Net income was $6.4 million, or $0.12 per diluted share in the quarter and $14.2 million, or $0.27 per diluted share for 2011

New funded loan volume exceeded $250 million in the quarter and $850 million for the year, driving annual net loan growth of 8%

Weighted average yield on new loans was 7.5% in the quarter

Net interest margin increased to 4.77% in the quarter from 3.98%, or 4.61% adjusted for the impact of early debt retirement, in the third quarter

Credit costs were consistent with the prior quarter at $4.7 million and the NPA rate declined to 5.6% from 5.8% of loans

Book value per share increased $0.15 to $11.42

Total funded loan origination volume was $257 million in the fourth quarter and $858 million for the full year compared to $190 million in the third quarter and $572 million in 2010.

Net loan growth was 3% in the fourth quarter and 8% for the full year as the owned loan portfolio increased to approximately $1.9 billion as of December 31, 2011 from $1.8 billion as of September 30, 2011 and $1.7 billion as of December 31, 2010.

Asset-based lending and equipment finance businesses originated $29 million in the fourth quarter, or 15% of new loan volume retained on the balance sheet.

The owned loan portfolio remained balanced across industry sectors and highly diversified by issuer. As of December 31, 2011, no outstanding borrowings by a single obligor represented more than 1.5% of total loans outstanding, and the ten largest obligors comprised approximately 10% of the loan portfolio.

The managed loan portfolio increased 3% in the fourth quarter and 9% for the full year 2011 to $2.4 billion as of December 31, 2011 reflecting the net impact of new loan origination, which was partially offset by prepayments and scheduled amortization of existing loans.

Assets managed for third party institutional investors increased 4% in the fourth quarter and 15% for the year to approximately $518 million at December 31, 2011 compared to $500 million at September 30, 2011 and $452 million at December 31, 2010.

Net interest income before provision for credit losses increased to $23.5 million for the fourth quarter of 2011 compared to $18.8 million for the third quarter of 2011. Approximately $3 million of the improvement was due to the impact of the early retirement of debt in the third quarter and the balance was attributable to growth in interest income driven by net loan growth and an increase in the yield on the loan portfolio.

Net interest margin widened to 4.77% for the fourth quarter of 2011 compared to 3.98% for the third quarter of 2011. The net interest margin for the third quarter of 2011 reflected the accelerated amortization of deferred financing fees and unamortized discount related to the early retirement of bonds issued by the 2009-1 CLO. The net interest margin for the third quarter of 2011 was 4.61% before the impact of the early retirement of CLO bonds.

Adjusting for the impact of non-performing loans, the loan portfolio yield would have been 52 bps higher and net interest margin would have been 5.29%.

Non-interest income was $1.9 million for the fourth quarter of 2011 compared to $3.4 million for the third quarter of 2011.

Non-interest income in the fourth quarter of 2011 consisted primarily of a $0.6 million gain on the repurchase of debt, $0.7 million of asset management income, and $0.4 million of unused fees on revolving credit commitments, which was partially offset by a $1.5 million loss on certain equity interests retained in connection with various workouts.

Operating expenses decreased to $11.1 million in the fourth quarter of 2011 compared to $11.9 million in the third quarter of 2011 due primarily to lower professional fees and loan workout costs.

The Company had 88 full-time employees as of December 31, 2011.

Deferred income taxes increased modestly to $47.9 million as of December 31, 2011 from $47.1 million as of September 30, 2011. The increase was driven primarily by differences in the timing of when credit costs and equity compensation expenses are recognized according to GAAP and when they are deductible for income tax.

Approximately $26.0 million and $13.0 million of the deferred tax asset as of December 31, 2011 were related to our allowance for credit losses and equity compensation, respectively.

Credit performance continued to normalize as key credit metrics improved in the fourth quarter of 2011.

Total credit costs (including provision for credit losses and losses on interests retained in connection with workouts of impaired loans) in the fourth quarter were consistent with the prior quarter at $4.7 million.

Provision for credit losses to establish additional specific reserves were approximately $0.4 million in the fourth quarter of 2011, down significantly from $6.3 million in the third quarter of 2011.

Total provision expense was $4.3 million in the quarter compared to $4.6 million in the third quarter of 2011.

The allowance for credit losses decreased to $64.1 million, or 3.52% of loans and 63% of NPLs, at December 31, 2011, compared to $73.0 million, or 4.10% of loans, at September 30, 2011.

Two loans with an aggregate balance of $23.9 million as of December 31, 2011 were placed on non-accrual status in the fourth quarter of 2011.

Non-performing assets decreased by $37.7 million, or 27%, in 2011 to $102.2 million as of December 31, 2011 and the NPA rate declined from 8.17% to 5.61%.

Non-performing assets decreased 2% from the third quarter of 2011. At December 31, 2011, loans with an aggregate outstanding balance of $102.2 million, net of charge-offs, were on non-accrual status compared to loans with an aggregate outstanding balance of $103.8 million, net of charge-offs, at September 30, 2011. Non-performing assets, net of charge-offs, specific reserves and other adjustments were $102.2 million, or 42.8% of their aggregate face amount, as of December 31, 2011.

Non-accrual loans with an outstanding balance of $88.8 million and an additional $8.4 million of loans as of December 31, 2011 were also delinquent.

Net charge-offs were $13.2 million, or 2.89% of loans on an annualized basis, in the fourth quarter of 2011 compared to $9.4 million, or 2.10% of loans on an annualized basis, in the third quarter of 2011.

Increased the size of a warehouse credit facility with Wells Fargo from $125 million to $150 million.

Increased available liquidity by $25 million through an amendment of a credit facility with Fortress Credit Corp. effective January 27, 2012, increasing the size from $100 million to $125 million and extending the effective maturity by two years.

Extended the maturity of a seasoning warehouse credit facility with NATIXIS to May 19, 2012.

Maintained balance sheet leverage at 2.4x as of December 31, 2011.

Maintained ample liquidity with total cash and equivalents as of December 31, 2011 of $102.3 million, of which $18.5 million was unrestricted. Unrestricted cash decreased from approximately $27.6 million at September 30, 2011 and restricted cash increased from approximately $74.6 million to $83.8 million.

Book value per share was $11.42 at the end of the fourth quarter 2011 up from $11.27 at the end of the prior quarter primarily due to net income for the quarter and the amortization of equity compensation into stockholders’ equity.

Book value per share increased $0.46 in 2011.

Average diluted shares outstanding were 52.2 million shares for the quarter down from 52.6 million for prior quarter. Total outstanding shares at December 31, 2011 were 49.3 million compared to 49.5 million at September 30, 2011.

($ in thousands)

Assets:

Cash and cash equivalents

Restricted cash

Investments in debt securities, available-for-sale

Loans held-for-sale, net

Loans and leases, net

Deferred financing costs, net

Interest receivable

Property and equipment, net

Deferred income taxes, net

Income tax receivable

Other assets

Total assets

Liabilities:

Credit facilities

Term debt

Repurchase agreements

Accrued interest payable

Accounts payable

Other liabilities

Total liabilities

Total stockholders’ equity

Total liabilities and stockholders’ equity

($ in thousands, except per share amounts)

Net interest income:

Interest income

Interest expense

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Non-interest income:

Fee income

Asset management income

Gain (loss) on derivatives

Gain (loss) on sale of loans

Gain on acquisition

Other income (loss)

Total non-interest income

Operating expenses:

Compensation and benefits

Occupancy and equipment

General and administrative expenses

Total operating expenses

Income before income taxes

Income tax expense

Net income before noncontrolling interest

Net income attributable to noncontrolling interest

Net income

After tax adjustments to net income:

IPO related compensation and benefits expense ⁽¹⁾

Adjusted net income

Net income per share:

Basic

Diluted

Weighted average shares outstanding:

Basic

Diluted

Adjusted net income per share:

Basic

Diluted

Adjusted weighted average shares outstanding:

Basic

Diluted

($ in thousands, except per share amounts)

Net interest income:

Interest income

Interest expense

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Non-interest income:

Fee income

Asset management income

Gain on derivatives

Gain (loss) on sale of loans

Gain on acquisition

Other income

Total non-interest income

Operating expenses:

Compensation and benefits

Occupancy and equipment

General and administrative expenses

Total operating expenses

Income before income taxes

Income tax expense

Net income before noncontrolling interest

Net income attributable to noncontrolling interest

Net income

After tax adjustments to net income:

IPO related compensation and benefits expense ⁽¹⁾

Adjusted net income

Net income per share:

Basic

Diluted

Weighted average shares outstanding:

Basic

Diluted

Adjusted net income per share:

Basic

Diluted

Adjusted weighted average shares outstanding:

Basic

Diluted

($ in thousands)

Performance Ratios:

Return on average assets

Return on average equity

Net interest margin, before provision

Efficiency ratio

Portfolio yield

Credit Quality Ratios:

Delinquent loan rate (at period end)

Delinquent loan rate for accruing loans 60 days or more past due (at period end)

Non-accrual loan rate (at period end)

Non-performing asset rate (at period end)

Annualized net charge off rate (end of period loans)

Annualized net charge off rate (average period loans)

Allowance for credit losses ratio (at period end)

Capital and Leverage Ratios:

Equity to assets

Debt to equity

Book value per share

Average Balances:

Loans and other debt products, gross

Interest earning assets

Total assets

Interest bearing liabilities

Equity

Allowance for credit loss activity:

Balance as of beginning of period

General provision (credit) for credit losses

Specific provision for credit losses

Net charge offs

Balance as of end of period

Supplemental Data (at period end):

Investments in debt securities, gross

Loans held-for-sale, gross

Loans held-for-investment, gross

Loans and investments in debt securities, gross

Unused lines of credit

Standby letters of credit

Total funding commitments

Loan portfolio

Loans owned by NewStar Credit Opportunities Fund

Managed loan portfolio

Loans held-for-sale, gross

Loans held-for-investment, gross

Total loans, gross

Deferred fees, net

Allowance for loan losses - general

Allowance for loan losses - specific

Total loans, net

($ in thousands)

Performance Ratios:

Return on average assets

Return on average equity

Net interest margin, before provision

Efficiency ratio

Portfolio yield

Credit Quality Ratios:

Annualized net charge off rate (end of period loans)

Annualized net charge off rate (average period loans)

Average Balances:

Loans and other debt products, gross

Interest earning assets

Total assets

Interest bearing liabilities

Equity

Allowance for credit loss activity:

Balance as of beginning of period

General provision (credit) for credit losses

Specific provision for credit losses

Net charge offs

Balance as of end of period

($ in thousands)

Performance Ratios:

Return on average assets

Return on average equity

Efficiency ratio

Consolidated Statement of Operations Adjustments ⁽¹⁾:

Operating expenses

Less: IPO related compensation and benefits expense ⁽²⁾

Adjusted operating expenses

($ in thousands)

Performance Ratios:

Return on average assets

Return on average equity

Efficiency ratio

Consolidated Statement of Operations Adjustments ⁽¹⁾:

Operating expenses

Less: IPO related compensation and benefits expense ⁽²⁾

Adjusted operating expenses

($ in thousands)

Portfolio Data:

First mortgage

Senior secured asset-based

Senior secured cash flow

Other

Total

Leveraged Finance

Real Estate

Business Credit

Total