Capmark Financial Group Inc. Reports 2008 First Quarter Operating Results

Business Wire,  May 13, 2008  

• E-mail
• Print
• Link

* We generated over $2.0 billion of cash from repayments of held for sale and investment loans, sales and syndications of loans, and other investments in the first quarter and an additional $1.8 billion of cash from the European loan sale in April 2008.

* We were able to extend or refinance over $680 million of previously existing borrowing capacity on a committed basis and lengthened the weighted average maturity of funding at Capmark Bank by increasing our utilization of FHLB funding by over $450 million.

* We continued to control noninterest expenses.

Asset Quality

Asset quality has performed as expected in a difficult credit environment. The composition of our assets remains diverse within the commercial real estate sector, with only limited exposure to residential real estate.

Capmark remains dedicated to the systematic oversight of its assets and the determination of appropriate reserves and asset valuations, informed by credit, servicing, capital markets, and accounting professionals independent of the business platforms they oversee.

Our loans are subject to a comprehensive quarterly risk rating process managed by Capmark's Credit Department. This process enables Capmark to identify emerging credit concerns on both the asset level and portfolio level, and further enables us to determine strategies and devote resources for optimum resolutions of issues.

As of March 31, 2008, Capmark's held for investment loan portfolio was carried at $7.4 billion, which reflects an allowance for loan losses totaling $32.1 million and prior fair value and other adjustments totaling $97.3 million. The combination of the allowance for loan losses and fair value and other adjustments totaled $129.4 million, or 1.75% of the total held for investment loan portfolio as of March 31, 2008.

Capmark's held for sale loan portfolio, as of March 31, 2008, was $7.7 billion. These loans do not have an allowance for loan losses but are carried at fair value. Fair value adjustments represent an aggregate discount of approximately $500 million to the aggregate unpaid principal balance of $8.2 billion as of March 31, 2008. On a pro-forma basis as of March 31, 2008 after giving effect to the European loan sale, the total held for sale loan portfolio would have been $5.9 billion, representing an aggregate discount of approximately $300 million to the aggregate unpaid principal balance of $6.2 billion.

Selected portfolio information is as follows:

* As of March 31, 2008, Capmark's loan portfolio totaled $15.1 billion, up from $14.7 billion as of December 31, 2007. On a pro-forma basis as of March 31, 2008 after giving effect to the European loan sale, Capmark's total loan portfolio would have been $13.3 billion, a decrease of approximately 9.5% since year-end.

* The ratio of Capmark's originated non-performing assets to total assets remained constant at 0.9% as of March 31, 2008, and December 31, 2007.

* As of March 31, 2008, 97.8% of Capmark's $15.1 billion loan portfolio was comprised of first lien commercial mortgage loans, with an average loan size of $9.9 million.