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2012年2月8日星期三

Apollo Investment Corporation Announces Quarterly Financial Results, Senior Management Changes, Quarterly Dividend …

NEW YORK, NY–(Marketwire -02/08/12)- Apollo Investment Corporation (NASDAQ: AINV – News)
  • Reports Net Assets of $1.6 billion and Net Asset Value per share of $8.16 as of December 31, 2011 and Net Investment Income of $0.20 per share for the quarter ended December 31, 2011
  • Names Respected Industry Veteran Edward Goldthorpe as President
  • Seeks to Capitalize on Current Market Opportunities by Providing Diverse Array of Private Debt Market Investment Solutions
  • Declares a Dividend of $0.20 per share for the Fiscal Fourth Quarter of 2012
  • Considers an Equity Capital Raise with Support from Apollo Global Management and Related Fee Waiver from Apollo Investment Management
Apollo Investment Corporation (NASDAQ: AINV – News) or the “Company”, “Apollo Investment“, “we” or “our” today announces financial results for its fiscal quarter ended December 30, 2011. Our net investment income was $0.20 per share for the quarter ended December 31, 2011 and net asset value (“NAV”) was $8.16 per share as of December 31, 2011.
The Board announced today that Mr. Edward Goldthorpe will be joining Apollo Investment Corporation as its President, succeeding Mr. Patrick Dalton, who formerly held positions as President and Chief Operating Officer. Mr. Edward Goldthorpe will also replace Mr. Dalton as Chief Investment Officer of our investment adviser. The Company announced that its Board of Directors has appointed Mr. James Zelter as the Company‘s interim President, effective immediately. He will also serve as interim CIO of Apollo Investment Management until Mr. Goldthorpe joins, which is expected to occur in the next 90 days. Mr. Zelter will retain his position as Chief Executive Officer of the Company. Apollo Investment also announced that its Board of Directors has appointed Mr. Gene Donnelly, Apollo Global Management, LLC’s CFO, as interim CFO and Treasurer for the Company. Mr. Donnelly succeeds Mr. Richard Peteka who formerly served as the Company’s CFO and Treasurer. Mr. Donnelly will serve as interim CFO and Treasurer until a permanent replacement has been appointed by the Board. The Board also named Ms. Eileen Patrick as the Executive Vice President of Corporate Strategy for the Company. In this newly created role, Ms. Patrick will assist in the execution of Apollo Investment Corporation’s strategic expansion during this period of transition.
In order to capitalize on various proprietary market opportunities and to maintain an appropriate capital structure, the Board has authorized management to explore whether the Company should raise up to $200 million of additional equity capital, which may be conducted, among other means, through either a marketed deal or a rights offering. Apollo Global Management has informed the Company that it intends to support AINV’s equity capital raise, which in the case of a rights offering could include the exercise of oversubscription rights as a backstop for up to $50 million. In further support of an equity offering, Apollo Investment Management has informed the Company that it intends to waive its management and incentive fees associated with any shares issued through this offering. Additionally, Apollo Global Management may also purchase shares of AINV in the open market.
The Company also announced that its Board of Directors has declared for the fourth fiscal quarter of 2012 a dividend of $0.20 per share, payable on April 3, 2012 to stockholders of record as of February 18, 2012. We believe having a dividend that is more closely aligned with net investment income per share is prudent and appropriate. The specific tax characteristics of this dividend will be reported to stockholders on Form 1099 after the end of the calendar year.
Mr. Zelter, Apollo Investment Corporation’s Chief Executive Officer, said, “Since the onset of the global credit crisis, we believe the role of business development companies such as Apollo Investment Corporation has become increasingly important, filling the gap left by banks and traditional financial services companies. Prior to the credit crisis, AINV focused primarily on providing acquisition financing to middle market private equity sponsors. Today, we believe the growing void in the capital markets creates attractive opportunities for our business. Consequently, we intend to expand our footprint to provide a wider array of proprietary private financing solutions for companies across a broad spectrum of industries and situations. The changes we have announced today, including more closely aligning our dividend with our net investment income and our decision to explore the raising of additional equity capital, are designed to reposition us to grow our business in the current environment.”
Mr. Zelter continued, “We are very pleased that industry veteran Edward Goldthorpe has agreed to join the senior management team at AINV, and we are confident he will play a major role in driving growth and value creation for the Company. Broadly speaking, we believe the changes we have made will enable us to capitalize on the meaningful opportunities we see in the current market and generate attractive risk-adjusted returns for our shareholders.”
ABOUT EDWARD J. GOLDTHORPE:Mr. Goldthorpe was most recently with Goldman Sachs for the past 13 years, where he served as a Managing Director with the Bank Loan Distressed Investing Desk (2009-2012), and prior to that Mr. Goldthorpe was a Managing Director with the Special Situations Group within the firm’s Securities Division (2005-2009). Previously, Mr. Goldthorpe was a Vice President in the High Yield Distressed Group (2001-2005), an analyst in the Merchant Banking Division (2000-2001), and an analyst in the Investment Banking Division (1999-2000).
FINANCIAL HIGHLIGHTS FOR THE QUARTER ENDED DECEMBER 31, 2011:
At December 31, 2011:
Total Assets: $2.9 billion
Investment Portfolio: $2.8 billion
Net Assets: $1.6 billion
Net Asset Value per share: $8.16
Portfolio Activity for the Quarter Ended December 31, 2011:
Investments made during the quarter: $95 million
Number of new portfolio companies invested: 3
Investments sold or prepaid during the quarter: $175 million
Number of portfolio company exits: 5
Operating Results for the Quarter Ended December 31, 2011 (in thousands, except per share amounts):
Net investment income: $38,538
Net realized and unrealized gain: $25,159
Net increase in net assets from operations: $63,697
Net investment income per share: $0.20
Net realized and unrealized gain per share: $0.12
Earnings per share — basic: $0.32
Earnings per share — diluted: $0.31
CONFERENCE CALL / WEBCAST AT 11:00 AM EST ON FEBRUARY 8, 2012
The Company will host a conference call at 11:00 a.m. (Eastern Standard Time) on Wednesday, February 8, 2012 to present third fiscal quarter results. All interested parties are welcome to participate in the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call, international callers should dial (973) 633-6740. Participants should reference Apollo Investment Corporation or Conference ID: 40610975 when prompted. Following the call you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available through February 22, 2012 by calling (800) 585-8367; international callers please dial (404) 537-3406, reference pin #40610975. The audio webcast will be available later that same day. To access the audio webcast please visit the Event Calendar in the Investor Relations section of our website at www.apolloic.com.
PORTFOLIO AND INVESTMENT ACTIVITYDuring the three months ended December 31, 2011, we invested $95 million across 3 new and 6 existing portfolio companies, through a combination of primary and secondary market purchases. This compares to investing $382 million in 8 new and 3 existing portfolio companies for the three months ended December 31, 2010. Investments sold or prepaid during the three months ended December 31, 2011 totaled $175 million versus $481 million for the three months ended December 31, 2010.
At December 31, 2011, our portfolio consisted of 67 portfolio companies and was invested 29% in senior secured loans, 60% in subordinated debt, 1% in preferred equity and 10% in common equity and warrants measured at fair value versus 69 portfolio companies invested 29% in senior secured loans, 62% in subordinated debt, 1% in preferred equity and 8% in common equity and warrants at December 31, 2010.
The weighted average yields on our senior secured loan portfolio, subordinated debt portfolio and total debt portfolio as of December 31, 2011 at our current cost basis were 9.7%, 12.6% and 11.7%, respectively. At December 31, 2010, the yields were 8.7%, 12.9% and 11.5%, respectively.
Since the initial public offering of Apollo Investment in April 2004 and through December 31, 2011, invested capital totaled over $8.6 billion in 164 portfolio companies. Over the same period, Apollo Investment completed transactions with more than 100 different financial sponsors.
At December 31, 2011, 66% or $1.7 billion of our income-bearing investment portfolio is fixed rate and 34% or $0.8 billion is floating rate, measured at fair value. On a cost basis, 65% or $1.8 billion of our income-bearing investment portfolio is fixed rate and 35% or $1.0 billion is floating rate. At December 31, 2010, 63% or $1.7 billion of our income-bearing investment portfolio was fixed rate and 37% or $1.0 billion was floating rate. On a cost basis, 63% or $1.8 billion of our income-bearing investment portfolio was fixed rate and 37% or $1.0 billion was floating rate.
RESULTS OF OPERATIONS
Results comparisons below are for the three and nine months ended December 31, 2011 and December 31, 2010.
Investment Income
For the three and nine months ended December 31, 2011, gross investment income totaled $83.8 million and $272.4 million, respectively. For the three and nine months ended December 31, 2010, gross investment income totaled $94.3 million and $264.1 million, respectively. The decrease in gross investment income for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 was primarily due to a decrease in the receipt of prepayment premiums and other deal related income. The increase in gross investment income for the nine months ended December 31, 2011 as compared to the nine months ended December 31, 2010 was primarily due to an increase in the receipt of prepayment premiums and other deal related income.
Expenses
Expenses totaled $45.3 million and $140.7 million, respectively, for the three and nine months ended December 31, 2011, of which $24.3 million and $75.6 million, respectively, were base management fees and performance-based incentive fees and $16.9 million and $50.2 million, respectively, were interest and other debt expenses. Administrative services and other general and administrative expenses totaled $4.0 million and $14.9 million, respectively, for the three and nine months ended December 31, 2011. Expenses totaled $44.2 million and $122.9 million, respectively, for the three and nine months ended December 31, 2010, of which $27.7 million and $80.1 million, respectively, were base management fees and performance-based incentive fees and $13.4 million and $34.1 million, respectively, were interest and other debt expenses. Administrative services and other general and administrative expenses totaled $3.0 million and $8.8 million, respectively, for the three and nine months ended December 31, 2010. Expenses consist of base investment advisory and management fees, insurance expenses, administrative services fees, legal fees, directors’ fees, audit and tax services expenses, and other general and administrative expenses. The increase in expenses from the December 2010 periods to the December 2011 periods was primarily due to an increase in interest expense as our average interest cost in the current periods is over 100 basis points higher than in the year ago periods and the average debt outstanding is roughly $150 million higher on a year over year basis. The increase in average interest cost resulted from the issuance of new tranches of long-term fixed rate debt in periods during and subsequent to the three and nine month periods ended December 31, 2010. In addition, in the nine month period ended December 31, 2011, the Company recognized approximately $4.0 million in net non-recurring expenses, including legal and other professional expenses of $4.7 million net of a non-recurring reduction of administrative expenses.
Net Investment Income
The Company’s net investment income totaled $38.5 million and $131.7 million, or $0.20 and $0.67, per average basic share, respectively, for the three and nine months ended December 31, 2011. The Company’s net investment income totaled $50.1 million and $141.1 million, or $0.26 and $0.73, per average basic share, respectively, for the three and nine months ended December 31, 2010.
Net Realized Losses
The Company had investment sales and prepayments totaling $175 million and $1.3 billion, respectively, for the three and nine months ended December 31, 2011. The Company had investment sales and prepayments totaling $481 million and $722 million, respectively, for the three and nine months ended December 31, 2010. Net realized losses for the three and nine months ended December 31, 2011 were $275.0 million and $341.1 million, respectively. For the three and nine months ended December 31, 2010, net realized losses totaled $64.9 million and $150.5 million, respectively. Net realized losses for the three and nine month periods ended December 31, 2011 were primarily derived from the exits of select investments, specifically Grand Prix Holdings, which accounted for $274 million of the realized loss totals, but also included Playpower Holdings, TL Acquisitions and FSC Holdings. The realized losses incurred upon the exit of these investments reversed out previously reported unrealized losses. Net realized losses for the three and nine months ended December 31, 2010 were primarily derived from selective exits and restructurings of underperforming investments.
Net Unrealized Appreciation (Depreciation) on Investments, Cash Equivalents and Foreign Currencies
For the three and nine months ended December 31, 2011, net change in unrealized appreciation on the Company’s investments, cash equivalents, foreign currencies and other assets and liabilities totaled $300.2 million and $5.9 million, respectively. For the three and nine months ended December 31, 2010, net change in unrealized appreciation on the Company’s investments, cash equivalents, foreign currencies and other assets and liabilities totaled $99.3 million and $77.7 million, respectively. For the three months ended December 31, 2011, the increase in unrealized appreciation was mainly derived from the reclassification of $274 million of previously recognized unrealized depreciation on our investment in Grand Prix Holdings to a realized loss. For the nine months ended December 31, 2011, the change in unrealized depreciation was comprised of the impact from Grand Prix Holdings together with the general decline in capital market conditions during the period. For the three and nine months ended December 31, 2010, net unrealized appreciation was impacted by net changes in specific portfolio company fundamentals and stronger capital market conditions.
Net Increase (Decrease) in Net Assets From Operations
For the three months ended December 31, 2011, the Company had a net increase in net assets resulting from operations of $63.7 million. For the nine months ended December 31, 2011, the Company had a net decrease in net assets resulting from operations of $203.5 million. For the three and nine months ended December 31, 2010, the Company had a net increase in net assets resulting from operations of $84.5 million and $68.4 million, respectively. For the three months ended December 31, 2011 basic and diluted earnings per average share were $0.32 and $0.31, respectively. For the nine months ended December 31, 2011, basic and diluted losses per average share were $1.04 and $1.04, respectively. The basic and diluted earnings per average share were $0.43 and $0.36 for the three and nine months ended December 31, 2010.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s liquidity and capital resources are generated and generally available through periodic follow-on equity and debt offerings, our senior secured, multi-currency $1.254 billion revolving credit facility maturing on April 12, 2013 (see note 10 within the Notes to Financial Statements) (the “Facility”), our senior secured notes, investments in special purpose entities in which we hold and finance particular investments on a non-recourse basis, as well as from cash flows from operations, investment sales of liquid assets and prepayments of senior and subordinated loans and income earned from investments. The Company also has investments in its portfolio that contain PIK provisions. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders annually in the form of dividends, even though the Company has not yet collected the cash. For the nine months ended December 31, 2011, accrued PIK totaled $13.1 million, on total investment income of $272.4 million. On April 13, 2011, $380 million of commitments on the Facility matured. At December 31, 2011, the Company had $743 million in borrowings outstanding on its Facility and $511 million of unused capacity. As of December 31, 2011, aggregate lender commitments under the Facility total $1.254 billion.
On May 3, 2010, the Company closed on its most recent follow-on public equity offering of 17.25 million shares of common stock at $12.40 per share raising approximately $204 million in net proceeds. In the future, the Company may raise additional equity or debt capital, among other considerations. The primary use of funds will be investments in portfolio companies, reductions in debt outstanding and other general corporate purposes, including the payment of interest, fees or distributions to shareholders.
On September 30, 2010, the Company entered into a note purchase agreement, providing for a private placement issuance of $225 million in aggregate principal amount of five-year, senior secured notes with a fixed interest rate of 6.25% and a maturity date of October 4, 2015 (the “Senior Secured Notes”). On October 4, 2010, the Senior Secured Notes were sold to certain institutional accredited investors pursuant to an exemption from registration under the Securities Act of 1933, as amended. Interest on the Senior Secured Notes will be due semi-annually on April 4 and October 4, commencing on April 4, 2011. The proceeds from the issuance of the Senior Secured Notes were primarily used to reduce other outstanding borrowings and/or commitments on the Company’s Facility.
On January 25, 2011, the Company closed a private offering of $200 million aggregate principal amount of senior unsecured convertible notes (the “Convertible Notes”). The Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2011. The Convertible Notes will mature on January 15, 2016 unless earlier converted or repurchased at the holder’s option. Prior to December 15, 2015, the Convertible Notes will be convertible only upon certain corporate reorganizations, dilutive recapitalizations or dividends, or if, during specified periods our shares trade at more than 130% of the then applicable conversion price or the Convertible Notes trade at less than 97% of their conversion value and, thereafter, at any time. The Convertible Notes will be convertible by the holders into shares of common stock, initially at a conversion rate of 72.7405 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes (14,548,100 common shares) corresponding to an initial conversion price per share of approximately $13.75, which represents a premium of 17.5% to the $11.70 per share closing price of the Company’s common stock on The NASDAQ Global Select Market on January 19, 2011. The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.28 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $11.70 per share. The Convertible Notes are senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
On August 11, 2011, the Company adopted a plan for the purpose of repurchasing up to $200 million of its common stock in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The Company’s plan was designed to allow it to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in the plan to repurchase shares on the Company’s behalf in accordance with the terms of the plan. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the plan. While the portion of the plan reliant on Rule 10b-18 remains in effect, the portion reliant on Rule 10b5-1 is subject to periodic renewal and is not currently in effect. As of December 31, 2011, no shares have been repurchased.
On September 29, 2011, the Company closed a private offering of $45 million aggregate principal amount of senior secured notes (the “Notes”) consisting of two series: (1) 5.875% Senior Secured Notes, Series A, of the Company due September 29, 2016 in the aggregate principal amount of $29 million; and (2) 6.250% Senior Secured Notes, Series B, of the Company due September 29, 2018, in the aggregate principal amount of $16 million. The Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the offering of Notes are intended to be used to fund new portfolio investments, reduce outstanding borrowings on the Company’s Facility and for general corporate purposes, including the payment of interest, fees or distributions to shareholders.
APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share amounts)

December 31, 2011
(unaudited)      March 31, 2011
-----------------  ---------------
Assets
Non-controlled/non-affiliated
investments, at value (cost--$2,813,436
and $2,900,378, respectively)           $       2,577,312  $     2,901,295
Non-controlled/affiliated investments,
at value (cost--$0 and $22,407,
respectively)                                          --           37,295
Controlled investments, at value (cost--
$221,639 and $376,051, respectively)              201,543          111,568
Cash                                                    --            5,471
Foreign currency (cost--$632 and $881,
respectively)                                         635              883
Receivable for investments sold                     81,810           13,461
Interest receivable                                 60,505           45,686
Dividends receivable                                    13            5,131
Miscellaneous income receivable                      1,216               --
Receivable from investment adviser                      --              576
Prepaid expenses and other assets                   19,902           27,447
-----------------  ---------------

Total assets                           $       2,942,936  $     3,148,813
-----------------  ---------------

Liabilities
Debt                                     $       1,213,185  $     1,053,443
Payable for investments purchased                   25,000           37,382
Dividends payable                                   55,172           54,740
Management and performance-based
incentive fees payable)                            24,327           27,553
Interest payable                                    10,614            9,703
Accrued administrative expenses                      2,502            1,738
Other liabilities and accrued expenses               2,665            3,223
Due to custodian                                     2,064               --
-----------------  ---------------

Total liabilities                      $       1,335,529  $     1,187,782
-----------------  ---------------

Net Assets
Common stock, par value $.001 per share,
400,000 and 400,000 common shares
authorized, respectively, and 197,043
and 195,502 issued and outstanding,
respectively                            $             197  $           196
Paid-in capital in excess of par                 2,886,449        2,871,559
Undistributed net investment income                 23,271           56,557
Accumulated net realized loss                   (1,055,001)        (713,873)
Net unrealized depreciation                       (247,509)        (253,408)
-----------------  ---------------

Total net assets                       $       1,607,407  $     1,961,031
-----------------  ---------------

Total liabilities and net assets       $       2,942,936  $     3,148,813
-----------------  ---------------

Net Asset Value Per Share                $            8.16  $         10.03
-----------------  ---------------

APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share amounts)

Three months ended           Nine months ended
--------------------------  --------------------------
December 31,  December 31,  December 31,  December 31,
2011          2010          2011          2010
------------  ------------  ------------  ------------
INVESTMENT INCOME:
From non-
controlled/non-
affiliated
investments:
Interest            $     77,220  $     83,820  $    238,264  $    233,166
Dividends                  1,125           992         5,410         3,712
Other income               3,521         6,650        16,761        11,958
From non-
controlled/
affiliated
investments:
Interest                      --         2,746           899         9,088
From controlled
investments:
Interest                   1,297            --         2,565            --
Dividends                    652            --         8,489         6,031
Other income                  --           110            --           110
------------  ------------  ------------  ------------

Total Investment
Income            $     83,815  $     94,318  $    272,388  $    264,065
------------  ------------  ------------  ------------

EXPENSES:
Management fees     $     14,693  $     15,203  $     46,171  $     44,787
Performance-based
incentive fees            9,634        12,532        29,398        35,284
Interest and other
debt expenses            16,926        13,433        50,222        34,079
Administrative
services expense          1,500         1,540         3,887         4,348
Other general and
administrative
expenses                  2,524         1,484        10,978         4,432
------------  ------------  ------------  ------------

Total expenses           45,277        44,192       140,656       122,930
------------  ------------  ------------  ------------

Net investment
income           $     38,538  $     50,126  $    131,732  $    141,135
------------  ------------  ------------  ------------

REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS, CASH
EQUIVALENTS AND
FOREIGN CURRENCIES:
Net realized gain
(loss):
Non-controlled/
non-affiliated
investments and
cash equivalents  $     (1,746) $    (55,650) $    (85,208) $   (142,777)
Non-controlled/
affiliated
investments                167            --        19,039            --
Controlled
investments           (274,452)           --      (274,452)           --
Foreign currencies        1,036        (9,289)         (507)       (7,673)
------------  ------------  ------------  ------------

Net realized loss     (274,995)      (64,939)     (341,128)     (150,450)
------------  ------------  ------------  ------------

Net change in
unrealized gain
(loss):
Investments and
cash equivalents       298,005        89,088        (7,464)       71,140
Foreign currencies        2,149        10,229        13,363         6,535
------------  ------------  ------------  ------------

Net change in
unrealized gain
(loss)                300,154        99,317         5,899        77,675
------------  ------------  ------------  ------------

Net realized and
unrealized gain
(loss) from
investments, cash
equivalents and
foreign currencies       25,159        34,378      (335,229)      (72,775)
------------  ------------  ------------  ------------

NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS     $     63,697  $     84,504  $   (203,497) $     68,360
------------  ------------  ------------  ------------

EARNINGS (LOSS) PER
SHARE BASIC         $       0.32  $       0.43  $      (1.04) $       0.36
DILUTED              $       0.31  $       0.43  $      (1.04) $       0.36
------------  ------------  ------------  ------------
About Apollo Investment Corporation
Apollo Investment Corporation is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company’s investment portfolio is principally in middle-market private companies. From time to time, the Company may also invest in public companies. The Company invests primarily in senior secured loans and mezzanine loans and equity in furtherance of its business plan. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Management, L.P., a leading private equity investor.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future operating results; our business prospects and the prospects of our portfolio companies; the impact of investments that we expect to make; the dependence of our future success on the general economy and its impact on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; our expected financings and investments; the adequacy of our cash resources and working capital; and the timing of cash flows, if any, from the operations of our portfolio companies.
We may use words such as “anticipates,” “believes,” “expects,” “intends”, “will”, “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.
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2012年1月31日星期二

Premier Service Bank Announces Financial Results for the Quarter and Year Ended December 31, 2011

RIVERSIDE, Calif.–(BUSINESS WIRE)– Premier Service Bank (OTCBB:PSBK.OB – News) today announced its unaudited financial results for the quarter and year ended December 31, 2011.
For the year ended December 31, 2011, the Bank reported a net loss of $2.19 million, or ($1.77) per diluted share, compared to a net loss of $3.26 million, or ($2.66) per diluted share for the year ended December 31, 2010. The net loss for the fourth quarter of 2011 was $820 thousand, or ($0.66) per diluted share, compared to a net loss of $707 thousand, or ($0.57) per diluted share for the fourth quarter of 2010. The variance in earnings between the respective periods is primarily attributed to the provisions to the Bank’s allowance for loan losses, which, for the year ended December 31, 2011, totaled $2.79 million, compared to $4.01 million for the year ended December 31, 2010. The provision to the allowance for loan losses for the fourth quarter of 2010 totaled $910 thousand, compared to $960 thousand for the same period in 2010.
At December 31, 2011, the Bank had $8.93 million of non-performing loans, representing 8.61% of the Bank’s total loans, compared to $8.21 million of non-performing loans, or 6.98% of total loans, at December 31, 2010. Impairment analyses are performed on the Bank’s non-performing loans and impairment adjustments, if any, are written off as a part of this process. The Bank had foreclosed real estate of $2.92 million at December 31, 2011, compared to foreclosed real estate of $1.87 million at December 31, 2010. All non-performing loans were on non-accrual at December 31, 2011 and 2010. The allowance for loan losses totaled $2.36 million at December 31, 2011, or 2.28% of total loans as of that date, compared to $2.55 million at December 31, 2010, or 2.17% of total loans as of that date.
At December 31, 2011, the Bank had total assets of $141 million, representing a decrease of $14.7 million or 9.45% compared to total assets of $156 million at December 31, 2010. Total deposits at December 31, 2011 were $111.8 million, representing a 9.43% reduction compared to total deposits of $123.4 million at December 31, 2010. Non-interest bearing demand deposits totaled $41.1 million at December 31, 2011, representing 36.8% of total deposits at that date, compared to $37.6 million of non-interest bearing demand deposits at December 31, 2010, which represented 30.5% of total deposits at that date.
The Bank’s gross loan portfolio totaled $103.7 million at December 31, 2011, representing an 11.9% decrease compared to gross loans of $117.6 million at December 31, 2010. Unfunded credit commitments stood at $7.6 million at December 31, 2011, representing a 42.9% decrease when compared to unfunded commitments of $13.3 million at December 31, 2010.
The Bank’s net interest margin for the year ended December 31, 2011 was 4.82%, a decrease of 0.14% compared to the net interest margin of 4.96% for the year ended December 31, 2010. The Bank’s net interest margin for the quarter ended December 31, 2011 was 4.64%, a decrease of 0.09% compared to the net interest margin of 4.73% for the fourth quarter of 2010.
At December 31, 2011, the Bank was adequately capitalized under applicable regulatory guidelines. Total shareholders’ equity at December 31, 2011 was $10.7 million, representing a decrease of $2.2 million, or 17%, compared to total shareholders’ equity of $12.9 million at December 31, 2010. On December 1, 2010, the Bank entered into a Consent Order with the Federal Deposit Insurance Corporation and the California Department of Financial Institutions. Among the provisions of the Consent Order is the requirement that within 90 days from the effective date of the Order (by February 28, 2011), the Bank shall increase and thereafter maintain its Tier I capital in such an amount to ensure that the Bank’s leverage ratio equals or exceeds 9.50 percent and its total risk-based capital ratio equals or exceeds 12 percent. The Bank was not in compliance with this requirement as of February 28, 2011 as required by the Order. As of December 31, 2011, these capital ratios were 7.21% and 10.78%, respectively. As a result, the Bank had not achieved compliance, as of December 31, 2011, with the capital ratios required by the Order. The Bank attempted to comply with the capital requirements of the Order during 2011, but its private placement offering during 2011 of up to $10 million of common stock to accredited investors was not successful. The stock permit issued by the DFI for that offering expired on December 23, 2011, and the Bank did not request an extension of the permit in view of the stale financial statements included in the offering and other factors. Because the Bank did not sell the minimum amount required by the offering, all subscriptions were returned when the offering expired. Before the Bank may commence a new offering, it must receive audited financial statements for its year ended December 31, 2011, and a new stock permit must be issued. Audited financial statements are anticipated to be issued in early February. At that time, if the Bank has not satisfied the capital ratios required by the Order, the Bank intends to seek a new stock permit from the Department of Financial Institutions for the sale of up to $10 million of common stock to accredited investors in another nonpublic offering. While the Bank continues to be adequately capitalized under applicable regulatory guidelines, in order to comply with the capital requirements of the Consent Order the Bank will need to complete the proposed capital offering in 2012 or find another solution which improves its capital ratios, including the possible sale of the Bank or a transfer of control of the Bank, or taking steps to decrease the asset size of the Bank until the ratios are in compliance with the Consent Order.
The Bank’s President and Chief Executive Officer, Kerry L. Pendergast, stated, “While 2011, in most respects, was a continuum of 2010, there are anecdotal signs suggesting that, perhaps, the local marketplace is beginning to shows some signs of stabilization. While it is too early to state that we’ve turned the corner, I would suggest that our customers appear to be more optimistic about the future.”
Pendergast went on to say, “Throughout 2011 Premier Service Bank focused its efforts on managing the credit portfolio; while this message has been embedded in our releases for quite some time, it is central to returning the Bank to consistent profitability. Recognizing that delinquency is generally a precursor to more serious issues developing in a relationship, management and staff intensified their collection efforts throughout the year; as a result, overall delinquency within the institution has been trending downward over the last 2 quarters. In 2011 the Bank contributed $2.79 million to its Allowance for Loan Losses as compared to a contribution of $4.01 million in 2010; this serves to support the belief that the pace of problem loans is beginning to decline and that appraisal valuations, tied to Classified Commercial Real Estate Loans, are also beginning to stabilize.”
Pendergast said in closing, “While improving the overall asset quality of the Bank continues to be the primary focus of the executive management team and our Board of Directors, our entire team works tirelessly to ensure that our “customer first” mindset does not get lost in the process. Throughout the year, all of the Bank’s front line officers participated in a structured calling program that focused on the Bank’s existing customer base; at a minimum, each client assigned to an account officer was called on at least twice within the calendar year. The importance of retention calling cannot be overstated and is critical in an environment where large, money center banks are entering the region with the dollars and the resources to buy market share.”
Premier Service Bank is a California state-chartered bank with two offices, its headquarters office in Riverside and a full-service banking office in Corona. The Bank provides commercial banking services, including a wide variety of checking accounts, investment services with competitive deposit rates, on-line banking products, and real estate, construction, commercial and consumer loans, to small and medium-sized businesses, professionals and individuals. Additional information about Premier Service Bank is available at its website at www.premierservicebank.com.
Forward-looking Statements
This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about Premier Service Bank’s business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and in the following: Premier Service Bank’s ability to increase its assets, deposits and total loans, control expenses, retain critical personnel, manage interest rate risk, manage technological changes, address regulatory requirements, and other risks discussed from time to time in Premier Service Bank’s filings and reports with the Federal Deposit Insurance Corporation. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and Premier Service Bank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.
For a more complete discussion of risks and uncertainties, investors and security holders are urged to read Premier Service Bank’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by Premier Service Bank with the FDIC.
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Financial Data – Premier Service Bank
(Unaudited)
 
Quarter Ended
(In Thousands)   Dec. 31, 2011Sept. 30, 2011June 30, 2011Mar. 31, 2011Dec. 31, 2010
 
Interest income(not taxable equivalent)$1,750$1,843$1,959$1,938$2,063
Interest expense 222  232  245  291  329 
Net interest income1,5281,6111,7141,6471,734
Provision for loan losses 910  275  884  725  960 
Net interest income after provision for loan losses6181,336830922774
Non-interest income129148261178163
Non-interest expense 1,566  1,625  1,722  1,694  1,644 
Income before income taxes(819)(141)(631)(594)(707)
(Benefit)/Provision for income taxes 1  -  -  -  - 
Net income$(820)$(141)$(631)$(594)$(707)
 
Quarter Ended
(In Thousands)   Dec. 31, 2011Sept. 30, 2011June 30, 2011Mar. 31, 2011Dec. 31, 2010
Per share:
Net income – basic$(0.66)$(0.12)$(0.51)$(0.48)$(0.57)
Weighted average shares used in basic1,2611,2611,2611,2611,261
Net income – diluted$(0.66)$(0.12)$(0.51)$(0.48)$(0.57)
Weighted average shares used in diluted1,2611,2611,2611,2611,261
Book value at period end$5.22$5.89$6.00$6.49$6.97
Ending shares1,2611,2611,2611,2611,261
 
 
Balance Sheet – At Period-End
Cash and due from banks$22,867$21,875$17,947$22,636$24,060
Investments and Fed fund sold8,4467,7249,76610,2508,476
Gross Loans103,668109,429111,500113,645117,624
Deferred fees(198)(211)(233)(254)(263)
Allowance for loan losses(2,359)(3,130)(2,803)(2,561)(2,549)
Net Loans101,111106,088108,464110,830114,812
Other assets 8,832  9,398  10,559  10,592  8,644 
Total Assets$141,256 $145,085 $146,736 $154,308 $155,992 
 
Non-interest-bearing deposits$41,130$43,246$43,762$44,947$37,588
Interest-bearing deposits70,62969,49970,51977,34785,809
Other liabilities18,81220,81820,79719,74919,737
Shareholders’ equity 10,685  11,522  11,658  12,265  12,858 
 
Total Liabilities and Shareholders’ equity$141,256 $145,085 $146,736 $154,308 $155,992 
 
Asset Quality & Capital – At Period-End
Non-accrual loans$8,926$9,591$6,309$8,047$8,209
Loans past due 90 days or more-----
Other real estate owned2,9273,1944,0363,9271,865
Other bank owned assets -  -  -  -  - 
Total non-performing assets$11,853 $12,785 $10,345 $11,974 $10,074 
 
Allowance for losses to loans, gross2.28%2.86%2.51%2.25%2.17%
Non-accrual loans to total loans, gross8.61%8.76%5.66%7.08%6.98%
Non-performing loans to total loans, gross8.61%8.76%5.66%7.08%6.98%
Non-performing asset to total assets8.39%8.81%7.05%7.76%6.46%
Allowance for losses to non-performing loans26.43%32.63%44.43%31.83%31.05%
 
Total risk-based capital ratio10.78%11.15%10.92%11.27%11.64%
Tier 1 risk-based capital ratio9.52%9.88%9.66%10.00%10.38%
Tier 1 leverage ratio7.21%7.86%7.73%7.87%8.05%

2012年1月9日星期一

Student loans: Pay them down or start an emergency fund?

Student loans are above $50,000, but there are ways to balance saving with paying down debt. See questions No. 2, 3, and 5 for advice on student loans.
What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries.
1. Investing in light of default
2. Debt eradication
3. Loans or emergency fund?
4. Repetitive questions
5. What’s next on my path?
6. Time for a financial advisor?
7. Polite hygiene advice
8. Wedding and financial planning
9. What are readers like?
10. 2012 predictions
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Trent Hamm
The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.

Recent posts

How long does it take for you to stop dating checks and other documents with the previous year after the calendar flips?
I’ll admit that it will probably take me most of January to get used to writing 2012.
Q1: Investing in light of default
I have a small IRA, with half in a mutual fund, which has topped out, and the other half in two stocks which are near to bottoming out, from a lag factor associated with recession and reinvestment.
I anticipate a currency devaluation as an effect of renegotiation or default on national debt limits. Would overseas money markets be a safe place to stash funds from the sale of the mutual while I wait for it to drop so I can repurchase it? If you believe that our debt problems will negatively impact overseas money markets, what is an alternate spot, exclusive of index funds, which will drop as the market does?
- Monica
I don’t think I would trust overseas money markets more than domestic ones, as I think a lot of economies are facing some sort of currency devaluation due to the ongoing economic conditions.
I also wouldn’t bank my entire plan on market timing, particularly when you’re making moves based on a sense of a fund having “topped out” or “bottoming out.” If I were you and I moved forward with this plan, I’d set some thresholds on when to buy back in. For example, you might want to say that you’ll buy back in after three months if either the value of the fund is down, say, 15% or it matches the value you sold it at.
Don’t worry about what the absolute top of the market is or what the bottom is – worry about making money for yourself.
Q2: Debt eradication
I’m a 22-year old student who will graduate with a B.A. in December. I took out some federal and private loans to pay for school. I saved for the past year and paid off the private loans while in school. I’ll be left with $16,000 at 6.8% when I graduate. I have no other debt and a 3-month emergency fund ($6,000). I plan to make payments well over the minimum to pay this balance off in 2 years or less.
Is this a good thing? The more I research credit and credit scores, it seems that a relatively low-balance loan isn’t a bad thing to keep around for ten, even fifteen years. However, having a positive net worth is my #1 priority. Should I be making aggressive payments or simply using that money to pad my retirement and savings while keeping the loan around? While paying the loan aggressively I’ll still be contributing 15% of my net income to an IRA. I have one credit card with a $500 limit; never carried a balance. I pay bills on time every month. I currently rent. A house isn’t on my to-do list, and I’ll buy a car outright if I get one in the future. Is it enough to build my credit without a credit card balance, mortgage, car payment, and (soon) no student loan?
- Belinda
I don’t think the value of having a 6.8% student loan (in terms of your credit score) is worth the financial cost of having to pay 6.8% interest on the balance every year. If it’s within your means without causing other financial troubles, I would pay it off sooner rather than later.
Given that you do have a continuing line of credit in the form of your credit card, your credit report won’t go completely empty after you pay off the student loan. I would consider using the card regularly (and paying off the balance) and being open to moderate raises in your credit limit.
You’re doing very well. Keep along your current path and you’ll continue to do very well.
Q3: Loans or emergency fund?
I’ll graduate from grad school this May with $25,500 in federal subsidized loans (spouse and I also still have $27k combined undergrad debt at 5.3%). I haven’t technically needed these loans for the last year of school but because they’re subsidized I’ve been storing the money in a rewards checking account earning about 3%. It will be around 12,000 total in November when the subsidization ends and 6.8% interest kicks in. This is the extent of our short-term savings/emergency fund right now (my spouse and I are also saving for retirement). So, since we are looking to save for life’s big things in the next few years (car, family, and house, probably in that order), and we don’t have a defined emergency fund amount, I wonder how much of that 12k should we pay back immediately? We’re currently steadily employed though I’m seeking new full-time work in my desired field instead of my current part-time job. We have roughly $1000 extra/month to put to good use on student loan repayment and savings (we’re a pretty frugal couple), but I’m not sure what the best combination would be. We have to pay minimum $400/mo on our student loans. Is it best to pay more on student loans and postpone more emergency/car/baby/home savings? Is it best to pay back the entire $12k “savings” (which is really borrowed money) and start our “real” savings from scratch? I’m lost and confused and would be interested in your and your readers’ opinions. 
- Danika
If I were you, I would establish a new emergency fund and fund it with enough money to provide three months or so of living expenses for you and your partner. I would then use the remainder to pay off your highest loan and then use the subsequent $1,000 per month toward minimum payments and whatever loan has the highest interest rate.
I would count that 6.8% loan as already having that rate and make “payments” on that debt to a savings account. Then, when the subsidization ends, I’d pay the entire balance of that savings account to that 6.8% loan.
In terms of balancing emergency protection and a path toward debt freedom, I think this is a very good plan.
Q4: Repetitive questions
I’ve noticed that there are a lot of consistent shall we say themes in your reader mailbag questions. Student loans come up a lot for example and so does retirement. Why repeat so much?
- Shaun
The reason these stories show up so often is because they’re the type of concerns that cause people to really start thinking about their finances and because they are so common among people. A lot of people leave college with student loans and they worry about paying them off.
I use a lot of these types of questions because there are a lot of variations in the story and because it’s a genuine concern that a lot of people out there have.
I try to choose questions that reflect the whole of the questions that I receive. I do often pick out specific interesting ones, but I also see from my email inbox that I get a LOT of questions about student loans, so I cover those questions.
Q5: What’s next on my path?
I’m now fortunate to be in a position where I’m (finally) earning a great wage at a company I have no intention of leaving anytime soon, living in a city (NYC) that I love, and living well below my means.
It’s been drilled into me for years that paying off your credit card(s) and building a healthy emergency fund are the first foundation steps to a healthy financial life. I’ve accomplished both (finally!), and have $0 credit card debt (only one credit card), and $11,000 in savings. I still have outstanding student loans, which I’m paying back and contributing more than the minimum on each month – these are at a very low interest rate, and the total repayment each month comes to $350. Paying off one would save me about half of that amount as the payments are pretty much equal between the loans.
I’m also putting $12,000/year into a 401(k), and am planning on continuing to contribute $1,000/mo into my savings account for the next 9 months – until it reaches $20,000. Since I live in NYC, I plan on renting for quite a few more years and I’m planning ahead for when I’ll want to move (moving into a new apartment here typically costs $4-5,000 upfront in costs for my price range – first month’s rent, last month’s rent, possibly a broker’s fee and a security deposit). 6 months of my bills (if I were laid off) comes to about $15,000, and that’s my emergency fund savings goal since I don’t have close family in the area and wouldn’t want to have to move due to prolonged unemployment. The $20,000 goal for this year assumes that I’ll want to move within the next year, which is a possibility (but not set in stone).
I’m not in a hurry to change my plans right now as I still have a bit of time left to contribute to my savings account, but I’d like to have some solid steps in place when I get there.
So – what comes next? It seems like after the savings account, credit card and retirement account are all healthy (or being contributed to healthily), that any number of options open up. I don’t get an employer match on my 401(k), so it’s 100% my own money in there, and I’d like to max it out for a few years, due to not being able to contribute anything in my younger 20′s (4 years of working w/o the spare $$ to contribute). But, I’ll still have a good amount of money that I’m now putting into savings left over after maxing out my 401(k), and I want to make sure I’m investing it wisely, if that’s even the right first step after this.
Are there any recommended steps after this point, or does it depend on the individual and their goals?
- Jill
It really comes down to goal-setting more than anything else.
Simply put, there is no general right way to invest. There are only good ways to invest to help you reach a specific goal. If you don’t know what you’re saving for, you’re probably going to save in an inopportune manner.
Let’s say, for example, that you decide to start investing in stocks because you heard they have a great return, not because you had any goals in mind. Let’s say you make this decision in January 2008. In December 2008, you decide to buy a house because you got pregnant and you decided you needed a house for that child. Your money has now lost 40% of its value.
You would have been far better off in a savings account had you incorporated the idea of buying a house in the next one or two years into your plan.
Spend some time thinking about where you want your life to be in five years or ten years. Where are you headed? Your investment choices should really follow that.
Jill also had a follow-up question.


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