UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) November 12, 2015

 

StoneCastle Financial Corp.

(Exact Name of Registrant as Specified in Charter)

 

Delaware 333-189307 90-0934878
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)

 

152 West 57th Street, 35th floor, New York, NY 10019
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code (212) 354-6500

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02 Results of Operations and Financial Condition.

 

On November 12, 2015 the registrant issued a press release announcing its financial results for the third quarter ended September 30, 2015. The text of the press release is included as Exhibit 99.1 to this Form 8-K.

 

The information disclosed under this item 2.02 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit Number   Description  
       
99.1   Press Release, dated November 12, 2015  
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  STONECASTLE FINANCIAL CORP.
   
Date: November 12, 2015  
   
  By: /s/ Patrick J. Farrell  
  Name: Patrick J. Farrell
  Title: Chief Financial Officer
 

Exhibit Index

 

Exhibit Number   Description  
       
99.1   Press Release, Dated  November 12, 2015  
 

Exhibit 99.1

 

 

 

StoneCastle Financial Corp. Reports Third

Quarter 2015 Results

 

NEW YORK, November 12, 2015 – StoneCastle Financial Corp. (Nasdaq: BANX) (“StoneCastle Financial” or the “Company”), an investment company registered with the Securities and Exchange Commission (“SEC”), today announced results for the third fiscal quarter ended September 30, 2015.

 

Third Quarter 2015 Investment Highlights:

 

·Deployed $12.8 million in net new investments

 

·Invested $30 million in debt in 5 investments

 

·Received repayments of $9.3 million from 7 investments

 

·Received sales proceeds of $7.9 million from 10 investments

 

Highlighted investment activity in the third quarter 2015 included:

 

·$2.5 million in Victory Bancorp, Inc. Subordinated Term Loan, 8.5%, 9/22/2025

 

·$4.0 million in Linden Bancshares, Inc. Subordinated Term Loan, 8.75%, 7/31/2025

 

·$7.5 million in Bankwell Financial Group, Inc., Unsecured Fixed Rate Subordinated Notes, 5.75%, 8/15/2025

 

·$7.5 million in Market Street Bancshares, Inc. Subordinated Term Loan, 6.5%, 8/14/2025

 

·$8.5 million in Sandhills Holding Company, Inc. Subordinated Term Loan, 8.75%, 7/31/2025

 

A complete listing of investments as of the end of the quarter can be found on the Company’s website at www.StoneCastle-Financial.com.

 

The estimated annualized yield generated by the invested portfolio as of September 30, 2015 (excluding cash and cash equivalents) was approximately 8.33%.

 

Third Quarter 2015 Financial Results

 

Total earnings for the third quarter were $2,414,612 or $.37 per share. Net investment income was $2,396,410 or $.37 per share, comprised of $4,105,132 in gross income and $1,708,722 of expenses. Realized capital gains were $18,202.

 

Net Assets at quarter end were $143,807,916, up from $143,506,606 in the previous quarter. The Company’s Net Asset Value was $22.09 per share, up $.04 from the prior quarter. The value of the invested portfolio increased $7,998.

 

The Company paid a quarterly cash distribution of $0.33 per share on September 29, 2015 to shareholders of record at the close of business on September 21, 2015.

 

The Company had $58 million outstanding on its $70 million credit facility, which represents approximately 29% of total assets. According to regulated investment company rules, the Company may borrow only up to 33.3% of its total assets.

 

Portfolio and Investment Summary

 

As of the close of business on September 30, 2015, the Company had total assets of $203,119,964, up 5% from the previous quarter, consisting of total investments of $197,497,723, cash of $4,018,444, and other assets of $1,603,797.  Other assets include interest and dividends receivable of $443,451, receivables for securities sold of $231,371, and prepaid assets of $928,975.

 

During the quarter, the Company deployed $12,807,959 in net new investments. The Company invested $30,000,000 in 5 debt investments. The Company received repayments totaling $9,326,879 from 7 investments and sold 10 investments for proceeds of $7,865,162.

 

Quarterly Conference Call

 

StoneCastle Financial will host a webcast and conference call on November 12, 2015 at 5:00 pm Eastern time.

 

The conference call can be accessed by dialing 1-877-407-9039 for domestic callers or 1-201-689-8470 for international callers. Participants may also access the call via live webcast by visiting StoneCastle Financial’s investor relations website at www.stonecastle-financial.com. To listen to a live broadcast, go to the website at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay will be available shortly after the call and be available through midnight (Eastern Time) on November 26, 2015. The replay can be accessed by dialing 1-877-870-5176 for domestic callers or 1-858-384-5517 for international callers. The passcode for the replay is 13619678. The archive of the webcast will be available on the Company’s website for a limited time.

 

About StoneCastle Financial Corp.

 

StoneCastle Financial is an SEC registered non-diversified, closed-end management investment company listed on the NASDAQ Global Select Market under the symbol “BANX.” StoneCastle Financial intends to make long-term, passive, non-control investments in community banks seeking capital for organic growth, acquisitions, share repurchases and other refinancing activities. Its investment objective is to provide current income and, to a lesser extent, capital appreciation. StoneCastle Financial is managed by StoneCastle Asset Management LLC.

 

Disclaimer and Risk Factors:

 

There is no assurance that StoneCastle Financial will achieve its investment objective. StoneCastle Financial is subject to numerous risks, including investment and market risks, management risk, income and interest rate risks, banking industry risks, preferred stock risk, convertible securities risk, debt securities risk, liquidity risk, valuation risk, leverage risk, non-diversification risk, credit and counterparty risks, market discount from net asset value risk and market disruption risk. Shares of closed-end investment companies may trade above (a premium) or below (a discount) their net asset value. Shares of StoneCastle Financial may not be appropriate for all investors. Investors should review and consider carefully StoneCastle Financial’s investment objective, risks, charges and expenses. Past performance does not guarantee future results. Learn more at www.stonecastle-financial.com.

 

The Annual Report, Semi-Annual Report and other regulatory filings of the Company with the SEC are accessible on the SEC’s website at www.sec.gov and on the Company’s website at www.stonecastle-financial.com, and may discuss these or other factors that affect the Company.

 

CONTACT: Investor Contact:

 

Julie Muraco

 

347-887-0324

 

 

 

Copyright 2015 StoneCastle Financial Corp.

 

STONECASTLE FINANCIAL CORP.

Statement of Assets and Liabilities

(unaudited)

 

   September 30, 2015   June 30, 2015 
Assets          
Investments in securities, at fair value (cost: $197,239,693 and $186,099,598 respectively)  $197,497,723   $186,349,630 
Receivable for securities sold   231,371     
Cash and cash equivalents (1)   4,018,444    4,003,914 
Interest and dividends receivable   443,451    1,781,948 
Prepaid assets   928,975    892,256 
Total assets   203,119,964    193,027,748 
           
Liabilities          
Loan payable   58,000,000    38,500,000 
Payable for securities purchased       10,000,000 
Investment advisory fee payable (2)   720,450    668,586 
Loan interest payable   47,669    49,963 
Directors fee payable   9,835    6,670 
Accrued expenses payable   534,094    295,923 
Total liabilities   59,312,048    49,521,142 
Net Assets   143,807,916    143,506,606 
           
Net Assets consist of:          
Common stock at par ($0.001 per share)   6,511    6,509 
Paid-in-capital   145,741,865    145,715,072 
Distributions in excess of net investment income   (4,196,505)   (4,444,820)
Accumulated net realized gains on investments   1,998,015    1,979,813 
Net unrealized appreciation on investments   258,030    250,032 
Net Assets  $143,807,916   $143,506,606 
           
Net Asset Value Per Share:          
Common Stock Shares Outstanding   6,510,953    6,509,375 
Net asset value per common share  $22.09   $22.05 
Market price per share  $16.82   $17.30 
Market price discount to net asset value per share   -23.86%   -21.54%

 

(1) Includes $3,500,000 of restricted cash held in a segregated account at Texas Capital Bank to cover collateral requirements.
(2) Investment advisory fee payable net of waiver for September 30, 2015 and June 30, 2015 of $175,504 and $173,596.
 

STONECASTLE FINANCIAL CORP.

Statement of Operations
(unaudited)

 

   For The Nine Months
Ended September 30,
2015
   For the Three Months
Ended September 30,
2015
 
Investment Income        
Dividends  $5,280,082   $1,601,119 
Interest   5,858,332    2,435,450 
Origination fee income   50,511    22,802 
Other income   93,771    45,761 
Total Investment Income   11,282,696    4,105,132 
           
Expenses          
Investment advisory fees (1)   2,541,501    895,954 
Interest expense   1,021,286    405,698 
ABA marketing and licensing fees   359,632    109,632 
Professional fees   268,367    92,165 
Transfer agent, custodian fees and administrator fees   202,684    70,532 
Due diligence expense   155,583    51,045 
Directors’ fees   135,085    44,916 
Bank fees   120,231    52,956 
Investor relations fees   88,370    28,821 
Insurance expense   67,470    22,531 
Miscellaneous  fees   243,092    109,976 
Total expenses before waivers   5,203,301    1,884,226 
Less: Advisory fee waiver (2)   (520,789)   (175,504)
Net expenses after waivers   4,682,512    1,708,722 
Net Investment Income   6,600,184    2,396,410 
           
Realized and Unrealized Gain on Investments          
Net realized gain on investments   1,998,015    18,202 
Net change in unrealized depreciation on investments   447,700    7,998 
Net realized and unrealized gain on investments   2,445,715    26,200 
Net Increase in Net Assets Resulting From Operations  $9,045,899   $2,422,610 

 

(1) Investment advisory fee reflects gross contractual fee.
(2) Investment advisory fee waiver reflects waiver of fees related to proceeds of issuance of common stock issued on November 7, 2014 and December 2, 2014. In previous quarters, this waiver was shown net against investment advisor fees.
 

STONECASTLE FINANCIAL CORP.

Financial Highlights

(unaudited)

 

   For the Three Months
Ended September 30,
2015
 
Per Share Operating Performance    
Net Asset Value, beginning of period  $22.05 
Net investment income(1)   0.37 
Net realized and unrealized gain on investments(1)   0.00 
Total from investment operations   0.37 
      
Less distributions to shareholders     
From net investment income   (0.33)
Total distributions   (0.33)
      
Net asset value, end of period  $22.09 
Per share market value, end of period  $16.82 
Total investment return based on market value (2)   -0.89%
      
Ratios and Supplemental Data     
Net assets, end of period (in millions)  $143.8 
      
Ratios (as a percentage to average net assets):     
Expenses before waivers (3)(7)   5.20%
Expenses after waivers (3)(4)(8)   4.72%
Net investment income(3)(9)   6.62%
Portfolio turnover rate (5)   9%
      
Revolving Credit Agreement     
Total revolving credit agreement outstanding (000’s)  $58,000 
Asset coverage per $1,000 for revolving credit agreement (6)   3,479 

 

 
(1) Based on the average shares outstanding during quarter.
(2) Based on share market price and reinvestment of distributions at the price obtained under the Dividend Reinvestment Plan. Total return does not include sales load and offering expenses.
(3) Annualized
(4) Excluding interest expense, the ratio would have been 3.60%.
(5) Not annualized
(6) Calculated by subtracting the Company’s total liabilities (excluding the loan) from the Company’s total assets and dividing the amount by the loan outstanding in 000’s.
(7) Ratio of expenses before waivers to average managed assets equals 3.77%.
(8) Ratio of expenses after waivers to average managed assets equals 3.42%.
(9) Ratio of net investment income to average managed assets equals 4.80%.