First Eagle Private Credit (NEWS) 8-K This presentation contains forward-looking statements. All statements other than

Investor Presentation

February

2010

Exhibit 99.1

1

This presentation contains forward-looking statements. All statements other than

statements of historical fact included in this presentation are forward-looking

statements, including, without limitation, statements related to

any plans to raise

additional capital. These statements also include information with respect to future

events, including our anticipated financial performance and results of operations. 

These forward looking statements are not guarantees of our future performance or of

the occurrence of future events and are subject to material risks and uncertainties that

could cause actual results or events to differ materially from the results or events

contemplated by the forward-looking statements. Factors that could affect our results

and cause them to materially differ from those contained in the forward-looking

statements include our limited operating history; the current dislocation in the credit

markets and the general state of the economy; our ability to compete effectively in a

highly competitive industry; and the impact of federal, state and local laws and

regulations that govern non-depository commercial lenders and businesses generally.

More detailed information about these risk factors can be found in the section titled

“Risk Factors”

in our annual report on Form 10-K, as such section is updated by our

quarterly reports on Form 10-Q, all of which are filed with the SEC.

Forward Looking Statements

2

Agenda

I.

Introduction

II.

History

III.

Business Strategy and Credit Thesis

IV.

Core Strengths and Competitive Advantage

V.

Performance

VI.

Value Considerations

VII.

Opportunity

Appendix

3

Introduction

Emerging from a period of unprecedented challenges

Our ability to navigate through this period reflects both the quality of the business

plan and the experience of the management team

Although credit costs weighed heavily on financial results in 2009, the outlook is

improving

Believe provision expense and reserve levels have peaked

Expect to be profitable in 2010 as credit costs moderate

Fundamental business model still able to generate attractive returns in a lower

leverage environment with increased focus on asset management activities

4

History

Formed in June 2004 by a team of senior banking executives

Initially capitalized with $210 million from a group of investors led by Corsair

Capital and Capital Z Partners

Funded lending activities through a combination of equity, warehouse lines from

major banks and securitizations (CLOs)

Launched $600 million sidecar fund with $150 million of equity from Och-Ziff and

Caisse Depot de Quebec

Raised $235 million from IPO in December 2006 and another $125 million in a

follow-on PIPE transaction in December 2007/January 2008

Raised $1.8 billion of debt capital through issuance of five CLOs

Issued $75 million of revolving Holdco notes and completed new $275 CLO  in

January 2010

Tangible equity was $546 million, or $10.92 per share, as of December 31, 2009,

down only 9% from peak of $12.00 per share

5

Business Strategy and Credit Thesis

Focus on direct origination of loans with control over due diligence and

negotiation of transaction terms

Employ experienced, credit-trained bankers

Apply

disciplined

selection

criteria

for

target

markets,

clients

and transactions

Enforce a rigorous credit process

Execute a defensive portfolio strategy

–

Broad diversification by issuer and across industry sectors

–

Focus

on

senior

debt

with

conservative

leverage

and

substantial

capital

below

NewStar

in

the

capital

structure

from

investors

with

incentive

and

resources

to

support

their

investment

Invest in experienced portfolio managers to support credit process and actively

manage credit portfolios

Emphasize

asset

management

and

syndication

activities

to

provide

strategic

advantage to lending business and enhance returns on equity

6

Core Strengths and Competitive Advantage

Experienced, cohesive management team

Direct origination capabilities and lending franchise

Skill and experience of bankers and portfolio managers

Credit and risk management capabilities

Loan syndication capabilities and asset management platform

Funding platform

Operating and loan servicing infrastructure

7

Performance

Credit Performance

Financial Highlights

Lagging 12-Month Default Rate by Principal

Amount

1

Funding –

Debt Maturity Profile

Liquidity

($ in thousands)

2007

2008

2009

Total Assets

$2,622,765

$2,571,522

$2,200,072

Loans, Gross

2,402,322

2,409,148

2,036,213

Managed Assets

2,980,594

2,970,389

2,578,717

Non-performing Loans / Loans

0.97

%

2.52

%

8.08

%

ALLL / Loans

1.58

%

2.25

%

5.68

%

Charge-offs / Loans

0.19

%

0.82

%

3.61

%

Net Interest Income

$94,592

$102,554

$94,642

Non-interest Income

(28,176)

18,930

10,653

Operating Expenses

57,494

44,789

42,435

Provision for Credit Losses

19,510

38,224

133,093

Net Income

(8,639)

22,398

(44,260)

Net Interest Margin

4.23

%

4.02

%

3.98

%

Efficiency Ratio

86.57

%

24.04

%

39.69

%

FTE

132

94

61

Secured Short-term Debt

$677,739

$411,267

$91,890

Secured Term Debt

84,000

219,000

270,375

Term Debt Securitizations

1,280,725

1,305,171

1,252,677

Tangible Equity

502,690

581,555

546,062

Book Value Per Share

11.58

12.00

10.92

Year EndedDecember 31,

Source: Standard and Poor’s LCD and S&P/LSTA Leveraged Loan Index

and Company Estimates

S&P LSTA Index

NEWS Total Loans

NEWS Middle Market

Corporate Loans

Note:

The S&P LSTA lagging 12-Month Default Rate published for the US Leveraged Loan Index is calculated by summing the total par amount outstanding, at time of default, of the defaulted facilities 

over the previous 12 month time period divided by the total par amount outstanding of the overall index as of the beginning of that 12 month period.  A  loan is considered defaulted if an obligor is 

in payment default, bankruptcy or has been downgraded to a “D” rating from Standard & Poor’s.  For NewStar’s calculation of the lagging 12-month default rate, a loan is considered  defaulted if its 

has been classified as a non-performing loan.  

8

Value

Considerations

–

Breakdown

of

Book

Value

Warehouse

Secured Term Debt

CLO Trusts

Parent Company

Assets

Memo: NPAs

Debt

Net Assets

Net Asset Value / Share

Memo: NPAs

/

Share

$174

0

92

82

$1.63

n.m.

$407

0

270

136

$2.72

n.m.

$1,412

88

1,253

159

$3.18

$1.76

$100

84

--

--

--

100

$1.99

$1.68

Unrestricted Cash

$40

--

--

--

--

40

$0.80

--

Unencumbered

Loans

and OREO

Assets

Memo: NPAs

Reserves

Deferred loan fees

Liabilities

Net Assets

Net Asset Value / Share

Memo: NPAs

/

Share

Deferred Tax Asset

$57

--

--

--

--

57

$1.13

--

Financing Subsidiaries

Subtotal

Subtotal

$1,993

88

1,615

377

$7.53

$1.76

$342

84

(115)

(21)

35

171

$3.39

$1.68

As of 12/31/2010

$10.92

Other¹

$145

--

(115)

(21)

35

(26)

($0.53)

--

1

Assets

include

restricted

cash

balances

of

$91.1

million,

deferred

financing

costs

of

$18.6

million,

interest

receivable

of

$7.9

,

net

fixed

assets

of

$1.0

million.

Income tax receivable of $7.3 million and other assets totaling $19.6 million.  Reserves include allowance for loan losses not allocated to unencumbered assets. 

Liabilities  include accrued interest payable of $2.8 million, accounts payable of $0.6 million and other liabilities totaling $31.6 million. Restricted cash  is shown at

the parent company for illustrative purposes, but  is held  principally at the financing subsidiary level to be used for reinvestment in loan collateral, debt service,

and to meet any reserve requirements.

9

Opportunity

Unlock balance sheet value

Restart growth in an historically attractive lending environment

Leverage origination and servicing platforms with core strength in credit

management into new markets and asset types

Participate in consolidation of CLO and other credit managers

Build on current track record to launch new credit funds

10

Opportunity

Expect strong demand for loans from LBO and refinancing activity

With an estimated $400 million of capital

available for investment, private equity

has purchasing power of nearly $1 trillion

assuming 40% equity contributions in

new deals

NewStar

targets buyout funds which

represent approximately $40bn or 10.0%

of the un-invested private equity capital

That translates into a target market

opportunity of approximately $32bn

Record amounts of leveraged loans were

issued from 2005 to 2007, much of which

will mature in the next three to four years

With a more than $1.3 trillion of

leveraged loans issued between 2005

and 2007, lenders should see a

significant refinancing opportunity

Leveraged Loans Maturing in Next Five Years

US Fundraising and LBO Volume

Source:

S&P LCD

11

Opportunity

Thinner competitive landscape with reduced lending capacity

Dramatic decrease in number of loan

market investors

Expect loan market to experience

imbalance as CLOs

lose reinvestment

capacity as record amounts of loans are

scheduled to mature

Deal structures in future likely to be more

influenced by regulators as banks

increase share

Declining # of Active Institutional Loan Investor Groups

Non-US Banks

Institutional Investors

US Banks

Securities Firms

Finance Cos

Reduction in US CLO Lending Capacity

Institutional Investors Have Dominated the Market

Source:

S&P LCD

12

Opportunity

Return expectations in a higher cost of capital and lower leverage market

Earning assets / total assets

–

NPAs

and reserves

Asset yields

–

Pricing strategy and

business/asset mix

Leverage

–

Market conditions, credit

performance, and mix of asset

types

Fee revenue / non-interest income

–

Asset management and loan

syndication

Scale

–

Expenses as % of total assets

–

Staffing strategy

2

3

4

5

1

2

4

5

1

3

Amount

Amount

Leverage

%

Earning Assets

100

$        

Debt

80

$        

4.00

x

80.0%

Equity

20

1.00

x

20.0%

100

$        

100

$      

%

$

%

Interest Income

Debt Index (LIBOR)

0.30%

-

$       

Loan Index (LIBOR incl. floors)

1.00%

1.0

Credit Spread

5.00%

5.0

Upfront Fee

0.50%

0.5

All-in Spread

5.50%

5.5

Total Interest Income (Yield)

6.50%

6.5

Interest Expense (Cost of Funds)

Index (LIBOR)

0.30%

(0.2)

Credit Spread

2.20%

(1.8)

Nominal Interest Expense

2.50%

x Advance Rate

80.0%

Effective Interest Expense

2.00%

(2.0)

Net Interest Income

4.50%

4.5

Non-Interest Income

1.25%

1.3

Revenue

5.75%

5.8

Credit Costs

1.00%

(1.0)

Risk Adjusted Revenue

4.75%

4.8

Expenses

1.25%

(1.3)

Pre-Tax ROAA (Income)

3.50%

3.5

Pre-tax ROE

17.5%

17.5%

Illustrative Business Model Economics

13

#####

4.00%

4.50%

5.00%

5.50%

6.00%

17.50%

0.25%

0.60%

1.00%

1.50%

2.00%

1.50%

15.3%

17.8%

20.3%

22.8%

25.3%

1.50%

16.6%

18.3%

20.3%

22.8%

25.3%

1.75%

14.3%

16.8%

19.3%

21.8%

24.3%

1.75%

15.6%

17.3%

19.3%

21.8%

24.3%

2.00%

13.3%

15.8%

18.3%

20.8%

23.3%

2.00%

14.6%

16.3%

18.3%

20.8%

23.3%

CoF

2.20%

12.5%

15.0%

17.5%

20.0%

22.5%

CoF

2.10%

14.2%

15.9%

17.9%

20.4%

22.9%

2.25%

12.3%

14.8%

17.3%

19.8%

22.3%

2.25%

13.6%

15.3%

17.3%

19.8%

22.3%

2.50%

11.3%

13.8%

16.3%

18.8%

21.3%

2.50%

12.6%

14.3%

16.3%

18.8%

21.3%

2.75%

10.3%

12.8%

15.3%

17.8%

20.3%

2.75%

11.6%

13.3%

15.3%

17.8%

20.3%

#####

       3.00

       3.50

       4.00

       4.50

       5.00

17.50%

4.00%

4.50%

5.00%

5.50%

6.00%

1.50%

16.6%

18.5%

20.3%

22.2%

24.0%

0.75%

15.0%

17.5%

20.0%

22.5%

25.0%

1.75%

15.9%

17.6%

19.3%

21.0%

22.8%

1.00%

13.8%

16.3%

18.8%

21.3%

23.8%

2.00%

15.1%

16.7%

18.3%

19.9%

21.5%

1.25%

12.5%

15.0%

17.5%

20.0%

22.5%

CoF

2.20%

14.5%

16.0%

17.5%

19.0%

20.5%

1.50%

11.3%

13.8%

16.3%

18.8%

21.3%

2.25%

14.4%

15.8%

17.3%

18.8%

20.3%

1.75%

10.0%

12.5%

15.0%

17.5%

20.0%

2.50%

13.6%

15.0%

16.3%

17.7%

19.0%

2.00%

8.8%

11.3%

13.8%

16.3%

18.8%

2.75%

12.9%

14.1%

15.3%

16.5%

17.8%

2.25%

7.5%

10.0%

12.5%

15.0%

17.5%

Credit Costs

#####

0.50%

0.75%

1.00%

1.50%

2.00%

17.50%

0.75%

1.00%

1.25%

1.50%

1.75%

1.50%

22.8%

21.6%

20.3%

17.8%

15.3%

0.50%

18.8%

20.0%

21.3%

22.5%

23.8%

1.75%

21.8%

20.6%

19.3%

16.8%

14.3%

0.75%

17.5%

18.8%

20.0%

21.3%

22.5%

2.00%

20.8%

19.6%

18.3%

15.8%

13.3%

1.00%

16.3%

17.5%

18.8%

20.0%

21.3%

CoF

2.20%

20.0%

18.8%

17.5%

15.0%

12.5%

1.25%

15.0%

16.3%

17.5%

18.8%

20.0%

2.25%

19.8%

18.6%

17.3%

14.8%

12.3%

1.50%

13.8%

15.0%

16.3%

17.5%

18.8%

2.50%

18.8%

17.6%

16.3%

13.8%

11.3%

1.75%

12.5%

13.8%

15.0%

16.3%

17.5%

2.75%

17.8%

16.6%

15.3%

12.8%

10.3%

2.00%

11.3%

12.5%

13.8%

15.0%

16.3%

Exp

Non-Interest Income

Exp

Loan Credit Spread

Loan LIBOR

Debt / Equity

Loan Credit Spread

Opportunity

Business Model Economics -

Sensitivity to Key Drivers

“CoF”

Cost of funds

Appendix

15

Loan Portfolio

Outstandings

($MM)

2002 -

2003

6/06: Closed

second CLO

($500MM)

9/02-6/04:

Developed

strategy

and team

6/05: CAM-2 servicer

rating from Fitch

6/07: Closed

third CLO

($600MM)

Overview

Corporate History

6/04: NewStar

formed with

$210MM of

equity

7/04: Closed

first loan

11/07: Raised

$121MM in

equity

12/07: Closed

NCOF CLO

($560MM)

11/07: Closed

Term Debt

Facility

($300MM)

12/06: NEWS

IPO ($218MM)

8/05: Established

NCOF asset

management business

with $150MM of equity

8/05: Closed first

CLO ($375MM)

12/07:

Became

Sarbanes-

Oxley

Compliant

11/08:

Extended

Citi

Warehouse

($300MM)

6/09: Fitch

affirmed

CAM-2

servicer

rating

Credit Crisis/Cycle

7/09: Term Out

of Wachovia /

Wells

Warehouse

5/09:

Renewal of

Natixis

Warehouse

7/09: Rollout of

Everest analytics

& reporting

system

(1)

Estimate as of 9/30/09

1/10: Closed

fourth CL0

($275 MM)

1/10: Issued

$75 MM

Revolving

Credit Notes

•

61 employees

•

4,000+ opportunities

•

$2.6 billion assets under management (inc. NCOF)

16

House values peak

Record M&A and capital markets

activity

Tightening credit spreads

Loose

credit

standards

(2

nd

lien,

Covevent

lite, PIK Toggle)

Easy access to capital / New

entrants in loan markets

Subprime Crisis

Financial Crisis

Recession

Asset Bubble

2005-2006

2007

2009

2008

Housing bubble bursts

Massive writedowns

of

MBS / CDOs

Other credit markets peak

SIVs

begin to unwind and ABCP

market collapses

Syndicated loan and CLO market

shuts down in second half

Banks begin to pull warehouse lines

Macro

Environment

Access to capital severely

constrained as markets freeze

Banks forced to de-lever and build

reserves

High profile failures of top tier banks

and other non-bank lenders

Government coordinates massive

intervention and bailout

Economy contracts sharply

Banking system stabilizes and

congress passes economic stimulus

bill

Credit losses worsen as CRE

markets collapse and consumer

markets weaken further

Over 100 banks fail

Credit spreads begin to tighten as

market conditions improve

Financial industry consolidation

gains momentum

Overview

Managing through the financial crisis

Raised $850 million through two

CLOs

Raised $100 million of corporate

debt

Raised $235 million in IPO

Added over $1 bn

of warehouse

line borrowing capacity

Substantial growth through direct

origination

Focused on senior debt

Reduced scale of planned CRE

and Structured Products lending

platforms

Completed $600 million CLO to

fund balance sheet and $560

million CLO to fund NCOF

Completed $300 million term

debt financing

Raised $125 mn

of equity

capital in PIPE transaction

Maintained growth trajectory and

warehouse lines, but curtailed

syndications activity

Sold securities portfolio and

exited structured products

segment

Began to assess alternative

funding models

Shifted to defensive posture to

preserve liquidity and protect

balance sheet

Slowed origination activity and

began to pursue depository

strategy

Increased term debt by $100

million

Maintained profitability, while

increasing reserves

Entered agreement to acquire

commercial bank and explored

opportunities to participate  in

government programs

Completed extensive regulatory

review process before withdrawing

applications and terminating bank

acquisition

Restructured balance sheet,

reducing short-term debt by 82%

and total debt by $340 million

Experienced elevated credit costs,

but outperformed benchmarks

Right-sized cost base

Positioned company to be survivor

and capitalize on emerging

opportunities

Issued first CLO since market

collapsed

Issued $75 million of revolving

Holdco credit notes

17

Business Model: Management

Experienced Executive Team

Executive

Title

Years

Experience

Prior Experience

Executive

Management

Tim Conway

Chief Executive Officer

24

Head of Corporate Finance, Capital Markets and

Leveraged Finance, Fleet Boston

Head of Loan Syndications, Private Placements and

Acquisition Finance, Citicorp Securities

Peter Schmidt-Fellner

Chief Investment Officer

22

Head of High Yield Bond Sales, Trading, Research

and loan trading and Co-Head of High Yield Capital

Markets, Chemical/Chase/JP Morgan

Corporate

Administration

John Bray

Chief Financial Officer

30

Director of LOB Finance, Fleet Boston Financial

Chief Financial Officer, Fleet Credit Card Services

John Frishkopf

Managing Director, Treasurer

and Head of Asset

Management

22

Turnaround Professional, Nightingale & Associates

Chief Financial Officer, VSZ (Slovak Steel Company)

Vice President, Citicorp Securities

Robert Brown

Managing Director, Corporate

Strategy & Development

17

MD & Head of Sales Planning & Performance

Management for the Global Wealth & Investment

Management Division of Bank of America

MD& Head of Strategy & Business Development for

Commercial Finance Division of Bank of America

Credit

Bob Clemmens

Chief Credit Officer, Middle

Market

33

Head of Risk for the Americas, Barclays Bank

Member, Counterparty Risk Management Policy Group

Dan Adkinson

Managing Director,

Commercial Real Estate

29

Head of Real Estate Debt Capital Markets, JP Morgan

Fleming Asset Management

Origination

Dave Dobies

Managing Director, Middle

Market

19

Managing Director, Fleet Securities

Scott Poirier

Managing Director, Sales &

Trading

15

Head of European Debt Capital Markets, Fleet

Securities

Managing Director, Sales & Trading, Fleet Securities

18

Business Model: Management

With Experience Working Together

NewStar’s

executives have collaborated together at predecessor institutions over the past 20 years

19

Admin Agent: $2 billion of loans

Underwrite or Arrange up to $65MM

Loans:  ~$2.0 billion

Hold Sizes:  $5 –

17.5 million

Loans:  ~$0.6 billion

Hold Sizes:  $5 –

17.5 million

$5MM –

$100MM

Commitment

Business Model: Origination and Distribution Platform

Flexible and Scalable

Ability to commit substantial capital to customers

Hold limits enhance diversification

Generates multiple revenue streams

Asset Management Fees

Agency Fees

Syndication Fees

Interest Income

Commitment Fees

Amendment Fees

Other Fees

Customer

20

Business Model:  Target Market

Focused on the Middle Market

Target Market = US Middle Market

Aaa

$1,000

$5,000

Source: 

S&P Capital IQ

CIT

Management estimates

B1

B2

B3

NR

$10

$50

$250

Structure of U.S. Commercial Lending Market

Ba3

Baa

Credit Rating

NewStar

targets the market for financing mid-sized companies, which is large and fragmented with no single competitor holding a

dominant market share…

Middle Market

–

Non-investment

grade

companies

with

$25

–

500

million

of

revenue

–

Addressable market of approximately $1.5 trillion

Characteristics

–

Constant change combined with M&A activity drives consistent need for new financing

–

Complex financing needs comparable to large companies, but on a scale not suitable for capital

markets

–

Long-term

bank

consolidation

and

recent

credit

crisis

has

left

market

under-served

with

few

scale

competitors

Senior Debt

Large Banks

Investment Banks

Finance Companies

BDCs

Regional

Banks

Middle Market

Hedge Funds

CLO Managers

Community Banks

Annual Revenue

Number of

Companies

Approximate Market

Size ($bn)

% of Market

$25-50

32,057

433

28%

$50-100

17,144

386

25%

$100-250

10,190

382

25%

$250-500

3,866

319

21%

63,257

1,520

100%

21

Typically

floating

rate

senior

secured

obligations

with

liens

on

all

assets

(including

stock

of

subsidiaries)

Restrictive covenants provide additional protection tied to financial performance and reporting rights among other things

Pricing

of

senior

secured

(1

lien)

loans

ranges

from

LIBOR

+

550

bps

to

LIBOR

+

750

bps

Significant

junior

capital

and

‘cash’

equity

provide

support

for

senior

debt

Business Model: Credit Product Strategy

Middle Market Loan Characteristics

Assets

Current Assets

Cash

Accounts receivable

Inventories

Other current assets

Long Term Assets

Plant & Equipment

Real Estate

Intangibles

Subsidiary Stock

Liabilities and Equity

Equity

30 –

50%

Subordinated Debt (Unsecured)

0 –

20%

All

assets

pledged

to

Hypothetical Borrower

Company Profile

Transaction Characteristics

Target Credit Profile

Revenue:

$25 -

250 million

EBITDA:

$5 -

50 million

Stable predictable cash flow

Rating:

Non-rated, but implied

Ba3/B1/B2/B3 credit quality

Industries:

Defensive

Stage:

Mature companies with

franchise value

Sr. Debt:

Up to $150 million

Avg

size is $50 -

$75 million

Jr. Debt:

Up to $50 million

Avg

size is $15 –

25 million

Sr. Lev:

<3.00x (LTV < 50%)

Total Lev:

<4.00x (LTV < 60%)

Equity:

>40%

st

Senior Secured Debt (1    Lien)

40 -

55%

Senior Secured Debt (2    Lien)

0 –

20%

st

nd

22

Managing Director

New York Region

9 Old Kings Hwy South

Darien, CT 06820

203-716-8411

Qualifications

Number

of Key

Relationships:

Business Model: Direct Origination

Uniquely Qualified Bankers

40-60 Financing Opportunities

6-8 Closed Deals

•

Industry expertise

•

Credit experience

•

Capital markets perspective

and insight

20

5-10

3-5

5

10-15

•

20+ Year Commercial Banker

•

Middle Market Executive

•

Senior Credit Officer

23

Business Model

Credit Selection

Key strategy characteristics

–

Targeted direct origination with industry focus

–

Sophisticated, experienced bankers

–

Disciplined screening process

–

Relative value assessment

–

Diversification

–

Focus on senior secured positions

Key credit considerations

–

Strong, sustainable business franchise

–

Consistent historical operating performance

–

Stable, predictable cash flow and operating results

–

Reasonable growth potential

–

Strong equity sponsorship

–

Appropriate capital structure for business risks and

operating performance characteristics

–

Appropriate structural protection, rights and remedies

for position in capital structure

Target industry sectors with defensive orientation

Credit Selection

Strong business franchise with sustainable

competitive advantage

Consistent, predictable cash flow and reasonable

enterprise valuation

Appropriate

capital

structure

with

sufficient

new

cash equity (LTV and Min. Equity)

Management team and sponsor with track record

and available capital to support transaction

US Credit Markets

Transaction structure (security position, covenants,

rights and remedies) and pricing

Credit Selection

NewStar’s

credit process combines a disciplined

screening process with a conservative credit approach

Credit policies and practices are based on a fundamental approach to credit selection and management…

24

Business Model: Portfolio Strategy

Diversification and Focus on Senior Debt

Highly diversified portfolio by

issuer and across industries

Specialized teams focused on

key industry segments:

Media and Information Services

Healthcare

Energy

Commercial Real Estate

Defensively positioned

Increased focus on senior debt,

which now comprises >96% of

overall portfolio

Avoided covenant lite

transactions

Minimized 2

lien commitments

Exited structured credit

$2.0 billion (217 obligors)

(1)

Portfolio Strategy

1

All figures represents loans, gross

nd

Mfg -

Cons. Non Durable,  $151 ,

7%

Mfg -

Cons. Durable,  $34 , 2%

Retail,  $49 , 2%

Restaurants,  $86 , 4%

Consumer Svcs,  $22 , 1%

Printing/Publishing,  $141 , 7%

Cable/Telecom,  $58 , 3%

Broadcasting,  $44 , 2%

Entertainment/Leisure,  $36 , 2%

Tech Svcs,  $110 , 5%

Environmental Svcs,  $50 , 2%

Marketing Svcs,  $101 , 5%

Other Business Svcs,  $121 , 6%

Energy/Chemical Svcs,  $139 , 7%

Auto/Transportation,  $38 , 2%

Industrial/Other,  $143 , 7%

Healthcare,  $208 , 10%

Building Materials,  $62 , 3%

Financial Services,  $79 , 4%

Commercial -

Non-Mortgage,  $24 ,

1%

Consumer -

Non-Mortgage,  $16 ,

1%

CRE-Office,  $174 , 9%

CRE

-

Multi

-Family,  $65 , 3%

CRE-Industrial,  $42 , 2%

CRE-Retail,  $25 , 1%

CRE-Other,  $15 , 1%

Commercial

Real Estate

16%

Consumer / Retail

16%

Media

14%

Business Services

18%

Industrial (Other)

16%

Structured Products

2%

Financial

Performance

26

Financial Results

Summary of Q4 2009

December 31,

September 30,

December 31,

($ in thousands, except per share amounts)

2009

2009

2008

Net income (loss)

$

(13,405)

$

(10,262)

$

2,754

After tax adjustments to net income (loss):

IPO

related

compensation

and

benefits

expense

(1)

1,872

915

2,102

Loss

on

assets

sold

and

retained

residual

interest

(2)

-

-

258

Adjusted net income (loss)

$

(11,533)

$

(9,347)

$

5,114

Net income (loss) per share:

Basic

$

(0.27)

$

(0.21)

$

0.06

Diluted

$

(0.27)

$

(0.21)

$

0.06

Weighted average shares outstanding:

Basic

49,349,508

49,173,245

48,510,697

Diluted

49,349,508

49,173,245

48,510,697

Adjusted net income (loss) per share:

Basic

$

(0.23)

$

(0.19)

$

0.11

Diluted

$

(0.23)

$

(0.19)

$

0.11

Adjusted weighted average shares outstanding:

Basic

49,349,508

49,173,245

48,510,697

Diluted

49,349,508

49,173,245

48,510,697

Three Months Ended

(1) Non-cash compensation charge related to restricted stock grants made since our inception as a private company, including equity awards made in 

     connection with the initial public offering.

(2) Loss and expenses incurred in connection with the sale of assets comprised of 50 debt securities and two loans during Q2 2007, permanent impairments 

     on these assets, the change in fair value of the residual interest in these assets, and the impact on the effective tax rate. The change in effective tax rate 

     was applied retrospectively.

27

Financial Results

Q4 2009 Income Statement

(1)

Non-cash compensation charge related to restricted stock grants made since our inception as a private company, including equity awards made in

connection with the initial public offering.

(2)

Loss and expenses incurred in connection with the sale of assets comprised of 50 debt securities and two loans during Q2 2007, permanent impairments

on these assets, the change in fair value of the residual interest in these assets, and the impact on the effective tax rate. The change in effective tax rate

was applied retrospectively.

December 31,

September 30,

December 31,

($ in thousands)

2009

2009

2008

Net interest income:

Interest income

$

31,943

$

33,675

$

45,845

Interest expense

7,553

9,197

21,445

Net interest income

24,390

24,478

24,400

Provision for credit losses

39,032

32,577

17,930

Net interest income after provision for credit losses

(14,642)

(8,099)

6,470

Non-interest income:

Fee income

415

388

866

Asset management income

716

758

1,457

Gain (loss) on derivatives

41

126

1,366

Gain (loss) on sale of loans and debt securities

-

-

(1)

Loss on investments in debt securities

-

-

(1)

Other income (expense)

3,274

(1,139)

4,958

Total non-interest income

4,446

133

8,645

Operating expenses:

Compensation and benefits

6,512

7,578

4,172

Occupancy and equipment

791

769

718

General and administrative expenses

2,257

2,580

3,054

Total operating expenses

9,560

10,927

7,944

Income (loss) before income taxes

(19,756)

(18,893)

7,171

Income tax expense (benefit)

(6,405)

(6,957)

4,417

Net income (loss) before noncontrolling

interest

(13,351)

(11,936)

2,754

Net

(income)

loss

attributable

to

noncontrolling

interest

(54)

1,674

-

Net income (loss)

$

(13,405)

$

(10,262)

$

2,754

After tax adjustments to net income (loss):

IPO related compensation and benefits expense(1)

1,872

915

2,102

Loss on assets sold and retained residual interest(2)

-

-

258

Adjusted net income (loss)

$

(11,533)

$

(9,347)

$

5,114

Three Months Ended

28

Financial Results

Q4 2009 Balance Sheet

December 31,

September 30,

December 31,

($ in thousands)

2009

2009

2008

Assets:

Cash and cash equivalents

$

39,848

$

31,128

$

50,279

Restricted cash

136,884

109,618

84,163

Investments in debt securities, available-for-sale

4,183

3,859

3,025

Loans held-for-sale

15,736

3,072

-

Loans, net

1,878,978

2,041,087

2,328,812

Deferred financing costs, net

18,557

19,219

21,003

Interest receivable

7,949

8,442

10,608

Property and equipment, net

976

976

1,252

Deferred income taxes, net

56,449

56,863

31,238

Income tax receivable

7,260

603

-

Other assets

33,252

32,703

41,142

Total assets

$

2,200,072

$

2,307,570

$

2,571,522

Liabilities:

Credit facilities

$

91,890

$

135,742

$

411,267

Term debt

1,523,052

1,567,864

1,524,171

Accrued interest payable

2,774

3,408

9,773

Income tax payable

-

-

353

Accounts payable

645

386

1,049

Other liabilities

31,591

38,660

43,354

Total liabilities

1,649,952

1,746,060

1,989,967

NewStar

Financial, Inc. stockholders’

equity

546,062

557,506

581,555

Noncontrolling

interest

4,058

4,004

-

Total stockholders' equity

550,120

561,510

581,555

Total liabilities and stockholders’

equity

$

2,200,072

$

2,307,570

$

2,571,522

29

Financial Results

Improving Credit Outlook May Signal Peak in Allowance for Loan Losses

Allowance for credit losses increased 13.2% to $114.5 million, or 5.68% of loans as of December 31, 2009 compared to

$101.1 million or 4.69% of loans as September 30, 2009

Non-accruing loans were $162.7 million as of December 31, 2009 compared to $147.6 million as of September 30, 2009

New specific reserves totaling $40.0 million were established  in Q4 ‘09 compared to $33.3 million for Q3 ‘09

Other real estate owned was $9.4 million as of 12/31/09

Net

charge-offs

were

$25.7

million

or

5.06%

of

loans

on

an

annualized

basis

for

Q4

09,

compared

to

$17.8

million

or

3.27%

of

loans on an annualized basis for Q3 09.  Net charge-offs for the full year in 2009 were  3.61% of loans.

Improving credit outlook may signal peak in provision expense and allowance for loan losses, but levels of charge-offs and

NPAs

are expected to remain elevated for several quarters

Credit Metrics

Allowance for credit losses

December 31,

September 30,

December 31,

2009

2009

2008

Three Months Ended

Balance as of beginning of period

101,117

$         

86,340

$           

44,933

$           

General provision for credit losses

(1,002)

(703)

4,726

Specific provision for credit losses

40,034

33,280

13,204

Net charge offs

(25,679)

(17,800)

(8,886)

Balance as of end of period

114,470

$         

101,117

$         

53,977

$           

Delinquent loan rate (at period end)

6.15

%

6.91

%

0.69

%

Delinquent loan rate for accruing loans 60 days

or more past due (at period end)

0.99

1.69

-

Non-accrual loan rate (at period end)

8.08

6.84

2.52

Non-performing asset rate (at period end)

8.55

7.08

2.82

Annualized net charge off rate (end of period loans)

5.06

3.27

1.47

Annualized net charge off rate (average period loans)

4.82

3.18

1.46

Allowance for credit losses ratio (at period end)

5.68

4.69

2.25

Funding Model

31

Business Model: Funding

Wholesale model

•

3-yr term funding provided by banks for

static pools

•

Self amortizing –

repaid from principal

collections

•

Advance rates of 65–75%

•

L+175-375bps

•

Collateralized Loan Obligations (CLOs)

•

NEWS retains equity –

consolidated on

balance sheet

•

Non-recourse

•

Reinvestment capacity

•

Approx. L+54bps blended cost of funds

•

91% advance rate (D/E: 10x)

•

Equity used to capitalize financing subsidiaries and partially fund new loan origination

•

Approximately 22% Tangible Equity to Total Assets

•

Initially funded by $210 million of private equity

•

Raised gross proceeds of $235 million in IPO (Nasdaq: NEWS)

•

Raised gross proceeds of $125 million in private placement of common stock

Banks

•

Advances used to partially fund new

loan origination

•

Repaid from proceeds of  term debt

securitizations

•

Advance rates down to 50% (D/E: 1.0x) 

from peak of 75-80% (D/E: 3-4.0x)

•

Cost of funds increased from low of

L+60bps to L+250-450bps

•

Borrowing capacity down to approx. $100

million from peak of $900 million

•

Limited recourse

•

Renewed annually

Banks

32

Funding Platform Strengthened by Recent Financings

Completed $275 million CLO scheduled to mature on July 30,

2018

Repaid all outstanding borrowings under Deutsche Bank term

facility with proceeds from new CLO

Entered into a note agreement with an institutional investor

establishing $75 million revolving credit facility with a maturity

date of July 5, 2013

Reduced refinancing risk by renewing Citi

warehouse line until

November 2010

Increased unrestricted cash position to $40 million

Maintained reinvestment capacity in two existing CLOs

(CLO II

and III) at attractive ‘locked-in’

spreads

Protecting the Balance Sheet

Funding Sources

1

Funding Profile

1

As of 12/31/2009

Cash Position

1

Pro forma for closing of Revolving Credit Notes and CLO IV (2009-1)

Warehouse

Credit Facilities

$211 million

Term Debt

$1.6 billion

Equity

$546 million

Total: $2.5 billion

Corporate Debt

$75 million

$130

$150

$349

$500

$588

$275

$50

$11

$130

$75

Short Term

<1 yr

Medium Term

1-3 yrs

Long Term

>3 yrs

Unrestricted Cash

$

39.8

Restricted Cash Pledged to Credit Facilities & CLOI

38.2

Restricted Cash Available for Debt Service

51.8

Restricted Cash for Reinvestment

37.6

Restricted Cash Held in Escrow

9.3

Total Restricted Cash

136.9

Total Cash

$

176.7

Management Biographies

34

Management Biographies

Timothy

J.

Conway

–

Chief Executive Officer and Director

Timothy J. Conway is our Chief Executive Officer and President and was elected to serve as Chairman of our Board of Directors in

September 2006. He has been our Chief Executive Officer and President and has served on our Board of Directors since our inception

in June 2004. From July 2002 to June 2004, Mr. Conway worked full-time on our founding. From 1996 to July 2002, Mr. Conway was a

Managing Director at FleetBoston Financial Corporation or its predecessors responsible for Corporate Finance and Capital Markets.

From 1987 to 1996, Mr. Conway held various senior management positions at Citicorp Securities, Inc. He was a Managing Director and

Senior Securities Officer and was responsible for the bank’s private placement, loan syndication and acquisition finance businesses.  

Mr. Conway received his undergraduate degree from Fairfield University and his masters of business administration from the University

of Connecticut.

Peter

A.

Schmidt-Fellner

–

Chief Investment Officer

Peter

A.

Schmidt-Fellner

has

served as our Chief Investment Officer since our inception in 2004 and is a Director Nominee. From

1993

to

2003,

Mr.

Schmidt-Fellner

was

at

JPMorgan

Securities,

Inc.

and

its

various

subsidiaries

and

predecessor

institutions,

where

during

his

tenure,

he

was

responsible

for

High

Yield

Bond

Sales,

Trading and Research, Loan Trading and Co-Head of High

Yield

Bond

Capital

Markets.

Mr.

Schmidt-Fellner

received

his

undergraduate

degree

from

Colby

College

and

his masters in business

administration from the Tuck School of Business at Dartmouth.

John

Kirby

Bray

–

Chief Financial Officer

John K. Bray has served as our Chief Financial Officer since January 2005. From April 2004 to October 2004, Mr. Bray was the

Business Financial Officer at Bank of America. From August 1979 to April 2004, Mr. Bray held various positions at FleetBoston

Financial

Corporation

or

its

predecessors,

most

recently

as

Director

of

Finance

—

Line

of

Businesses.

Mr.

Bray

received

his

undergraduate degree from the College of the Holy Cross and his masters of business administration from the University of Hartford.

35

Management Biographies

John

J.

Frishkopf

–

Managing

Director,

Treasurer

and

Head

of

Asset

Management

John J. Frishkopf

has served as a Managing Director and Treasurer/Head of Asset Management since our inception in 2004.

From February 1999 to June 2004, he was a Managing Director of Milford Associates, LLC, a turnaround and corporate

restructuring

advisory

firm,

which

he

founded

in

1999.

Mr.

Frishkopf

received his undergraduate degree from the Massachusetts

Institute

of

Technology

and

his

masters

of

science

in

management

from

the

Sloan

School

of

Management

at

the

Massachusetts

Institute of Technology.

J.

Daniel

Adkinson

–

Head

of

Commercial

Real

Estate

J. Daniel Adkinson

has served as a Managing Director and Head of our Commercial Real Estate group since our inception in

2004.

From

October

1994

to

June

2004,

he

was

a

portfolio

manager

at JP Morgan Fleming Asset Management where he worked

in

both

the

Fixed

Income

and

Real

Estate

Investment

groups.

From

2001

to

2004,

Mr.

Adkinson

served

as

a

member

of

the

Board

of

Directors

and

of

the

Compensation

Committee

of

ARCap

REIT, Inc. and its predecessor company. He is an adjunct assistant

professor

at

the

Graduate

School

of

Business

of

Columbia

University.

Mr.

Adkinson

received his undergraduate degree from

Williams College.

Robert

T.

Clemmens

–

Chief

Credit

Officer,

Middle

Market

Robert T. Clemmens

has served as a Chief Credit Officer since our inception in 2004 with responsibility for our Middle Market

Corporate

and

Structured

Products

groups.

From

October

2002

to

February

2004,

Mr.

Clemmens

was at Tacitus Capital

Management, a hedge fund, where he most recently served as Executive Vice President concentrating on fixed income research.

From 1981 to 2002, he held various positions at Barclays Capital, most recently as a Managing Director and Head of Risk

Management

for

the

Americas.

Mr.

Clemmens

received

his undergraduate degree from Laurentian University and his masters in

business administration from York University.

36

Management Biographies

David

R.

Dobies

–

Managing

Director,

Middle

Market

David R. Dobies

has served as a Managing Director and Co-Head of our Middle Market Corporate group since our inception in

2004.

From

1995

to

2004,

Mr.

Dobies

served in various capacities at FleetBoston Financial Corporation or its predecessors, most

recently

as

Managing

Director

and

Head

of

the

Media,

Entertainment

and

Sports

Finance

syndication

businesses.

Mr. Dobies

received his undergraduate degree from Villanova University and his masters in business administration from the William E. Simon

School of Business at the University of Rochester.

Robert

K.

Brown

–

Head

of

Strategy

and

Corporate

Development

Robert Brown serves as Head of Strategy and Corporate Development. He also serves as a member of firm’s management

committee

and

is

responsible

for

Investor

Relations.

Prior to joining the firm, Mr. Brown was head of Sales Planning &

Performance Management for the Global Wealth & Investment Management Division of Bank of America. Prior to that, Mr. Brown

served

as

head

of

strategy

and

business

development

for

Bank

of

America’s

Commercial

Finance

Division.

Mr. Brown joined Fleet

Financial Group in 1992 and served in various roles of increasing responsibility in the company’s commercial banking and capital

markets businesses.   Mr. Brown received his undergraduate degree from the University of Vermont and his masters of business

administration from the University of Rhode Island.

Scott

Poirier

–

Managing

Director,

Sales

&

Trading

R.

Scott

Poirier

has

served

as

a

Managing

Director

and

Head

of

Sales

and

Trading

since

our

inception

in

2004.

From

October

2002 to June 2004, Mr. Poirier worked full-time on our founding. From March 1997 to October 2002, Mr. Poirier was employed by

FleetBoston Financial Corporation or its predecessors where he most recently served as a Managing Director and Group Head of

the European Debt Capital Markets Group in London. Mr. Poirier received his undergraduate degree from the United States

Military Academy at West Point and his masters in business administration from Yale University.

37

Board of Directors Biographies

Richard

E.

Thornburgh

–

Vice

Chairman

of

Corsair

Investments

LLC

In

February

2006,

Mr.

Thornburgh

joined

Corsair

Capital

LLC

as

a

partner. From 1976 until December 2005, he held several positions at the

Credit

Suisse

Group

and

its

various

subsidiaries

and

predecessor

institutions, most recently as Executive Vice Chairman and Member of the

Credit

Suisse

Group

Executive

Board.

He

currently

serves

on

the

Board

of

Directors

of

the

Credit

Suisse

Group

and

is

on

its

Risk

Committee.

He also serves on the Board of Directors of Dollar General Corporation and is on its Finance Committee and Strategic Planning Committee.

Mr. Thornburgh received his undergraduate degree from the University of Cincinnati and his masters in business administration from Harvard

University College of Business Administration.

Charles

N.

Bralver

–

Senior

Associate

Dean

for

International

Business

and

Finance

at

the

Fletcher

School

at

Tufts

University

Charles

N.

Bralver

joined

our

Board

of

Directors

in

2009.

Mr.

Bralver

is the Senior Associate Dean for International Business and Finance at

the Fletcher School at Tufts University, was a founding partner and Vice Chairman of Oliver, Wyman & Co., and has served as a Strategic

Advisor at Warburg Pincus, LLC.

T. Kimball Brooker

Jr. –

Senior Vice President of Arnhold

and S. Bleichroeder

Advisers, LLC

T.

Kimball

Brooker,

Jr.

has

served

on

our

Board

of

Directors

since

our

inception

in

2004.

Since

January

2009,

he

has

served

as

a

Senior

Vice

President

of

Arnhold

and

S.

Bleichroeder

Advisers,

LLC,

an

asset

management

firm

headquartered

in

New

York.

From

August

1998

through

November 2008, he was employed by, or a partner of, Corsair Capital LLC (and/or its current or prior affiliates including J.P. Morgan Chase &

Co.

with

whom

Corsair

was

affiliated

until

it

separated

from

J.P.

Morgan

Chase

&

Co.

in

March

2006).

Mr.

Brooker

is also a Director of

Insurance

Revolution,

Inc.,

SPARTA

Insurance

and

Barbara

Oil

Company.

Mr.

Brooker

received his undergraduate degree from Yale

University and his masters in business administration from Harvard Business School.

Maureen

P.

O’Hara

–

Finance

professor

at

the

Johnson

Graduate

School

of

Management,

Cornell

University

Maureen O'Hara is the Robert W. Purcell Professor of Finance at the Johnson Graduate School of Management, Cornell University, where

she joined the faculty in 1979. She has had visiting appointments at UCLA, the London Business School, the University of New South Wales,

Cambridge University, and Hong Kong University of Science and Technology. She has served as President of the Western Finance

Association and recently served as President of the American Finance Association. Ms. O'Hara currently serves on the Board of Directors of

Investment Technology Group, Inc., where she has been lead director since January 2005 and where she has served on the Compensation

Committee, Audit Committee and Nominating Committee. Ms. O'Hara received her undergraduate degree from the University of Illinois and

her masters of science in economics and Ph.D. in finance from Northwestern University.

38

Brian

L.P.

Fallon

–

Partner

of

O'Conner

Capital

Partners

Brian L.P. Fallon is a Partner of O'Conner Capital Partners. Prior to joining O'Conner Capital Partners in September of 2007, Mr. Fallon was a

Managing

Director

and

Principal

of

Extell

Development Company from 2002-2007. From 1982-2002, Mr. Fallon held numerous positions at

Meredith & Grew, Inc. and served on the Board of Directors. Mr. Fallon is involved in various non-profit boards and activities and

currently

serves

as

a

Director

on

the

Advisory

Council

of

the

Robert

F.

Kennedy

Children's

Action

Corps

as

well

as

The

Community

Builders,

Inc.

Mr.

Fallon

received

his

undergraduate

degree

from

Siena

College

and

his

masters

in

public

administration

from

the

Maxwell

School

at

Syracuse

University.

Bradley

E.

Cooper

–

Partner

of

Capital

Z

Partners

Management,

LLC

Bradley

E.

Cooper

is

a

Partner

of

Capital

Z

Partners

Management,

LLC,

the

successor

to

Capital

Z

Management,

LLC

(which

he

joined

as

a

founding Partner in July 1998). He previously held similar positions at Insurance Partners, L.P. and International Insurance Advisors, L.P.

Mr.

Cooper

serves

on

the

board

of

directors

of

MountainView

Capital

Holdings,

LLC

and

Argo

Group

International

Holdings

Ltd.

and is a

member of Argo's Investment Committee. Mr. Cooper received an undergraduate degree from the University of Michigan.

Frank

R.

Noonan

–

Former

CFO

of

Unum

Corporation

and

CEO

of

R.H.

Donnelly

Co.

From

August

1991

through

May

2002,

Frank

R.

Noonan

was

the

Chief

Executive Officer of R.H. Donnelley Co. He also served as President

of

R.H.

Donnelley

Co.

from

August

1991

to

July

1998

and

was

Chairman

from

July

1998

through

May

2002.

From

May

1989

to

August

1991,

Mr.

Noonan

served

as

Senior

Vice

President,

Finance,

with

Dun

&

Bradstreet,

the

former

parent

company

of

R.H.

Donnelley

Co.,

and

was

a

member

of

its

Board

of

Directors

in

1998.

Prior

to

joining

Dun

&

Bradstreet,

Mr.

Noonan

served

as

Chief

Financial

Officer

and

Senior

Vice

President

at

Unum

Corporation

from

July

1981

to

December

1989.He

currently

is

a

Director

and

member

of

the

Audit

Committee

of

Avnet,

Inc.

and

was

previously

a

Director

and

member

of

the

Audit

Committee

of

Toys

"R"

Us,

Inc.

Mr.

Noonan

received

his

undergraduate

degree

from

the

University

of

New

Hampshire.

Board of Directors Biographies