Capmark Financial Group Inc. Issues Quarterly Report as of and for the three and six months ended June 30, 2013

  Capmark Financial Group Inc. Issues Quarterly Report as of and for the three
  and six months ended June 30, 2013

Business Wire

HORSHAM, Pa. -- August 12, 2013

Capmark Financial Group Inc. (the “Company”) today issued its Quarterly Report
as of and for the three and six months ended June 30, 2013. The Company
reported consolidated net income of $46.9 million and $45.2 million for the
three and six months ended June 30, 2013, respectively. The Company also
reported consolidated total assets of $1.6 billion, consolidated total
liabilities of $0.9 billion, and stockholders’ equity of $0.7 billion as of
June 30, 2013.

Highlights for the second quarter were:

  *The Company realized total proceeds of $210 million from the monetization
    of loan and REO assets.
  *The Company achieved consolidated net gains on loans, investments and real
    estate of $56 million, partially offset by $14 million of noninterest
    expense. The net gains included a $14 million gain on shares in a
    collateralized debt obligation that were redeemed.
  *The Company paid a cash distribution of $2.50 per share on June 21, 2013
    to shareholders of record on June 17, 2013, bringing aggregate
    distributions to shareholders since emergence from bankruptcy to $21.50
    per share.
  *The Company paid an additional $2 million and $4 million under the
    settlement agreement with the Japanese lenders and the Crystal Ball
    Holding of Bermuda settlement agreement, respectively. The settlement
    agreements and the Company’s obligations thereunder were terminated.
  *The Company continued to reduce its staffing levels and office locations
    commensurate with the reduction in assets. The Company reduced its staff
    from 90 employees at year end to 54 at June 30, 2013. The Company reduced
    its five office locations at December 31, 2012 to three by the end of the
    second quarter.

Consolidated Balance Sheet

The Company had consolidated total assets of $1.6 billion and $2.9 billion as
of June 30, 2013 and December 31, 2012, respectively, primarily comprised of a
portfolio of loans, real estate, real estate-related assets and cash and cash
equivalents. Assets totaling $0.7 billion and $1.4 billion were held at
Capmark Bank and $153.5 million and $253.5 million were associated with
discontinued operations as of June 30, 2013 and December 31, 2012,
respectively.

The Company had consolidated total liabilities of $0.9 billion and $1.5
billion as of June 30, 2013 and December 31, 2012, respectively. Capmark Bank
had liabilities of $0.6 billion and $1.0 billion and liabilities of $79.2
million and $114.7 million were associated with discontinued operations as of
June 30, 2013 and December 31, 2012, respectively. Capmark Bank’s liabilities
were primarily comprised of Federal Deposit Insurance Corporation
(“FDIC”)-insured deposit liabilities as of June 30, 2013 and December 31,
2012.

Total stockholders’ equity was $0.7 billion as of June 30, 2013 as compared to
$1.3 billion as of December 31, 2012. The reduction was primarily due to the
$701.7 million of cash distributions to holders of the Company’s common stock
in the six months ended June 30, 2013.

Consolidated Results of Operations

The Company had income from continuing operations before income taxes of $51.4
million in the three months ended June 30, 2013, primarily due to $60.4
million of noninterest income partially offset by $13.5 million of noninterest
expense. Noninterest income of $60.4 million primarily included $36.2 million
of realized gains on the disposition of real estate investments, $14.2 million
of realized gain on the redemption of an interest in a collateralized debt
obligation, $3.0 million of recapture of losses from the application of the
lower of cost or fair value to loans held for sale and $2.9 million of
realized gains on full or partial dispositions of loans held for sale.
Noninterest expense of $13.5 million included $6.6 million of compensation and
benefits costs and $5.9 million of professional fees, of which $3.5 million
were associated with litigation and bankruptcy related matters. Interest
expense of $1.7 million primarily included $8.6 million of contractual
interest expense from deposit liabilities at Capmark Bank offset by $7.2
million from the accretion of the fresh start accounting premium for the
deposit liabilities.

The Company had income from continuing operations before income taxes of $53.1
million in the six months ended June 30, 2013, primarily due to $70.7 million
of noninterest income and $18.5 million of interest income on loans held for
sale and investment securities available for sale. The $70.7 million of
noninterest income and $18.5 million of interest income was partially offset
by $32.4 million of noninterest expense and $3.7 million of interest expense.
Noninterest income of $70.7 million primarily included $36.4 million of
realized gains on the dispositions of real estate investments, $14.2 million
of realized gain on the redemption of an interest in a collateralized debt
obligation and $15.0 million of realized gains on full or partial dispositions
of loans held for sale. Interest income in the six months ended June 30, 2013
included the recognition of $5.5 million of previously deferred interest on
loans held for sale. The $32.4 million of noninterest expense included $15.4
million of compensation and benefits costs and $11.6 million of professional
fees, of which $6.0 million were associated with litigation and bankruptcy
related matters. The $3.7 million of interest expense primarily included $18.8
million of contractual interest expense from deposit liabilities at Capmark
Bank offset by $15.7 million from the accretion of the fresh start accounting
premium for the deposit liabilities.

Liquidity

As of June 30, 2013, the Company’s continuing operations had $852.7 million in
total cash and cash equivalents (including restricted cash), of which $690.6
million was held by Capmark Bank and $162.2 million was held by its other
subsidiaries. The following table summarizes the cash, cash equivalents and
restricted cash from continuing operations (in thousands):

                                                          
Cash, Cash Equivalents and Restricted Cash   June 30, 2013   December 31, 2012
Capmark Bank cash and cash equivalents       $   690,556     $    1,296,156
Non-Capmark Bank:
Cash and cash equivalents                        100,164          182,726
Restricted cash                                 62,017          75,219
Total cash, cash equivalents and
restricted cash attributable to continuing   $   852,737     $    1,554,101
operations
                                                             

The following table summarizes the components of restricted cash from
continuing operations (in thousands):

                                                          
Restricted Cash                              June 30, 2013   December 31, 2012
Cash from consolidated variable interest     $    38,168     $      49,663
entities (“VIEs”)
Bankruptcy disputed administrative,
priority and convenience class claims             8,811             8,865
escrow
Distribution escrow                               11,064            7,462
Other                                            3,974            9,229
Restricted cash from continuing operations   $    62,017     $      75,219
                                                             

Cash from consolidated VIEs is from entities that are no longer owned by the
Company but continue to be recognized on the Company’s balance sheet because
derecognition criteria under GAAP have not been met.

On August 2, 2013, the Company received $6.4 million of cash from the reserves
for disputed administrative and priority claims. This cash release was due to
the resolution of administrative and priority claims.

The Company’s primary sources of liquidity are expected to be (1) principal
and interest payments on loans, (2)proceeds from the sale of loans, including
discounted payoffs received in connection with loan workout efforts, (3)
distributions received from equity investments, (4) proceeds from the sale of
real estate and (5) sales of other assets in its portfolio.

Capmark Bank has cash and cash equivalents in excess of all of its remaining
deposit liabilities and other liabilities as well as its expected operating
expenses over the next 12 months. On October 2, 2009, Capmark Bank consented
to cease and desist orders (the “C&D Orders”) with the FDIC and the Utah
Department of Financial Institutions (“UDFI”). Capmark Bank is prohibited
under the C&D Orders from declaring or paying dividends or making any other
form of payment representing a reduction in capital to Capmark Financial Group
Inc. without the prior written consent or non-objection of the FDIC and the
UDFI.

The Company expects to generate sufficient liquidity to meet its needs for
cash in its Non-Capmark Bank operations over the next 12 months, including
paying its operating expenses. The Company also expects that Capmark Bank has
sufficient liquidity to meet its needs for cash for the next 12 months,
including paying its operating expenses and interest and principal due on
maturing deposit liabilities and other liabilities. Capmark Bank’s remaining
deposits mature prior to August 31, 2013.

The Company paid a cash distribution of $2.50 per share on June 21, 2013 to
shareholders of record on June 17, 2013. Information with respect to the tax
treatment of the distribution to shareholders can be found on the Company’s
website at www.capmark.com.

The Company will consider making additional distributions to shareholders of
cash in excess of working capital needs and expects to make a distribution in
the third quarter of 2013; however, the specific timing and amount of any
distribution have not been determined.

Capmark Bank distributed $157.1 million, $4.9 million and $34.7 million in
cash to Capmark Financial Group Inc. in February, May and August 2013,
respectively.

Other

Pursuant to the Company’s Third Amended Joint Plan of Capmark Financial Group
Inc. and certain of its subsidiaries and affiliates (the “Plan”), on the
effective date of the Plan the Company established a reserve for disputed
general unsecured claims (the “GUC Reserve”) which consisted of: (i) $39.0
million of cash, (ii) $54.1 million of its secured notes, and (iii) 5.5
million shares of the Company’s common stock.

Pursuant to the Plan, semi-annual supplemental distributions from the GUC
Reserve have been made since the Plan’s effective date. In July and August
2013, as part of the supplemental distribution required under the Plan,
approximately $56 million in cash and 1.8 million shares of the Company’s
common stock from the GUC Reserve became available for distribution to the
holders of allowed general unsecured claims in accordance with the Plan. As of
the date of this report, the GUC Reserve consisted of approximately $71
million of cash and 1.9 million shares of the Company’s common stock, net of
any amounts withheld for expected tax payments.

Supplemental Financial Information

The Company’s Quarterly Report as of and for the three and six months ended
June 30, 2013 and 2012 and related supplemental financial information may be
found on the Company’s website (www.capmark.com) under the heading “Financial
Reporting.”

Investor Conference Call

The Company will hold a conference call for investors to be broadcast live
over the Internet on August 13, 2013 at 2:30 p.m. Eastern Time regarding the
topics addressed in this news release and the Quarterly Report as of and for
the three and six months ended June 30, 2013 and 2012 and related supplemental
financial information. To listen to the conference call, please go to the
Company’s website (www.capmark.com) under the heading “Investor Relations” at
least fifteen minutes prior to the scheduled start time to register and
download and install any necessary audio software. For those who are unable to
listen to the live broadcast, an archived replay will be available on the
website for a period of time. Investors who have questions for the Company’s
management can participate in the conference call by dialing the following:

  *Toll free number: (877) 254-2825
  *Conference ID#: 31040544

Forward-Looking Statements

Certain statements in this release may constitute forward-looking statements.
These statements are based on management’s current expectations and beliefs
but are subject to a number of factors and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. Such forward-looking statements are made only as
of the date of this release. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the
Company’s expectations with regard thereto or changes in events, conditions,
or circumstances on which any such statement is based.

About Capmark®:

Capmark is a real estate finance company focused on the management of its
commercial real estate-related assets and businesses with a view to maximizing
their value. Capmark is headquartered in Horsham, Pennsylvania and operates
principally in North America. For more information, visit www.capmark.com


CAPMARK FINANCIAL GROUPINC.
Consolidated Balance Sheet (unaudited)
(in thousands, except share amounts)

                                            June 30, 2013  December 31, 2012
Assets
Cash and cash equivalents                    $  790,720      $    1,478,882
Restricted cash (1)                             62,017            75,219
Accounts and other receivables (1)              66,221            51,496
Investment securities available for sale        12,371            4,611
Loans held for sale (1)                         314,692           591,814
Real estate investments (1)                     27,706            154,112
Equity investments                              200,897           248,350
Other assets (1)                                12,380            13,048
Assets of discontinued operations (1)          153,506          253,518
Total assets                                 $  1,640,510    $    2,871,050
Liabilities and Equity
Liabilities:
Deposit liabilities                             579,552           1,018,601
Other borrowings (1)                            164,605           222,062
Other liabilities (1)                           98,171            127,457
Liabilities of discontinued operations (1)     79,204           114,719
Total liabilities                              921,532          1,482,839
Commitments and Contingent Liabilities
Equity:
Common stock, $.001 par value; shares
authorized — 110,000,000; shares issued         100               100
and outstanding — 100,242,722 at June 30,
2013 and December 31, 2012
Capital paid in excess of par value             540,036           1,240,834
Retained earnings                               135,514           90,313
Accumulated other comprehensive income         2,134            (4,885)
(loss), net of tax
Total Capmark Financial Group Inc.              677,784           1,326,362
stockholders’ equity
Noncontrolling interests                       41,194           61,849
Total equity                                   718,978          1,388,211
Total liabilities and equity                 $  1,640,510    $    2,871,050
                                                             

_____________________
(1) The following table presents assets of consolidated variable interest
entities (“VIEs”) included in each balance sheet line item that can be used
only to settle the obligations of the consolidated VIE and liabilities of the
consolidated VIE included in each balance sheet line item for which creditors
or other interest holders do not have recourse to the general credit of
Capmark Financial Group Inc. and its subsidiaries.


                                                              
                June 30,    December                       June 30,   December
                            31,                                       31,
                2013        2012                           2013       2012
Assets                                      Liabilities
Restricted      $ 38,168    $ 49,663        Other          $ 4,827    $ 4,903
cash                                        borrowings
Accounts and                                Other
other             196         1,055         liabilities      1,314      2,011
receivables
                                            Liabilities
Loans held        30,558      181,794       of              8,217     13,580
for sale                                    discontinued
                                            operations
Real estate       20,324      22,225        Total          $ 14,358   $ 20,494
investments                                 liabilities
Other assets      2,053       1,482
Assets of
discontinued     49,353     65,606
operations
Total assets    $ 140,652   $ 321,825
                                                                      


CAPMARK FINANCIAL GROUPINC.
Consolidated Statement of Comprehensive Income (unaudited)
(in thousands, except per share data)

                              Three months ended     Six months ended
                               June 30,   June 30,    June 30,    June 30,
                               2013        2012        2013         2012
Net Interest Income
Interest income                $ 6,139     $ 32,583    $ 18,463     $ 70,856
Interest expense                1,703      19,669     3,726       39,669
Net interest income             4,436      12,914     14,737      31,187
Noninterest Income
Net gains on loans               8,364       116,579     19,196       137,860
Net gains (losses) on            47,585      (1,765)     48,385       (4,564)
investments and real estate
Other (losses) gains, net        (518)       5,033       (2,007)      (2,785)
Equity in income (loss) of
joint ventures and               3,698       (3,190)     4,163        441
partnerships
Fee revenue                      8           1,055       141          2,932
Net real estate investment      1,312      489        858         2,533
and other income
Total noninterest income        60,449     118,201    70,736      136,417
Net revenue                     64,885     131,115    85,473      167,604
Noninterest Expense
Compensation and benefits        6,598       15,199      15,358       29,977
Professional fees                5,888       8,698       11,558       14,546
Occupancy and equipment          540         980         1,198        2,393
Other expenses                  459        5,186      4,309       12,707
Total noninterest expense       13,485     30,063     32,423      59,623
Income from continuing
operations before income tax     51,400      101,052     53,050       107,981
provision
Income tax provision            91         (845)      250         (1,189)
(benefit)
Income from continuing
operations after income tax      51,309      101,897     52,800       109,170
provision
Loss from discontinued          (5,230)    (2,433)    (13,403)    (13,652)
operations, net of tax
Net income                       46,079      99,464      39,397       95,518
Plus: Net loss attributable     911        11,296     5,804       38,243
to noncontrolling interests
Net income attributable to     $ 46,990    $ 110,760   $ 45,201     $ 133,761
Capmark Financial Group Inc.
Other comprehensive income
(loss)
Net change in unrealized
gains and losses on              (5,200)     (1,265)     8,110        (4,386)
investment securities
Net foreign currency            (159)      2,775      (1,091)     2,564
translation
Other comprehensive income      (5,359)    1,510      7,019       (1,822)
(loss)
Comprehensive income
attributable to Capmark        $ 41,631    $ 112,270   $ 52,220     $ 131,939
Financial Group Inc.
Basic net income per share     $ 0.52      $ 1.14      $ 0.59       $ 1.48
from continuing operations
Diluted net income per share     0.52        1.13        0.59         1.48
from continuing operations
Basic and diluted net income
per share attributable to       0.47       1.11       0.45        1.34
Capmark Financial Group Inc.
Basic weighted average           99,728      99,594      99,728       99,594
shares outstanding
Diluted weighted average         99,756      99,762      99,745       99,734
shares outstanding
                                                                    

                                                              
CAPMARK FINANCIAL GROUPINC.
Consolidated Statement of Changes in Stockholders’ Equity (unaudited)
(in thousands, except number of shares)
                                                                 
                                                 Six Months      Year ended
                                                 Ended           December 31,
                                                 June 30, 2013   2012
Common Stock
Number of shares outstanding at beginning of       100,242,722     100,052,475
period
Additional shares issued                           —               243,767
Treasury shares retired                           —              (53,520)
Number of shares outstanding at end of period     100,242,722    100,242,722
Common Stock
Balance at beginning of period                   $ 100           $ 100
Additional shares issued                          —              —
Balance at end of period                          100            100
Capital Paid in Excess of Par Value
Balance at beginning of period                     1,240,834       2,692,602
Additional shares issued                           —               —
Shareholder distributions                          (701,699)       (1,454,296)
Treasury shares retired                            —               (648)
Stock-based compensation                          901            3,176
Balance at end of period                          540,036        1,240,834
Retained Earnings (Accumulated Deficit)
Balance at beginning of period                     90,313          (31,651)
Net income attributable to Capmark Financial      45,201         121,964
Group Inc.
Balance at end of period                          135,514        90,313
Accumulated Other Comprehensive Income (Loss),
net of tax
Balance at beginning of period                     (4,885)         (1,617)
Other comprehensive income (loss)                 7,019          (3,268)
Balance at end of period                          2,134          (4,885)
Total Capmark Financial Group Inc.                677,784        1,326,362
Stockholders’ Equity
Noncontrolling Interests
Balance at beginning of period                     61,849          178,960
Net loss attributable to noncontrolling            (5,804)         (52,288)
interests
Other comprehensive income (loss) attributable     —               —
to noncontrolling interests
Other (includes impact of sale of discontinued    (14,851)       (64,823)
operations assets)
Balance at end of period                          41,194         61,849
Total Equity                                     $ 718,978       $ 1,388,211
                                                                   


CAPMARK FINANCIAL GROUPINC.
Consolidated Statement of Cash Flows (unaudited)
(in thousands)

                                          Six months ended  Six months ended
                                           June 30, 2013      June 30, 2012
Net Cash Provided By Operating             $   220,709        $   1,981,255
Activities of Continuing Operations
Investing Activities of Continuing
Operations
Net decrease in restricted cash                13,202             64,474
Proceeds from sales of investment
securities classified as available for         14,429             4,058
sale
Repayments of investment securities            —                  569,629
classified as available for sale
Proceeds from sales of real estate             160,602            152,033
investments
Proceeds from sales of/capital                 51,604             11,841
distributions from equity investments
Other investing activities, net               1                 (677)
Net cash provided by investing                239,838           801,358
activities of continuing operations
Financing Activities of Continuing
Operations
Repayments of debt                             —                  (530,169)
Repayments of other borrowings                 (57,457)           (405,969)
Repayment of deposit liabilities               (423,396)          (1,477,872)
Distribution to shareholders                   (701,699)          —
Other financing activities, net               (9,624)           —
Net cash used in financing activities of      (1,192,176)       (2,414,010)
continuing operations
Effect of Foreign Exchange Rates on Cash      (739)             (579)
Discontinued Operations
Net cash used in provided by operating         (10,530)           (11,080)
activities of discontinued operations
Net cash (used in) provided by investing       (4,140)            4,561
activities of discontinued operations
Net cash used in financing activities of      (22,340)          (25,833)
discontinued operations
Net cash used in discontinued operations       (37,010)           (32,352)
Net (Decrease) Increase in Cash and Cash       (769,378)          335,672
Equivalents
Cash and Cash Equivalents, Beginning of       1,568,920         2,737,811
Period(1)(2)
Cash and Cash Equivalents, End of          $   799,542        $   3,073,483
Period(3)(4)
                                                              
Supplemental Disclosures of Cash Flow
Information:
Income taxes refunded, net                 $   1,238          $   9,247
Interest paid                                  18,804             95,535
                                                                  

_____________________
Notes:
       Cash and cash equivalents exclude restricted cash of $150.4 million
(1)   from continuing and discontinued operations and include non-restricted
       cash of discontinued operations of $90.0 million, respectively as of
       December 31, 2012.
       
       Cash and cash equivalents exclude restricted cash of $232.7 million
(2)    from continuing and discontinued operations and include non-restricted
       cash of discontinued operations of $4.4 million, respectively as of
       December 31, 2011.
       
       Cash and cash equivalents exclude restricted cash of $140.7 million
(3)    from continuing and discontinued operations and include non-restricted
       cash of discontinued operations of $8.8 million, respectively as of
       June 30, 2013.
       
       Cash and cash equivalents exclude restricted cash of $142.1 million
(4)    from continuing and discontinued operations and include non-restricted
       cash of discontinued operations of $93.8 million, respectively as of
       June 30, 2012.
       

Contact:

Capmark Financial Group Inc.
Thomas L. Fairfield, 215-328-1555
 
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