NewStar issues restricted shares to execs
Written on May 26, 2010
NewStar Financial Inc., a Boston-based specialty finance company that has been hurt by losses on commercial real estate loans, recently awarded restricted stock with a combined value of $11.2 million to five senior executives.
The restricted stock vests in three years and comes with market-based conditions that include share price and book value targets. If all of the conditions are not met, the executives will forfeit all of the shares, according to a company filing with the Securities and Exchange Commission.
Shares of NewStar (Nasdaq: NEWS) closed at $7.88 on May 19, the day the restricted stock was awarded. The company’s stock price has nearly doubled over the past 12 months.
NewStar Chairman and CEO Tim Conway stands to receive the largest award, which was 368,421 shares currently worth about $2.8 million. Chief Investment Officer Peter Schmidt-Fellner is in line for 328,947 restricted shares; CFO John Bray was awarded 289,474 restricted shares; Managing Director David Dobies was awarded 184,211 shares; and Chief Credit Officer Robert Clemmens can potentially collect on 250,000 shares.
Earlier this month, NewStar reported a net loss of $9.9 million during the three months ended March 31 faxless payday loans. The company’s provision for credit losses was $27 million, compared with $39 million during the three months ended Dec. 31. Soured commercial real estate loans, though a small part of NewStar’s overall loan portfolio, have played a big part in credit losses.
The company’s commercial real estate portfolio has been reduced by about 30 percent to $320 million. Those loans represent 15 percent of the company’s total portfolio.
In that commercial real estate segment, four loans totaling $35 million have been classified as nonperforming, according to NewStar. “They have been written down by $4.3 million and have another $9.4 million of specific reserves, which implies a carrying value of $.61 on the dollar,” Conway said during a May 5 presentation.
Potential future credit losses on the company’s commercial real estate portfolio could be as high as $36.4 million, according to company estimates. The mid-range loss estimate is about $15 million.
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