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

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

Business Wire

HORSHAM, Pa. -- November 7, 2013

Capmark Financial Group Inc. (the “Company”) today issued its Quarterly Report
as of and for the three and nine months ended September 30, 2013. The Company
reported consolidated net income of $8.8 million and $54.0 million for the
three and nine months ended September 30, 2013, respectively. The Company also
reported consolidated total assets of $0.9 billion, consolidated total
liabilities of $0.3 billion, and stockholders’ equity of $0.5 billion as of
September 30, 2013.

Highlights for the third quarter were:

  *Total cash received from asset collections and revenue was $74 million.
    Included in the total cash received, the Company realized total proceeds
    of $54 million from the monetization of loan and REO assets and investment
    securities and $16 million of distributions from real estate equity and
    debt funds.
  *The Company achieved consolidated income of $9 million primarily as a
    result of net gains on investments and real estate of $12 million and
    interest income of $5 million partially offset by $10 million of
    noninterest expense. The net gains included a $12 million realized gain on
    interests in a collateralized debt obligation that were sold.
  *The Company paid a cash distribution of $1.65 per share on September 27,
    2013 to shareholders of record on September 23, 2013, bringing aggregate
    distributions to shareholders since emergence from bankruptcy to $23.15
    per share.
  *The Company continued to reduce its staffing levels commensurate with the
    reduction in assets, reducing its staff from 90 employees at year end to
    49 at September 30, 2013.
  *On September 25, 2013 the FDIC issued an order determining that Capmark
    Bank is not engaged in the business of receiving deposits and therefore
    its deposit insurance will terminate on December 31, 2013.

Consolidated Balance Sheet

The Company had consolidated total assets of $0.9 billion and $2.9 billion as
of September 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 $0.1 billion and $1.4 billion were held at
Capmark Bank and $149.4 million and $253.5 million were associated with
discontinued operations as of September 30, 2013 and December 31, 2012,
respectively.

The Company had consolidated total liabilities of $0.3 billion and $1.5
billion as of September 30, 2013 and December 31, 2012, respectively. Total
liabilities of $0.3 billion and $1.5 billion included secured and other
borrowings of $173.1 million and $219.8 million as of September 30, 3013 and
December 31, 2012, respectively, which are related to assets that are no
longer owned by the Company but recognized on the Company’s balance sheet as
financings as result of accounting for certain transfers of financial assets.
Capmark Bank had liabilities of $6.2 million and $1.0 billion and liabilities
associated with discontinued operations were of $79.1 million and $114.7
million as of September 30, 2013 and December 31, 2012, respectively. Capmark
Bank had no Federal Deposit Insurance Corporation (“FDIC”)-insured deposit
liabilities as of September 30, 2013. As of December 31, 2012, Capmark Bank’s
liabilities were primarily comprised of these deposit liabilities.

Total stockholders’ equity was $0.5 billion as of September 30, 2013 as
compared to $1.3 billion as of December 31, 2012. The reduction was primarily
due to the $867.1 million of cash distributions to the Company’s common
stockholders in the nine months ended September 30, 2013.

Consolidated Results of Operations

The Company had income from continuing operations before income taxes of $9.5
million in the three months ended September 30, 2013, primarily due to $14.3
million of noninterest income and $5.3 million of interest income on loans
held for sale and investment securities available for sale partially offset by
$9.6 million of noninterest expense. Noninterest income of $14.3 million
primarily included $11.9 million of realized gains on the sale of interests in
a collateralized debt obligation and $1.6 million of income and unrealized
gains on equity investments. Noninterest expense of $9.6 million included $5.9
million of compensation and benefits costs and $4.4 million of professional
fees. Interest expense of $0.6 million primarily included $2.1 million of
contractual interest expense from deposit liabilities at Capmark Bank offset
by $1.7 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 $62.6
million in the nine months ended September 30, 2013, primarily due to $85.1
million of noninterest income and $23.8 million of interest income partially
offset by $42.0 million of noninterest expense and $4.3 million of interest
expense. The $85.1 million of noninterest income primarily included $36.8
million of realized gains on the dispositions of real estate investments,
$26.1 million of realized gain on the redemption and sale of interests in
collateralized debt obligations, $15.3 million of realized gains on full or
partial dispositions of loans held for sale and $5.8 million due primarily to
unrealized gains on equity investments. Interest income in the nine months
ended September 30, 2013 included the recognition of $5.5 million of
previously deferred interest on loans held for sale. The $42.0 million of
noninterest expense included $21.2 million of compensation and benefits costs
and $16.0 million of professional fees. The $4.3 million of interest expense
primarily included $20.9 million of contractual interest expense from deposit
liabilities at Capmark Bank offset by $17.4 million from the accretion of the
fresh start accounting premium for the deposit liabilities.

Liquidity

As of September 30, 2013, the Company’s continuing operations had
$152.7million in total cash and cash equivalents (including restricted cash),
of which $64.1 million was held by Capmark Bank and $88.6 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   September 30, 2013   December 31, 2012
Cash
Non-Capmark Bank:
Cash and cash equivalents               $      34,759        $    182,726
Restricted cash                                53,842             75,219
Capmark Bank cash and cash                    64,125            1,296,156
equivalents
Total cash, cash equivalents and
restricted cash attributable to         $      152,726       $    1,554,101
continuing operations
                                                             

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. The Company
expects to generate sufficient liquidity to meet its needs for cash in its
operations over the next 12 months, including paying its operating expenses.

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

                                                          
Restricted Cash                         September 30, 2013   December 31, 2012
Cash from consolidated variable         $      37,824        $      49,663
interest entities (“VIEs”)
Distribution escrow                            11,913               7,462
Bankruptcy disputed administrative,
priority and convenience class claims          2,241                8,865
escrow
Other                                         1,864               9,229
Restricted cash from continuing         $      53,842        $      75,219
operations
                                                             

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. The cash release was due to the resolution
of administrative and priority claims.

The Company paid a cash distribution of $1.65 per share on September 27, 2013
to shareholders of record on September 23, 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 fourth 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, $34.7 million and $36.8
million in cash to CFGI in February, May, August and November 2013,
respectively.

Supplemental Financial Information

The Company’s Quarterly Report as of and for the three and nine months ended
September 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 November 12, 2013 at 2:00 p.m. Eastern Time regarding the
topics addressed in this news release and the Quarterly Report as of and for
the three and nine months ended September 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#: 97811259

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 GROUP INC.
Consolidated Balance Sheet (unaudited)
(in thousands, except share amounts)
                                                                  
                                                  September 30,   December 31,
                                                  2013            2012
Assets
Cash and cash equivalents                         $   98,884      $  1,478,882
Restricted cash (1)                                   53,842         75,219
Accounts and other receivables (1)                    64,300         51,496
Investment securities available for sale              14,033         4,611
Loans held for sale (1)                               303,940        591,814
Real estate investments (1)                           16,289         154,112
Equity investments                                    180,998        248,350
Other assets (1)                                      8,100          13,048
Assets of discontinued operations (1)                149,420       253,518
Total assets                                      $   889,806     $  2,871,050
Liabilities and Equity
Liabilities:
Secured and other borrowings (1)                      175,366        222,062
Other liabilities (1)                                 72,497         127,457
Deposit liabilities                                   —              1,018,601
Liabilities of discontinued operations (1)           79,070        114,719
Total liabilities                                    326,933       1,482,839
Commitments and Contingent Liabilities
Equity:
Common stock, $.001 par value; shares
authorized — 110,000,000; shares issued and           100            100
outstanding —100,242,722 at September 30, 2013
and December 31, 2012
Capital paid in excess of par value                   375,085        1,240,834
Retained earnings                                     144,329        90,313
Accumulated other comprehensive income (loss),       5,052         (4,885)
net of tax
Total Capmark Financial Group Inc.                    524,566        1,326,362
stockholders’ equity
Noncontrolling interests                             38,307        61,849
Total equity                                         562,873       1,388,211
Total liabilities and equity                      $   889,806     $  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.


                                                                 
               September   December                             September   December
               30,         31,                                  30,         31,
               2013        2012                                 2013        2012
Assets                                           Liabilities
Restricted                                       Secured and
cash           $ 37,824    $ 49,663              other          $  4,789    $ 4,903
                                                 borrowings
Accounts and                                     Other
other            98          1,055               liabilities       196        2,011
receivables
                                                 Liabilities
Loans held       30,914      181,794             of               7,894     13,580
for sale                                         discontinued
                                                 operations
Real estate      11,400      22,225              Total          $  12,879   $ 20,494
investments                                      liabilities
Other assets     184         1,482
Assets of
discontinued    46,186     65,606
operations
Total assets   $ 126,606   $ 321,825
                                                                            

                                                    
CAPMARK FINANCIAL GROUP INC.
Consolidated Statement of Comprehensive Income (unaudited)
(in thousands, except per share data)
                                                       
                              Three months ended       Nine months ended
                              September  September    September   September
                              30, 2013    30, 2012     30, 2013     30, 2012
Net Interest Income
Interest income               $ 5,348     $ 22,921     $ 23,811     $ 93,777
Interest expense               576        6,656       4,302       46,325
Net interest income            4,772      16,265      19,509      47,452
Noninterest Income
Net gains on loans              157         3,827        19,353       141,687
Net gains (losses) on           12,364      (3,703)      60,749       (8,267)
investments and real estate
Other gains (losses), net       197         (8,625)      (1,810)      (11,410)
Equity in income of joint       1,641       10,335       5,804        10,776
ventures and partnerships
Fee revenue                     52          359          193          3,291
Net real estate investment     (63)       (4,084)     795         (1,551)
and other income
Total noninterest income       14,348     (1,891)     85,084      134,526
Net revenue                    19,120     14,374      104,593     181,978
Noninterest Expense
Compensation and benefits       5,850       17,168       21,208       47,145
Professional fees               4,432       8,370        15,990       22,916
Occupancy and equipment         503         5,492        1,701        7,885
Other expenses                 (1,205)    12,312      3,104       25,019
Total noninterest expense      9,580      43,342      42,003      102,965
Income (loss) from
continuing operations           9,540       (28,968)     62,590       79,013
before income tax provision
Income tax provision           115        (819)       365         (2,008)
(benefit)
Income (loss) from
continuing operations after     9,425       (28,149)     62,225       81,021
income tax provision
Loss from discontinued         (4,585)    (13,776)    (17,988)    (27,428)
operations, net of tax
Net income (loss)               4,840       (41,925)     44,237       53,593
Plus: Net loss attributable    3,975      10,999      9,779       49,242
to noncontrolling interests
Net income (loss)
attributable to Capmark       $ 8,815     $ (30,926)   $ 54,016     $ 102,835
Financial Group Inc.
Other comprehensive income
(loss)
Net change in unrealized
gains and losses on             2,442       (758)        10,552       (5,068)
investment securities
Net foreign currency           476        (682)       (615)       1,806
translation
Other comprehensive income     2,918      (1,440)     9,937       (3,262)
(loss)
Comprehensive income (loss)
attributable to Capmark       $ 11,733    $ (32,366)   $ 63,953     $ 99,573
Financial Group Inc.
Basic and diluted net
income (loss) per share       $ 0.13      $ (0.17)     $ 0.72       $ 1.31
from continuing operations
Basic and diluted net
income (loss) per share       $ 0.09      $ (0.31)     $ 0.54       $ 1.03
attributable to Capmark
Financial Group Inc.
Basic weighted average          99,728      99,594       99,728       99,594
shares outstanding
Diluted weighted average        99,809      99,594       99,766       99,743
shares outstanding
                                                                    

                                                          
CAPMARK FINANCIAL GROUP INC.
Consolidated Statement of Changes in Stockholders’ Equity (unaudited)
(in thousands, except number of shares)
                                                             
                                        Nine Months Ended    Year ended
                                        September 30, 2013   December 31, 2012
Common Stock
Number of shares outstanding at              100,242,722         100,052,475
beginning of period
Additional shares issued                     —                   243,767
Treasury shares retired                     —                  (53,520)
Number of shares outstanding at end         100,242,722        100,242,722
of period
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                    (867,100)           (1,454,296)
Treasury shares retired                      —                   (648)
Stock-based compensation                    1,351              3,176
Balance at end of period                    375,085            1,240,834
Retained Earnings (Accumulated
Deficit)
Balance at beginning of period               90,313              (31,651)
Net income attributable to Capmark          54,016             121,964
Financial Group Inc.
Balance at end of period                    144,329            90,313
Accumulated Other Comprehensive
Income (Loss), net of tax
Balance at beginning of period               (4,885)             (1,617)
Other comprehensive income (loss)           9,937              (3,268)
Balance at end of period                    5,052              (4,885)
Total Capmark Financial Group Inc.          524,566            1,326,362
Stockholders’ Equity
Noncontrolling Interests
Balance at beginning of period               61,849              178,960
Net loss attributable to                     (9,779)             (52,288)
noncontrolling interests
Other comprehensive income (loss)
attributable to noncontrolling               —                   —
interests
Other (includes impact of sale of           (13,763)           (64,823)
discontinued operations assets)
Balance at end of period                    38,307             61,849
Total Equity                            $    562,873         $   1,388,211
                                                                 

                                                         
CAPMARK FINANCIAL GROUP INC.
Consolidated Statement of Cash Flows (unaudited)
(in thousands)
                                                            
                                       Nine months ended    Nine months ended
                                       September 30, 2013   September 30, 2012
Net Cash Provided By Operating         $    207,051         $    2,391,482
Activities of Continuing Operations
Investing Activities of Continuing
Operations
Net decrease in restricted cash             21,376               81,977
Proceeds from sales of investment
securities classified as available          27,143               7,183
for sale
Repayments of investment securities         —                    570,336
classified as available for sale
Proceeds from sales of real estate          172,477              208,148
investments
Proceeds from sales of/capital
distributions from equity                   69,604               52,298
investments
Other investing activities, net            1,665               (2,159)
Net cash provided by investing             292,265             917,783
activities of continuing operations
Financing Activities of Continuing
Operations
Repayments of debt                          —                    (738,958)
Repayments of secured and other             (46,647)             (392,744)
borrowings
Transfer of deposit liabilities             —                    (874,026)
Repayment of deposit liabilities            (1,001,206)          (1,774,907)
Distribution to shareholders                (867,100)            —
Other financing activities, net            (9,682)             —
Net cash used in financing                 (1,924,635)         (3,780,635)
activities of continuing operations
Effect of Foreign Exchange Rates on        (956)               (304)
Cash
Discontinued Operations
Net cash used in operating
activities of discontinued                  (7,993)              (5,724)
operations
Net cash (used in) provided by
investing activities of discontinued        (5,756)              131,464
operations
Net cash used in financing
activities of discontinued                 (22,340)            (43,252)
operations
Net cash (used in) provided by              (36,089)             82,488
discontinued operations
Net Decrease in Cash and Cash               (1,462,364)          (389,186)
Equivalents
Cash and Cash Equivalents, Beginning       1,568,920           2,737,811
of Period(1)(2)
Cash and Cash Equivalents, End of      $    106,556         $    2,348,625
Period(3)(4)
                                                            
Supplemental Disclosures of Cash
Flow Information:
Income taxes refunded, net             $    1,539           $    11,020
Interest paid                               34,849               134,725
                                                                 

_____________________

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 $134.2 million
(3)      from continuing and discontinued operations and include
         non-restricted cash of discontinued operations of $7.7 million,
         respectively as of September 30, 2013.
         
         Cash and cash equivalents exclude restricted cash of $124.1 million
(4)      from continuing and discontinued operations and include
         non-restricted cash of discontinued operations of $100.1 million,
         respectively as of September 30, 2012.
         

Contact:

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