NewStar Financial reported adjusted net income for the third quarter of 2011 of $3.6 million compared to $6 million on the same basis for the same year-ago period. The company’s provision for credit losses increased to $4.4 million in the quarter, up from $2.3 million sequentially and $1.2 million for the same quarter last year.

The company said total funded loan origination volume for the third quarter of 2011 was $190 million compared to $250 million in the second quarter. The asset-based lending and equipment finance businesses originated $11 million, or 8.5% of new loan volume retained on the balance sheet.

The owned loan portfolio increased 3% to $1.8 billion as of September 30, 2011 compared to June 30, 2011. The composition of the owned loan portfolio continued to reflect a focus on senior debt with 96% invested in 1st lien senior secured loans at September 30, 2011.

“I am pleased with our results in the third quarter. We maintained our momentum despite significant volatility – especially in the debt capital markets. Our results reflected strength in new business volume, as well as steady improvement in our credit performance and earnings capacity. We generated $190 million of new funded loan volume at very attractive spreads and net loan growth was 11% on an annualized basis,” said Tim Conway, NewStar’s chairman and chief executive officer. “Our credit performance also improved as credit costs and NPAs both declined. Loan growth and improving margins are also driving top line revenue gains and increasing our earnings power.” Conway added.

To read the full text of NewStar Financial’s news release, click here.