CapitalSource Inc. (CSE, Financial) filed Quarterly Report for the period ended 2009-03-31.
CapitalSource is a specialized commercial finance company offering asset- based senior cash flow and mezzanine financing to small and mid-sized borrowers through three focused lending units: Corporate Finance Healthcare Finance and Structured Finance. CapitalSource Inc. has a market cap of $1.26 billion; its shares were traded at around $4.16 with a P/E ratio of 6.82 and P/S ratio of 1.07. The dividend yield of CapitalSource Inc. stocks is 0.96%. CapitalSource Inc. had an annual average earning growth of 44.3% over the past 5 years.
Although we have made loans as large as $325 million, as of March 31, 2009, our average loan size was $8.9 million and our average loan exposure by client was $14.0 million. Our loans generally have a maturity of one to five years with a weighted average maturity of 2.4 years as of March 31, 2009. Substantially all of our loans require monthly interest payments at variable rates and, in many cases, our loans provide for interest rate floors that help us maintain our yields when interest rates are low or declining. We price our loans based upon the risk profile of our clients. As of March 31, 2009, our geographically diverse client base consisted of 669 clients with headquarters in 46 states, the District of Columbia, Puerto Rico and select international locations, primarily in Canada and Europe.
The increase in consolidated operating expenses was primarily due to a $3.2 million increase in compensation and benefits primarily resulting from the addition of CapitalSource Bank employees, a $4.5 million increase in professional fees and an increase of $1.5 million in depreciation and amortization expense primarily resulting from increases in CapitalSource Banks fixed assets over the previous year. The increase in professional fees is primarily due to consulting fees. These increases were partially offset by a $1.5 million decrease in travel and entertainment expense. The remaining increase in operating expenses for the three months ended March 31, 2009 was primarily attributable to a $2.4 million increase in administrative expenses primarily due to FDIC premiums related to CapitalSource Bank.
During the three months ended March 31, 2009 and 2008, we recorded ($53.4) million and $3.1 million of income tax (benefit) expense, respectively. The effective income tax rate on our consolidated net income was 33.9% and 32.0% for the three months ended March 31, 2009 and 2008, respectively. The increase in the effective tax rate for the three months ended March 31, 2009, compared to the three months ended March 31, 2008, is primarily due to the revocation of our REIT status at the beginning of 2009, the non deductibility for tax purposes of a portion of the interest expense incurred on our convertible debentures, and higher state tax rates caused in part by the establishment of our banking operations in California in the third quarter of 2008. The increase in the effective tax rate was offset in part by the tax impacts of the convertible debt exchange and our equity compensation plans, and taxes on foreign exchange gains incurred with respect to our European operations.
Read the The complete ReportCSE is in the portfolios of Seth Klarman of The Baupost Group, Michael Price of MFP Investors LLC.
CapitalSource is a specialized commercial finance company offering asset- based senior cash flow and mezzanine financing to small and mid-sized borrowers through three focused lending units: Corporate Finance Healthcare Finance and Structured Finance. CapitalSource Inc. has a market cap of $1.26 billion; its shares were traded at around $4.16 with a P/E ratio of 6.82 and P/S ratio of 1.07. The dividend yield of CapitalSource Inc. stocks is 0.96%. CapitalSource Inc. had an annual average earning growth of 44.3% over the past 5 years.
Highlight of Business Operations:
Through our CapitalSource Bank segment activities, CapitalSource Bank provides a wide range of financial products to middle market businesses and participates in broadly syndicated debt financing for larger businesses, and also offers depository products and services in southern and central California that are insured by the Federal Deposit Insurance Corporation (FDIC) to the maximum amounts permitted by regulation. As of March 31, 2009, our CapitalSource Bank segment had 280 loans outstanding with an aggregate principal balance of $2.9 billion and held a $1.1 billion senior participation interest in the A Participation Interest.Although we have made loans as large as $325 million, as of March 31, 2009, our average loan size was $8.9 million and our average loan exposure by client was $14.0 million. Our loans generally have a maturity of one to five years with a weighted average maturity of 2.4 years as of March 31, 2009. Substantially all of our loans require monthly interest payments at variable rates and, in many cases, our loans provide for interest rate floors that help us maintain our yields when interest rates are low or declining. We price our loans based upon the risk profile of our clients. As of March 31, 2009, our geographically diverse client base consisted of 669 clients with headquarters in 46 states, the District of Columbia, Puerto Rico and select international locations, primarily in Canada and Europe.
The increase in consolidated operating expenses was primarily due to a $3.2 million increase in compensation and benefits primarily resulting from the addition of CapitalSource Bank employees, a $4.5 million increase in professional fees and an increase of $1.5 million in depreciation and amortization expense primarily resulting from increases in CapitalSource Banks fixed assets over the previous year. The increase in professional fees is primarily due to consulting fees. These increases were partially offset by a $1.5 million decrease in travel and entertainment expense. The remaining increase in operating expenses for the three months ended March 31, 2009 was primarily attributable to a $2.4 million increase in administrative expenses primarily due to FDIC premiums related to CapitalSource Bank.
During the three months ended March 31, 2009 and 2008, we recorded ($53.4) million and $3.1 million of income tax (benefit) expense, respectively. The effective income tax rate on our consolidated net income was 33.9% and 32.0% for the three months ended March 31, 2009 and 2008, respectively. The increase in the effective tax rate for the three months ended March 31, 2009, compared to the three months ended March 31, 2008, is primarily due to the revocation of our REIT status at the beginning of 2009, the non deductibility for tax purposes of a portion of the interest expense incurred on our convertible debentures, and higher state tax rates caused in part by the establishment of our banking operations in California in the third quarter of 2008. The increase in the effective tax rate was offset in part by the tax impacts of the convertible debt exchange and our equity compensation plans, and taxes on foreign exchange gains incurred with respect to our European operations.
Read the The complete ReportCSE is in the portfolios of Seth Klarman of The Baupost Group, Michael Price of MFP Investors LLC.
