CapitalSource

CapitalSource, Inc.
Public
Traded as NYSE: CSE (ceased trading at market close on 7 April 2014 due to PACW merger)
Industry Finance
Founded Chevy Chase, Maryland (2000)
Headquarters Los Angeles, California
Key people
 John K. Delaney,
Executive Chairman
Products Financial Services
Website www.capitalsource.com

CapitalSource, Inc. is a commercial lender that provides senior debt loans of $5 million to $100 million to middle-market companies throughout the United States. The company targets specific industries in its portfolio of holdings, particularly focusing on healthcare companies. As of September 30, 2009, the company had total commercial assets of $10.4 billion and $4.4 billion in deposits.[1] CapitalSource banking services in southern and central California through its wholly owned subsidiary CapitalSource Bank. It was co-founded in 2000 by Executive Chairman John K. Delaney and is headquartered in Chevy Chase, Maryland.[2]

CapitalSource is often referred to as an “old-fashioned” balance sheet lending business because its loans are originated, underwritten and managed internally. The majority of its loans are in three categories: senior asset-based, cash-flow, and first mortgage loans.

Since its inception, CapitalSource has committed $28 billion in loans to more than 1,600 customers.

Structure

CapitalSource has three distinct businesses. CapitalSource Bank provides commercial loans and debt investments funded with retail deposits. Healthcare Net Lease provides long-term, triple net leases to skilled nursing facilities and other "senior housing" providers. The third business is Other Commercial Finance,[3] which includes the company’s legacy commercial loan portfolio, the owners trust transaction and all other parent assets and liabilities.

Board of Directors

The members of CapitalSource’s Board of Directors are: John K. Delaney – founder & Executive Chairman of the Board William G. Byrnes – Presiding Director, since 2003 Andrew B. Fremder, since 2000 Sara L. Grootwassink Lewis, since 2004 C. William Hosler, since 2007 Timothy M. Hurd, since 2000 Lawrence C. Nussdorf, since 2007

History

CapitalSource was founded in 2000 by now-Congressman John Delaney (D-MD) and Jason Fish with an initial capitalization of more than $500 million, which at the time was the largest private capitalization for a finance company.[4]

In 2003, CapitalSource completed an IPO and began trading on the New York Stock Exchange (NYSE) under the symbol CSE. In 2006, CapitalSource completed its conversion to a Real Estate Investment Trust (REIT), which enabled the company to remain competitive in a highly liquid market due to the tax benefits of REIT status.

CapitalSource Bank branch footprint in California state.

The company pursued deposit-based funding for nearly three years before forming CapitalSource Bank, a de novo industrial bank, in 2008.[5] The same year it purchased various deposits and assets, including 22 retail branches, from Fremont Investment & Loan. The operations of CapitalSource Bank commenced on July 28, 2008.

On July 15, 2008, CapitalSource Inc. announced that it intended for its wholly owned subsidiary, CapitalSource Healthcare REIT, to file a registration statement on Form S-11 with the Securities and Exchange Commission within the next 30 days for the initial public offering of CapitalSource Healthcare REIT's common shares. .[6]

In 2009, CapitalSource completed its revocation of REIT status.[7] Today the company operates as a C-Corp, as it did prior to 2006.

CapitalSource was briefly involved in a controversial hotel project which also involved rapper Jay-Z and developer Andre Balazs, but CapitalSource stepped out of the project when they sold the property note to another developer at a loss.[8]

CapitalSource Bank was involved in another newsworthy property issue in 2010 when they foreclosed upon a high-end Manhattan project under development. The ‘’’Manhattan Blue’’’ condominium building had initial interest from Leonardo DiCaprio, but the developers failed to sell enough units to make payments to CapitalSource. .[9]

In early 2012, CapitalSource moved its headquarters to Los Angeles.[10]

In 2013, the Washington Post identified CapitalSource as a major lender to Aeon Financial, a secretive company that aggressively purchases tax liens and charges homeowners "excessive," "unreasonable," and "extraordinarily high" in order to avoid foreclosure.[11]

CapitalSource was acquired by PacWest Bancorp in July 2013 for around $2.29 billion.[12] The merger received final regulatory approval on 1 April 2014. In the agreement, CapitalSource, trading as CSE, ceased to trade at market close on 7 April 2014. Existing CapitalSource shareholders received a combination of cash and a fixed exchange ratio of PACW shares.

Recognition

CapitalSource Bank played a central role in the founding of the Elder Financial Protection Network (EFPN), and the California State Legislature presented CapitalSource Bank with a Certificate of Recognition for helping to launch and maintain it.[13] Gary Dunn, Capital Source Bank’s VP CRA, is a member of the Board of Directors for EFPN, serving as Treasurer.[14] CapitalSource Bank was awarded a Bank Enterprise Award from the Community Development Financial Institutions Fund by the U.S. Treasury Department for its investment in low-income and economically distressed communities in California in 2010.[15][16]

References

  1. ↑ EDGAROnline. "CapitalSource Inc (CSE) 10-Q".
  2. ↑ Thomas Heath, "Washington Post," May 14, 2007,"
  3. ↑ Hoover's Handbook of Emerging Companies, Volume 4 of Hoover’s Handbook. Hoover’s. 2007. p. 69. ISBN 978-1-57311-117-1.
  4. ↑ Dan Freed, "The Street," October 13, 2009,"
  5. ↑ Forbes, Bertie (Oct 3, 2008). Forbes, Volume 177, Issues 10-13 (Forbes Inc.) 177 (10-13): 122 http://books.google.com/books?id=cRG8AAAAIAAJ&q=Forbes,+Volume+177&dq=Forbes,+Volume+177&hl=en&ei=iA7GTOOZGoH78Ab9somxDw&sa=X&oi=book_result&ct=result&resnum=3&ved=0CDUQ6AEwAg. Missing or empty |title= (help)
  6. ↑ "CapitalSource Announces Proposed Initial Public Offering of CapitalSource Healthcare REIT".
  7. ↑ Washington Business Journal (October 31, 2008). "CapitalSource to rid REIT status in 2009". Retrieved October 21, 2010.
  8. ↑ Anton Troianovski (May 10, 2010). "Plans for 14th Street Hotel Go Nowhere". Wall Street Journal. Retrieved October 25, 2010.
  9. ↑ Craig Karmin (August 5, 2010). "Foreclosure Buyer Gets Hudson Blue". Wall Street Journal. Retrieved October 25, 2010.
  10. ↑ Washington Business Journal (July 31, 2012). "CapitalSource has quietly moved its headquarters to Los Angeles". Retrieved January 10, 2013.
  11. ↑ The Washington Post http://www.washingtonpost.com/sf/investigative/2013/12/08/debt-collecting-machine/?hpid=z1#home. Missing or empty |title= (help)
  12. ↑ Reuters (23 July 2013). "Deals of the day -- mergers and acquisitions". Reuters.
  13. ↑ CapitalSource Bank. "CapitalSource Bank Community Reinvestment". Retrieved 2010-10-22.
  14. ↑ Elder Financial Protection Network. "Board of Directors EFPN". Retrieved 2010-10-22.
  15. ↑ U.S. Treasury Department. "CDFI Fund Awards Nearly $25 Million to Institutions for Increasing Lending and Investment in Economically Distressed Communities".
  16. ↑ U.S. Treasury Department. "Community Development Financial Institutions Fund 2010 BEA Award List".

External links