- Net Income of $58 Million or $0.29 Per Share in 4Q, Includes Gains on Asset Sales of $23 million or $0.12 Per Share
- 4Q Loan Growth of $312 Million (4.8%) at CapitalSource Bank Resulted in 2013 Loan Growth of 19.0%
- 4Q Net Interest Income of $91 Million at CapitalSource Bank was 9% Higher Than 4Q'12
- Full Year Net Income of $141 Million at CapitalSource Bank was 15% Higher than the Prior Year
- Net Interest Margin of 4.76% at CapitalSource Bank in 4Q / Full Year NIM of 4.87%
- CapitalSource Bank Credit Metrics Remained at Very Low Levels - Year End NPAs at 60 bps of Total Assets
LOS ANGELES, Jan. 23, 2014 (GLOBE NEWSWIRE) -- CapitalSource Inc. (NYSE:CSE) today announced financial results for the fourth quarter and full year 2013. The Company reported fourth quarter net income of $58 million or $0.29 per diluted share, compared to net income of $48 million or $0.24 per diluted share in the prior quarter and net income of $47 million or $0.22 per diluted share in the fourth quarter of 2012. Net income for 2013 was $164 million or $0.82 per diluted share, compared to net income of $491 million or $2.13 per diluted share for 2012, which included $347 million or $1.49 per diluted share related to the reversal of a substantial portion of the Company's deferred tax asset valuation allowance in the second quarter of 2012.
"2013 was an outstanding year of growth and profitability for CapitalSource Bank. Our national lending franchise once again outperformed our expectations - originating over $2.5 billion of new loans which resulted in 19% loan growth," said James J. Pieczynski, CapitalSource CEO. "Our strong financial performance last year will be greatly enhanced by the planned merger with PacWest Bancorp. We are very pleased that CapitalSource shareholders overwhelmingly approved the merger at a special meeting on January 13, and we look forward to receiving the required regulatory approvals so the transaction can close before the end of the first quarter."
"Our intense focus on profitable loan growth, maintaining an industry-leading net interest margin, expense management, and tight credit underwriting and monitoring clearly produced the intended results last year," said Tad Lowrey, CapitalSource Bank Chairman and CEO. "2013 net income at the Bank was 15% higher than the prior year; Bank assets grew by more than $700 million or 10% and surpassed $8 billion; operating expenses were down modestly, despite the strong growth; full-year net interest margin was 4.87%; and all key credit metrics were at very low levels at year-end. Non-performing assets, for example, were only 60 basis points of total assets," added Lowrey.
"Unrestricted cash at the Parent Company increased to $411 million at the end of the fourth quarter, as loan sales and payoffs reduced the Parent loan portfolio to just $86 million at year-end. In addition, $37 million of investment securities were sold in the quarter, resulting in a gain of $23 million or $0.12 per share. The investment securities were capital assets and the gains were not taxed due to a corresponding release from the Company's valuation allowance," said John Bogler, CFO. "Full-year consolidated operating expenses declined by $16 million or 9%, which is a notable achievement given our strong loan growth and reflects the scalability of our operating structure. The balance sheet at CapitalSource Bank strengthened throughout 2013 and we ended the year with very strong capital levels, despite 19% loan growth. Our Tier 1 leverage ratio was 13.88% and our risk-based capital ratio was 16.29% at year end."
CAPITALSOURCE BANK SEGMENT
This segment includes our commercial lending and banking activities in CapitalSource Bank.
Fourth Quarter 2013 Highlights
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Net Income was $37.6 million, a decrease of $0.8 million from the prior quarter, due primarily to increases in loan and lease loss provision and REO related expenses partially offset by a $5 million increase in loan fee income. Net income for 2013 increased 15% to $140.7 million, compared to $122.7 million for 2012.
-
Loans and Leases increased $312 million or 4.8%. New funded loan and lease production was $644 million, compared to $604 million in the prior quarter. Total loans and leases were $6.9 billion at year end, an increase of 19% in 2013.
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Bank Assets increased $146 million or 1.8% from the prior quarter. Total Bank assets were $8.1 billion at year end, an increase of 9.6% in 2013.
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Net Interest Margin was 4.76%, a decrease of 10 basis points from the prior quarter, primarily due to higher MBS premium amortization in the investment portfolio, partially offset by increased portfolio loan mix. 4Q loan yield declined 5 basis points to 6.25%, while full year NIM was 4.87%.
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Capital - The Tier 1 leverage ratio increased 33 basis points to 13.88%, while the total risk-based capital ratio increased 1 basis point to 16.29%.
- Credit Quality - All key credit quality metrics remained at very low levels. Loan and lease loss provision was $4.4 million, compared to $2.2 million in the prior quarter. Non-performing assets increased by $4 million to $49 million or 0.60% of total assets, compared to 0.56% at the end of the prior quarter. Net charge-offs were $0.5 million in the quarter, compared to $1.7 million in the prior quarter, and were 0.10% of average loans for the full year.
Fourth Quarter 2013 Details
Quarter Ended | |||||||
12/31/13 vs 9/30/13 | 12/31/13 vs 12/31/12 | ||||||
12/31/2013 | 9/30/2013 | 12/31/2012 | $ | % | $ | % | |
($ in thousands) | |||||||
Interest income | $107,482 | $107,810 | $98,544 | $(328) | —% | $8,938 | 9% |
Interest expense | 16,358 | 16,106 | 15,122 | (252) | (2) | (1,236) | (8) |
Loan and lease loss provision | 4,428 | 2,230 | 1,447 | (2,198) | (99) | (2,981) | (206) |
Non-interest income | 21,496 | 16,039 | 18,243 | 5,457 | 34 | 3,253 | 18 |
Non-interest expense | 43,837 | 42,101 | 44,262 | (1,736) | (4) | 425 | 1 |
Income tax expense | 26,789 | 25,015 | 22,008 | (1,774) | (7) | (4,781) | (22) |
Net income | 37,566 | 38,397 | 33,948 | (831) | (2) | 3,618 | 11 |
Net Interest Margin was 4.76%, a decrease of 10 basis points from the prior quarter due primarily to higher MBS premium amortization in the investment portfolio, partially offset by increased portfolio loan mix.
Quarter Ended | |||||||
12/31/2013 | 9/30/2013 | ||||||
Net Interest Margin |
Average Balance |
Interest Income/Expense |
Average Yield/Cost |
Average Balance |
Interest Income/Expense |
Average Yield/Cost |
|
($ in thousands) | |||||||
Loans | $6,490,933 | $102,318 | 6.25% | (1) | $6,326,704 | $100,461 | 6.30% |
Investment securities | 978,790 | 4,647 | 1.88 | 1,044,070 | 6,922 | 2.63 | |
Cash and other interest-earning assets | 132,740 | 517 | 1.55 | (2) | 109,515 | 427 | 1.55 |
Total interest-earning assets | 7,602,463 | 107,482 | 5.61 | 7,480,289 | 107,810 | 5.72 | |
Deposits | 6,090,152 | 13,681 | 0.89 | 5,963,151 | 13,407 | 0.89 | |
Borrowings | 590,489 | 2,677 | 1.80 | 632,608 | 2,699 | 1.69 | |
Total interest-bearing liabilities | 6,680,641 | 16,358 | 0.97 | 6,595,759 | 16,106 | 0.97 | |
Net interest income / spread | $91,124 | 4.64% | $91,704 | 4.75% | |||
Net interest margin | 4.76% | 4.86% |
(1) Loan yield for the quarter included 45 basis points of fee and discount accretion, compared to 39 basis points in the prior quarter
(2) Other interest earning assets included short term investments and FHLB stock totaling $70.2 million with an average yield of 2.66%, compared to 2.17% in the prior quarter
Non-Interest Expense was $44 million, an increase of $2 million from the prior quarter due primarily to higher accrual for incentive compensation and higher OREO expense, partially offset by an FDIC assessment adjustment. For 2013, non-interest expense declined $0.3 million.
Income Tax Expense was $27 million for the quarter, compared to $25 million in the prior quarter. The effective tax rate for the quarter was 41.6%, compared to 39.5% in the prior quarter.
Cash and Investments decreased by $150 million to $1.0 billion, as available liquidity was redeployed to partially fund loan growth. The portfolio yield increased by 12 basis points due to the lower mix of cash and cash equivalents.
Cash and Investments | 12/31/2013 | 9/30/2013 | ||||
($ in thousands) | Balance | Yield | Duration (Years) | Balance | Yield | Duration (Years) |
Cash and cash equivalents and restricted cash | $87,312 | 0.14% | 0.0 | $180,261 | 0.13% | 0.0 |
Agency MBS | 784,240 | 2.28% | 3.7 | 838,182 | 2.33% | 4.3 |
Non-agency MBS | 20,203 | 4.71% | 1.8 | 22,206 | 4.72% | 1.7 |
CMBS | 74,369 | 2.30% | 0.8 | 74,403 | 2.32% | 1.0 |
CLO | 47,337 | 2.62% | 5.1 | 47,860 | 2.66% | 5.3 |
Asset-backed securities | 3,169 | 11.37% | 1.4 | 3,599 | 11.36% | 1.5 |
SBA Asset-backed securities | 15,533 | 3.12% | 5.9 | 15,708 | 3.12% | 5.9 |
$1,032,163 | 2.20% | 3.2 | $1,182,219 | 2.08% | 3.4 |
Loans and Leases increased $312 million or 4.8% from the prior quarter. For 2013, loans and leases increased $1.1 billion or 19.0%. The largest concentrations of new loans funded in the quarter were commercial real estate, equipment finance, healthcare real estate and technology cash flow.
Quarter Ended | |||
Loan and Lease Roll Forward (1) | 12/31/2013 | 9/30/2013 | 12/31/2012 |
($ in thousands) | |||
Beginning balance | $6,585,818 | $6,410,398 | $5,362,665 |
New loans or commitment increases funded | 643,907 | 603,808 | 843,208 |
Existing loans and leases | |||
Principal repayments, net (2) | (327,658) | (385,177) | (381,240) |
Leased equipment depreciation | (3,854) | (3,646) | (3,036) |
Transfers to held for sale, net | — | (10,569) | — |
Loan sales (3) | (3,256) | (27,218) | (15,810) |
Transfers to foreclosed assets | — | (118) | (1,120) |
Charge-offs, net | (508) | (1,660) | (977) |
Loans purchased from the Parent Company | 3,131 | — | — |
Ending balance - Net principal | 6,897,580 | 6,585,818 | 5,803,690 |
Deferred fees and discounts | (45,452) | (45,614) | (47,729) |
Ending balance - Net book | $6,852,128 | $6,540,204 | $5,755,961 |
(1) Includes operating leases and equity investments related to operating leases which are included in other assets and other investments, respectively, on our balance sheet.
(2) Includes principal repayments on existing loans, changes in revolving lines of credit (repayments and draws), increases in existing term loans and other organic changes within the loan portfolio.
(3) Consists of loans that were both transferred to HFS and sold within the period reported.
Quarter Ended | Full Year | |||
Loan and Lease Portfolio Detail | 12/31/2013 | 9/30/2013 | 12/31/2012 | Change (%) |
($ in thousands) | ||||
Healthcare Asset Based | $169,518 | $132,855 | $159,143 | 7% |
Equipment Finance(1) | 771,851 | 681,153 | 609,350 | 27% |
Lender Finance & Timeshare | 1,041,044 | 928,284 | 844,776 | 23% |
Insurance Premium Finance | 30,390 | 38,783 | 17,236 | 76% |
Other Asset Based | 8,147 | 66,138 | 63,501 | (88)% |
Total Asset Based | 2,020,950 | 1,847,213 | 1,694,006 | 19% |
General Cash Flow | 290,752 | 272,502 | 187,637 | 55% |
Technology Cash Flow | 711,294 | 672,461 | 612,892 | 16% |
Healthcare Cash Flow | 492,395 | 517,475 | 377,694 | 30% |
Security Cash Flow | 358,635 | 320,463 | 306,134 | 17% |
Professional Practice | 142,767 | 159,095 | 176,480 | (19)% |
Total Cash Flow | 1,995,843 | 1,941,996 | 1,660,837 | 20% |
General Commercial Real Estate | 1,032,420 | 942,623 | 634,561 | 63% |
Multifamily | 777,675 | 843,721 | 903,048 | (14)% |
Healthcare Real Estate | 771,029 | 731,789 | 671,060 | 15% |
Small Business | 299,663 | 278,476 | 240,178 | 25% |
Total Real Estate | 2,880,787 | 2,796,609 | 2,448,847 | 18% |
Total - Net Principal | 6,897,580 | 6,585,818 | 5,803,690 | 19% |
Deferred fees and discounts | (45,452) | (45,614) | (47,729) | |
Total - Net Book | $6,852,128 | $6,540,204 | $5,755,961 | 19% |
(1) Includes $154 million of operating leases and related equity investments as of December 31, 2013, $142 million as of September 30, 2013 and $137 million as of December 31, 2012 which are included in Other Assets and Other Investments, respectively.
Deposits were $6.1 billion at quarter end, an increase of $76 million or 1% from the prior quarter. For 2013, deposits grew by $548 million or 10%. The weighted average interest rate on total deposits at December 31, 2013 increased 1 basis point from the end of the prior quarter to 0.90%. The weighted average rate of new and renewing time deposits in the quarter was 0.91%, compared to 0.93% in the prior quarter.
FHLB Borrowings were $625 million, an increase of $35 million from the prior quarter. The ending balance includes $50 million of overnight advances used to fund loans closing near the end of the quarter. Excluding the overnight advances, the weighted average rate of FHLB term borrowings was 1.80% as of December 31, 2013, compared to 1.78% at the end of the prior quarter and the average remaining maturity was 2.5 years, compared to 2.6 years at the end of the prior quarter.
Allowance for Loan and Lease Losses was $109 million or 1.63% of the loan portfolio as detailed below. Net quarterly provision was $4.4 million, compared to $2.2 million in the prior quarter, due to higher general reserves attributable to higher loan growth and new specific reserves.
Quarter Ended | ||||
Allowance for Loan and Lease Losses | 12/31/2013 | |||
($ in thousands) | General | Specific | Total | % Loans |
Beginning balance | $104,742 | $807 | $105,549 | |
Loan and lease loss provision | 1,470 | 2,958 | 4,428 | |
Charge-offs, net | — | (508) | (508) | |
Ending balance | $106,212 | $3,257 | $109,469 | 1.63% |
Quarter Ended | ||||
9/30/2013 | ||||
General | Specific | Total | % Loans | |
Beginning balance | $103,997 | $982 | $104,979 | |
Loan and lease loss provision | 745 | 1,485 | 2,230 | |
Charge-offs, net | — | (1,660) | (1,660) | |
Ending balance | $104,742 | $807 | $105,549 | 1.65% |
Charge-offs were $0.5 million, compared to $1.7 million in the prior quarter. TTM charge-offs were $6.3 million or 0.10% of average loans, compared to 0.12% in the prior quarter.
Non-performing Assets were $49 million or 0.60% of total assets, an increase of $4 million from the prior quarter but unchanged from one year ago. Non-accrual loans were $47 million, an increase of $6 million from the prior quarter due primarily to the addition of one non-accrual loan and an increase of $5 million from one year ago.
Non-performing Assets | 12/31/2013 | 9/30/2013 | ||
Balance | % of Total Assets | Balance | % of Total Assets | |
($ in thousands) | ||||
Non-accrual loans - current | $43,332 | 0.54% | $37,589 | 0.47% |
Non-accrual loans - delinquent 30-89 days | 1,363 | 0.02 | 727 | 0.01 |
Non-accrual loans - delinquent 90+ days | 1,899 | 0.02 | 1,959 | 0.03 |
Total non-accrual loans | 46,594 | 0.58 | 40,275 | 0.51 |
REO and foreclosed assets | 1,988 | 0.02 | 4,098 | 0.05 |
Total non-performing assets | $48,582 | 0.60% | $44,373 | 0.56% |
Troubled Debt Restructurings were $17 million, compared to $20 million at the end of the prior quarter, all of which were current and on non-accrual in both quarters.
OTHER COMMERCIAL FINANCE SEGMENT
This segment includes the Parent Company loan portfolio and other legacy business activities at CapitalSource Inc.
Fourth Quarter 2013 Details
Net Income was $21 million, compared to $9 million in the prior quarter, due primarily to the increase in gain on sale of investments.
Quarter Ended | |||||||
12/31/13 vs. 9/30/13 | 12/31/13 vs. 12/31/12 | ||||||
12/31/2013 | 9/30/2013 | 12/31/2012 | $ | % | $ | % | |
($ in thousands) | |||||||
Interest income | $6,077 | $4,598 | $16,050 | 1,479 | 32 | (9,973) | (62) |
Interest expense | 2,449 | 2,538 | 3,750 | 89 | 4 | 1,301 | 35 |
Loan and lease loss (recovery) / provision | (165) | (3,299) | 7,428 | (3,134) | (95) | 7,593 | 102 |
Non-interest income | 23,992 | 3,401 | 7,998 | 20,591 | 605 | 15,994 | 200 |
Non-interest expense | 6,076 | 9,510 | 11,118 | 3,434 | 36 | 5,042 | 45 |
Income tax expense (benefit) | 757 | (10,176) | (11,857) | (10,933) | (107) | (12,614) | (106) |
Net income | 20,952 | 9,426 | 13,609 | 11,526 | 122 | 7,343 | 54 |
Interest Income was $6 million, an increase of $1 million from the prior quarter, due primarily to the recapture of non-accrual interest on a loan that paid off during the quarter.
Non-Interest Income was $24 million, compared to $3 million in the prior quarter due primarily to an increase in gain on sale of investments.
Non-Interest Expense was $6 million, a decrease of $3 million from the prior quarter due primarily to lower merger related expenses and gains in OREO and foreclosed assets related activities.
Unrestricted Cash at quarter end was $411 million, an increase of $116 million from the prior quarter. The largest sources of cash were loan sales and principal collections of $68 million, proceeds from the sale of investments of $37 million and tax payments from the Bank to the Parent Company of $28 million. The principal uses of cash in the quarter were operating expenses, the quarterly dividend payment on common stock and interest on trust preferred securities. There were no share repurchases during the quarter pursuant to the terms of the merger agreement with PacWest.
Loans decreased by $55 million from the prior quarter to $86 million as detailed below.
Quarter Ended | |||
Loan and Lease Roll Forward | 12/31/2013 | 9/30/2013 | 12/31/2012 |
($ in thousands) | |||
Beginning balance | $142,090 | $259,364 | $687,576 |
Existing loans and leases | |||
Principal repayments, net (1) | (52,762) | (72,010) | (58,285) |
Transfers to held for sale, net | — | (3,446) | (22,698) |
Loan sales (2) | (854) | (39,188) | (63,019) |
Transfers to foreclosed assets | — | — | — |
Net recoveries / (charge-offs) | 1,631 | (2,630) | (17,255) |
Loans sold to the Bank | (3,131) | — | — |
Ending balance - Net principal | 86,974 | 142,090 | 526,319 |
Deferred fees and discounts | (1,042) | (1,509) | (5,713) |
Ending Balance - Net book | $85,932 | $140,581 | $520,606 |
(1) Includes principal repayments on existing loans, changes in revolving lines of credit (repayments and draws), increases in existing term loans and other organic changes within the loan portfolio.
(2) Consists of loans that were both transferred to HFS and sold within the period reported.
Allowance for Loan and Lease Losses increased by $1 million to $11 million or 12.86% of loans. Despite the portfolio reduction and the resolution of problem loans in the fourth quarter, the remaining loans have a higher percentage of both non-accrual and less favorable risk ratings than the previous quarter.
Non-performing Assets were $65 million, a decline of $20 million (23%) from the prior quarter due to loan resolutions and sales resulting in a $20 million decline in non-accrual loans, and were $30 million (32%) lower than one year ago. All collections on non-accrual loans are applied to the outstanding principal balance.
Non-performing Assets | 12/31/2013 | 9/30/2013 | ||
Balance | % of Total Assets | Balance | % of Total Assets | |
($ in thousands) | ||||
Non-accrual loans current | $28,456 | 3.37% | $45,982 | 5.41% |
Non-accrual loans - delinquent 30-89 days | 54 | 0.01 | 1 | — |
Non-accrual loans - delinquent 90+ days | 25,736 | 3.04 | 28,492 | 3.35 |
Total non-accrual loans | 54,246 | 6.42 | 74,475 | 8.76 |
Accruing loans - delinquent 90+ days | — | — | — | — |
REO and foreclosed assets | 10,836 | 1.28 | 10,401 | 1.22 |
Total non-performing assets | $65,082 | 7.70% | $84,876 | 9.98% |
Troubled Debt Restructurings were $38 million, all of which were on non-accrual and $10 million of which were delinquent as to payment status. At September 30, 2013 troubled debt restructurings were $61 million, $55 million of which were on non-accrual and $10 million of which were delinquent as to payment status.
CONSOLIDATED
Fourth Quarter 2013 Details
Net Income was $58 million or $0.29 per diluted share, compared to net income of $48 million or $0.24 per diluted share in the prior quarter and $47 million or $0.22 per diluted share in the fourth quarter of 2012 - as detailed below. Pretax income increased to $86 million compared to $63 million in the prior quarter, due primarily to an increase in the gain on sale of investments and loan sales. Pretax income for 2013 increased by 20% to $246 million, compared to $206 million for 2012.
Quarter Ended | |||||||
12/31/13 vs. 9/30/13 | 12/31/13 vs. 12/31/12 | ||||||
12/31/2013 | 9/30/2013 | 12/31/2012 | $ | % | $ | % | |
($ in thousands) | |||||||
Interest income | $113,258 | $112,718 | $114,921 | $540 | 1% | $(1,663) | (1)% |
Interest expense | 18,807 | 18,644 | 18,872 | (163) | (1) | 65 | 1 |
Loan and lease loss provision / (recovery) | 4,263 | (1,069) | 8,875 | (5,332) | (499) | 4,612 | 52 |
Non-interest income | 42,076 | 15,708 | 20,549 | 26,368 | 168 | 21,527 | 105 |
Non-interest expense | 46,114 | 47,614 | 49,423 | 1,500 | 3 | 3,309 | 7 |
Income tax expense | 28,227 | 14,839 | 11,224 | (13,388) | (90) | (17,003) | (151) |
Net income | 57,923 | 48,398 | 47,076 | 9,525 | 20 | 10,847 | 23 |
Interest Income was $113 million, unchanged from the prior quarter. Interest income for 2013 was $448 million compared to $468 million for 2012 - a decrease of 4%, due primarily to declining loan yields and $435 million of run-off in the Parent Company loan portfolio.
Net Interest Margin was 4.72%, a decrease of 5 basis points from the prior quarter due primarily to higher MBS amortization in the investment portfolio partially offset by increased portfolio loan mix. Net interest income was $94 million, unchanged from the prior quarter.
Non-Interest Income was $42 million, compared to $16 million in the prior quarter due primarily to an increase in gains on investment and loan sales and increased loan fee income.
Non-Interest Expense was $46 million, a decrease of $2 million from the prior quarter due primarily to lower merger-related costs. For 2013, operating expenses were $170 million, compared to $186 million for 2012, and non-operating expenses were $19 million, including pre-close merger-related costs of $5 million and operating lease expenses which grew to $14 million, compared to $10 million for 2012 as total operating leases increased by $18 million to $132 million.
Quarter Ended | ||
Non-Interest Expense | 12/31/2013 | 9/30/2013 |
($ in thousands) | ||
Compensation and benefits | $28,351 | $26,618 |
Professional fees | 1,648 | (49) |
Occupancy expenses | 3,689 | 3,434 |
FDIC fees and assessments | 290 | 1,642 |
General depreciation and amortization | 1,574 | 1,590 |
Loan servicing expense | 1,429 | 925 |
Other administrative expenses | 5,759 | 6,129 |
Total operating expenses | 42,740 | 40,289 |
Leased equipment depreciation | 3,854 | 3,646 |
Expense from real estate owned and other foreclosed assets, net | (321) | (768) |
Other non-interest expense, net (includes merger-related costs) | (159) | 4,447 |
Total non-interest expense | $46,114 | $47,614 |
Loans and Leases increased $257 million from the prior quarter as detailed below.
Quarter Ended | |||
Loan and Lease Roll Forward (1) | 12/31/2013 | 9/30/2013 | 12/31/2012 |
($ in thousands) | |||
Beginning balance | $6,727,908 | $6,669,762 | $6,050,241 |
New loans or commitment increases funded | 643,907 | 603,808 | 843,208 |
Existing loans and leases | |||
Principal repayments, net (2) | (380,420) | (457,187) | (439,525) |
Leased equipment depreciation | (3,854) | (3,646) | (3,036) |
Transfers to held for sale, net | — | (14,015) | (22,698) |
Loan sales (3) | (4,110) | (66,406) | (78,829) |
Transfers to foreclosed assets | — | (118) | (1,120) |
Net recoveries / (charge-offs) | 1,123 | (4,290) | (18,232) |
Ending balance - Net principal | 6,984,554 | 6,727,908 | 6,330,009 |
Deferred fees and discounts | (46,030) | (46,407) | (53,628) |
Ending balance - Net book | $6,938,524 | $6,681,501 | $6,276,381 |
(1) Includes operating leases and equity investments related to operating leases which are included in Other Assets and Other Investments.
(2) Includes principal repayments on existing loans, changes in revolving lines of credit (repayments and draws), increases in existing term loans and other organic changes within the loan portfolio.
(3) Consists of loans that were both transferred to HFS and sold within the period reported.
Allowance for Loan and Lease Losses was $121 million, or 1.78% of the loan portfolio, compared to $115 million or 1.76% at the end of the prior quarter. Net charge-offs as a percentage of average loans for the twelve month period ended December 31, 2013 were 0.27%, compared to 0.59% for the twelve month period ended September 30, 2013.
Quarter Ended | ||||
Allowance for Loan and Lease Losses | 12/31/2013 | |||
($ in thousands) | General | Specific | Total | % Loans |
Beginning balance | $113,374 | $1,760 | $115,134 | |
Loan and lease loss provision / (recovery) | 2,936 | 1,327 | 4,263 | |
Recoveries, net | — | 1,123 | 1,123 | |
Ending balance | $116,310 | $4,210 | $120,520 | 1.78% |
Quarter Ended | ||||
9/30/2013 | ||||
General | Specific | Total | % Loans | |
Beginning balance | $112,543 | $7,950 | $120,493 | |
Loan and lease loss provision / (recovery) | 831 | (1,900) | (1,069) | |
Charge-offs, net | — | (4,290) | (4,290) | |
Ending balance | $113,374 | $1,760 | $115,134 | 1.76% |
Non-performing Assets were $114 million, a decline of $16 million from the prior quarter due primarily to a $14 million decrease in non-accrual loans and a decline of $30 million (21%) from one year ago. All collections on non-accrual loans are applied to the outstanding principal balance.
Non-performing Assets | 12/31/2013 | 9/30/2013 | ||
Balance | % of Total Assets | Balance | % of Total Assets | |
($ in thousands) | ||||
Non-accrual loans - current | $71,788 | 0.81% | $83,571 | 0.95% |
Non-accrual loans - delinquent 30-89 days | 1,417 | 0.01 | 728 | 0.01 |
Non-accrual loans - delinquent 90+ days | 27,635 | 0.31 | 30,451 | 0.35 |
Total non-accrual loans | 100,840 | 1.13 | 114,750 | 1.31 |
Accruing loans - delinquent 90+ days | — | — | — | — |
REO and foreclosed assets | 12,824 | 0.15 | 14,499 | 0.17 |
Total non-performing assets | $113,664 | 1.28% | $129,249 | 1.48% |
Troubled Debt Restructurings were $55 million, all of which were on non-accrual and $10 million of which were delinquent as to payment status. At September 30, 2013 troubled debt restructurings were $81 million, $75 million of which were on non-accrual and $10 million of which were delinquent as to payment status.
Deferred Tax Asset, net, decreased by $19 million during the quarter to $252 million, with the decline largely due to the utilization of the Federal NOLs.
Consolidated Tax Expense was $28.2 million, which equates to an effective tax rate of 32.8%. Tax expense for the quarter includes a tax benefit of $9 million from the release of valuation allowance in connection with the disposition of certain investment securities during the quarter.
Book Value Per Share was $8.31 at the end of the quarter, an increase of $0.22 from the prior quarter. Total shareholders' equity was $1.6 billion at the end of the quarter, an increase of $43 million from the prior quarter.
Tangible Book Value Per Share was $7.43 at the end of the quarter, an increase of $0.22 from the end of the prior quarter.
Average Diluted Shares Outstanding were 199.0 million shares for the quarter, compared to 198.5 million shares for the prior quarter. Total outstanding shares at December 31, 2013 were 196.9 million, which was 128 million or 39% lower than outstanding shares in December of 2010 when the Company initiated a share repurchase program. The share repurchase program was terminated in 2013 in connection with the planned merger with PacWest Bancorp. The average purchase price for the 136 million shares purchased between December 2010 and March 2013 was $6.83.
Quarterly Cash Dividend of $0.01 per common share was paid on December 27, 2013 to common shareholders of record on December 13, 2013.
Pending Merger with PacWest Bancorp - CapitalSource Inc. stockholders overwhelmingly approved the Agreement and Plan of Merger ("Merger Agreement"), dated July 22, 2013, with PacWest Bancorp at a special meeting held on January 13, 2014 in Los Angeles, California. The Merger was also approved by the California Department of Business Oversight (DBO) on December 17, 2013. Before the transaction can close, regulatory approval must be received from the Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC) and other conditions of the Merger must be met.
CapitalSource Bank Call Report
CapitalSource Bank will file its Consolidated Reports of Condition and Income for a Bank With Domestic Offices Only-FFIEC 041, for the quarter ended December 31, 2013 (the "Call Report") with the Federal Deposit Insurance Corporation ("FDIC") on or before January 30, 2014. The Call Report will subsequently be posted by the FDIC on its website at http://cdr.ffiec.gov/Public/.
About CapitalSource
CapitalSource Inc. (NYSE:CSE), through its wholly owned subsidiary CapitalSource Bank, makes commercial loans to small and middle-market businesses nationwide and offers depository products and services in 21 retail branches in southern and central California. CapitalSource, headquartered in Los Angeles, CA, had total assets of $8.9 billion and total deposits of $6.1 billion as of December 31, 2013. For more information, visit www.capitalsource.com.
Forward Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, strategies, goals, and projections and including statements about our expectations regarding pending merger between the Company and PacWest, 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: the ability to complete the pending merger between the Company and PacWest, including obtaining regulatory approvals, or any future transaction, successfully integrate the companies following completion of the merger or achieve expected beneficial synergies and/or operating efficiencies, in each case within expected time-frames or at all; the possibility that regulatory approvals may not be received on expected time frames or at all; the possibility that personnel changes in connection with the merger may not proceed as planned; the possibility that the cost of additional capital may be more than expected; changes in the Company's stock price before completion of the merger, including as a result of the financial performance of PacWest prior to closing; the reaction to the merger of the companies' customers, employees and counterparties; and other factors described in CapitalSource's 2012 Annual Report on Form 10-K and documents subsequently filed by CapitalSource with the Securities and Exchange Commission. All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law.
CapitalSource Fourth Quarter 2013 - Financial Supplement | ||
CapitalSource Inc. | ||
Consolidated Balance Sheets | ||
($ in thousands) | ||
December 31, | December 31, | |
2013 | 2012 | |
(Unaudited) | ||
ASSETS | ||
Cash and cash equivalents | $ 176,889 | $ 180,803 |
Interest-bearing deposits in other banks | 15,391 | 108,285 |
Other short-term investments | 263,519 | 9,998 |
Restricted cash | 58,653 | 104,044 |
Investment securities: | ||
Available-for-sale, at fair value | 870,482 | 1,079,025 |
Held-to-maturity, at amortized cost | 74,369 | 108,233 |
Total investment securities | 944,851 | 1,187,258 |
Loans held for sale | — | 22,719 |
Loans held for investment | 6,830,519 | 6,192,858 |
Less deferred loan fees and discounts | (46,030) | (53,628) |
Total loans held for investment | 6,784,489 | 6,139,230 |
Less allowance for loan and lease losses | (120,520) | (117,273) |
Total loans held for investment, net | 6,663,969 | 6,021,957 |
Interest receivable | 26,068 | 29,112 |
Other investments | 52,124 | 60,363 |
Goodwill | 173,135 | 173,135 |
Deferred tax asset, net | 252,268 | 362,283 |
Other assets | 278,623 | 289,048 |
Total assets | $ 8,905,490 | $ 8,549,005 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Liabilities: | ||
Deposits | $ 6,127,690 | $ 5,579,270 |
Term debt | — | 177,188 |
Other borrowings | 1,037,156 | 1,005,738 |
Other liabilities | 104,017 | 161,637 |
Total liabilities | 7,268,863 | 6,923,833 |
Shareholders' equity: | ||
Preferred stock (50,000,000 shares authorized; no shares outstanding) | — | — |
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 196,855,283 and 209,551,674 shares issued and outstanding, respectively) | 1,969 | 2,096 |
Additional paid-in capital | 3,038,218 | 3,157,533 |
Accumulated deficit | (1,402,690) | (1,559,107) |
Accumulated other comprehensive (loss) income, net | (870) | 24,650 |
Total shareholders' equity | 1,636,627 | 1,625,172 |
Total liabilities and shareholders' equity | $ 8,905,490 | $ 8,549,005 |
CapitalSource Fourth Quarter 2013 - Financial Supplement | |||||
CapitalSource Inc. | |||||
Consolidated Statements of Operations and Comprehensive Income | |||||
(Unaudited) | |||||
($ in thousands, except per share data) | |||||
Three Months Ended | Year Ended | ||||
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|
Net interest income: | |||||
Interest income: | |||||
Loans and leases | $ 107,329 | $ 104,211 | $ 105,960 | $ 415,375 | $ 428,397 |
Investment securities | 5,306 | 8,003 | 8,493 | 30,242 | 38,230 |
Other | 623 | 504 | 468 | 1,859 | 1,587 |
Total interest income | 113,258 | 112,718 | 114,921 | 447,476 | 468,214 |
Interest expense: | |||||
Deposits | 13,681 | 13,407 | 12,366 | 51,941 | 51,035 |
Borrowings | 5,126 | 5,237 | 6,506 | 22,147 | 28,372 |
Total interest expense | 18,807 | 18,644 | 18,872 | 74,088 | 79,407 |
Net interest income | 94,451 | 94,074 | 96,049 | 373,388 | 388,807 |
Loan and lease loss provision / (recovery) | 4,263 | (1,069) | 8,875 | 20,531 | 39,442 |
Net interest income after loan and lease loss provision / (recovery) | 90,188 | 95,143 | 87,174 | 352,857 | 349,365 |
Non-interest income: | |||||
Loan fees | 10,247 | 5,921 | 6,662 | 23,546 | 18,561 |
Leased equipment income | 5,551 | 5,194 | 4,298 | 20,590 | 14,113 |
Gain on investments, net | 23,860 | 2,123 | 6,453 | 28,965 | 7,382 |
Gain (loss) on derivatives, net | 835 | (1,566) | (174) | 1,061 | (823) |
Other non-interest income, net | 1,583 | 4,036 | 3,310 | 8,388 | 10,613 |
Total non-interest income | 42,076 | 15,708 | 20,549 | 82,550 | 49,846 |
Non-interest Expense: | |||||
Compensation and benefits | 28,351 | 26,618 | 28,083 | 107,676 | 105,430 |
Professional fees | 1,648 | (49) | 3,656 | 4,824 | 12,814 |
Occupancy expenses | 3,689 | 3,434 | 3,438 | 14,577 | 16,840 |
FDIC fees and assessments | 290 | 1,642 | 1,538 | 5,068 | 5,957 |
General depreciation and amortizations | 1,574 | 1,590 | 1,398 | 6,261 | 5,934 |
Loan servicing expense | 1,429 | 925 | 1,782 | 6,566 | 13,011 |
Other administrative expenses | 5,759 | 6,129 | 6,826 | 24,754 | 26,499 |
Total operating expenses | 42,740 | 40,289 | 46,721 | 169,726 | 186,485 |
Leased equipment depreciation | 3,854 | 3,646 | 3,036 | 14,427 | 9,919 |
Expense from real estate owned and other foreclosed assets, net | (321) | (768) | 211 | 821 | 6,790 |
Gain on extinguishment of debt | — | — | — | — | (8,059) |
Other non-interest expense, net | (159) | 4,447 | (545) | 4,104 | (1,453) |
Total non-interest expense | 46,114 | 47,614 | 49,423 | 189,078 | 193,682 |
Net income before income taxes | 86,150 | 63,237 | 58,300 | 246,329 | 205,529 |
Income tax expense (benefit) | 28,227 | 14,839 | 11,224 | 82,037 | (285,081) |
Net income | 57,923 | 48,398 | 47,076 | 164,292 | 490,610 |
Other comprehensive (loss) income, net of tax | |||||
Unrealized (loss) gain on available-for-sale securities, net of tax | (19,772) | (4,285) | 2,793 | (25,521) | 5,595 |
Unrealized loss on foreign currency translation, net of tax | — | — | — | — | (351) |
Other comprehensive (loss) income | (19,772) | (4,285) | 2,793 | (25,521) | 5,244 |
Comprehensive income | $ 38,151 | $ 44,113 | $ 49,869 | $ 138,771 | $ 495,854 |
Net income per share: | |||||
Basic | $ 0.30 | $ 0.25 | $ 0.23 | $ 0.84 | $ 2.19 |
Diluted | $ 0.29 | $ 0.24 | $ 0.22 | $ 0.82 | $ 2.13 |
Average shares outstanding: | |||||
Basic | 193,956,110 | 193,099,993 | 208,438,784 | 195,189,983 | 223,928,583 |
Diluted | 199,047,159 | 198,456,994 | 213,482,389 | 200,451,899 | 230,154,989 |
Dividends declared per share | $ 0.01 | $ 0.01 | $ 0.51 | $ 0.04 | $ 0.54 |
CapitalSource Inc. | ||||||||
Segment Balance Sheets | ||||||||
(Unaudited) | ||||||||
($ in thousands) | ||||||||
December 31, 2013 | September 30, 2013 | |||||||
CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | |
ASSETS | ||||||||
Cash and cash equivalents and restricted cash | $ 87,312 | $ 427,140 | $ — | $ 514,452 | $ 180,261 | $ 310,831 | $ — | $ 491,092 |
Investment securities: | ||||||||
Available-for-sale | 870,482 | — | — | 870,482 | 879,696 | 31,876 | — | 911,572 |
Held-to-maturity | 74,369 | — | — | 74,369 | 122,262 | — | — | 122,262 |
Loans | 6,698,093 | 85,932 | 464 | 6,784,489 | 6,408,385 | 144,054 | 716 | 6,553,155 |
Allowance for loan and lease losses | (109,469) | (11,051) | — | (120,520) | (105,549) | (9,585) | — | (115,134) |
Loans, net of allowance for loan and lease losses | 6,588,624 | 74,881 | 464 | 6,663,969 | 6,302,836 | 134,469 | 716 | 6,438,021 |
Receivables due from affiliates | 2,117 | 8,276 | (10,393) | — | 1,253 | 7,120 | (8,373) | — |
Other assets | 455,842 | 335,235 | (8,859) | 782,218 | 446,933 | 366,067 | (21,028) | 791,972 |
Total assets | $ 8,078,746 | $ 845,532 | $ (18,788) | $ 8,905,490 | $ 7,933,241 | $ 850,363 | $ (28,685) | $ 8,754,919 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Liabilities: | ||||||||
Deposits | $ 6,127,690 | $ — | $ — | $ 6,127,690 | $ 6,051,411 | $ — | $ — | $ 6,051,411 |
Borrowings | 625,000 | 412,156 | — | 1,037,156 | 590,000 | 411,599 | — | 1,001,599 |
Balance due to affiliates | 8,276 | 2,117 | (10,393) | — | 7,120 | 1,253 | (8,373) | — |
Other liabilities | 81,877 | 34,256 | (12,116) | 104,017 | 86,903 | 46,423 | (24,631) | 108,695 |
Total liabilities | 6,842,843 | 448,529 | (22,509) | 7,268,863 | 6,735,434 | 459,275 | (33,004) | 7,161,705 |
Shareholders' equity: | ||||||||
Common stock | 921,000 | 1,969 | (921,000) | 1,969 | 921,000 | 1,969 | (921,000) | 1,969 |
Additional paid-in capital/retained earnings/deficit | 315,773 | 395,904 | 923,851 | 1,635,528 | 273,357 | 370,217 | 928,769 | 1,572,343 |
Accumulated other comprehensive income, net | (870) | (870) | 870 | (870) | 3,450 | 18,902 | (3,450) | 18,902 |
Total shareholders' equity | 1,235,903 | 397,003 | 3,721 | 1,636,627 | 1,197,807 | 391,088 | 4,319 | 1,593,214 |
Total liabilities and shareholders' equity | $ 8,078,746 | $ 845,532 | $ (18,788) | $ 8,905,490 | $ 7,933,241 | $ 850,363 | $ (28,685) | $ 8,754,919 |
CapitalSource Inc. | ||||||||
Segment Statements of Operations | ||||||||
(Unaudited) | ||||||||
($ in thousands) | ||||||||
Three Months Ended December 31, 2013 | Three Months Ended September 30, 2013 | |||||||
Net interest income: | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED |
Interest income: | ||||||||
Loans and leases | $102,318 | $5,312 | $(301) | $107,329 | $100,461 | $3,440 | $310 | $104,211 |
Investment securities | 4,647 | 659 | — | 5,306 | 6,922 | 1,081 | — | 8,003 |
Other | 517 | 106 | — | 623 | 427 | 77 | — | 504 |
Total interest income | 107,482 | 6,077 | (301) | 113,258 | 107,810 | 4,598 | 310 | 112,718 |
Interest expense: | ||||||||
Deposits | 13,681 | — | — | 13,681 | 13,407 | — | — | 13,407 |
Borrowings | 2,677 | 2,449 | — | 5,126 | 2,699 | 2,538 | — | 5,237 |
Total interest expense | 16,358 | 2,449 | — | 18,807 | 16,106 | 2,538 | — | 18,644 |
Net interest income | 91,124 | 3,628 | (301) | 94,451 | 91,704 | 2,060 | 310 | 94,074 |
Loan and lease loss provision / (recovery) | 4,428 | (165) | — | 4,263 | 2,230 | (3,299) | — | (1,069) |
Net interest income after loan and lease loss provision / (recovery) | 86,696 | 3,793 | (301) | 90,188 | 89,474 | 5,359 | 310 | 95,143 |
Non-interest income: | ||||||||
Loan fees | 10,114 | 133 | — | 10,247 | 5,643 | 278 | — | 5,921 |
Leased equipment income | 5,551 | — | — | 5,551 | 5,194 | — | — | 5,194 |
Other non-interest income, net | 5,831 | 23,859 | (3,412) | 26,278 | 5,202 | 3,123 | (3,732) | 4,593 |
Total non-interest income, net | 21,496 | 23,992 | (3,412) | 42,076 | 16,039 | 3,401 | (3,732) | 15,708 |
Non-interest expense: | ||||||||
Compensation and benefits | 28,646 | (295) | — | 28,351 | 27,421 | (803) | — | 26,618 |
Professional fees | 1,019 | 629 | — | 1,648 | 984 | (1,033) | — | (49) |
Leased equipment depreciation | 3,854 | — | — | 3,854 | 3,646 | — | — | 3,646 |
Expense of real estate owned and other foreclosed assets, net | 1,212 | (1,533) | — | (321) | 6 | (774) | — | (768) |
Other non-interest expense, net | 9,106 | 7,275 | (3,799) | 12,582 | 10,044 | 12,120 | (3,997) | 18,167 |
Total non-interest expense, net | 43,837 | 6,076 | (3,799) | 46,114 | 42,101 | 9,510 | (3,997) | 47,614 |
Net income (loss) before income taxes | 64,355 | 21,709 | 86 | 86,150 | 63,412 | (750) | 575 | 63,237 |
Income tax expense (benefit) | 26,789 | 757 | 681 | 28,227 | 25,015 | (10,176) | — | 14,839 |
Net income | $37,566 | $20,952 | $(595) | $57,923 | $38,397 | $9,426 | $575 | $48,398 |
Twelve Months Ended December 31, 2013 | Twelve Months Ended December 31, 2012 | |||||||
Net interest income: | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED | CAPITALSOURCE BANK | OTHER COMMERCIAL FINANCE | INTERCOMPANY ELIMINATIONS | CONSOLIDATED |
Interest income: | ||||||||
Loans and leases | $390,858 | $22,477 | $2,040 | $415,375 | $359,233 | $72,662 | $(3,498) | $428,397 |
Investment securities | 26,389 | 3,853 | — | 30,242 | 32,396 | 5,834 | 38,230 | |
Other | 1,638 | 221 | — | 1,859 | 1,454 | 133 | 1,587 | |
Total interest income | 418,885 | 26,551 | 2,040 | 447,476 | 393,083 | 78,629 | (3,498) | 468,214 |
Interest expense: | ||||||||
Deposits | 51,941 | — | — | 51,941 | 51,035 | — | 51,035 | |
Borrowings | 10,744 | 11,403 | — | 22,147 | 11,061 | 17,311 | 28,372 | |
Total interest expense | 62,685 | 11,403 | — | 74,088 | 62,096 | 17,311 | — | 79,407 |
Net interest income | 356,200 | 15,148 | 2,040 | 373,388 | 330,987 | 61,318 | (3,498) | 388,807 |
Loan and lease loss provision | 16,866 | 3,665 | — | 20,531 | 16,192 | 23,250 | 39,442 | |
Net interest income after loan and lease loss provision | 339,334 | 11,483 | 2,040 | 352,857 | 314,795 | 38,068 | (3,498) | 349,365 |
Non-interest income: | ||||||||
Loan fees | 22,772 | 774 | — | 23,546 | 16,089 | 2,472 | 18,561 | |
Leased equipment income | 20,590 | — | — | 20,590 | 14,113 | — | 14,113 | |
Other non-interest income, net | 22,822 | 32,489 | (16,897) | 38,414 | 30,293 | 12,050 | (25,171) | 17,172 |
Total non-interest income, net | 66,184 | 33,263 | (16,897) | 82,550 | 60,495 | 14,522 | (25,171) | 49,846 |
Non-interest expense: | ||||||||
Compensation and benefits | 107,619 | 57 | — | 107,676 | 102,417 | 3,013 | — | 105,430 |
Professional fees | 4,214 | 610 | — | 4,824 | 5,628 | 7,186 | — | 12,814 |
Leased equipment depreciation | 14,427 | — | — | 14,427 | 9,919 | — | — | 9,919 |
Expense of real estate owned and other foreclosed assets, net | 1,203 | (382) | — | 821 | 2,169 | 4,621 | — | 6,790 |
Loss on extinguishment of debt | — | — | — | — | — | (8,059) | — | (8,059) |
Other non-interest expense, net | 40,786 | 37,185 | (16,641) | 61,330 | 48,436 | 44,583 | (26,231) | 66,788 |
Total non-interest expense, net | 168,249 | 37,470 | (16,641) | 189,078 | 168,569 | 51,344 | (26,231) | 193,682 |
Net income (loss) before income taxes | 237,269 | 7,276 | 1,784 | 246,329 | 206,721 | 1,246 | (2,438) | 205,529 |
Income tax expense (benefit) | 96,593 | (15,237) | 681 | 82,037 | 84,055 | (370,209) | 1,073 | (285,081) |
Net income | $140,676 | $22,513 | $1,103 | $164,292 | $122,666 | $371,455 | $(3,511) | $490,610 |
CapitalSource Inc. | |||||
Selected Financial Data | |||||
(Unaudited) | |||||
Three Months Ended | Year Ended | ||||
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 | |
CapitalSource Bank Segment: | |||||
Performance ratios: | |||||
Return on average assets | 1.86% | 1.94% | 1.84% | 1.82% | 1.73% |
Return on average equity | 12.28% | 12.94% | 12.53% | 12.07% | 11.73% |
Return on average tangible equity | 14.33% | 15.17% | 14.93% | 14.18% | 14.06% |
Yield on average interest earning assets | 5.61% | 5.72% | 5.72% | 5.72% | 5.90% |
Cost of interest bearing liabilities | 0.97% | 0.97% | 0.98% | 0.97% | 1.04% |
Deposits | 0.89% | 0.89% | 0.89% | 0.88% | 0.95% |
Borrowings | 1.80% | 1.69% | 1.83% | 1.77% | 1.88% |
Net interest spread | 4.64% | 4.75% | 4.74% | 4.75% | 4.86% |
Net interest margin | 4.76% | 4.86% | 4.84% | 4.87% | 4.97% |
Operating expenses as a percentage of average total assets | 1.95% | 1.97% | 2.22% | 1.99% | 2.21% |
Efficiency ratio (1) | 35.91% | 37.26% | 41.32% | 37.65% | 41.10% |
Loan yield | 6.25% | 6.30% | 6.80% | 6.41% | 7.01% |
Capital ratios: | |||||
Tier 1 leverage | 13.88% | 13.55% | 13.06% | 13.88% | 13.06% |
Total risk-based capital | 16.29% | 16.28% | 16.50% | 16.29% | 16.50% |
Tangible common equity to tangible assets | 13.44% | 13.20% | 12.89% | 13.44% | 12.89% |
Average balances ($ in thousands): | |||||
Average loans | $ 6,490,933 | $ 6,326,704 | $ 5,342,683 | $ 6,096,284 | $ 5,121,261 |
Average assets | 8,000,439 | 7,872,206 | 7,327,136 | 7,735,485 | 7,094,631 |
Average interest earning assets | 7,602,463 | 7,480,289 | 6,859,237 | 7,317,119 | 6,663,700 |
Average deposits | 6,090,152 | 5,963,151 | 5,557,241 | 5,870,561 | 5,400,247 |
Average borrowings | 590,489 | 632,608 | 597,772 | 606,110 | 587,301 |
Average equity | 1,213,335 | 1,177,526 | 1,077,507 | 1,165,041 | 1,045,760 |
Other Commercial Finance Segment: | |||||
Performance ratios: | |||||
Yield on average interest earning assets | 7.02% | 5.21% | 8.19% | 6.43% | 8.42% |
Cost of interest bearing liabilities | 2.36% | 2.45% | 2.49% | 2.56% | 2.60% |
Net interest spread | 4.66% | 2.76% | 5.70% | 3.87% | 5.82% |
Net interest margin | 4.19% | 2.34% | 6.28% | 3.67% | 6.57% |
Loan yield | 19.06% | 6.68% | 8.41% | 8.23% | 8.75% |
Average balances ($ in thousands): | |||||
Average loans | $ 110,583 | $ 204,258 | $ 676,349 | $ 273,102 | $ 830,316 |
Average assets | 858,339 | 888,371 | 1,335,561 | 940,388 | 1,368,522 |
Average interest earning assets | 343,484 | 350,057 | 779,581 | 413,152 | 933,521 |
Average borrowings | 411,708 | 410,686 | 600,328 | 445,530 | 665,937 |
Average equity | 394,126 | 382,778 | 625,945 | 409,804 | 570,693 |
Consolidated CapitalSource Inc.: (2) | |||||
Performance ratios: | |||||
Return on average assets | 2.60% | 2.20% | 2.17% | 1.90% | 5.80% |
Return on average equity | 14.26% | 12.27% | 10.97% | 10.41% | 30.25% |
Return on average tangible equity | 15.98% | 13.81% | 12.22% | 11.70% | 33.88% |
Yield on average interest earning assets | 5.65% | 5.71% | 5.99% | 5.79% | 6.16% |
Cost of interest bearing liabilities | 1.05% | 1.06% | 1.11% | 1.07% | 1.19% |
Net interest spread | 4.60% | 4.65% | 4.88% | 4.72% | 4.97% |
Net interest margin | 4.72% | 4.77% | 5.00% | 4.83% | 5.12% |
Efficiency ratio (1) | 32.21% | 37.96% | 41.14% | 38.44% | 43.50% |
Operating expenses as a percentage of average total assets | 1.94% | 1.85% | 2.16% | 1.96% | 2.21% |
Leverage ratios: | |||||
Equity to total assets (as of period end) | 18.38% | 18.20% | 19.01% | 18.38% | 19.01% |
Tangible common equity to tangible assets | 16.76% | 16.54% | 17.33% | 16.76% | 17.33% |
Average balances ($ in thousands): | |||||
Average loans | $ 6,602,120 | $ 6,531,395 | $ 6,018,343 | $ 6,369,520 | $ 5,952,699 |
Average assets | 8,822,143 | 8,732,982 | 8,642,344 | 8,649,453 | 8,456,527 |
Average interest earning assets | 7,946,551 | 7,830,778 | 7,638,130 | 7,730,404 | 7,598,342 |
Average borrowings | 1,002,197 | 1,043,295 | 1,198,100 | 1,051,639 | 1,253,237 |
Average deposits | 6,090,152 | 5,963,151 | 5,557,241 | 5,870,561 | 5,400,247 |
Average equity | 1,611,659 | 1,564,289 | 1,706,761 | 1,578,241 | 1,621,874 |
(1) Efficiency ratio is defined as operating expense (non-interest expense less REO expense, early debt term expense, provision for unfunded commitments and lease depreciation) divided by net interest and non-interest income, less leased equipment depreciation. | |||||
(2) Applicable ratios have been calculated on a continuing operations basis. |
CapitalSource Inc. | |||||
Credit Quality Data | |||||
(Unaudited) | |||||
December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | |
Loans 30-89 days contractually delinquent: | |||||
As a % of total loans(1) | 0.03% | 0.01% | 0.01% | 0.71% | 0.40% |
Loans 30-89 days contractually delinquent | $ 2.4 | $ 0.7 | $ 0.4 | $ 43.7 | $ 24.5 |
Loans 90 or more days contractually delinquent: | |||||
As a % of total loans(1) | 0.41% | 0.46% | 0.78% | 0.69% | 0.63% |
Loans 90 or more days contractually delinquent | $ 27.6 | $ 30.5 | $ 50.3 | $ 43.0 | $ 39.1 |
Loans on non-accrual:(2) | |||||
As a % of total loans(1) | 1.49% | 1.75% | 2.41% | 2.40% | 1.94% |
Loans on non-accrual | $ 100.8 | $ 114.8 | $ 156.1 | $ 148.6 | $ 119.7 |
Impaired loans:(3) | |||||
As a % of total loans(4) | 1.49% | 1.80% | 2.51% | 2.41% | 3.29% |
Impaired loans | $ 100.8 | $ 117.4 | $ 162.4 | $ 148.9 | $ 201.7 |
Allowance for loan and lease losses: | |||||
As a % of total loans(4) | 1.78% | 1.76% | 1.86% | 1.92% | 1.91% |
As a % of non-accrual loans | 119.52% | 100.33% | 77.20% | 79.58% | 97.96% |
Allowance for loan and lease losses | $ 120.5 | $ 115.1 | $ 120.5 | $ 118.3 | $ 117.3 |
Net charge offs (last twelve months): | |||||
As a % of total average loans | 0.27% | 0.59% | 0.79% | 1.24% | 1.27% |
Net charge offs (last twelve months) | $ 17.3 | $ 36.7 | $ 48.2 | $ 74.4 | $ 75.8 |
(1) Includes loans held for investment, loans held for sale and deferred loan fees and discounts. Excludes allowance for loan and lease losses. | |||||
(2) Includes loans with an aggregate principal balance of $27.6 million, $30.5 million, $50.3 million, $43.0 million, and $39.1 million as of December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012, 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 $3.5 million,$8.3 million and $2.4 million, as of September 30, 2013, March 31, 2013 and December 31, 2012, respectively. As of December 31, 2013 and June 30, 2013 there were no non-performing loans classified as held for sale. | |||||
(3) Includes loans with an aggregate principal balance of $27.6 million, $30.5 million, $50.3 million, $43.0 million, and $38.1 million as of December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012, respectively, that were also classified as loans 90 or more days contractually delinquent, and loans with an aggregate principal balance of $100.8 million, $111.3 million, $156.1 million, $140.4 million, and $117.3 million as of December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively, that were also classified as loans on non-accrual status. | |||||
(4) Includes loans held for investment and deferred loan fees and discounts. Excludes the allowance for loan and lease losses. |