(RTTNews) - Wednesday, private equity firm MCG Capital Corp. (MCGC: News ), reported a turn to profit for the third quarter from a loss a year-ago, on lower depreciation charges on investments. Revenues declined 24.6% year-on-year, led by monetization initiatives that restructured the company's investment portfolio.

Arlington, Virginia- based MCG reported third quarter net income of $4.18 million or $0.06 per share, compared with a net loss of $66.95 million or $0.90 per share last year.

The recently ended quarter's results reflect a $75.3 million reduction in the net investment loss recognized on the fair value of investment portfolio, that impacted year-ago results.

Distributable net operating income, which measures net operating income adjusted for amortization of employee restricted stock awards, declined to $10.9 million or $0.14 per share from $14.9 million or $0.20 per share

On average, 5 analysts polled by Thomson Reuters expected the company to report earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter declined to $23.61 million from $31.3 million in the prior-year quarter, just about ahead of $23.38 million expected by Wall street analysts.

Total interest and dividend income dropped to $23.06 million from $30.38 million, led by a $2.3 million decline in non-affiliate investments and $4.4 million fall in control investments, of which the company holds more than 25% ownership.
The company attributed the fall in revenues to a reduction in the average portfolio balance stemming from monetization activities. MCG has been monetizing equity securities and redeploying the proceeds in new investment opportunities, as a measure believed to increase stockholder value.

Top-Line for the period were hurt further by lower interest rates paid on loans from other banks, measured in LIBOR which declined 250 base points, higher non-accrual loans and decline in loan fees.

Operating expenses were lower at $14.95 million for the July-September period compared with $18.28 million for the same period last year. However, net operating income before taxes, was still lower for the quarter at $8.66 million versus $13.01 million last year.

Total depreciation on investments charged a miniscule $0.07 million this year, compared with a heavy $71.26 million last year, led by a $61.68 million depreciation cost on control investments in the year-ago period. Net investment losses for the third quarter was $4.4 million, up from $79.72 million last year.

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