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Dec 18, 2012

NewStar Completes $325 Million CLO

Fifth Balance Sheet Securitization Upsized deal from $300 million to $325 million due to strong investor interest Four classes of notes were issued to fifteen different investors Priced notes at par to yield a weighted average spread of approximately Libor plus 254 bps Achieved an advance rate of approximately 81%, placing approximately $263 million of notes rated AAA/Aaa through Baa2 Retained notes rated Ba1 and B2 in addition to equity interests totaling approximately $62 million, or 19% of the capital structure BOSTON, Dec. 19, 2012 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS), a specialized commercial finance company, announced today that it completed a $325 million term debt securitization known as NewStar Commercial Loan Funding 2012-2. All classes of notes were priced at par and the transaction was upsized from $300 million, reflecting broad participation among institutional investors. NewStar Commercial Loan Funding 2012-2 is NewStar's fifth balance sheet securitization since inception and part of a programmatic approach to the company's funding strategy. The notes offered through this CLO transaction are backed by a diversified portfolio of commercial loans originated by NewStar. The transaction was executed through a private offering via Rule 144A and Regulation S. NewStar placed various classes of notes rated AAA/Aaa through Baa2 totaling approximately $263 million and will retain Ba1 and B2-rated notes in addition to the equity interests, which together represent 19% of the collateral pool, or approximately $62 million.  "Our ability to generate broad investor interest in this transaction underscores the strength of NewStar's track record and the value of our direct origination platform. The quality of the execution also reinforces our access to the capital markets and ability to expand and diversify our investor base," said NewStar CEO, Tim Conway. "Wells Fargo Securities did an outstanding job structuring and marketing the deal to drive the best execution." "The CLO market continues to provide attractive term financing for our balance sheet and this deal marked another important milestone for us," said John Frishkopf, head of asset management and treasury at NewStar. "With fifteen different investors across four classes of bonds, we were able to upsize the deal and price all tranches at par to achieve an attractive structure and all-in cost of funds."    NewStar Financial will serve as manager of the CLO, which has a three-year reinvestment period. The Class A notes are rated by two rating agencies and the Class B — F notes are rated by a single rating agency. All of the notes were priced at par with a weighted average yield of LIBOR plus 2.54%. Wells Fargo Securities was placement agent and sole book runner. This announcement is neither an offer to sell nor a solicitation of an offer to buy the notes. The notes subject to the private placement have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. About NewStar Financial, Inc.: 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 a range of senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases. NewStar originates loans and leases directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $30 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, Los Angeles CA, Philadelphia PA, Portland OR, San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information. The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044CONTACT: Corporate Inquiries: NewStar Financial Robert K. Brown (617) 848-2558
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Nov 06, 2012

NewStar Reports Third Quarter 2012 Net Income of $6.1 Million, or $0.11 per Diluted Share

Loan Growth - New funded loan volume was approximately $180 million and loan balances at quarter-end were 5% higher than at the same time in the prior yearRevenue Growth — Risk-adjusted revenue[1] increased 18.5% from the same period in the prior year, but decreased 8% from the prior quarterMargins — Net interest margin remained attractive at 4.22% compared to 4.21% in the prior quarter and 3.98% in the same period in the prior yearCredit Trends — Although credit metrics were favorable to the same period last year, NPAs and delinquencies edged slightly higher from the prior quarter and provision for credit losses increased $3.5 millionExpenses — Operating expenses decreased $2.7 million from the prior quarter due primarily to last quarter's charge related to settlement of litigation in connection with a problem loanBuilding Book Value - Book value per share increased by $0.18 to $11.87 in the quarter, or $0.60 from the same time in the prior year BOSTON, Nov. 7, 2012 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS), a specialized commercial finance company, today reported net income of $6.1 million, or $0.11 per diluted share for the third quarter of 2012. These results compare to net income of $3.4 million, or $0.06 in the third quarter of 2011 and $5.6 million in the prior quarter. Income before income taxes (pre-tax income) was $10.5 million for the third quarter of 2012. That compares to $5.9 million in the third quarter of 2011 and $9.7 million in the prior quarter. "I am pleased to report another solid quarter highlighted by an 8% increase in earnings and a $0.18 increase to book value," said Tim Conway, NewStar's Chairman and Chief Executive Officer. "Although weaker than expected loan demand and M&A activity slowed our pace of new loan origination in the quarter, I am happy with our overall strong results," he added. "I also remain optimistic that we will have a strong finish to the year as we are already experiencing a significant pick-up in activity that we expect to continue through year-end," he concluded.Managed and Owned Loan Portfolios Total new funded loan origination volume was approximately $180 million in the third quarter compared to $205 million in the prior quarter and $190 million in the third quarter of the prior year. Lower volumes reflected weaker demand for acquisition financing from financial sponsors amid a slowdown in M&A activity and overall business investment. The managed loan portfolio remained steady at $2.4 billion as of September 30, 2012 approximately equal to June 30, 2012 as new funded loan origination offset loan run-off from scheduled amortization and prepayments of existing loans. The owned portfolio also remained stable at $1.9 billion as of September 30, 2012 as new funded loan origination offset the impact of run-off from scheduled amortization and prepayments of existing loans. Real Estate loans decreased by 3%, while our Business Credit and Leveraged Finance loan portfolios increased by 8% and 0.4%, respectively. Assets managed for third party institutional investors increased by 3% in the third quarter to approximately $515 million at September 30, 2012 compared to $498 million at June 30, 2012 due primarily to new funded loan origination. Asset-based lending and equipment finance businesses originated $23 million in the third quarter, or nearly 20% of new loan volume retained on the balance sheet. The owned loan portfolio remained balanced across industry sectors and highly diversified by issuer. As of September 30, 2012, no outstanding borrowings by a single obligor represented more than 1.4% of total loans outstanding, and the ten largest obligors comprised approximately 9.7% of the loan portfolio.Net Interest Income / Margin Net interest income increased to $21.7 million for the third quarter of 2012 compared to $21.4 million for the second quarter of 2012 and $18.8 million in the third quarter of last year.   The portfolio yield increased to 6.45% in the third quarter compared to 6.35% in the prior quarter, but was down somewhat from 6.58% in the same period in the prior year.  Net interest margin was stable at 4.22% for the third quarter of 2012 compared to 4.21% for the second quarter of 2012, and 3.98% in the third quarter of last year.  Adjusting for the negative impact of non-performing loans, the loan portfolio yield would have been 35 bps higher, or 6.80% and net interest margin would have been 4.48% for the third quarter of 2012.    Non-Interest Income Non-interest income was $3.2 million for the third quarter of 2012, up from $1.8 million for the second quarter of 2012 and $3.4 million loss in the same period in the prior year. The change from the second quarter was due primarily to $1.3 million of gains on the repurchase of CLO debt in the third quarter, which was partially offset by a $0.3 million OREO write-down.  Other non-interest income in the third quarter of 2012 consisted primarily of $0.7 million of asset management income, $0.7 million of amendment and exit fees, and $0.4 million of unused fees on revolving credit commitments.Expenses Operating expenses decreased by $2.7 million to $10.7 million in the third quarter of 2012 compared to $13.4 million in the second quarter of 2012 due primarily to a $2.1 million charge during the second quarter (net of insurance coverage) related to settlement of litigation in connection with a problem real estate loan that was the subject of the litigation.  Operating expenses excluding non-cash equity compensation[1] were $9.0 million in the third quarter of 2012, or 1.7% of average assets an annualized basis. The efficiency ratio excluding non-cash equity compensation[2] in the third quarter of 2012 was 36.1% The Company had 100 full-time employees as of September 30, 2012.Income Taxes Deferred income taxes increased to $46.4 million as of September 30, 2012 compared to $45.2 million as of June 30, 2012 due primarily to an increase in the allowance for credit losses and related timing differences of when credit costs are recognized according to GAAP and when it is excluded for income tax. Approximately $23.9 million and $14.5 million of the deferred tax asset as of September 30, 2012 were related to our allowance for credit losses and equity compensation, respectively.Loan Credit Quality Credit performance declined slightly in Q3 2012 compared to the prior quarter, but was significantly better than the same period in the prior year and reflected expected variation around a continued positive trend line.     Total credit costs (including provision for credit losses and losses on OREO or interests retained in connection with workouts of impaired loans) in the third quarter increased to $4.0 million, or 0.9% of average loans on an annualized basis, from $0.2 million in the prior quarter.  Specific provision expense was approximately $4.6 million in the third quarter of 2012, up from $2.6 million in the second quarter of 2012. The allowance for credit losses was $59.4 million, or 3.21% of loans and 72.5% of NPLs, at September 30, 2012, compared to $55.3 million, or 3.02% of loans, at June 30, 2012. Non-performing assets increased by $9.8 million from the prior quarter. New loans totaling $9.9 million were placed on non-accrual status and loans totaling $3.8 million were returned to performing status in the third quarter of 2012. We also took control of a $5.1 million property and classified it as OREO. The resulting $11.2 million net increase in NPAs was partially offset by a $1.4 million decrease from loan repayment activity and equity method accounting adjustments.  At September 30, 2012, loans with an aggregate outstanding balance of $81.9 million, net of charge-offs, were on non-accrual status compared to loans with an aggregate outstanding balance of $77.3 million, net of charge-offs, at June 30, 2012. Non-performing assets, net of charge-offs, specific reserves and other adjustments were $95.5 million, or 49% of their aggregate face amount, as of September 30, 2012. Non-accrual loans with an outstanding balance of $43.1 million and accruing loans with an outstanding balance of $21.1 million as of September 30, 2012 were also delinquent.  Recoveries were $0.3 million and no loans were charged-off in the third quarter of 2012 compared to net charge-offs of $9.0 million, or 1.97% of loans on an annualized basis, in the second quarter of 2012.Funding and Capital Balance sheet leverage decreased slightly to 2.47x as of September 30, 2012 from 2.51x at June 30, 2012 due primarily to CLO run-off and repayments of the commercial real estate repurchase agreement, partially offset by increased borrowings under warehouse lines used to fund new loan origination.   Maintained ample liquidity with total cash and equivalents as of September 30, 2012 of $185.6 million, of which $34.2 million was unrestricted. Unrestricted cash increased from approximately $28.4 million at June 30, 2012 and restricted cash increased from approximately $126.9 million to $151.4 million.Book Value Book value per share was $11.87 at the end of the third quarter 2012 up from $11.69 at the end of the prior quarter primarily due to net income for the quarter and the amortization of equity compensation into stockholders' equity.Share Count Average diluted shares outstanding were 53.0 million shares for the quarter, which was up slightly from 52.6 million shares for the prior quarter. Total outstanding shares at September 30, 2012 were 49.4 million, consistent with outstanding shares as of June 30, 2012.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 877-755-7419 approximately 5-10 minutes prior to the call. International callers should dial 973-200-3080. All callers should reference "NewStar Financial."    For convenience, an archived replay of the call will be available through November 14, 2012 by dialing 800-585-8367. International callers should call 404-537-3406. For all replays, please use the passcode 50027276. 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 market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $35 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, Philadelphia, PA, Portland OR and San Francisco CA. For more detailed information, please visit our website at www.newstarfin.com.  The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044Forward-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, strategic plans, objectives, future performance, financing plans and business. As such, they are subject to material risks and uncertainties, including our limited operating history; the general state of the economy; 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 risk factors can be found in NewStar's filings with the Securities and Exchange Commission (the "SEC"), including Item 1A ("Risk Factors") of our 2011 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 with the SEC on or before November 9, 2012 and urges its shareholders to refer to that document for more complete information concerning NewStar's financial results.Non-GAAP Financial Measures References to "risk-adjusted revenue" mean the sum of net interest income after provision for credit losses as determined under GAAP and non-interest income as determined under GAAP. NewStar management uses "risk adjusted revenue" to make operational and investment decisions, and NewStar believes that it provides useful information to investors in their evaluation of our financial performance and condition. A calculation of risk-adjusted revenue is included on pages 11 and 12 of this release.  References to "operating expenses, excluding non-cash equity compensation" mean operating expenses as determined under GAAP, excluding compensation expense related to restricted stock grants and option grants.  GAAP requires that these items be included in operating expenses. NewStar management uses "operating expenses, excluding non-cash equity compensation" 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 compensation expense related to restricted stock grants and option grants eliminates unique amounts that make it difficult to assess our core performance and compare our period‑over‑period results. A reconciliation of operating expenses, excluding non-cash equity compensation to operating expenses is included on pages 11 and 12 of this release. [1]  Risk-adjusted revenue is a non-GAAP measure calculated as the sum of net interest income after provision for credit losses and non-interest income. See "Non-GAAP Measurements" at the end of this press release and page 11 for reconciliation of non-GAAP to GAAP measurements.[2]  Operating expenses excluding non-cash equity compensation is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and page 11 for reconciliation of non-GAAP to GAAP measurements.[3]  Efficiency ratio excluding non-cash equity compensation is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and page 11 for reconciliation of non-GAAP to GAAP measurements.NewStar Financial, Inc.        Consolidated Balance Sheets        (unaudited)                    September 30,June 30,December 31,September 30, ($ in thousands)2012201220112011Assets:                
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Nov 04, 2012

NewStar Amends Credit Facility to Increase Size to $175 Million and Extend Maturity

More Lending Capacity - Increased size of Wells Fargo led credit facility by $25 million to $175 million with accordion feature that provides flexibility for further increase to $200 million  Diversified Funding Sources - New lender further diversifies funding sources  Extended Revolving Period - Extended revolving reinvestment period by three years to November 2015  Matches Duration - Credit facility matures in five years, amortizing over two years following the expiry of the reinvestment period, which effectively matches the projected duration of loan collateral  Short-term Funding Flexibility - Amendment increases a sublimit for additional short-term funding capacity that will be used to replace existing funding capabilities provided through a short-term credit facility from Natixis that expires in December 2012  BOSTON, Nov. 5, 2012 (GLOBE NEWSWIRE) -- NewStar Financial Inc., a specialized commercial finance company, announced today that it has amended its existing credit facility with Wells Fargo to increase its size by $25 million to $175 million and extend its reinvestment period and final maturity by three years among other things. The credit facility will be used to provide additional new lending capacity to support growing middle market loan volume originated by NewStar's Leveraged Finance group. The increase brings total warehouse borrowing capacity to $675 million, which is expected to satisfy the company's short-term funding requirements for loan growth through 2013. The hybrid structure of the credit facility combines features of a traditional warehouse financing with the benefits of a term-debt securitization.   The credit facility has a three-year reinvestment period, during which time advances may be drawn, repaid and redrawn. Borrowings under the credit facility are to be repaid over the five-year term of the loan, which matures in November 2017, matching the projected duration of the underlying loan collateral. Advances under the credit facility are secured primarily by middle-market, first-lien senior secured corporate loans. Advance rates under the credit facility range from 65% to 70% based on the type of eligible loan collateral. The facility may be prepaid and, although, it is expected to be refinanced through the issuance of CLO notes, may be used to fund loan collateral through maturity if securitization markets are unsupportive. Wells Fargo Securities syndicated the credit facility and serves as Administrative Agent.  "Our ability to attract new lenders and increase our credit lines reflects the quality of NewStar's credit performance and track record, as well as the strength of the company's origination capabilities across our specialized lending businesses," said NewStar CEO, Tim Conway. "Wells Fargo has been a valued partner for NewStar since our inception and we are excited to continue building on our relationship," he added.  John Frishkopf, NewStar's Treasurer, also noted that "not only are we extending the reinvestment period and maturity, but we are also bringing in a new lender in order to expand the credit facility while also broadening our banking relationships."Forward-Looking Statements: This press release contains forward-looking statements, including statements regarding NewStar's application of the net proceeds from the warehouse facility; projected duration of loan collateral underlying the warehouse facility; and the ability of NewStar to meet its expected short-term funding requirements for 2012. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those results indicated in the forward-looking statements include uncertainties relating to future events that could affect its intended application of net proceeds and market conditions that could affect its underlying loans and ability to fund loan growth.About NewStar Financial, Inc.: 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 a range of senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases. NewStar originates loans and leases directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $30 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, Los Angeles CA, Philadelphia PA, Portland OR, San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information. The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044CONTACT: Corporate Inquiries: NewStar Financial Robert K. Brown (617) 848-2558
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Oct 24, 2012

NewStar Financial Schedules Release of Results for the Third Quarter of 2012

BOSTON, Oct. 24, 2012 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS) announced today that it will report results for the third quarter of 2012 on Wednesday, November 7, 2012 before the markets open. NewStar will also host a webcast/conference call to discuss the results on Wednesday, November 7, 2012 at 10:00am Eastern Time. All interested parties are invited to participate via telephone or webcast, which will be hosted through the Investor Relations section of the website 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 877-755-7419 approximately 5-10 minutes prior to the call. International callers should dial 973-200-3080. All callers should reference "NewStar Financial." For convenience, an archived replay of the call will be available through November 14, 2012 by dialing 800-585-8367. International callers should call 404-537-3406. For all replays, please use the passcode 50027276. The audio replay will also be available through the Investor Relations section of the website at www.newstarfin.com. About NewStar Financial, Inc.: 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 market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $35 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, Philadelphia PA, San Francisco CA, and Portland OR. For more detailed transaction and contact information, please visit our website at www.newstarfin.com. The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044CONTACT: Corporate Inquiries: NewStar Financial Colleen M. Banse 617.848.2502 cbanse@newstarfin.com NewStar Financial Brian J. Fischesser 617.848.2512 bfischesser@newstarfin.com
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Oct 03, 2012

NewStar Leveraged Finance Hires Banker Eric Barton

BOSTON, Oct. 3, 2012 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS) announced today that it has hired banker Eric Barton as a Director in its Chicago office. Barton will join Managing Director Thad Johnson and Director Jason Wendorf to broaden NewStar's regional marketing activities with responsibility for generating new financing opportunities with mid-sized companies, private equity firms and other investors in the middle market. Mr. Barton has 15 years of middle market experience. Prior to joining NewStar, Mr. Barton was the Head of Portfolio Management & Research-Alternative Investments Management for Mesirow Investment Management Partners where he was a senior member of the team responsible for the formation of a joint venture between Mesirow Financial Investment Management and Mubadala Development Company in the United Arab Emirates. Prior to Mesirow, Mr. Barton spent more than five years at CapX Partners as a Director-Private Equity Fund where he evaluated and structured opportunities across a variety of asset classes, including secured debt and equipment leases. "I am very excited to join an established team with such depth and experience in middle market lending," said Barton. "I am looking forward to working with the NewStar team to continue building on its established direct origination franchise as we broaden our coverage of private equity firms and intermediaries in these attractive markets." "I am excited to have Eric join us," said Pat McAuliffe, Co-Head of Middle Market Origination for NewStar. "Eric, Thad and Jason give us a strong presence in the Chicago market to cover mid-sized companies and financial sponsors located predominantly in the Midwest." "We are pleased to add Eric to our team in Chicago to enhance our coverage of key markets in the Midwest," said Tim Conway, NewStar's Chief Executive Officer. "Eric brings valuable credit and transaction execution experience to the team and will help reinforce our position in the marketplace as a smart, reliable partner at a time when we are increasing our activity across the country," Conway added.    Mr. Eric Barton   101 North Wacker Drive Suite 602     Chicago, IL 60606   P 312.525.8138  ebarton@newstarfin.comAbout NewStar Financial, Inc.: 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 market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $35 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, Philadelphia, PA, San Francisco CA, and Portland OR. For more detailed information, please visit our website at www.newstarfin.com.  The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044CONTACT: Corporate Inquiries: NewStar Financial Colleen M. Banse 617.848.2502 cbanse@newstarfin.com NewStar Financial Brian J. Fischesser 617.848.2512 bfischesser@newstarfin.com
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Aug 02, 2012

NewStar Reports Second Quarter 2012 Net Income of $5.6 Million, or $0.11 Per Diluted Share

Higher Average Loan Balances and Lower Credit Costs Drove a 10% Increase in Risk-Adjusted Revenue 1Loan Growth - New funded loan volume exceeded $205 million and average loan balances were up over 4% from the prior quarter and nearly 10% higher than the same period in the prior year  Revenue Growth — Risk-adjusted revenue2 increased nearly 10% from the prior quarter and over 36% from the same period in the prior year  Continued Positive Credit Trends - Provision expense declined sequentially and from the same period in the prior year  Margins — Net interest margin remained strong at 4.21% in Q2 2012 compared to 4.30% in the prior quarter  Expenses — Operating expenses increased $2.7 million from the prior quarter due primarily to a charge related to settlement of litigation in connection with a problem loan  Building Book Value - Book value per share increased by $0.12 to $11.69   BOSTON, Aug. 2, 2012 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS), a specialized commercial finance company, today reported net income of $5.6 million, or $0.11 per diluted share for the second quarter of 2012. These results compare to net income of $3.4 million, or $0.06 in the second quarter of 2011 and $6.1 million in the prior quarter. Earnings were negatively impacted by a $2.1 million net charge related to a settlement of litigation in connection with an impaired real estate loan. Excluding this charge, net income would have been $6.8 million, or $0.13 per diluted share in the second quarter of 20123. Income before income taxes (pre-tax income) was $9.7 million, or $11.8 million, excluding the litigation charge, for the second quarter of 2012. That compares to $10.4 million in the prior quarter and $6.1 million in the second quarter of 2011.  "I am pleased to report another solid quarter highlighted by strong risk-adjusted revenue growth, improving credit performance and a 12% increase in earnings, excluding the after-tax cost of a legal settlement" said Tim Conway, NewStar's Chairman and Chief Executive Officer. "We originated more than $205 million of new funded loans in the quarter despite weaker loan demand and slower M&A activity. Origination highlights included strong growth in our asset-based lending business which largely offset higher than expected prepayments in our leveraged finance portfolio," he added. "Although our earnings were impacted by the charge related to the settlement of litigation, our overall results were strong and I continue to be optimistic about the second half of the year as we continue to meet our customers' needs and improve returns," he concluded.1,2 Risk-adjusted revenue is a non-GAAP measure calculated as the sum of net interest income after provision for credit losses and non-interest income. See "Non-GAAP Measurements" at the end of this press release and page 12 for reconciliation of non-GAAP to GAAP measurements.3 Net income excluding litigation charges is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and page 12 for reconciliation of non-GAAP to GAAP measurements.Managed and Owned Loan Portfolios Total new funded loan origination volume was $205 million in the second quarter compared to $241 million in the prior quarter and $250 million in the second quarter of the prior year. Lower volumes reflected weaker demand for acquisition financing from financial sponsors amid a slowdown in M&A activity. The managed loan portfolio decreased slightly to $2.4 billion as of June 30, 2012 from nearly $2.5 billion at March 31, 2012 as loan run-off from scheduled amortization and  prepayments of existing loans offset new loan origination. The owned portfolio was stable at $1.9 billion as of June 30, 2012 compared $1.9 billion as of March 31, 2012 as gains from loan originations were offset by an elevated level of run-off. Leveraged Finance and Real Estate loans decreased by 3.0% and 5.4%, respectively, while the Business Credit loan portfolio increased by 21%.  Assets managed for third party institutional investors decreased by 11.6% in the second quarter to approximately $498 million at June 30, 2012 compared to $563 million at March 31, 2012 due primarily to an elevated level of prepayments. Asset-based lending and equipment finance businesses originated $38 million in the second quarter, or 21% of new loan volume retained on the balance sheet. The owned loan portfolio remained balanced across industry sectors and highly diversified by issuer. As of June 30, 2012, no outstanding borrowings by a single obligor represented more than 1.4% of total loans outstanding, and the ten largest obligors comprised approximately 9.6% of the loan portfolio.Net Interest Income / Margin Net interest income after provision for credit losses increased 16% to $21.3 million for the second quarter of 2012 compared to $18.3 million for the first quarter of 2012 and $17.6 million in the second quarter of last year. The increase was due primarily to lower provision for credit losses and higher interest income driven by higher average loan balances and increased deferred fee income as prepayments accelerated in the quarter, which was partially offset by higher interest expense associated with increased average debt levels.   The portfolio yield remained relatively stable at 6.35% in the second quarter compared to 6.39% in the prior quarter and 6.42% in the same period in the prior year.  Net interest margin narrowed slightly to 4.21% for the second quarter of 2012 compared to 4.30% for the first quarter of 2012, and 4.28% in the second quarter of last year.  Adjusting for the impact of non-performing loans, the loan portfolio yield would have been 34 bps higher, or 6.69% and net interest margin would have been 4.52%.    Non-Interest Income Non-interest income was $1.8 million for the second quarter of 2012 compared to $2.8 million for the first quarter of 2012 and $0.8 million loss in the same period in the prior year. The change from the first quarter was due primarily to $1.3 million of gains on the repurchase of CLO debt in the first quarter, which did not recur in the second quarter.  Non-interest income in the second quarter of 2012 consisted primarily of $0.7 million of asset management income, $0.4 million of loan syndication fees, and $0.4 million of unused fees on revolving credit commitments.Expenses Operating expenses increased by $2.7 million to $13.4 million in the second quarter of 2012 compared to $10.7 million in the first quarter of 2012 due primarily to a $2.1 million charge (net of insurance coverage) related to settlement of litigation in connection with a problem real estate loan that was the subject of the litigation.  Although we had previously considered the claims to be without merit, we concluded that settlement of the lawsuit was prudent in order to avoid additional costs to defend the case and the risk of an adverse judgment.  Operating expenses excluding non-cash equity compensation4 were $11.5 in the second quarter of 2012, or 2.2% of average assets an annualized basis. The efficiency ratio excluding non-cash equity compensation5 in the second quarter of 2012 was 49.5% The Company had 101 full-time employees as of June 30, 2012.Income Taxes Deferred income taxes decreased to $45.2 million as of June 30, 2012 compared to $48.0 million as of March 31, 2012 due primarily to a decrease in the allowance for loan losses and related timing differences of when credit costs are recognized according to GAAP and when they are deductible for income tax.  Approximately $23.5 million and $14.0 million of the deferred tax asset as of June 30, 2012 were related to our allowance for credit losses and equity compensation, respectively.Loan Credit Quality Credit performance continued to normalize in the second quarter of 2012 as provision expense and the allowance for loan losses decreased and NPAs declined slightly.   Total credit costs (including provision for credit losses and losses on OREO or interests retained in connection with workouts of impaired loans) in the second quarter decreased to $0.2 million, or 0.03% of average loans on an annualized basis, from $2.9 million in the prior quarter.  The component of provision expense used to establish additional specific reserves was approximately $2.6 million in the second quarter of 2012, up from $1.6 million in the first quarter of 2012. The allowance for credit losses was $55.3 million, or 3.02% of loans and 72% of NPLs, at June 30, 2012, compared to $64.1 million, or 3.43% of loans, at March 31, 2012. Non-performing assets decreased by $0.8 million from the prior quarter. New loans totaling $17.8 million were placed on non-accrual status and loans totaling $13.2 million were returned to performing status in the second quarter of 2012. The resulting $4.5 million net increase in NPAs was more than offset by a $2.0 million decrease from loan repayment activity and equity method accounting adjustments, as well as 3.3 million of net charge-offs.  At June 30, 2012, loans with an aggregate outstanding balance of $77.3 million, net of charge-offs, were on non-accrual status compared to loans with an aggregate outstanding balance of $77.1 million, net of charge-offs, at March 31, 2012. Non-performing assets, net of charge-offs, specific reserves and other adjustments were $85.7 million, or 57.2% of their aggregate face amount, as of June 30, 2012. Non-accrual loans with an outstanding balance of $38.1 million as of June 30, 2012 were also delinquent.  Net charge-offs were $9.0 million, or 1.97% of loans on an annualized basis, in the second quarter of 2012 compared to $2.9 million, or 0.62% of loans on an annualized basis, in the first quarter of 2012. Charge-offs were taken on three previously identified problem loans with established specific reserves of $10.8 million in the aggregate.  Funding and Capital Balance sheet leverage decreased slightly to 2.51x as of June 30, 2012 from 2.55x at March 31, 2012 due primarily to CLO run-off and repayments of the commercial real estate repurchase agreement, partially offset by increased borrowings under warehouse lines to fund new loan origination.   Maintained ample liquidity with total cash and equivalents as of June 30, 2012 of $155.3 million, of which $28.4 million was unrestricted. Unrestricted cash increased from approximately $17.4 million at March 31, 2012 and restricted cash increased from approximately $105.0 million to $126.9 million. Extended the revolving period of a credit facility with Natixis Financial Products LLC to December 17, 2012.Book Value Book value per share was $11.69 at the end of the second quarter 2012 up from $11.57 at the end of the prior quarter primarily due to net income for the quarter and the amortization of equity compensation into stockholders' equity.Share Count Average diluted shares outstanding were 52.6 million shares for the quarter, which was up slightly from 52.2 million shares for the prior quarter. Total outstanding shares at June 30, 2012 were 49.4 million, which was consistent with outstanding shares as of March 31, 2012. Repurchased 70,727 shares of common stock at an average price of $10.79 during the second quarter of 2012. 4  Operating expenses excluding non-cash equity compensation is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and page 12 for reconciliation of non-GAAP to GAAP measurements.5 Efficiency ratio excluding non-cash equity compensation is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and page 12 for reconciliation of non-GAAP to GAAP measurements.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 877-755-7419 approximately 5-10 minutes prior to the call. International callers should dial 973-200-3080. All callers should reference "NewStar Financial."    For convenience, an archived replay of the call will be available through August 9, 2012 by dialing 800-585-8367. International callers should call 404-537-3406. For all replays, please use the passcode 12773107. 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 market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $35 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, Philadelphia, PA, Portland OR and San Francisco CA. For more detailed information, please visit our website at www.newstarfin.com. The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044Forward-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, strategic plans, objectives, future performance, financing plans and business. As such, they are subject to material risks and uncertainties, including our limited operating history; the general state of the economy; 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 risk factors can be found in NewStar's filings with the Securities and Exchange Commission (the "SEC"), including Item 1A ("Risk Factors") of our 2011 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 with the SEC on or before August 9, 2012 and urges its shareholders to refer to that document for more complete information concerning NewStar's financial results.Non-GAAP Financial Measures References to "net income excluding litigation charge" and "earnings per share excluding litigation charge" means net income or earnings per share, respectively, as determined under GAAP, excluding the effect of the charge to earnings that resulted from the litigation settlement paid during the period. GAAP requires that this item be included in net income. NewStar believes these measures provide useful information to investors in their evaluation of our fin
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Jul 19, 2012

NewStar Financial Schedules Release of Results for the Second Quarter of 2012

BOSTON, July 19, 2012 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS) announced today that it will report results for the second quarter of 2012 on Thursday, August 2, 2012 before the markets open. NewStar will also host a webcast/conference call to discuss the results on Thursday, August 2, 2012 at 10:00am Eastern Time. All interested parties are invited to participate via telephone or webcast, which will be hosted through the Investor Relations section of the website 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 877-755-7419 approximately 5-10 minutes prior to the call. International callers should dial 973-200-3080. All callers should reference "NewStar Financial." For convenience, an archived replay of the call will be available through August 9, 2012 by dialing 800-585-8367. International callers should call 404-537-3406. For all replays, please use the passcode 12773107. The audio replay will also be available through the Investor Relations section of the website at www.newstarfin.com. About NewStar Financial, Inc.: 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 market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $35 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, Philadelphia PA, San Francisco CA, and Portland OR. For more detailed transaction and contact information, please visit our website at www.newstarfin.com.  The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044CONTACT: Corporate Inquiries: NewStar Financial Colleen M. Banse 617.848.2502 cbanse@newstarfin.com NewStar Financial Brian J. Fischesser 617.848.2512 bfischesser@newstarfin.com
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Jun 20, 2012

NewStar Financial, Inc. Leads Financing for the Acquisition of Copernicus Group Institutional Review Board

BOSTON, June 20, 2012 -- NewStar Financial, Inc. (Nasdaq: NEWS), a specialized commercial finance company, announced today that it has served as Lead Arranger and Administrative Agent for Senior Credit Facilities totaling $33,500,000 to support Arsenal Capital Partners' ("Arsenal") acquisition of Copernicus Group Institutional Review Board ("CGIRB"). Earlier this year, NewStar served as Lead Arranger and Administrative Agent for Senior Credit Facilities supporting Arsenal's acquisition of Western Institutional Review Board ("WIRB"). Both WIRB and CGIRB operate federally mandated panels that ensure appropriate steps are taken to protect the rights, safety, and welfare of human subjects participating in clinical research and trials.

CGIRB, established in 1996, is a leading independent provider of compliance services which play an integral role in the clinical trial process for new drugs and medical devices. The primary responsibility of IRBs is to ensure that the rights and welfare of human research subjects are protected. With offices in the US and affiliates in Canada, CGIRB provides review services primarily to clinical research organizations ("CROs") and major drug and medical device sponsors throughout North America.

Arsenal Capital Partners is a leading New York-based private equity firm that invests in middle-market companies in the healthcare, specialty industrial, and financial services sectors. Arsenal currently manages over $800 million of committed capital. Stephen McLean, Partner at Arsenal and Co-Head of the firm's Healthcare Group, said, "NewStar's support in arranging the Senior Credit Facilities for the acquisition of CGIRB demonstrates once again that they are a consistent and reliable financing partner."

"We are excited to support Arsenal's acquisition of CGIRB and their strategy of building a portfolio of world class companies which support clinical research. Both WIRB and CGIRB are leaders in their respective market segments and we're excited to work with Arsenal again as they build a market leading company in the IRB space," said Tom Gillis, Director at NewStar. The deal team for the transaction included Tom Gillis, Robert Milordi, Annie Fisher and Christopher Lynch.

About NewStar Financial, Inc.:

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

NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, Philadelphia, PA, San Francisco CA, and Portland OR. For more detailed information, please visit our website at www.newstarfin.com.

Corporate Inquiries:
NewStar Financial
Robert K. brown
617.848.2558
rbrown@newstarfin.com

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