NewStar Financial, Inc.
Nov 1, 2017
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NewStar Reports Net Income of $4.6 Million, or $0.11 per Diluted Share, for the Third Quarter of 2017 and Declares $0.02 Quarterly Dividend per Share

BOSTON, Nov. 01, 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 third quarter of 2017, reporting net income of $4.6 million, or $0.11 per diluted share. These results compare to net income of $4.2 million, or $0.10 per diluted share in the second quarter of 2017 and $8.6 million, or $0.19 per diluted share in the third quarter of 2016. Operating income before income taxes was $7.7 million for the third quarter of 2017 compared to $7.2 million for the second quarter of 2017 and $14.6 million in the third quarter of 2016.

Tim Conway, Chief Executive Officer of NewStar commented: "Our results in the third quarter were solid and in line with our expectations as we maintained an active investment pace and completed the previously announced acquisition of a CLO manager, adding approximately $725 million to our assets under management.  Revenue was up nearly 5% due primarily to higher net interest income, which reflected improvement in the margin from rising index rates.  Non-interest income also improved as a reduction in negative mark-to-market adjustments more than offset a decrease in capital markets related revenues.  Provision expense was down and credit related activity was consistent with our expectations. Although expenses were somewhat higher than our target run-rate due partly to strategic costs and additional intangible amortization expenses from the recent acquisition, pre-tax earnings were up 7.6% from the prior quarter.  While I am pleased with our financial results for the quarter, I am also excited about the progress we made on our strategic objectives, which culminated in the announcement of an agreement to sell the company to First Eagle Investment Management.  As you know, our strategy has been focused on transforming the company from a balance sheet driven commercial finance company into an investment manager of third-party assets, while unlocking the value of our portfolio investments and asset management platform for stockholders. Over the last eighteen months, we have taken important steps intended to increase stockholder value by returning capital through dividends and share repurchases, growing managed assets through acquisition and new fund formation, and streamlining operations to improve efficiency.  The transactions we announced in early October are a culmination of that strategy and represent a significant milestone for the company.  I believe the transaction delivers compelling value for NewStar stockholders and also allows the Company to transition seamlessly to a larger investment platform, while maintaining continuity for customers."

Sale Transaction

Dividend Declaration

Managed and Owned Investment Portfolios

Net Interest Income / Margin

Non-Interest Income

Credit Performance

Expenses

Income Taxes

Funding and Capital

Equity

About NewStar Financial

NewStar Financial Inc. (NASDAQ:NEWS) is an internally-managed lender and credit-oriented asset manager headquartered in Boston, MA. 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. The Company also offers a range of investment management products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit. The Company manages approximately $7.2 billion of assets, $3.6 billion held in consolidated subsidiaries of the Company and $3.6 billion in off balance sheet credit funds. 

NewStar also has regional offices in Chicago, IL, Norwalk, CT, and New York, NY. For more detailed information, please visit our website at www.newstarfin.com. 

For additional information contact:

Robert K. Brown
500 Boylston Street, Suite 1250
Boston, MA 02116
617.848.2558
rbrown@newstarfin.com

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding, among other things, future performance, our expectations regarding our ability to support continued future asset growth or expense reductions, our pending merger transaction with First Eagle and the pending asset sale transaction with the GSO fund. 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, the market price for NewStar's stock prevailing from time to time, the nature of other investment opportunities presented to NewStar from time to time, objectives, future performance, financing plans and restrictive covenants in our debt instruments and other material agreements. As such, they are subject to material risks and uncertainties. These risks and uncertainties include the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with First Eagle or our asset sale transaction with the GSO fund; the timing in which those transactions might be consummated; the failure to obtain the approval of stockholders or required regulatory approvals or other consents or to satisfy any other conditions to the transactions; the effect of the announcement of the transactions on our operations and relationships with third parties or that compliance by NewStar with the operating restrictions in the transaction agreements could have an adverse effect on NewStar's business; the risk that NewStar may not realize any or a portion of the tax refunds applicable to the contingent value rights (or that such tax refunds may be delayed or subject to disputes by the Congressional Joint Committee on Taxation or taxing authorities); our ability to leverage new and future assets to support growth; the general state of the economy; our ability to compete effectively in a highly competitive industry; our ability to integrate acquired businesses; 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 2016 Annual Report on Form 10-K, and as supplemented by any 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, 2017 with the SEC on or before November 9, 2017 and urges its shareholders to refer to that document for more complete information concerning NewStar's financial results.

Non-GAAP Financial Measures

References to "total revenue" refer to net interest income plus non-interest income.  "Adjusted operating expenses" refers to operating expenses, excluding severance costs and compensation expense related to restricted stock grants that are required to be included under GAAP.  NewStar management uses adjusted operating expenses to analyze performance in support of operational and investment decisions, and NewStar believes that these measurements provide useful information to investors in their evaluation of our financial performance and condition.  Excluding non-recurring items from revenue measures and excluding expenses incurred in connection with severance costs and compensation expense related to equity awards each eliminate unique amounts that make it difficult to assess our core performance and compare our period over period results. Reconciliations of these non-GAAP financial measures to their respective most directly comparable GAAP measures are included on pages 13 and 14 of this release.  

Additional Information and Where to Find It

This communication is being made in respect of the proposed transactions involving First Eagle Investment Management, LLC, GSO Capital Partners and NewStar. The proposed transactions will be submitted to the stockholders of the Company for their consideration. In connection therewith, the Company intends to file relevant materials with the Securities and Exchange Commission (the "SEC"), including a definitive proxy statement. However, such documents are not currently available. This communication does not constitute a solicitation of any vote or approval. BEFORE MAKING ANY VOTING OR ANY INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTIONS.

Investors will be able to obtain free of charge the proxy statement (when available) and other documents filed with the SEC at the SEC's website at http://www.sec.gov. In addition, the proxy statement and our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website at www.newstarfin.com as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

Participants in Solicitation

The directors, executive officers and certain other members of management and employees of NewStar are "participants" in the solicitation of proxies from stockholders of NewStar in favor of the proposed asset sale and the proposed merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the stockholders of NewStar in connection with the proposed asset sale and the proposed merger will be set forth in the proxy statement and the other relevant documents to be filed with the SEC. You can find information about NewStar's executive officers and directors in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in its definitive proxy statement filed with the SEC on Schedule 14A on April 21, 2017.

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

         
NewStar Financial, Inc.        
Consolidated Balance Sheets        
(unaudited)        
         
         
  September 30, June 30, December 31, September 30,
($ in thousands) 2017 2017 2016 2016
Assets:        
         
Cash and cash equivalents $  62,538 $  49,721 $  154,480 $  36,266
Restricted cash 251,653 223,268 262,643 370,487
Cash collateral on deposit with custodians 7,564 7,564 7,564 7,564
Investments in debt securities, available-for-sale 175,837 151,426 119,307 90,814
Loans held-for-sale, net 371,941 346,626 144,060 429,718
Loans and leases, net 2,995,997 3,037,363 3,239,191 3,186,998
Interest receivable 15,496 13,536 14,622 14,829
Property and equipment, net 212 239 274 296
Deferred income taxes, net 32,081 36,863 40,807 29,881
Income tax receivable 6,606 3,764  1,381
Goodwill 17,884 17,884 17,884 17,884
Identified intangible asset, net 5,318 405 572 655
Other assets 59,507 42,736 39,188 53,786
Assets held-for-sale    162,801
Total assets  $  4,002,634 $  3,931,395 $  4,040,592 $  4,403,360
         
Liabilities:        
         
Credit facilities, net $  456,961 $  396,139 $  445,493 $  492,758
Term debt, net 16,973   
Term debt securitizations, net 2,085,733 2,097,459 2,195,064 2,327,717
Senior notes, net 375,287 374,830 373,919 373,462
Subordinated notes, net 246,929 245,082 241,390 239,543
Repurchase agreements, net 80,569 79,269 55,046 52,591
Accrued interest payable 34,435 20,230 21,319 31,021
Income tax payable   12,562 
Other liabilities 59,995 75,144 48,377 170,380
Liabilities held-for-sale    44,158
Total liabilities 3,356,882 3,288,153 3,393,170 3,731,630
Total stockholders' equity 645,752 643,242 647,422 671,730
Total liabilities and stockholders' equity $  4,002,634 $  3,931,395 $  4,040,592 $  4,403,360


NewStar Financial, Inc.        
Consolidated Statements of Operations        
(unaudited)        
         
        
 Three Months Ended
 September 30, June 30, December 31, September 30,
($ in thousands, except per share amounts) 2017   2017   2016   2016 
Net interest income:       
Interest income$  58,752  $  56,913  $  64,217  $  65,155 
Interest expense   43,145     41,905     43,529     39,897 
Net interest income   15,607     15,008     20,688     25,258 
Provision for credit losses   1,494     2,698     2,635     3,570 
Net interest income after provision for credit losses   14,113     12,310     18,053     21,688 
       
Non-interest income (loss):       
Asset management income   3,544     3,826     3,062     3,353 
Fee income   1,025     2,161     1,442     2,946 
Loss on derivatives, net —    —      (153)    (13)
Gain (loss) on sale of loans, net   294     511     (2,131)    (19)
Other miscellaneous income    1,984     1,848     1,327     794 
Mark to market adjustment on fair value loans    (867)    (3,181)    1,830     3,437 
Net unrealized (loss) gain on loans held-for-sale    (457)    14     7,751     468 
Gain on sale of Business Credit and Equipment Finance assets —    —      6,655   —  
Total non-interest income    5,523     5,179     19,783     10,966 
Operating expenses:       
Compensation and benefits   7,480     6,747     10,704     13,175 
General and administrative expenses   4,420     3,552     8,758     4,894 
Total operating expenses   11,900     10,299     19,462     18,069 
Income from operations before income taxes   7,736     7,190     18,374     14,585 
Income tax expense    3,151     3,038     8,044     5,941 
Net income $  4,585  $  4,152  $  10,330  $  8,644 
        
Earnings per share:       
Basic EPS $  0.11  $  0.10  $  0.23  $  0.19 
Diluted EPS $  0.11  $  0.10  $  0.23  $  0.19 
        
Weighted average shares outstanding:       
Basic   40,786,576     41,216,013     43,732,133     45,812,139 
Diluted    40,807,231     41,283,296     43,780,606     45,812,139 
         
Dividends declared per common share$  0.02  $  0.02  $  —  $  — 

 

 

NewStar Financial, Inc.    
Consolidated Statements of Operations    
(unaudited)    
     
  Year Ended September 30,
($ in thousands, except per share amounts)  2017   2016 
Net interest income:    
Interest income $  170,747  $  186,499 
Interest expense    126,144     117,816 
Net interest income    44,603     68,683 
Provision for credit losses    10,341     24,906 
Net interest income after provision for credit losses    34,262     43,777 
     
Non-interest income (loss):    
Asset management income    11,017     10,337 
Fee income    6,379     5,836 
Loss on derivatives, net  —      (31)
Gain on sale of loans, net    1,501     36 
Other miscellaneous income     5,330     3,490 
Mark to market adjustment on fair value loans    (6,817)    3,705 
Loss on total return swap  —      (6,062)
Unrealized loss on loans held-for-sale, net    (557)    (5,345)
Gain on sale of divested business and assets   —      22,511 
Total non-interest income     16,853     34,477 
Operating expenses:    
Compensation and benefits    21,664     32,640 
General and administrative expenses    12,172     15,337 
Total operating expenses    33,836     47,977 
Income from operations before income taxes    17,279     30,277 
Income tax expense     7,160     12,383 
Net income  $  10,119  $  17,894 
     
Earnings per share:    
Basic EPS  $  0.24  $  0.38 
Diluted EPS $  0.24  $  0.38 
     
Weighted average shares outstanding:    
Basic    41,268,530     46,216,047 
Diluted    41,289,020     46,216,047 
     
Dividends declared per common share$  0.06  $  -  

 

NewStar Financial, Inc.        
Selected Financial Data        
(unaudited)        
         
         
  Three Months Ended
  September 30, June 30, December 31, September 30, 
($ in thousands)  2017   2017   2016   2016 
Performance Ratios:        
Return on average assets  0.46%  0.42%  0.98%  0.84%
Return on average equity    2.82     2.60     6.26     5.16 
Pre-tax return on average equity (ROAE)    4.76     4.50     11.14     8.71 
Net interest margin, before provision    1.61     1.56     1.96     2.50 
Operating expenses as a percentage of average AUM    0.67     0.64     1.15     1.09 
Operating expenses as a percentage of average total assets    1.20     1.05     1.84     1.76 
Efficiency ratio    56.32     51.02     48.09     49.88 
Portfolio yield    6.44     6.43     6.53     6.77 
         
Credit Quality Ratios:        
Delinquent loan rate for loans 60 days or more past due (at period end)  1.20%  0.45%  0.64%  0.50%
Delinquent loan rate for accruing loans 60 days or more past due (at period end)    0.74   —    —    —  
Non-accrual loan rate (at period end)    3.39     3.06     2.99     2.66 
Non-performing asset rate (at period end)    3.88     3.04     3.45     3.12 
Annualized net charge off (recovery) rate (end of period loans)    1.11     0.97     2.26     (0.01)
Annualized net charge off (recovery) rate (average period loans)    0.99     0.88     1.98     -  
Allowance for credit losses ratio (at period end)    1.52     1.75     1.76     2.29 
         
Capital and Leverage Ratios:        
Equity to assets  16.13%  16.36%  16.02%  15.25%
Debt to equity     5.05     4.96     5.11     5.19 
Book value per share $  15.57  $  15.40  $  15.12  $  14.38 
         
Average Balances:        
Loans and other debt products, gross $  3,605,002  $  3,541,958  $  3,904,115  $  3,818,252 
Interest earning assets    3,842,343     3,869,500     4,192,123     4,019,721 
Total assets    3,940,898     3,931,395     4,196,793     4,095,296 
Interest bearing liabilities    3,287,069     3,306,672     3,588,650     3,399,977 
Equity    644,137     643,242     656,282     666,530 
Assets under management (AUM)    7,028,972     6,503,448     6,758,842     6,609,920 
         
Allowance for credit loss activity:        
Balance as of beginning of period $  47,285  $  52,081  $  66,366  $  64,043 
General (release) provision for credit losses    (2,369)    (600)    1,430     336 
Specific provision for credit losses    3,862     3,298     2,498     3,234 
Net (charge offs) recoveries    (8,560)    (7,494)    (18,886)    46 
Reclass of Equipment Finance to Assets held-for-sale    -     -     -     (1,293)
Balance as of end of period $  40,218  $  47,285  $  51,408  $  66,366 
         
         
  Three Months Ended
  September 30, June 30, December 31, September 30, 
($ in thousands)  2017   2017   2016   2016 
Supplemental Data (at period end):        
Investments in debt securities $  185,811  $  159,248  $  126,050  $  96,931 
Loans and leases, held-for-sale (1)     375,560     349,757     145,966     593,640 
Loans held-for-investment    3,060,290     3,110,072     3,319,550     3,281,727 
Loans and investments in debt securities    3,621,661     3,619,077     3,591,566     3,972,298 
Deferred fees, net (2)    (38,127)    (36,851)    (38,072)    (60,918)
Allowance for loan losses - general    (28,094)    (30,449)    (31,165)    (29,705)
Allowance for loan losses - specific    (11,665)    (16,363)    (19,771)    (36,160)
Total loans and investments in debt securities, net $  3,543,775  $  3,535,414  $  3,502,558  $  3,845,515 
         
         
Unused lines of credit    303,861     306,113     326,051     287,172 
Standby letters of credit    6,776     6,825     8,239     8,754 
Total unfunded commitments $  310,637  $  312,938  $  334,290  $  295,926 
         
         
(1) Includes gross equipment loans and leases, held-for-sale with an outstanding balance of $158.3 million at September 30, 2016, which is included in Assets held-for-sale.
(2) Includes deferred fees, net related to equipment loans and leases held-for-sale of $20.3 million at September 30, 2016.

 

NewStar Financial, Inc.    
Selected Financial Data    
(unaudited)    
     
     
  Nine Months Ended September 30,
($ in thousands)  2017   2016 
Performance Ratios:    
Return on average assets  0.34%  0.59%
Return on average equity    2.10     3.61 
Net interest margin, before provision    1.54     2.25 
Operating expenses as a percentage of average total assets    1.14     1.58 
Operating expenses as a percentage of average AUM    0.66     0.95 
Efficiency ratio    55.06     46.51 
Portfolio yield    6.38     6.38 
     
Credit Quality Ratios:    
Annualized net charge off (recovery) rate (end of period loans)    0.94     0.58 
Annualized net charge off (recovery) rate (average period loans)    0.84     0.50 
     
Average Balances:    
Loans and other debt products, gross $  3,562,475  $  3,896,966 
Interest earning assets    3,875,594     4,082,501 
Total assets    3,962,680     4,066,659 
Interest bearing liabilities    3,312,287     3,405,781 
Equity    645,608     661,365 
Assets under management (AUM)    6,880,484     6,718,832 
     
Allowance for credit loss activity:    
Balance as of beginning of period $  51,408  $  58,726 
General (release) provision for credit losses    (3,084)    2,614 
Specific provision for credit losses    13,424     22,292 
Net charge offs    (21,530)    (14,154)
Reclass due to sale of Business Credit and transfer of Equipment Finance to Assets held-for-sale —      (3,112)
Balance as of end of period $  40,218  $  66,366 
     

 

NewStar Financial, Inc.        
Non-GAAP Selected Financial Data        
(unaudited)        
           
         
  Three Months Ended
  September 30, June 30, December 31, September 30,
($ in thousands)  2017   2017   2016   2016 
Performance Ratios:        
         
Consolidated Statement of Operations  Adjustments (1):        
Operating expenses $  11,900  $  10,299  $  19,462  $  18,069 
Less: non-cash equity compensation expense (2)    873     870     921     959 
Less: severance expenses  —    —      3,519     4,197 
Adjusted operating expenses $  11,027  $  9,429  $  15,022  $  12,913 
         
Adjusted operating expenses as a percentage of average total assets  1.11%  0.96%  1.42%  1.25%
   
  Three Months Ended
  September 30, June 30, December 31, September 30,
   2017   2017   2016   2016 
Risk-adjusted revenue        
Net interest income after provision for credit losses $  14,113  $  12,310  $  18,053  $  21,688 
Non-interest income    5,523     5,179     19,783     10,966 
Risk-adjusted revenue $  19,636  $  17,489  $  37,836  $  32,654 
         
(1) Adjustments are pre-tax, unless otherwise noted.  
(2) Non-cash compensation charge related to restricted stock grants.   

 

NewStar Financial, Inc.    
Non-GAAP Selected Financial Data    
(unaudited)    
     
     
  Nine Months Ended September 30,
($ in thousands)  2017   2016 
Performance Ratios:    
     
Consolidated Statement of Operations  Adjustments(1):    
Operating expenses $  33,836  $  47,977 
Less: non-cash equity compensation expense (2)    2,601     2,822 
Less: severance costs  —    4,197   
Adjusted operating expenses $  31,235  $  40,958 
     
Adjusted operating expenses as a percentage of average total assets  1.05%  1.35%
     
  Nine Months Ended September 30,
   2017   2016 
Risk-adjusted revenue    
Net interest income after provision for credit losses $  34,262  $  43,777 
Non-interest income    16,853     34,477 
Risk-adjusted revenue $  51,115  $  78,254 
     
(1) Adjustments are pre-tax.
(2) Non-cash compensation charge related to restricted stock grants. 

 

NewStar Financial, Inc.                    
Portfolio Data                    
(unaudited)                    
                     
  September 30,  June 30,  December 31,  September 30, 
($ in thousands) 2017  2017  2016  2016 
                     
Portfolio Data: (Balance Sheet AUM)                    
Leveraged Finance $  3,610,945   99.7%$  3,608,404   99.7% $  3,580,942   99.7%$  3,796,267   95.6%
Real Estate    10,716   0.3     10,673   0.3     10,624   0.3     17,742   0.4 
Equipment Finance (1)  —  —    —  —    —  —      158,289   4.0 
Total $  3,621,661   100.0%$  3,619,077   100.0% $  3,591,566   100.0%$  3,972,298   100.0%
                     
Managed Portfolio (AUM)                    
Commercial Lending                    
Loans held-for-investment (2) $  2,652,825   37.0%$  2,706,944   41.5% $  2,915,805   43.3%$  2,892,467$  43.5%
Loans held-for-sale (1)(2)    375,560   5.2     349,757   5.4     145,966   2.1     593,640   8.9 
Total Commercial Lending $  3,028,385   42.2%$  3,056,701   46.9% $  3,061,771   45.4%$  3,486,107   52.4%
                     
Asset Management                    
  Middle Market Direct Lending                     
  Investments in debt securities (2) $  185,811   2.6%$  159,248   2.4% $  126,050   1.9%$  96,931   1.4%
  Arlington Program (3)    404,376   5.7     402,002   6.2     402,762   6.0     397,319   6.0 
  Berkeley Fund (3)    503,445   7.0     501,199   7.7     502,245   7.4   —    -  
  Clarendon Fund (3)    400,659   5.6     400,191   6.1     399,022   5.9     397,916   6.0 
  Exeter Fund CLO (3)    295,134   4.1   —  —    —  —    —  —  
  Fairfield Fund CLO (3)    400,721   5.3   —  —    —  —    —  —  
  Credit Opportunities Fund (3)    9,970   0.1     10,068   0.2     10,661   0.2     11,300   0.2 
  Global Atlantic SMA    4,092   0.1     4,092   0.1   —  —    —  —  
  Sub-total Middle Market Direct Lending    2,204,208   30.5%   1,476,800   22.6%    1,440,740   21.4%   903,466   13.6%
  Liquid/Tradeable Credit                    
  Arch Street (3)    407,465   5.7%   403,128   6.2%    403,745   6.0     389,260   5.8 
  Avery Street (3)  —  —    —  —      51,556   0.8     63,893   1.0 
  Emerson Place (3)  —  —    —  —      82,660   1.2     104,265   1.6 
  Hull Street (3)    495,127   6.9     494,969   7.6     495,684   7.3     498,870   7.5 
  Lime Street (3)    130,646   1.8     168,197   2.6     241,145   3.6     241,687   3.6 
  Longfellow Place (3)    499,328   7.0     499,153   7.7     500,080   7.4     500,341   7.5 
  Staniford Street (3)    397,882   5.6     397,990   6.1     398,329   5.9     397,912   6.0 
  Other (3)    18,599   0.3     24,474   0.4     64,153   1.0     66,678   1.0 
  Sub-total Liquid/Tradeable Credit    1,949,047   27.3%   1,987,911   30.5%    2,237,352   33.2%   2,262,906   34.0%
  Total Managed Assets $   7,181,640    100.0 %$   6,521,412    100.0 % $   6,739,863    100.0 %$   6,652,479    100.0 %
                     
(1) Equipment Finance has been moved to held-for-sale as of September 30, 2016.
(2) Managed assets owned by NewStar Financial Inc. include investments in debt securities, loans held-for-sale (LHFS), assets held-for-sale, and loans held-for-investment.  Cash and other consolidated assets of NewStar Financial Inc. are excluded. 
(3) Managed assets include loans, cash and other investments held by funds and managed by NewStar Financial and its affiliates.