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Apr 19, 2017

NEWSTAR SCHEDULES RELEASE OF RESULTS FOR THE FIRST QUARTER OF 2017

Boston, April 19, 2017 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. ("NewStar") (NASDAQ:NEWS) announced today that it will report financial results for the first quarter of 2017 on Wednesday, May 3, 2017 before the markets open.

NewStar will also host a webcast/conference call to discuss the results on Wednesday, May 3, 2017 at 10:00am Eastern Time.  All interested parties are invited to participate via telephone or webcast, which will be hosted through the News & Noteworthy section of the company's 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 May 11, 2017 by dialing 855-859-2056. International callers should call 404-537-3406. For all replays, please use the passcode 8405117. The audio replay will also be available through the News & Noteworthy section of our website at www.newstarfin.com

About NewStar Financial, Inc.:

NewStar Financial, Inc. (Nasdaq:NEWS) is an internally-managed commercial finance company with $6.7 billion of assets managed across two complementary business lines — middle market direct lending and asset management. The Company's direct lending activities are focused on meeting the complex financing needs of companies and private investors in the middle markets through specialized lending groups that offer a range of flexible debt financing options to fund working capital, growth strategies, acquisitions and recapitalizations. Through its asset management platforms, NewStar also offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit.

NewStar is headquartered in Boston MA and has regional offices in Chicago IL, Darien CT, and New York NY. Please visit our website at www.newstarfin.com for more detailed information. 

CONTACT: NewStar Financial Robert K. Brown 617.848.2558 rbrown@newstarfin.com
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Feb 14, 2017

NewStar Adopts New Dividend Policy and Declares First Quarterly Dividend

BOSTON, Feb. 14, 2017 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS), a specialized commercial finance company, announced today that its Board of Directors adopted a new dividend policy and declared a quarterly dividend of $0.02 per share of common stock.  The dividend is expected to be paid on March 17, 2017, to shareholders of record at the close of business on March 2, 2017.  This marks the first dividend paid to stockholders in the company's history.  The declaration and payment of future dividends will be subject to the board's approval. 

The dividend policy is intended to provide more balance to the company's strategy to return capital to its shareholders, which, to date, has focused on share repurchases.  The company returned $43 million of capital to shareholders in 2016 through share repurchases and the board previously authorized another buyback program for 2017 for up to $30 million.   

Commenting on the dividend, NewStar CEO Tim Conway said, "The board's decision to adopt a quarterly dividend policy in addition to its previous authorization of a buyback program reflects our strong belief in the intrinsic value of the company and demonstrates our commitment to improving the investment value of our stock as we continue to capitalize on strategic market opportunities."

About NewStar Financial, Inc.:

NewStar Financial Inc. (NASDAQ:NEWS) is an internally-managed, commercial finance company with $6.7 billion of assets managed across two complementary business lines — middle market direct lending and asset management.  The Company's direct lending activities are focused on meeting the complex financing needs of companies and private investors in the middle markets through specialized lending groups that offer a range of flexible debt financing options.  Credit investments are originated directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. Through its asset management platforms, NewStar offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit. The Company manages approximately $1.3 billion of assets in a series of private credit funds and separate accounts that co-invest in middle market loans originated through its established leveraged finance lending platform and its strategic relationship with GSO Capital, the credit division of The Blackstone Group. Through its wholly-owned subsidiary, NewStar Capital, the Company also has more than $2 billion of assets managed across a series of CLOs that invest primarily in broadly syndicated, non-investment grade loans, as well as other sponsored funds and managed accounts that invest across various asset classes, including non-investment grade loans and bonds. 

NewStar is headquartered in Boston MA and has regional offices in Chicago, IL, Darien, CT, and New York, NY. For more detailed information, please visit our website at www.newstarfin.com.

Forward-looking Statements

Statements in this press release regarding the company's intention to pay quarterly dividends on its common stock from time to time as part of a new dividend policy are forward looking statements.  There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements.  These include, among others, the market price of the company's stock prevailing from time to time, the company's cash flows from operations, general economic conditions, the application of restrictive covenants in the company's debt instruments and other factors identified in the company's Annual Report on Form 10‑K and most recent Quarterly Reports on Form 10-Q filed with the SEC.

Corporate Inquiries: NewStar Financial Robert K. Brown (617) 848-2558
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Feb 14, 2017

NewStar Reports Net Income of $10.3 Million, or $0.23 per Diluted Share, for the Fourth Quarter and $28.2 Million, or $0.61 per Diluted Share, for FY 2016

 

  • Divestiture — Sold equipment finance platform and related assets for $105 million in cash, or approximately 1.2x allocated book value, net of debt repayment, transactions fees and other retained liabilities.  The transaction generated a gain of approximately $6.7 million in the fourth quarter.
  • Investment Activity — New funded credit investments totaled $671 million in the fourth quarter and $1.9 billion for the full year, compared to $427 million last quarter and $3 billion for the full year in 2015.
  • Managed Assets — Managed loans and credit investments increased by 1.3% from the prior quarter to more than $6.7 billion as growth in managed funds offset the impact of the equipment finance asset sale during the quarter. Excluding the impact of ABL and equipment finance divestitures in 2016, managed loans and credit investments increased $306 million, or 4.8%, from the same period last year due to new fund formation and growth in balance sheet lending programs. 
  • Revenue — Total revenue  increased by $4.2 million, or 11.7%, from the prior quarter to $40.5 million in the fourth quarter due primarily to a gain recognized on the sale of the equipment finance platform and related assets, as well as favorable mark-to-market adjustments. Total revenue for the full year increased by $44.5 million, or 44.9%, to $143.6 million compared to $99.1 million in 2015 due primarily to gains recognized on the sales of the asset-based lending and equipment finance businesses, as well as a significant increase in asset management fee revenue and favorable mark-to-market adjustments. 
  • Net Interest Margin — The margin narrowed to 1.96% for the fourth quarter from 2.50% in the third quarter and 2.19% for 2016, down from 2.39% in the prior year as an increase in portfolio yield was outpaced by higher interest expense due primarily to debt prepayment expenses, increases in LIBOR index rates and wider credit spreads on new CLO issuance.  
  • Credit — Credit costs decreased $0.9 million from the prior period to $2.6 million and were up $9.2 million for the full year compared to 2015.  Net charge-offs for fourth quarter were $18.9 million due primarily to a planned restructuring of a legacy loan, which was also placed on non-accrual status.  Net charge-offs for the year were $33.0 million compared to $3.4 million for 2015 as several long-term work-outs were resolved and charge-offs were applied against previously established reserves.
  • Expenses — Cost saving targets were achieved in the fourth quarter as run-rate operating expenses were reduced to $11.3 million, excluding $4.7 million of operating and transaction expenses related to the equipment finance business and $3.5 million of severance expense related to cost saving initiatives. 
  • Capital Management — Returned $43.0 million of capital to shareholders in 2016 through accretive share repurchases, including $34.1 million in the fourth quarter. Book value per share increased to $15.12 as of December 31, 2016, up $0.74 from the end of the prior quarter and $0.95 from the end of last year.  Subsequent to year-end, NewStar also adopted a new quarterly dividend policy and declared a $0.02 dividend payable on March 17, 2017 to holders of record on March 2, 2017, marking the first dividend paid to stockholders in the company's history. 

BOSTON, Feb. 14, 2017 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (NASDAQ:NEWS) ("NewStar" or the "Company"), an internally-managed, middle market direct lender and credit-oriented asset manager, today announced financial results for its fourth quarter of 2016, reporting net income of $10.3 million, or $0.23 per diluted share. These results compare to net income of $8.6 million, or $0.19 per diluted share in the third quarter of 2016 and $4.2 million, or $0.09 per diluted share in the fourth quarter of 2015. Operating income before income taxes was $18.4 million for the fourth quarter of 2016 compared to $14.6 million for the third quarter of 2016 and $7.1 million in the fourth quarter of 2015.

The company also announced financial results for its fiscal year, reporting net income of $28.2 million, or $0.61 per diluted share for 2016 compared to $16.9 million, or $0.35 per diluted share in 2015.  Income from operations before income taxes was $48.7 million for 2016 compared to $28.8 million in 2015. 

Tim Conway, NewStar's Chairman and Chief Executive Officer, commented on the Company's performance: "We made significant progress on our key priorities in 2016 as we took important steps to streamline operations, reduce costs and reposition NewStar as a credit-oriented asset manager, while also returning a meaningful amount of capital to our shareholders.   We sold two non-core businesses at substantial premiums, increasing our liquidity and financial flexibility.  We reduced baseline expenses by 33% on a run-rate basis as of the fourth quarter, improving profitability.  And, we continued to expand our asset management activities with the launch of two new credit funds and a separate account with target investment portfolios of approximately $1 billion.  More than 53% of our credit investments are now held in managed funds and we doubled our management fee income in 2016." 

"Our financial results reflected the progress we are making as pre-tax returns on equity exceeded 11% in the quarter.  Revenue was up nearly 12% over last quarter and 46% from the same quarter last year. Credit costs remained within expected ranges.  Loan demand from M&A activity rebounded and our investment pace returned to expected levels.  Importantly, we returned $43 million, or 6.5% of our average equity capital, to investors in 2016 and recently declared our first quarterly dividend.  The board's decision to adopt a quarterly dividend policy was intended to provide more balance to our capital management strategy, reflecting our commitment to improve the investment value of our stock."

Sale of Equipment Finance platform and related assets

  • On December 1, 2016, the Company sold its equipment finance platform and related assets to Boston-based Radius Bank for $105 million in cash, net of debt repayment, transaction fees and certain retained liabilities. 
  • NewStar's equipment finance business was an independent provider of flexible equipment financing solutions to middle market companies nationwide. NewStar launched the business in 2011 and expanded it significantly over the last five years.
  • The purchase price reflected a premium of approximately 5% of NewStar's net investment in receivables, totaling approximately $133 million, and was approximately 1.2x book value, based on allocated equity capital of 30% of net receivables.
  • The sale generated a gain of approximately $6.7 million in the fourth quarter.  Total transaction costs of $4.3 million were included in operating expenses.

Dividend Policy

  • On February 10, 2017, the Company's Board of Directors adopted a new dividend policy and declared a quarterly dividend of $0.02 per share of common stock. 
  • The dividend is expected to be paid on March 17, 2017, to shareholders of record at the close of business on March 2, 2017. 
  • This marks the first dividend paid to stockholders in the company's history.  The declaration and payment of future dividends will be subject to the board's approval. 

Managed and Owned Investment Portfolios

  • Total new funded credit investments were $671 million in the fourth quarter of 2016 compared to $427 million in the prior quarter and $700 million in the same quarter last year.  The pace of investment accelerated somewhat in the fourth quarter as demand for acquisition financing derived from middle market leverage buyout activity improved amid an increase in M&A activity.
  • New funded credit investments were approximately $1.9 billion for the full year compared to $3 billion in 2015 and $1.8 billion in 2014.  The decrease in investment activity reflected credit selectivity and slack demand for acquisition financing due to a weaker M&A activity in the first three quarters of the year. 
  • Balance sheet runoff from scheduled amortization, prepayments and loan sales (excluding the sale of the equipment finance business) totaled approximately $405 million in the fourth quarter, or 10.2% of loan and investment balances at the beginning of the period, up from $226 million, or 5.7% of balances in the prior quarter.  Runoff in the fourth quarter included $303 million of prepayments, $19 million of loan sales and $82 million of contractual amortization compared to prepayments of $148 million, loan sales of $27 million and amortization of $51 million in the prior quarter. 
  • Average yields on new middle market loans and other directly originated credit investments in the fourth quarter were 6.65%, consistent with the prior quarter.  Average yields for the full year were 6.91% compared to 6.54% in 2015. 
  • Loans and other investments outstanding, excluding assets managed for third parties, decreased by $381 million, or 9.6%, from the prior quarter.  The decrease was due primarily to the sale of $158 million of equipment finance loans and leases (gross) and the transfer of $485 million of loans-held-for-sale into a new managed fund during the fourth quarter.  Compared to the fourth quarter of 2015, loans and investments decreased by $239 million, or 6.2%, due to the sale of the ABL business in the first quarter of 2016, the sale of the equipment finance portfolio in the fourth quarter and the transfer of loans to managed funds which was partly offset by growth in the Leveraged Finance loan portfolio. 
  • The Leveraged Finance loan portfolio decreased by $215 million during the fourth quarter to $3.6 billion due primarily to the transfer of loans-held-for-sale to a new manage fund, but was up $367 million from the prior year due as new investment activity outpaced run-off.  Commercial real estate loans decreased by 40% in the fourth quarter and by 90% for the year to less than $11 million compared to $101 at the end of 2015. The sale of equipment finance related assets reduced gross loans and leases by $158.3 million.
  • Assets held in managed funds increased by $483 million, or 16%, in the fourth quarter to approximately $3.6 billion at year-end due to the formation of a new $500 million managed fund.  For the full year, assets held in managed funds increased by 14% as growth in AUM from new fund formation assets more than offset a decrease in assets managed in funds past their investment periods.    
  • The owned loan portfolio remained defensively positioned - balanced across industry sectors and highly diversified by issuer. As of December 31, 2016, no outstanding borrowings by a single obligor represented more than 0.8% of total loans outstanding, and the ten largest obligors comprised approximately 7.6% of the loan portfolio.

Net Interest Income / Margin

  • Net interest income decreased by $4.6 million to $20.7 million in the fourth quarter compared to $25.3 million in the prior quarter due primarily to $3.2 million of previously unrecorded interest income recognized during the third quarter in connection with the pay-off of a nonperforming loan at par.  Compared to the fourth quarter of last year, net interest income decreased by $3.7 million, or 15.1%.
  • For the full year, net interest income increased $8.6 million, or 10.6% due primarily to higher average balances and improvement in the portfolio yield. 
  • The portfolio yield was 6.53% in the fourth quarter compared to 6.77% the prior quarter and 6.33% in the comparable period in the prior year.  The decrease in yield from the prior quarter was due primarily to the non-recurring income recognized during the third quarter in connection with the pay-off of a non-performing loan at par and an increase in deferred fee amortization related to prepayments.  The increase from the prior year reflects the impact of higher yielding new credit investments. 
  • Funding costs were 4.83% in the fourth quarter, which was relatively consistent with 4.67% in the third quarter, but up from 4.32% in the comparable period in the prior year due to acceleration of capitalized financing fees in connection with early debt retirement, increasing LIBOR index rates and higher average cost of funds for new CLO issuance. 
  • As a result, the net interest margin narrowed to 1.96% for the fourth quarter of 2016 compared to 2.50% for the prior quarter and 2.45% in the fourth quarter of 2015.  The net interest margin was 2.19% for the full year compared to 2.39% last year. 

Non-Interest Income

  • Non-interest income increased by $8.8 million to $19.8 million for the fourth quarter of 2016 compared to $11.0 million in the prior quarter and $3.3 million in the same period last year. The increase reflected a $6.7 million gain recognized on the sale of the equipment finance platform and related assets as well as an increase of $7.3 million in net unrealized gains on loans held for sale. 
  • Other non-interest income items in the fourth quarter of 2016 were centered in asset management fees of $3.1 million and $1.4 million of capital markets-related fees. 
  • Non-interest income increased by $35.9 million to $54.3 million for the full year of 2016 compared to $18.4 million last year.  The increase reflected $29.2 million of gains recognized on divestitures and an increase of $6.7 million of asset management fees. 

Credit Performance

  • Provision expense remained within expected ranges in the fourth quarter at $2.6 million, down from $3.6 million in the prior quarter and $3.7 million in the same quarter last year.
  • Total provision expense for 2016 was $27.5 million, or 0.71% of average loans and investments during the year, up from $18.4 million, or 0.57% of average loans and investments in 2015 due primarily to the accelerated disposition of certain commercial real estate loans and the resolution of legacy impaired loans in the first quarter of 2016. 
  • Total net specific provision expense decreased by approximately $0.7 million in the fourth quarter of 2016 to $2.5 million compared to $3.2 million in the prior quarter and $2.4 million in the same quarter last year.  Specific provision expense was $24.8 million for the full year compared to $9.5 million last year. 
  • Net charge-offs in the fourth quarter of 2016 were $18.9 million compared to a small recovery in the prior quarter.  Charge-off activity in the fourth quarter was due primarily to the restructuring of a legacy impaired loan for which specific reserves had previously been established to cover the charge-off.  Although the remaining $12.7 million balance of the restructured loan was performing, it was placed on non-accrual status on a discretionary basis until the company demonstrates further progress on its turnaround strategy.  Net charges-offs for the year were $33.0 million, or 0.88% of average loans compared to $3.4 million, or 0.11% of average loans in 2015.
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Jan 31, 2017

NEWSTAR SCHEDULES RELEASE OF RESULTS FOR THE FOURTH QUARTER AND FISCAL YEAR OF 2016

Boston, Massachusetts, Jan. 31, 2017 (GLOBE NEWSWIRE) --

NewStar Financial, Inc. ("NewStar") (NASDAQ:NEWS) announced today that it will report financial results for the fourth quarter and fiscal year of 2016 on Tuesday, February 14, 2017 before the markets open.

NewStar will also host a webcast/conference call to discuss the results on Tuesday, February 14, 2017 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 company's 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 February 22, 2017 by dialing 855-859-2056. International callers should call 404-537-3406. For all replays, please use the passcode 56986355. The audio replay will also be available through the Investor Relations section of our website at www.newstarfin.com

About NewStar Financial, Inc.:

NewStar Financial, Inc. (Nasdaq:NEWS) is an internally-managed commercial finance company with more than $6 billion of assets managed across two complementary business lines — middle market direct lending and asset management. The Company's direct lending activities are focused on meeting the complex financing needs of companies and private investors in the middle markets through specialized lending groups that offer a range of flexible debt financing options to fund working capital, growth strategies, acquisitions and recapitalizations. Through its asset management platforms, NewStar also offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit.

NewStar is headquartered in Boston MA and has regional offices in Chicago IL, Darien CT, and New York NY. Please visit our website at www.newstarfin.com for more detailed information. 

NewStar Financial Inc. Robert K. Brown 617.848.2558 rbrown@newstarfin.com

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Dec 09, 2016

NewStar Authorizes New Share Repurchase Program

Boston, Massachusetts, Dec. 09, 2016 (GLOBE NEWSWIRE) --

NewStar Financial Inc. (Nasdaq:NEWS), a specialized commercial finance company, announced today that its Board of Directors has authorized the repurchase of up to $30 million of the company's common stock from time to time on the open market or in privately negotiated transactions.  The timing and amount of any shares repurchased will be determined by the company's management based on its evaluation of market conditions and other factors.  The new repurchase program will commence immediately following the expiry of the company's current program on December 31, 2016 and will expire on December 31, 2017 unless extended by the Board of Directors.  It may be suspended or discontinued at any time.  The company may also establish from time to time 10b5-1 trading plans that will provide flexibility as it buys back its shares. 

Under the existing program, as authorized in October 2015 and amended in February 2016, the company has repurchased approximately 2.4 million shares of its common stock for an aggregate purchase price of approximately $18.6 million to date, in addition to 2.5 million shares purchased in privately negotiated transactions authorized by the board of directors outside of the repurchase program for approximately $22.3 million in October 2016.

Commenting on the stock repurchase program, NewStar CEO Tim Conway said, "This buyback program reflects our strong belief in the intrinsic value of the company and demonstrates our commitment to improving the investment value of our stock as we continue to capitalize on strategic market opportunities."

About NewStar Financial, Inc.:

NewStar Financial Inc. (NASDAQ:NEWS) is an internally-managed, commercial finance company with $6.6 billion of assets managed across two complementary business lines — middle market direct lending and asset management.  The Company's direct lending activities are focused on meeting the complex financing needs of companies and private investors in the middle markets through specialized lending groups that offer a range of flexible debt financing options.  Credit investments are originated directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. Through its asset management platforms, NewStar offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit. The Company manages approximately $1.3 billion of assets in a series of private credit funds that co-invest in middle market loans originated through its established leveraged finance lending platform and its strategic relationship with GSO Capital, the credit division of The Blackstone Group. Through its wholly-owned subsidiary, NewStar Capital, the Company also has more than $2 billion of assets managed across a series of CLOs that invest primarily in broadly syndicated, non-investment grade loans, as well as other sponsored funds and managed accounts that invest across various asset classes, including non-investment grade loans and bonds. 

NewStar is headquartered in Boston MA and has regional offices in Chicago, IL, Darien, CT, and New York, NY. For more detailed information, please visit our website at www.newstarfin.com. 

Forward-looking Statements

Statements in this press release regarding the company's intention to repurchase shares of its common stock from time to time under the stock repurchase program are forward looking statements.  There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements.  These include, among others, the market price of the company's stock prevailing from time to time, the company's cash flows from operations, general economic conditions, and other factors identified in the company's Annual Report on Form 10‑K and most recent Quarterly Reports on Form 10-Q filed with the SEC.                 

NewStar Financial Robert K. Brown (617) 848-2558

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Dec 01, 2016

NewStar Sells Equipment Finance Business To Radius Bank

BOSTON, Dec. 01, 2016 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS) ("NewStar" or the "Company") announced today the sale of its equipment finance business and related assets to Boston-based Radius Bank ("Radius"), a federal savings association, for approximately $140 million in cash.    

NewStar Equipment Finance is an independent provider of flexible, equipment financing solutions to middle market companies nationwide.  NewStar launched the business in 2011 and expanded it significantly over the last five years under the leadership of industry veteran, Steve O'Leary. 

The transaction was structured as a sale of the business platform and related assets and generated net proceeds to NewStar of approximately $105 million, net of debt repayment, transaction fees and other retained liabilities. The purchase price reflected a premium of approximately 5% of NewStar's net investment in receivables totaling approximately $133 million and was approximately 1.2x book value, based on allocated equity capital of 30% of net receivables.  NewStar expects to recognize a gain on the sale in the fourth quarter of 2016. 

The sale of the equipment finance platform demonstrates a continuation of the Company's transformation from a bank-styled, diversified commercial finance company into a more specialized middle market direct lender with a focus on managing assets for institutional investors.  It also reflects a strategic decision to exit businesses with economic models increasingly challenged by competition from banks and other lenders with access to lower cost funding.  The cash proceeds from the transaction add significantly to the Company's liquidity position and enhance its flexibility to pursue other strategic priorities, including continued share repurchases.  The additional liquidity also allows the Company to re-invest in its higher-margin, core lending and asset management businesses, which the Company believes are positioned to capitalize on favorable market trends, including a reduction in banks' leveraged lending activity and growing interest among institutional investors in middle market private debt.    

NewStar's CEO Tim Conway commented: "I believe this transaction is a positive for all parties involved.  The leasing platform is a great fit with Radius' growth strategy and being part of a bank should provide a significant competitive advantage that will allow the team and the business to achieve their true potential.  For NewStar, the transaction generates an attractive financial return and further demonstrates the intrinsic value of our direct lending platforms that we believe is not fully recognized in our current share price.  The successful sales of both our equipment finance and asset-based lending businesses have added significantly to our liquidity position and enabled us to streamline the company's operations, which is expected to reduce our cost base by more than 30% from our first quarter run-rate and improve returns."  

Houlihan Lokey served as financial advisor and Locke Lord LLP served as legal counsel to NewStar in connection with the transaction.

About NewStar Financial, Inc.:

NewStar Financial, Inc. (NASDAQ:NEWS) is an internally-managed, commercial finance company with $6.6 billion of assets managed across two complementary business lines — middle market direct lending and asset management.  The Company's direct lending activities are focused on meeting the complex financing needs of companies and private investors in the middle markets through specialized lending groups that offer a range of flexible debt financing options.  Credit investments are originated directly through teams of experienced, senior bankers organized around key industry and market segments. Through its asset management platforms, NewStar offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit. The Company manages more than $1.3 billion of assets in a series of private credit funds that co-invest in middle market loans originated through its established leveraged finance lending platform and its strategic relationship with GSO Capital, the credit division of The Blackstone Group. Through its wholly-owned subsidiary, NewStar Capital, the Company also has more than $2 billion of assets managed across a series of CLOs that invest primarily in broadly syndicated, non-investment grade loans, as well as other sponsored funds and managed accounts focused on non-investment grade loans and bonds. 

NewStar is headquartered in Boston MA and has regional offices in Darien, CT, Chicago, IL and New York, NY. For more detailed information, please visit our website at www.newstarfin.com.                 

About Radius Bank:

With assets of approximately $850 million as of September 30, 2016, Radius Bank is a forward-thinking community bank offering a full complement of convenient, leading-edge personal and business products and services. The Bank serves consumers, small and middle market businesses, unions, government entities and non-profit organizations as its core clients. The Bank offers anytime/anywhere banking via mobile device, 24-hour ATM service, provides additional services such as treasury management capabilities, and partners with innovative organizations including mobile payments leader LevelUp, student loan debt reduction company Gradifi, online investment firm Aspiration, and online marketplace lender Prosper. Customers can readily access traditional, personalized branch banking at the Bank's Boston, MA financial center. Radius Bank is a member of the Federal Deposit Insurance Corporation and is an Equal Housing/Equal Opportunity Lender. For further information, visit the Bank's website at www.radiusbank.com.

Forward-Looking Statements:

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding NewStar's expected use of proceeds from the transaction, the timing and amount of any repurchases under the Company's existing share repurchase program, the likelihood of future asset dispositions, its ability to reinvest in the core business, and other strategic plans, as well as statements about the expected benefits of any of these actions.  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 its Annual Report on Form 10-K for the fiscal year ended December 31, 2015. 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.

Contact: NewStar Financial Inc. Robert K. Brown (617)848-2558 rbrown@newstarfin.com
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Nov 30, 2016

NewStar Closes New $505 Million Managed Credit Fund

  • The NewStar Berkeley Fund CLO (the "Berkeley Fund") represents the fourth in a series of managed credit funds focused on middle market senior debt originated through NewStar's direct lending platform
  • Berkeley Fund is structured as a Collateralized Loan Obligation (CLO) to provide financial leverage intended to magnify asset-level returns for equity investors
  • Upsized from initial target of $400 million to $505 million due to strong investor demand
  • NewStar retained 5% of each class of notes issued by the CLO to comply with risk retention rules and pre-seeded the fund with approximately $425 million of loans
  • Represents third CLO sponsored by NewStar in 2016, bringing total issuance to approximately $1.25 billion for the year

BOSTON, Nov. 30, 2016 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS) ("NewStar" or the "Company"), an internally-managed, specialized finance company, announced today that it has closed the NewStar Berkeley Fund CLO (the "Berkeley Fund" or the "Fund"), a $505 million middle market CLO managed for qualified institutional investors.  The Berkeley Fund is the fourth credit fund sponsored by NewStar to co-invest in middle market commercial loans originated through its direct lending platform and represents another significant milestone in the growth of the Company's asset management business. 

The Berkeley Fund is NewStar's 21st securitization since inception and third transaction completed in 2016.  The notes offered through this CLO transaction are backed by a diversified portfolio of commercial loans originated and underwritten by NewStar for the benefit of investors.  Various classes of notes rated Aaa through Ba3 were placed, which represented an advance rate of approximately 88.6%.  Third-party investors retained the equity interests, which represented approximately 10.8% of the capital structure, or approximately $54.5 million.  NewStar held 5% of each class of notes to satisfy risk retention rules and will serve as manager of the CLO, which has a four-year reinvestment period.  

Citigroup Global Markets Inc. was placement agent and sole book runner.  Dechert LLP acted as legal adviser to NewStar.

Commenting on the new fund, Tim Conway, NewStar's CEO stated: "The Berkeley Fund represents another important milestone for our asset management strategy. It also highlights important advantages that we believe NewStar can offer institutional investors who are looking for attractive yields with downside asset protection.  First, investors in our funds are able to leverage our established direct lending franchise and extensive balance sheet lending programs to generate proprietary investment opportunities that provide attractive value relative to other fixed income investment options. Second, our investment strategies are defensive, with a focus on 1st lien senior debt, which we believe offers the best combination of yield and position in the capital structure for this stage in the credit cycle.  And importantly, we can use our balance sheet to provide risk-retention solutions and pre-ramp portfolios to help investors optimize their returns." 

NewStar's Treasurer, Mike Eisenstein added: "The Berkeley Fund CLO also demonstrates NewStar's strong presence in the capital markets where we are recognized for our distinguished track record as a leading issuer of CLOs backed by both middle market and liquid loan collateral. As a result, we have strong support among a core group of repeat investors who continue to commit capital to our securitization programs and recognize the merits of middle market direct lending.  We were pleased to partner with the Citigroup Global Markets team on this deal and always appreciate the quality of transaction execution they deliver."

This announcement is neither an offer to sell nor a solicitation of an offer to buy the notes.

The notes were issued in a private placement and 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. 

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated benefits to fund investors of access to lending opportunities generated by our direct lending platform and investment strategies focused on 1st lien senior debt.  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 the impact of rapid growth in assets under management; 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.

Additional information about these and other risk factors can be found in NewStar's filings with the Securities and Exchange Commission (the "SEC"), including Item 1A ("Risk Factors") of our 2015 Annual Report on Form 10-K, as may be updated or supplemented by any Risk Factors contained in our subsequent 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.

About NewStar Financial, Inc.:

NewStar Financial, Inc. (NASDAQ:NEWS) is an internally-managed, commercial finance company with $6.6 billion of assets managed across two complementary business lines — middle market direct lending and asset management.  The Company's direct lending activities are focused on meeting the complex financing needs of companies and private investors in the middle markets through specialized lending groups that offer a range of flexible debt financing options.  Credit investments are originated directly through teams of experienced, senior bankers organized around key industry and market segments. Through its asset management platforms, NewStar offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit. The Company manages more than $1.3 billion of assets in a series of private credit funds that co-invest in middle market loans originated through its established leveraged finance lending platform and its strategic relationship with GSO Capital, the credit division of The Blackstone Group. Through its wholly-owned subsidiary, NewStar Capital, the Company also has more than $2 billion of assets managed across a series of CLOs that invest primarily in broadly syndicated, non-investment grade loans, as well as other sponsored funds and managed accounts focused on non-investment grade loans and bonds. 

NewStar is headquartered in Boston MA and has regional offices in Darien, CT, Chicago, IL and New York, NY. For more detailed information, please visit our website at www.newstarfin.com.

Contact: NewStar Financial Inc. Robert K. Brown (617)848-2558 rbrown@newstarfin.com
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Nov 02, 2016

NewStar Reports Net Income of $8.6 Million, or $0.19 per Diluted Share, for the Third Quarter of 2016

  • Investment Activity — New funded credit investments totaled $427 million in the third quarter compared to $476 million last quarter and $720 million in the same quarter last year, reflecting credit selectivity in a mixed market environment.
  • Managed Assets — Managed loans and credit investments increased slightly from the prior quarter to $6.7 billion, which was $2.0 billion, or 44.4%, higher than in the same period last year. Growth in assets from a new managed fund launched in the third quarter offset an expected decrease in assets in funds past their investment periods. New funds and separate accounts with targeted investment portfolios of $600 million were launched after the end of the third quarter.
  • Revenue — Total revenue1 increased by $10.9 million, or 43.4%, from the prior quarter to $36.2 million in the third quarter due primarily to higher average assets, favorable mark-to-market adjustments, previously unrecorded interest income recognized in connection with the repayment of a non-performing loan at par and higher capital markets related income. 
  • Net Interest Margin — The margin widened to 2.50% for the third quarter from 2.10% in the second quarter due primarily to the impact of interest income recognized in the quarter in connection with the pay-off of a non-performing loan at par.
  • Credit — Credit performance remained within expected ranges with provision expense of $3.6 million for the third quarter, consistent with the prior quarter and $0.9 million lower than in the same period last year.
  • Expenses — Operating expenses increased by $5.2 million to $18.1 million in the third quarter compared to the prior quarter due primarily to $4.2 million of severance charges related to cost saving initiatives and approximately $1.0 million of other elevated expenses related to short-term projects.
  • Equity — Book value per share increased by $0.26 to $14.38 as of September 30, 2016 from $14.12 at the end of the prior quarter due primarily to comprehensive income totaling $11.7 million in the third quarter. Subsequent to the end of the third quarter, the company repurchased 2.5 million shares at a weighted average cost of $8.93 per share in privately negotiated transactions, which is expected to be accretive to book value per share. 
  • Divestitures — Assets and liabilities of the equipment finance business were reclassified as held-for-sale as of September 30, 2016, reflecting an ongoing process to sell that business, which has resulted in a non-binding letter of intent with a prospective buyer. 

1 Total revenue is defined as the sum of net interest income and non-interest income

BOSTON, Nov. 02, 2016 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (NASDAQ:NEWS) ("NewStar" or the "Company"), an internally-managed, middle market direct lender and credit-oriented asset manager, today announced financial results for its third quarter of 2016, reporting net income of $8.6 million, or $0.19 per diluted share. These results compare to net income of $5.2 million, or $0.11 per diluted share in the second quarter of 2016 and $5.1 million, or $0.11 per diluted share in the third quarter of 2015. Operating income before income taxes was $14.6 million for the third quarter of 2016 compared to $8.8 million for the second quarter of 2016 and $8.8 million in the third quarter of 2015.

Tim Conway, NewStar's Chairman and Chief Executive Officer, commented on the Company's performance: "We continued to make progress on our key strategic priorities in the third quarter and our financial results reflected solid operating trends highlighted by a significant increase in earnings driven by strong revenue growth and stable asset quality.  Revenue increased by more than 40% over last quarter and 35% from the same quarter last year as core revenue increased, loan values recovered and we got a boost in interest income from the repayment of a non-performing loan at par.  Credit costs also remained stable within expected ranges and we absorbed elevated expenses recognized in the quarter primarily related to cost savings initiatives and strategic projects that are expected to provide future benefits. Loan demand from M&A activity remained relatively soft through the quarter.  As a result, our investment pace was below expected levels, reflecting our commitment to credit selectivity. Importantly, book value per share increased by $0.26 and, after quarter-end, we repurchased 2.5 million shares in privately negotiated transactions, which is expected to add more than $0.30 to book value."

"While I am pleased with the financial results, we also made meaningful progress on our key priorities in the quarter as we worked to streamline the business, reduce expenses and expand our asset management activities.  We completed a strategic review to explore the potential sale of our equipment finance business which resulted in a non-binding letter of intent with a prospective buyer.  That transaction is expected to close before year-end.   As a result of savings related to divestitures and other initiatives, we expect to have reduced baseline expenses by 25-30% on a run-rate basis by year end.  We also continue to make progress on our asset management strategy with the launch of two new managed funds and a separate account with target investment portfolios of approximately $1 billion.  In 2016, we have sponsored three new CLOs totaling approximately $1.3 billion, underscoring our position as a leading issuer in that key market." 

Managed and Owned Investment Portfolios

  • Total new funded credit investments were $427 million in the third quarter of 2016 compared to $476 million in the prior quarter and $720 million in the same quarter last year.  Investment activity in the third quarter of 2016 included liquid loan and middle market direct lending strategies.  Loan demand in the third quarter reflected seasonally slow activity through July and August, followed by a pick-up in September driven by refinancing activity, but remained muted overall compared to the prior quarter and last year.  M&A activity continued to reflect a cautious market sentiment amid uncertainty about the future direction of the economy, the rate environment and US elections.  
  • Balance sheet runoff from scheduled amortization, prepayments and loan sales totaled approximately $225 million, or 5.7% of loan and investment balances at the beginning of the period, down from $343 million, or 9.5% of balances in the prior quarter.  Runoff in the third quarter included $148 million of prepayments, $27 million of loan sales and $51 million of contractual amortization compared to prepayments of $190 million, loan sales of $102 million and amortization of $51 million in the prior quarter. 
  • Average yields on new middle market loans and other directly originated credit investments in the third quarter were 6.6%, down from 7.0% in the prior quarter due partly to the impact of competition for limited deal flow in the market and disciplined credit selectivity, but remained consistent with levels in the third quarter of last year. 
  • Loans and other investments outstanding, excluding assets managed for third parties, increased by $200 million, or 5.3%, from the prior quarter.  Net loan growth in the third quarter was driven by lending activity generated through our Leveraged Finance group and an increase in loans sourced for our liquid loan strategies. Compared to the third quarter of 2015, loans and investments increased $342 million, or 9.4% due to lending activity related to both direct lending and liquid loan strategies, which was partially offset by the sale of the ABL business in the first quarter of 2016. 
  • The Leveraged Finance loan portfolio increased by $231 million during the third quarter to $3.8 billion, while loans and leases in our Equipment Finance portfolio decreased by $7 million to $158 million and were reclassified as assets held-for-sale in connection with the planned divestiture of that business.  Commercial real estate loans decreased by 57% in the third quarter to less than $18 million due to the sale of a commercial property as part of an accelerated disposition of that portfolio.  A commercial real estate loan totaling $15.8 million was also reclassified as other real estate owned (OREO) during the quarter.  
  • Assets held in managed funds increased to approximately $3.1 billion as of September 30, 2016 as a decrease in assets managed in amortizing CLOs was more than offset by an increase in assets managed in the new Arch Street fund.  
  • The owned loan portfolio remained defensively positioned - balanced across industry sectors and highly diversified by issuer. Exposure to energy sectors was less than 1.2%, down slightly from the prior quarter.  As of September 30, 2016, no outstanding borrowings by a single obligor represented more than 1.2% of total loans outstanding, and the ten largest obligors comprised approximately 9.4% of the loan portfolio.

Net Interest Income / Margin

  • Net interest income increased by $4.4 million, or 20.8%, to $25.3 million in the third quarter compared to $20.9 million in the prior quarter due primarily to $3.2 million of previously unrecorded interest income recognized in connection with the pay-off of a nonperforming loan at par and a $28.4 million increase in average loans and credit investments compared to the prior quarter.  Compared to the third quarter of last year, net interest income increased by $2.0 million, or 8.7%.
  • The portfolio yield increased to 6.77% in the third quarter compared to 6.28% the prior quarter, and 6.32% in the comparable period in the prior year.  The increase in yield was due primarily to the income recognized in connection with the pay-off of a non-performing loan at par and an increase in deferred fee amortization related to prepayments. 
  • Funding costs were 4.67% in the third quarter which was relatively consistent with 4.65% in the second quarter, but up from 4.31% in the comparable period in the prior year. 
  • As a result, net interest margin widened to 2.50% for the third quarter of 2016 compared to 2.10% for the prior quarter, but narrowed slightly from 2.57% in the third quarter of 2015.

Non-Interest Income

  • Non-interest income increased by $6.6 million to $11.0 million for the third quarter of 2016 compared to $4.4 million in the prior quarter and $3.5 million in the same period last year.  The increase was due primarily to $3.9 million of unrealized gains on loans reported at fair value and higher capital markets related fees.  Unrealized gains partly reflected the recapture of unrealized losses from prior periods as loan values increased broadly across the market driven primarily by spread tightening.
  • Non-interest income in the third quarter of 2016 was centered in asset management income of $3.4 million, $2.9 million of capital markets related fees and $3.9 million of unrealized gains (net) on loans held at fair value. 

Credit Performance

  • Credit performance in the third quarter was consistent with the prior quarter and better than the same quarter last year as credit costs remained in expected ranges.
  • Provision expense was $3.6 million in the third quarter, consistent with the prior quarter and down from $4.5 million in the same quarter last year.        
  • Total net specific provision expense increased by approximately $0.8 million in the third quarter of 2016 to $3.2 million compared to $2.4 million in the prior quarter and $1.6 million in the same quarter last year. 
  • Net charge-offs in the third quarter reflected a small recovery of a previously charged-off loan compared to $6.9 million of charge-offs recognized in the prior quarter and no charge-offs in the same period last year. 
  • The allowance for credit losses was $66.4 million, or 2.29% of consolidated loans and approximately 76.0% of non-performing loans (NPLs), at September 30, 2016, compared to $64.0 million, or 2.09% of loans and approximately 66.8% of NPLs, at June 30, 2016.
  • Non-performing loans decreased by $8.6, or 9%, to $87.3 million, or 2.66% of loans and leases held for investment at September 30, 2016, compared to $95.9 million or 2.97% of loans and leases held for investment at the end of the prior period.  The decrease was due primarily to the repayment of an $8.4 million non-performing loan at par during the quarter. 
  • A commercial property valued at approximately $15.8 million was classified as OREO during the quarter.

Expenses

  • Operating expenses increased by $5.2 million to $18.1 million for the third quarter of 2016 compared to $12.8 million in the prior quarter due to approximately $1 million of expenses related to the planned sale of the equipment finance business and other short-term projects, as well as $4.2 million of severance expenses recognized in connection with cost saving initiatives.
  • As a result, expenses as a percentage of average assets increased to 1.76% of average assets in the third quarter compared to 1.29% in the prior quarter.
  • Operating expenses, excluding non-cash equity compensation and severance costs, were $12.9 million in the third quarter up from $11.9 million during the second quarter due primarily to non-recurring expenses related to the potential sale of the equipment finance business and other short-term projects. 
  • The Company had 83 full-time employees at September 30, 2016 compared to 90 full-time employees at June 30, 2016 and 122 employees at December 31, 2015.  The reduction in staffing levels reflects both the sale of the asset-based lending business, which had 26 full-time employees, and strategic initiatives to streamline operations. 
  • The company has identified additional opportunities to reorganize and streamline its operations to reduce expenses and expects to achieve run-rate savings of approximately 25-30% of the company's fiscal 2016 baseline cost base of approximately $60 million. 

Income Taxes

  • Deferred income taxes decreased $0.6 million to $29.9 million as of September 30, 2016.  The decrease in deferred income taxes was driven primarily by activity in the allowance for credit losses, equipment leasing and available for sale securities.  
  • Approximately $31.9 million and $11.7 million of the net deferred tax asset as of September 30, 2016 were related to our allowance for credit losses and incentive compensation, respectively, which was partially offset by $14.1 million of deferred tax liabilities related to the lease portfolio.

Funding and Capital

  • Total cash and equivalents as of September 30, 2016 were $406.8 million, of which $36.3 million was unrestricted.
  • Unrestricted cash increased slightly from $34.6 million at June 30, 2016, while restricted cash increased by $163.1 million to $370.5 million at September 30, 2016 due primarily to principal and interest collections on loans that were retained pending reinvestment in new loan collat
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