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) August 6, 2020


StoneCastle Financial Corp.

(Exact Name of Registrant as Specified in Charter)


Delaware 333-189307 90-0934878
(State or other jurisdiction
of incorporation)
File Number)
(IRS Employer
Identification No.)
100 Fillmore Street, Suite 325, Denver, Colorado   80206
(Address of principal executive offices)   (Zip Code)


Registrant’s telephone number, including area code (303) 398-2929


(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):


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


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


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


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


Securities registered pursuant to Section 12(b) of the Act:


Title of each class      Trading Symbol(s)   Name of each exchange on which registered
Common   BANX   NASDAQ


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 August 6, 2020 the registrant issued a press release announcing its financial results for the second quarter ended June 30, 2020. 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 August 6, 2020

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: August 6, 2020  
  By: /s/ Patrick J. Farrell
  Name: Patrick J. Farrell
  Title: Chief Financial Officer

Exhibit Index


Exhibit Number   Description
99.1   Press Release, Dated August 6, 2020

Exhibit 99.1




StoneCastle Financial Corp. Reports Second Quarter 2020 Results


DENVER, August 6, 2020 – 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 second fiscal quarter ended June 30, 2020.


Second Quarter 2020 Investment Highlights:


·Invested $36.3 million in six investments
·Realized proceeds of $5.0 million from the partial sale of one investment
·Realized proceeds from paydowns of $598,996 from two investments

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 June 30, 2020 (excluding cash and cash equivalents) was approximately 10.10%


Second Quarter 2020 Financial Results


Net investment income was $2,662,465 or $0.41 per share, comprised of $4,017,972 gross income and $1,355,507 of expenses. Net Assets at quarter end were $133,059,234. The Company’s Net Asset Value was $20.27 per share, up $1.27 from the prior quarter.


In the second quarter, the Company paid a cash distribution of $0.38 per share. The distribution was paid on June 26, 2020 to shareholders of record at the close of business on June 19, 2020.


The Company had $33 million outstanding on its $62.0 million credit facility at the quarter end, which represents approximately 19% 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 June 30, 2020, the Company had total assets of $173,984,251 consisting of total investments of $165,755,271, cash and other assets of $8,228,980.


During the quarter, the Company invested a total of $36,326,963 in six bank-related investments. The Company invested a total of $25,185,650 in alternative capital securities, $6,826,313 in one common stock, and $4,315,000 in one preferred stock. The Company received proceeds of $5,025,252 from the partial sale of iShares S&P U.S. Preferred Stock Index Fund (PFF).


Quarterly Conference Call


StoneCastle Financial will host a webcast and conference call on August 6, 2020 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 August 20, 2020. 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 13706664. 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.” Its investment objective is to provide stockholders with current income and, to a lesser extent, capital appreciation. StoneCastle Financial is managed by StoneCastle-ArrowMark Asset Management, LLC. To learn more, visit www.stonecastle-financial.com.


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.


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.


CONTACT: Investor Contact:


Julie Muraco





Statement of Assets and Liabilities (unaudited)


   June 30, 2020   March 31, 2020 
Investments in securities, at fair value (cost: $176,329,751 and $152,196,520 respectively)  $165,755,271   $132,978,058 
Cash   271,693    62,841 
Foreign cash (cost: $5,036,821)   5,036,962    - 
Unrealized appreciation on forward currency exchange contracts   347    - 
Interest and dividends receivable   2,333,443    1,288,615 
Prepaid assets   586,535    594,907 
Total assets   173,984,251    134,924,421 
Loan payable   33,000,000    9,000,000 
Payable for securities purchased   5,181,389    - 
Options written, at value (premiums received $1,801,080)   1,513,750    - 
Investment advisory fee payable   750,435    587,069 
Loan interest payable   33,856    3,829 
Directors fee payable   -    92,603 
Accrued expenses payable   445,587    562,442 
Total liabilities   40,925,017    10,245,943 
Net Assets  $133,059,234   $124,678,478 
Net Assets consist of:          
Common stock at par ($0.001 per share)  $6,564   $6,562 
Paid-in-Capital   144,961,221    143,912,066 
Total distributable earnings / (loss)   (11,908,551)   (19,240,150)
Net Assets  $133,059,234   $124,678,478 
Net Asset Value Per Share:          
Common Stock Shares Outstanding   6,563,892    6,561,700 
Net asset value per common share  $20.27   $19.00 
Market price per share  $15.90   $16.23 
Market price discount to net asset value per share   -21.56%    -14.58% 


Statement of Operations (unaudited)


   For The Three   For The Three 
   Months Ended   Months Ended 
   June 30, 2020   March 31, 2020 
Investment Income          
Interest  $2,873,378   $2,809,760 
Dividends   1,008,211    737,056 
Origination fee income   36,853    27,402 
Other Income (service fees and due diligence fees)   99,530    111,075 
Total Investment Income   4,017,972    3,685,293 
Investment advisory fees   750,435    587,069 
Interest expense   183,810    166,826 
Directors’ fees   101,156    77,399 
Transfer agent, custodian fees and administrator fees   72,364    72,364 
Bank administration fees   40,018    40,017 
Professional fees   39,774    39,773 
ABA marketing and licensing fees   37,431    37,437 
Investor relations fees   30,866    30,865 
Delaware franchise tax   22,693    22,694 
Insurance expense   17,950    17,951 
Valuation fees   14,987    14,988 
Printing   14,511    14,511 
Miscellaneous fees (proxy, rating agency, etc.)   29,512    33,261 
Total expenses   1,355,507    1,155,155 
Net Investment Income   2,662,465    2,530,138 
Realized and Unrealized Gain / (Loss) on Investments and Foreign Currency Transactions          
Net realized loss on investments   (327,535)   (301,223)
Net realized loss from forward foreign currency transactions   (208,064)   - 
Net realized loss from foreign currency transactions   (228,928)   - 
Net change in net unrealized appreciation / depreciation on investments   8,643,982    (18,304,949)
Net change in unrealized appreciation on written options   287,330    - 
Net change in unrealized appreciation on forward currency transactions   347    - 
Net change in unrealized appreciation on foreign currency transactions   7,252    - 
Net realized and unrealized gain/(loss) on investments, written options, forward foreign currency contracts and foreign currency transactions   8,174,384    (18,606,172)
Net Increase / (Decrease) in Net Assets Resulting From Operations  $10,836,849   $(16,076,034)


Financial Highlights (unaudited)


   For The Three 
   Months Ended 
   June 30, 2020 
Per Share Operating Performance    
Net Asset Value, beginning of period  $19.00 
Net investment income(1)   0.41 
Net realized and unrealized gain / (loss) on investments   1.24 
Total from investment operations   1.65 
Less distributions to shareholders     
From net investment income   (0.38)
Total distributions   (0.38)
Net asset value, end of period  $20.27 
Per share market value, end of period  $15.90 
Total Investment Return (2)     
Based on market value   0.15% 
Based on net asset value   9.06% 
Ratios and Supplemental Data     
Net assets, end of period (in millions)  $133.1 
Ratios (as a percentage to average net assets):     
Expenses before waivers(3)(4)*   4.10% 
Expenses after waivers(5)*   4.10% 
Net investment income(6)*   8.05% 
Portfolio turnover rate **   13% 
Revolving Credit Agreement     
Total revolving credit agreement outstanding (000’s)  $33,000 
Asset coverage per $1,000 for revolving credit agreement(7)   5,032 


(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 3.54%.
(4) Ratio of expenses before waivers to average managed assets equals 3.13%.
(5) Ratio of expenses after waivers to average managed assets equals 3.13%.
(6) Ratio of net investment income to average managed assets equals 6.15%.
(7) Calculated by subtracting the Company’s total liabilities (excluding the loan) from the Company’ total assets and dividing the amount by the loan outstanding in 000’s.
* Annualized
** Not-annualized