,590
                   -----------  -----------  -----------  -----------
   Total assets    $ 2,695,521  $ 2,656,979  $ 2,622,765  $ 2,351,079
 ====================================================================
 Liabilities:
 Repurchase
  agreements       $        --  $        --  $        63  $       545
 Credit facilities     540,030      511,800      677,739      705,401
 Term debt           1,532,425    1,540,225    1,364,725    1,165,725
 Accrued interest
  payable               10,168       10,092       17,537       26,629
 Income tax payable      1,261           --           --           --
 Accounts payable          176          388          197          643
 Other liabilities      33,712       26,157       59,814       25,042
                   -----------  -----------  -----------  -----------
   Total
    liabilities      2,117,772    2,088,662    2,120,075    1,923,985
   Total stock-
    holders' equity    577,749      568,317      502,690      427,094
                   -----------  -----------  -----------  -----------
   Total
    liabilities and
    stockholders'
    equity         $ 2,695,521  $ 2,656,979  $ 2,622,765  $ 2,351,079
 ====================================================================


 NewStar Financial, Inc.
 Consolidated Statements of Operations
 (unaudited)
 --------------------------------------------------------------------

                                   Three Months Ended
 ($ in thousands,  --------------------------------------------------
  except per      September 30,   June 30,  December 31, September 30,
  share amounts)      2008         2008         2007         2007
 ---------------   -----------  -----------  -----------  -----------
 Net interest
  income:
   Interest income $    44,903  $    46,034  $    55,606  $    52,626
   Interest expense     19,864       19,583       30,826       28,071
                   -----------  -----------  -----------  -----------
     Net interest
      income            25,039       26,451       24,780       24,555
   Provision for
    credit losses       11,960        3,723        8,155        6,553
                   -----------  -----------  -----------  -----------
     Net interest
      income after
      provision for
      credit losses     13,079       22,728       16,625       18,002

 Non-interest income:
   Fee income              725        1,395        5,620        3,334
   Asset management
    income               1,699        1,476        1,618        1,471
   Gain (loss) on
    derivatives            746          (11)         289          134
   Gain (loss) on
    sale of loans
    and debt
    securities           1,022           47         (359)          11
   Loss on
    investments in
    debt securities         (6)        (667)      (1,976)      (1,979)
   Loss on residual
    interest in
    securitization          --         (308)      (2,420)     (28,136)
   Other income          1,350         (339)       1,185        3,317
                   -----------  -----------  -----------  -----------
     Total
      non-interest
      income             5,536        1,593        3,957      (21,848)
 Operating expenses:
   Compensation
    and benefits         5,161        9,580       11,169       11,169
   Occupancy and
    equipment              795          938          835          781
   General and
    administrative
    expenses             2,500        2,972        2,667        2,309
                   -----------  -----------  -----------  -----------
     Total operating
      expenses           8,456       13,490       14,671       14,259
                   -----------  -----------  -----------  -----------
 Income (loss)
  before income
  taxes                 10,159       10,831        5,911      (18,105)
   Income tax
    expense
    (benefit)            2,580        4,908        4,677       (7,260)
                   -----------  -----------  -----------  -----------
 Net income (loss) $     7,579  $     5,923  $     1,234  $   (10,845)
                   ===========  ===========  ===========  ===========
   After tax
    adjustments to
    net income
    (loss):
     IPO related
      compensation
      and benefits
      expense (1)        1,131        1,512        1,654        1,945
     Loss on assets
      sold and
      retained
      residual
      interest (2)      (1,298)         169        4,240       16,628
     Net interest
      income earned
      on assets
      sold and
      retained
      residual
      interest (3)          --           --           --         (602)
                   -----------  -----------  -----------  -----------
 Adjusted net
  income           $     7,412  $     7,604  $     7,128  $     7,126
                   ===========  ===========  ===========  ===========


 Net income (loss)
  per share:
   Basic           $      0.16  $      0.12  $      0.03  $     (0.30)
   Diluted         $      0.16  $      0.12  $      0.03  $     (0.30)

 Weighted
  average shares
  outstanding:
   Basic            48,525,154   48,532,542   38,812,358   36,253,628
   Diluted          48,525,154   48,532,542   38,812,358   36,253,628

 Adjusted net
  income per share:
   Basic           $      0.15  $      0.16  $      0.18  $      0.20
   Diluted         $      0.15  $      0.16  $      0.18  $      0.20

 Adjusted weighted
  average shares
  outstanding:
    Basic           48,525,154   48,532,542   38,812,358   36,253,628
    Diluted         48,525,154   48,532,542   38,812,358   36,400,569

 (1) Non-cash compensation charge related to restricted stock grants
     made since our inception as a private company, including equity
     awards made in connection with the initial public offering.
 (2) Loss and expenses incurred in connection with the sale of assets
     comprised of 50 debt securities and two loans during Q2 2007,
     permanent impairments on these assets, the change in fair value
     of the residual interest in these assets, and the impact on the
     effective tax rate. The change in effective tax rate was applied
     retrospectively.
 (3) Net interest income earned on the assets sold during Q2 2007 and
     the residual interest in these assets.


 NewStar Financial, Inc.
 Consolidated Statements of Operations
 (unaudited)
 --------------------------------------------------------------------

                                                 Nine Months Ended
                                                    September 30,
                                             ------------------------
 ($ in thousands, except per share amounts)     2008         2007
 ------------------------------------------  -----------  -----------
 Net interest income:
   Interest income                           $   142,925  $   148,689
   Interest expense                               64,771       78,877
                                             -----------  -----------
     Net interest income                          78,154       69,812
   Provision for credit losses                    20,294       11,355
                                             -----------  -----------
     Net interest income after provision
      for credit losses                           57,860       58,457

 Non-interest income:
   Fee income                                      3,652       10,177
   Asset management income                         4,826        3,686
   Gain on derivatives                               791          488
   Loss on sale of loans and debt securities         283       (4,256)
   Loss on investments in debt securities           (931)     (18,327)
   Loss on residual interest in securitization      (631)     (28,136)
   Other income                                    2,295        4,235
                                             -----------  -----------
     Total non-interest income                    10,285      (32,133)
 Operating expenses:
   Compensation and benefits                      26,241       34,195
   Occupancy and equipment                         2,568        1,883
   General and administrative expenses             8,036        6,745
                                             -----------  -----------
     Total operating expenses                     36,845       42,823
                                             -----------  -----------
 Income (loss) before income taxes                31,300      (16,499)
   Income tax expense (benefit)                   11,656       (6,626)
                                             -----------  -----------
 Net income (loss)                           $    19,644  $    (9,873)
                                             ===========  ===========
   After tax adjustments to net income
    (loss):
     IPO related compensation and benefits
      expense (1)                                  3,836        7,227
     Loss on assets sold and retained
      residual interest (2)                         (937)      26,786
     Net interest income earned on assets
      sold and retained residual
      interest (3)                                    --       (2,860)
                                             -----------  -----------
 Adjusted net income                         $    22,543  $    21,280
                                             ===========  ===========


 Net income (loss) per share:
   Basic                                     $      0.41  $     (0.27)
   Diluted                                   $      0.41  $     (0.27)

 Weighted average shares outstanding:
   Basic                                      48,282,775   36,256,398
   Diluted                                    48,282,775   36,256,398

 Adjusted net income per share:
   Basic                                     $      0.47  $      0.59
   Diluted                                   $      0.47  $      0.58

 Adjusted weighted average shares
  outstanding:
   Basic                                      48,282,775   36,256,398
   Diluted                                    48,282,775   36,667,149

 (1) Non-cash compensation charge related to restricted stock grants
     made since our inception as a private company, including equity
     awards made in connection with the initial public offering.
 (2) Loss and expenses incurred in connection with the sale of assets
     comprised of 50 debt securities and two loans during Q2 2007,
     permanent impairments on these assets, the change in fair value
     of the residual interest in these assets, and the impact on the
     effective tax rate. The change in effective tax rate was applied
     retrospectively.
 (3) Net interest income earned on the assets sold during Q2 2007 and
     the residual interest in these assets.


 NewStar Financial, Inc.
 Selected Financial Data
 (unaudited)
 --------------------------------------------------------------------

                                   Three Months Ended
 ($ in thousands,  -------------------------------------------------
  except per      September 30,  June 30,   December 31, September 30,
  share amounts)      2008         2008         2007         2007
 ----------------  ----------   ----------   ----------   ----------
 Performance Ratios:
   Return on
    average assets       1.15%        0.91%        0.19%       (1.87)%
   Return on
    average equity       5.26         4.22         1.05        (9.91)
   Net interest
    margin, before
    provision            3.90         4.17         3.98         4.29
   Efficiency ratio     27.66        48.10        51.05       526.87
   Loan portfolio
    yield                7.32         7.52         9.28         9.72

 Credit Quality and
  Leverage Ratios:
   Delinquent
    loan rate
    (at period end)        --%        0.97%          --%        0.37%
   Non-accrual
    loan rate
    (at period end)      1.10         0.42         0.97         0.37
   Annualized net
    charge off rate      0.87         0.38         0.81           --
   Allowance for
    credit losses
    ratio (at
    period end)          1.87         1.60         1.58         1.62
   Equity to assets
    (at period end)     21.43        21.39        19.17        18.17
   Debt to equity
    (at period end)      3.59x        3.61x        4.06x        4.38x

 Average Balances:
   Loans and other
    debt products,
    gross          $2,398,212   $2,403,327   $2,304,028   $2,040,217
   Interest
    earning assets  2,551,689    2,553,025    2,471,037    2,272,435
   Total assets     2,628,428    2,624,658    2,522,382    2,302,288
   Interest
    bearing
    liabilities     1,958,274    1,973,580    1,992,228    1,808,174
   Equity             573,642      564,811      466,266      434,196

 Allowance for
  credit loss
  activity:
   Balance as of
    beginning of
    period         $   38,223   $   36,763   $   31,925   $   25,372
   General
    provision for
    credit losses         499        1,061        3,563        2,153
   Specific
    provision for
    credit losses      11,461        2,662        4,592        4,400
   Net charge offs     (5,250)      (2,263)      (4,593)          --
                   ----------   ----------   ----------   ----------
   Balance as of
    end of period  $   44,933   $   38,223   $   35,487   $   31,925
                   ==========   ==========   ==========   ==========

 Supplemental Data
  (at period end):
   Investments in
    debt securities,
    gross          $    6,887   $    6,918   $   38,787   $   41,608
   Loans held-for-
    sale, gross        19,012       16,168      115,055      117,755
   Loans held-for-
    investment,
    gross           2,406,520    2,396,107    2,248,480    1,973,793
                   ----------   ----------   ----------   ----------
   Loans and
    investments in
    debt securities,
    gross           2,432,419    2,419,193    2,402,322    2,133,156
   Unused lines of
    credit            370,704      364,855      454,837      412,168
   Standby letters
    of credit          32,079       26,680       20,382       12,904
                   ----------   ----------   ----------   ----------
   Total funding
    commitments    $2,835,202   $2,810,728   $2,877,541   $2,558,228
                   ==========   ==========   ==========   ==========

   Loan portfolio  $2,432,419   $2,419,193   $2,402,322   $2,133,156
   Loans owned by
    NewStar Credit
    Opportunities
    Fund              569,612      593,396      578,272      491,436
                   ----------   ----------   ----------   ----------
   Managed loan
    portfolio      $3,002,031   $3,012,589   $2,980,594   $2,624,592
                   ==========   ==========   ==========   ==========

   Loans held-for-
    sale, gross    $   19,012   $   16,168   $  115,055   $  117,755
   Loans held-for-
    investment,
    gross           2,406,520    2,396,107    2,248,480    1,973,793
                   ----------   ----------   ----------   ----------
   Total loans,
    gross           2,425,532    2,412,275    2,363,535    2,091,548
   Deferred fees,
    net               (21,241)     (19,187)     (15,762)     (10,179)
   Allowance for
    loan losses -
    general           (32,148)     (31,986)     (28,795)     (25,972)
   Allowance for
    loan losses -
    specific          (11,395)      (5,184)      (4,592)      (4,400)
                   ----------   ----------   ----------   ----------
   Total loans,
    net            $2,360,748   $2,355,918   $2,314,386   $2,050,997
                   ==========   ==========   ==========   ==========

   Book value per
    share          $    11.91   $    11.71   $    11.58   $    11.78


 NewStar Financial, Inc.
 Selected Financial Data
 (unaudited)
 --------------------------------------------------------------------

                                                Nine Months Ended
                                                   September 30,
                                             -----------------------
 ($ in thousands, except per share amounts)     2008         2007
 ------------------------------------------  ----------   ----------
 Performance Ratios:
   Return on average assets                        1.00%       (0.62)%
   Return on average equity                        4.68        (3.09)
   Net interest margin, before provision           4.09         4.33
   Efficiency ratio                               41.66       113.65
   Loan portfolio yield                            7.76         9.76

 Credit Quality Ratio:
   Annualized net charge off rate                  0.81%          --%

 Average Balances:
   Loans and other debt products, gross      $2,411,604   $1,950,180
   Interest earning assets                    2,554,199    2,156,401
   Total assets                               2,620,030    2,142,736
   Interest bearing liabilities               1,978,561    1,692,391
   Equity                                       560,748      427,748

 Allowance for credit loss activity:
   Balance as of beginning of period         $   35,487   $   20,570
   General provision for credit losses            2,643        6,955
   Specific provision for credit losses          17,651        4,400
   Net charge offs                              (10,848)          --
                                             ----------   ----------
   Balance as of end of period               $   44,933   $   31,925
                                             ==========   ==========


 NewStar Financial, Inc.
 Non-GAAP Data
 (unaudited)
 --------------------------------------------------------------------

                                       Adjusted
                   -------------------------------------------------
                                  Three Months Ended
                   -------------------------------------------------
                  September 30,  June 30,   December 31, September 30,
 ($ in thousands)     2008         2008         2007         2007
 ----------------  ----------   ----------   ----------   ----------
 Performance Ratios:
   Return on
    average assets       1.12%        1.17%        1.12%        1.24%
   Return on
    average equity       5.14         5.41         6.07         6.51
   Efficiency ratio     22.70        42.02        35.65        37.39
   Net interest
    margin, before
    provision            3.90         4.17         3.98         4.16
   Yield on
    interest
    earning assets       7.00         7.25         8.93         9.12

 Credit Quality and
  Leverage Ratios
  (at period end):
   Equity to assets     21.43        21.39        19.17        18.19

 Consolidated
  Statement of
  Operations
  Adjustments (1):
   Interest income $   44,903   $   46,034   $   55,606   $   52,626
   Less: interest
    income earned
    on assets sold
    and retained
    residual
    interest (2)           --           --           --        1,019
                   ----------   ----------   ----------   ----------
   Adjusted
    interest
    income         $   44,903   $   46,034   $   55,606   $   51,607
                   ==========   ==========   ==========   ==========

   Non-interest
    income         $    5,536   $    1,593   $    3,957   $  (21,848)
   Plus: loss on
    assets sold
    and retained
    residual
    interest (2)           --          308        2,420       28,136
                   ----------   ----------   ----------   ----------
   Adjusted
    non-interest
    income         $    5,536   $    1,901   $    6,377   $    6,288
                   ==========   ==========   ==========   ==========

   Operating
    expenses       $    8,456   $   13,490   $   14,671   $   14,259
   Less:
   IPO related
    compensation
    and benefits
    expense (3)         1,517        1,576        2,632        3,108
   Expenses
    resulting
    from sale of
    assets (2)             --           --          931           --
                   ----------   ----------   ----------   ----------
   Adjusted
    operating
    expenses       $    6,939   $   11,914   $   11,108   $   11,151
                   ==========   ==========   ==========   ==========

 Average Balances:
   Assets          $2,628,428   $2,624,658   $2,522,382   $2,302,288
   Less: assets
    sold and
    residual
    interest (2)           --          308        1,841       26,955
                   ----------   ----------   ----------   ----------
   Adjusted assets $2,628,428   $2,624,350   $2,520,541   $2,275,333
                   ==========   ==========   ==========   ==========

   Interest earning
    assets         $2,551,689   $2,553,025   $2,471,037   $2,272,435
   Less: assets
    sold and
    residual
    interest (2)           --          308        1,841       26,955
                   ----------   ----------   ----------   ----------
   Adjusted
    interest
    earning assets $2,551,689   $2,552,717   $2,469,196   $2,245,480
                   ==========   ==========   ==========   ==========

 Consolidated
  Balance Sheet
  Adjustments
   Assets          $2,695,521   $2,656,979   $2,622,765   $2,351,079
   Less: assets
    sold and
    residual
    interest (2)           --           --          631        3,051
                   ----------   ----------   ----------   ----------
   Adjusted assets $2,695,521   $2,656,979   $2,622,134   $2,348,028
                   ==========   ==========   ==========   ==========

 (1) Adjustments are pre-tax.
 (2) On June 29, 2007, the Company completed the sale of assets
     comprised of 50 debt securities and two loans and retained a
     residual interest in these assets. The adjustment represents the
     financial impact of the sold assets and residual interest.
 (3) Non-cash compensation charge related to restricted stock grants
     made since our inception as a private company, including equity
     awards made in connection with the initial public offering.


 NewStar Financial, Inc.
 Non-GAAP Data
 (unaudited)
 --------------------------------------------------------------------

                                                    Adjusted
                                             -----------------------
                                                Nine Months Ended
                                                   September 30,
                                             -----------------------
 ($ in thousands)                               2008         2007
 -----------------------------------------   ----------   ----------
 Performance Ratios:
   Return on average assets                        1.15%        1.42%
   Return on average equity                        5.37         6.65
   Efficiency ratio                               35.88        40.98
   Net interest margin, before provision           4.09         4.30
   Yield on interest earning assets                7.48         9.22
   Cost of funds                                   4.37         6.23

 Consolidated Statement of Operations
  Adjustments (1):
   Interest income                           $  142,925   $  148,689
   Less: interest income earned on assets
    sold and retained residual interest (2)          --        9,458
                                             ----------   ----------
   Adjusted interest income                  $  142,925   $  139,231
                                             ==========   ==========

   Interest expense                          $   64,771   $   78,877
   Less: interest expense related to
    assets sold (2)                                  --        4,620
                                             ----------   ----------
   Adjusted interest expense                 $   64,771   $   74,257
                                             ==========   ==========

   Non-interest income                       $   10,285   $  (32,133)
   Plus: loss on assets sold and retained
    residual interest (2)                           631       45,323
                                             ----------   ----------
   Adjusted non-interest income              $   10,916   $   13,190
                                             ==========   ==========

   Operating expenses                        $   36,845   $   42,823
   Less: IPO related compensation and
    benefits expense (3)                          4,891       10,792
                                             ----------   ----------
   Adjusted operating expenses               $   31,954   $   32,031
                                             ==========   ==========

 Average Balances:
   Assets                                    $2,620,030   $2,142,736
   Less: assets sold and residual
    interest (2)                                    310      137,422
                                             ----------   ----------
   Adjusted assets                           $2,619,720   $2,005,314
                                             ==========   ==========

   Interest earning assets                   $2,554,199   $2,156,401
   Less: assets sold and residual
    interest (2)                                    310      137,422
                                             ----------   ----------
   Adjusted interest earning assets          $2,553,889   $2,018,979
                                             ==========   ==========

   Interest bearing liabilities              $1,978,561   $1,692,391
   Less: credit facility funding for
    assets sold (2)                                  --       99,829
                                             ----------   ----------
   Adjusted interest bearing liabilities     $1,978,561   $1,592,562
                                             ==========   ==========

 (1) Adjustments are pre-tax.
 (2) On June 29, 2007, the Company completed the sale of assets
     comprised of 50 debt securities and two loans and retained a
     residual interest in these assets. The adjustment represents the
     financial impact of the sold assets and residual interest.
 (3) Non-cash compensation charge related to restricted stock grants
     made since our inception as a private company, including equity
     awards made in connection with the initial public offering.


 NewStar Financial, Inc.
 Portfolio Data
 (unaudited)
 --------------------------------------------------------------------

 ($ in thousands)         September 30, 2008         June 30, 2008
 -----------------------  -------------------     -------------------
 Portfolio Data:
   First mortgage         $  365,758     15.0%    $  385,535     15.9%
   Senior secured
    asset-based               42,830      1.8         45,861      1.9
   Senior secured cash
    flow                   1,905,906     78.4      1,857,847     76.8
   Senior subordinated
    asset-based               70,075      2.9         80,889      3.3
   Senior subordinated
    cash flow                  8,183      0.3          9,789      0.4
   Second lien                32,888      1.3         32,546      1.4
   Mezzanine/subordinated      6,779      0.3          6,726      0.3
                          ----------    -----     ----------    -----
     Total                $2,432,419    100.0%    $2,419,193    100.0%
                          ==========    =====     ==========    =====

   Middle Market
    Corporate             $2,044,945     84.1%    $2,006,708     82.9%
   Commercial Real Estate    387,474     15.9        412,485     17.1
                          ----------    -----     ----------    -----
     Total                $2,432,419    100.0%    $2,419,193    100.0%
                          ==========    =====     ==========    =====


 ($ in thousands)          December 31, 2007      September 30, 2007
 -----------------------  -------------------     -------------------
 Portfolio Data:
   First mortgage         $  353,755     14.7%    $  289,426     13.6%
   Senior secured
    asset-based               56,988      2.4         65,200      3.1
   Senior secured cash
    flow                   1,829,734     76.2      1,582,636     74.2
   Senior subordinated
    asset-based              110,719      4.6        115,566      5.4
   Senior subordinated
    cash flow                 14,352      0.6         26,162      1.2
   Second lien                32,295      1.3         53,440      2.5
   Mezzanine/subordinated      4,479      0.2            726       --
                          ----------    -----     ----------    -----
     Total                $2,402,322    100.0%    $2,133,156    100.0%
                          ==========    =====     ==========    =====

   Middle Market
    Corporate             $2,021,559     84.1%    $1,818,329     85.3%
   Commercial Real Estate    380,763     15.9        314,827     14.7
                          ----------    -----     ----------    -----
     Total                $2,402,322    100.0%    $2,133,156    100.0%
                          ==========    =====     ==========    =====


            

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