Washington, D.C. 20549







Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) November 1, 2018


StoneCastle Financial Corp.

(Exact Name of Registrant as Specified in Charter)


(State or other jurisdiction
of incorporation)
File Number)
(IRS Employer
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):


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


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


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


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


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company o


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Item 2.02          Results of Operations and Financial Condition.


On November 1, 2018 the registrant issued a press release announcing its financial results for the third quarter ended September 30, 2018. 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 1, 2018  

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.





Date: November 1, 2018

  By: /s/ Patrick J. Farrell
  Name: Patrick J. Farrell
  Title: Chief Financial Officer

Exhibit Index


Exhibit Number Description  
99.1 Press Release, Dated November 1, 2018  


Section 2: EX-99.1 (EX-99.1)


Exhibit 99.1




StoneCastle Financial Corp. Reports Third Quarter 2018 Results


NEW YORK, November 1, 2018 – 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, 2018.


Third Quarter 2018 Investment Highlights:


  · Invested $4.0 million in one investment
  · Received full call proceeds on $4.2 million from two investments
  · Exchanged $6.55 million of Chicago Shore Perpetual Preferred Series A and B into First Marquis Holdings, LLC Preferred Shares


Investment Activity in the Third Quarter 2018 Included:


  · Invested $4.0 million in TransPecos Financial Corp. Senior Term Loan, 9.00%, due 10/1/2028


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, 2018 (excluding cash and cash equivalents) was approximately 9.16%.


Third Quarter 2018 Financial Results


Net investment income was $2,601,368 or $0.40 per share, comprised of $4,401,621 in gross income and $1,800,253 of expenses. Net Assets at quarter end were $144,395,086, up slightly from the prior quarter. The Company’s Net Asset Value was $22.04 per share, up $0.03 from the prior quarter.


In the third quarter, the Company paid a cash distribution of $0.38 per share. The distribution was paid on September 28, 2018 to shareholders of record at the close of business on September 24, 2018.


The Company had $45.0 million outstanding on its $62.0 million credit facility at the quarter end, which represents approximately 23.6% 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, 2018, the Company had total assets of $190,821,869 consisting of total investments of $186,893,267, cash of $247,772 and other assets of $3,680,830. Other assets include interest and dividends receivable of $2,858,829 and prepaid assets of $822,001.


During the quarter, the Company invested $4.0 million in TransPecos Financial Corp, Senior Term Loan, 9% due 10/1/2028 and received full call proceeds of $4.2 million from First Western Financial, Inc., Fixed Rate Cumulative Perpetual Preferred Stock, Series A and Series C, 9%. The Company exchanged $6.55 million of Chicago Shore Perpetual Preferred Series A and Series B shares for preferred shares of First Marquis Holdings, LLC.


Quarterly Conference Call


StoneCastle Financial will host a webcast and conference call on November 1, 2018 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 15, 2018. The replay can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for the replay is 13683386. 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 at a 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





Statement of Assets and Liabilities (unaudited)


   September 30, 2018  June 30, 2018
Investments in securities, at fair value (cost: $185,417,086 and $185,642,227 respectively)  $186,893,267   $186,961,326 
Cash   247,772    245,842 
Interest and dividends receivable   2,858,829    2,819,886 
Prepaid assets   822,001    891,027 
Total assets   190,821,869    190,918,081 
Loan payable   45,000,000    45,500,000 
Investment advisory fee payable   835,917    832,978 
Loan interest payable   241,246    159,951 
Directors fee payable   12,908    12,492 
Accrued expenses payable   336,712    312,122 
Total liabilities   46,426,783    46,817,543 
Net Assets  $144,395,086   $144,100,538 
Net Assets consist of:          
Common stock at par ($0.001 per share)  $6,550   $6,548 
Paid-in-capital   145,025,061    144,984,096 
Accumulated net investment loss   (621,069)   (734,105)
Accumulated net realized loss on investments   (1,491,637)   (1,475,100)
Net unrealized appreciation on investments   1,476,181    1,319,099 
Net Assets  $144,395,086   $144,100,538 
Net Asset Value Per Share:          
Common Stock Shares Outstanding   6,550,110    6,548,242 
Net asset value per common share  $22.04   $22.01 
Market price per share  $22.42   $22.89 
Market price premium to net asset value per share   1.72%   4.00%


Statement of Operations (unaudited)


   For The Three
Months Ended
September 30, 2018
  For The Three
Months Ended
June 30, 2018
Investment Income          
Interest  $3,204,190   $3,074,584 
Dividends   1,086,034    1,050,289 
Origination fee income   8,392    160,195 
Other Income   103,005    95,409 
Total Investment Income   4,401,621    4,380,477 
Investment advisory fees   835,234    833,660 
Interest expense   535,870    493,347 
Professional fees   99,138    98,059 
Transfer agent, custodian fees and administrator fees   56,700    57,701 
Directors’ fees   49,935    51,230 
Bank fees   43,057    54,154 
ABA marketing and licensing fees   37,694    37,285 
Investor relations fees   31,204    30,865 
Delaware franchise tax   22,685    22,438 
Insurance expense   18,148    17,951 
Valuation fees   17,488    16,062 
Printing   9,018    14,173 
Due diligence expense   8,777    - 
Miscellaneous fees   35,305    43,294 
Total expenses   1,800,253    1,770,219 
Net Investment Income  $2,601,368   $2,610,258 
Realized and Unrealized Gain / (Loss) on Investments          
Net realized gain / (loss) on investments  $(16,537)  $33,891 
Net change in unrealized appreciation on investments  $157,082    2,617,109 
Net realized and unrealized gain on investments  $140,545    2,651,000 
Net Increase in Net Assets Resulting From Operations  $2,741,913   $5,261,258 


Financial Highlights (unaudited)


   For The Three
Months Ended
September 30, 2018
Per Share Operating Performance    
Net Asset Value, beginning of period  $22.01 
Net investment income(1)  $0.40 
Net realized and unrealized gain / (loss) on investments(1)  $0.01 
Total from investment operations  $0.41 
Less distributions to shareholders     
From net investment income  $(0.38)
Total distributions  $(0.38)
Net asset value, end of period  $22.04 
Per share market value, end of period  $22.42 
Total Investment Return (2)     
Based on market value   -0.36%
Based on net asset value   1.87%
Ratios and Supplemental Data     
Net assets, end of period (in millions)  $144.4 
Ratios (as a percentage to average net assets):     
Expenses before waivers(3)(4)*   4.95%
Expenses after waivers(5)*   4.95%
Net investment income(6)*   7.15%
Portfolio turnover rate **   6%
Revolving Credit Agreement     
Total revolving credit agreement outstanding (000’s)  $45,000 
Asset coverage per $1,000 for revolving credit agreement(7)   4,209 



(1) Based on the average shares outstanding during quarter.
(2) Reflects reinvestment of distributions at the price obtained under the Dividend Reinvestment Plan. Total return does not include sales load and offering expenses and are not annualized.
(3) Excluding interest expense, the ratio would have been 3.48%.
(4) Ratio of expenses before waivers to average managed assets equals 3.74%.
(5) Ratio of expenses after waivers to average managed assets equals 3.74%.
(6) Ratio of net investment income to average managed assets equals 5.41%.
(7) 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.
* Annualized
** Not-annualized