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

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Arleen Malone
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1 Capmark Financial Group Inc. Issues Quarterly Report as of and for the three and six months ended June 30, 2013 (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, 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, 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, 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, Total stockholders equity was $0.7 billion as of June 30, 2013 as compared to $1.3 billion as of December 31, 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,

2 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 , ,726 Restricted cash... 62,017 75,219 Total cash, cash equivalents and restricted cash attributable to continuing operations... $ 852,737 $ 1,554,101 2

3 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 entities ( VIEs )... $ 38,168 $ 49,663 Bankruptcy disputed administrative, priority and convenience class claims escrow... 8,811 8,865 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, The Company paid a cash distribution of $2.50 per share on June 21, 2013 to shareholders of record on June 17, Information with respect to the tax treatment of the distribution to shareholders can be found on the Company s website at 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. 3

4 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 ( 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 ( 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) Conference ID#: 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. 4

5 About Capmark : Capmark is a real estate finance company focused on the management of its commercial real estaterelated 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 Contact: Thomas L. Fairfield

6 CAPMARK FINANCIAL GROUP INC. Consolidated Balance Sheet (unaudited) (in thousands, except share amounts) December 31, June 30, 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) , ,814 Real estate investments (1)... 27, ,112 Equity investments , ,350 Other assets (1)... 12,380 13,048 Assets of discontinued operations (1) , ,518 Total assets... $ 1,640,510 $ 2,871,050 Liabilities and Equity Liabilities: Deposit liabilities ,552 1,018,601 Other borrowings (1) , ,062 Other liabilities (1)... 98, ,457 Liabilities of discontinued operations (1)... 79, ,719 Total liabilities ,532 1,482,839 Commitments and Contingent Liabilities... Equity: Common stock, $.001 par value; shares authorized 110,000,000; shares issued and outstanding 100,242,722 at June 30, 2013 and December 31, Capital paid in excess of par value ,036 1,240,834 Retained earnings ,514 90,313 Accumulated other comprehensive income (loss), net of tax... 2,134 (4,885) Total Capmark Financial Group Inc. stockholders equity ,784 1,326,362 Noncontrolling interests... 41,194 61,849 Total equity ,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, 2013 December 31, 2012 June 30, 2013 December 31, 2012 Assets Liabilities Restricted cash... $ 38,168 $ 49,663 Other borrowings... $ 4,827 $ 4,903 Accounts and other receivables ,055 Other liabilities... 1,314 2,011 Loans held for sale... 30, ,794 Liabilities of discontinued operations... 8,217 13,580 Real estate investments... 20,324 22,225 Total liabilities... $ 14,358 $ 20,494 Other assets... 2,053 1,482 Assets of discontinued operations... 49,353 65,606 Total assets... $ 140,652 $ 321,825 6

7 CAPMARK FINANCIAL GROUP INC. Consolidated Statement of Comprehensive Income (unaudited) (in thousands, except per share data) Three months ended June 30, June 30, Six months ended June 30, 2013 June 30, 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, ,579 19, ,860 Net gains (losses) on investments and real estate... 47,585 (1,765) 48,385 (4,564) Other (losses) gains, net... (518) 5,033 (2,007) (2,785) Equity in income (loss) of joint ventures and partnerships... 3,698 (3,190) 4, Fee revenue , ,932 Net real estate investment and other income... 1, ,533 Total noninterest income... 60, ,201 70, ,417 Net revenue... 64, ,115 85, ,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 ,198 2,393 Other expenses ,186 4,309 12,707 Total noninterest expense... 13,485 30,063 32,423 59,623 Income from continuing operations before income tax provision.. 51, ,052 53, ,981 Income tax provision (benefit) (845) 250 (1,189) Income from continuing operations after income tax provision... 51, ,897 52, ,170 Loss from discontinued operations, net of tax... (5,230) (2,433) (13,403) (13,652) Net income... 46,079 99,464 39,397 95,518 Plus: Net loss attributable to noncontrolling interests ,296 5,804 38,243 Net income attributable to Capmark Financial Group Inc.... $ 46,990 $ 110,760 $ 45,201 $ 133,761 Other comprehensive income (loss) Net change in unrealized gains and losses on investment securities... (5,200) (1,265) 8,110 (4,386) Net foreign currency translation... (159) 2,775 (1,091) 2,564 Other comprehensive income (loss)... (5,359) 1,510 7,019 (1,822) Comprehensive income attributable to Capmark Financial Group Inc.... $ 41,631 $ 112,270 $ 52,220 $ 131,939 Basic net income per share from continuing operations... $ 0.52 $ 1.14 $ 0.59 $ 1.48 Diluted net income per share from continuing operations Basic and diluted net income per share attributable to Capmark Financial Group Inc Basic weighted average shares outstanding... 99,728 99,594 99,728 99,594 Diluted weighted average shares outstanding... 99,756 99,762 99,745 99,734 7

8 CAPMARK FINANCIAL GROUP INC. Consolidated Statement of Changes in Stockholders Equity (unaudited) (in thousands, except number of shares) Six Months Ended June 30, 2013 Year ended December 31, 2012 Common Stock Number of shares outstanding at beginning of period ,242, ,052,475 Additional shares issued ,767 Treasury shares retired... (53,520) Number of shares outstanding at end of period ,242, ,242,722 Common Stock Balance at beginning of period... $ 100 $ 100 Additional shares issued... Balance at end of period 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 ,176 Balance at end of period ,036 1,240,834 Retained Earnings (Accumulated Deficit) Balance at beginning of period... 90,313 (31,651) Net income attributable to Capmark Financial Group Inc , ,964 Balance at end of period ,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. Stockholders Equity ,784 1,326,362 Noncontrolling Interests Balance at beginning of period... 61, ,960 Net loss attributable to noncontrolling interests... (5,804) (52,288) Other comprehensive income (loss) attributable to noncontrolling interests... Other (includes impact of sale of discontinued operations assets)... (14,851) (64,823) Balance at end of period... 41,194 61,849 Total Equity... $ 718,978 $ 1,388,211 8

9 CAPMARK FINANCIAL GROUP INC. Consolidated Statement of Cash Flows (unaudited) (in thousands) Six months ended June 30, 2012 Six months ended June 30, 2013 Net Cash Provided By Operating Activities of Continuing Operations... $ 220,709 $ 1,981,255 Investing Activities of Continuing Operations Net decrease in restricted cash... 13,202 64,474 Proceeds from sales of investment securities classified as available for sale... 14,429 4,058 Repayments of investment securities classified as available for sale ,629 Proceeds from sales of real estate investments , ,033 Proceeds from sales of/capital distributions from equity investments... 51,604 11,841 Other investing activities, net... 1 (677) Net cash provided by investing activities of continuing operations , ,358 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 continuing operations... (1,192,176) (2,414,010) Effect of Foreign Exchange Rates on Cash... (739) (579) Discontinued Operations Net cash used in provided by operating activities of discontinued operations... (10,530) (11,080) Net cash (used in) provided by investing activities of discontinued operations... (4,140) 4,561 Net cash used in financing activities of discontinued operations... (22,340) (25,833) Net cash used in discontinued operations... (37,010) (32,352) Net (Decrease) Increase in Cash and Cash Equivalents... (769,378) 335,672 Cash and Cash Equivalents, Beginning of Period(1)(2)... 1,568,920 2,737,811 Cash and Cash Equivalents, End of Period(3)(4)... $ 799,542 $ 3,073,483 Supplemental Disclosures of Cash Flow Information: Income taxes refunded, net... $ 1,238 $ 9,247 Interest paid... 18,804 95,535 Notes: (1) Cash and cash equivalents exclude restricted cash of $150.4 million from continuing and discontinued operations and include non-restricted cash of discontinued operations of $90.0 million, respectively as of December 31, (2) Cash and cash equivalents exclude restricted cash of $232.7 million from continuing and discontinued operations and include non-restricted cash of discontinued operations of $4.4 million, respectively as of December 31, (3) Cash and cash equivalents exclude restricted cash of $140.7 million from continuing and discontinued operations and include non-restricted cash of discontinued operations of $8.8 million, respectively as of June 30, (4) Cash and cash equivalents exclude restricted cash of $142.1 million from continuing and discontinued operations and include non-restricted cash of discontinued operations of $93.8 million, respectively as of June 30,

Capmark Financial Group Inc. Report as of and for the three and six months ended June 30, 2014 and 2013

Capmark Financial Group Inc. Report as of and for the three and six months ended June 30, 2014 and 2013 CAPMARK FINANCIAL GROUP INC. 116 Welsh Road Horsham, Pennsylvania 19044 (215) 328-4622 CAPMARK FINANCIAL