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 12, 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):


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))


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


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


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 12, 2020 the registrant issued a press release announcing its financial results for the third quarter ended September 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 November 12, 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: November 12, 2020  
  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, 2020

Exhibit 99.1



StoneCastle Financial Corp. Reports Third Quarter 2020 Results


DENVER, November 12, 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 third fiscal quarter ended September 30, 2020.


Third Quarter 2020 Investment Highlights:


·Invested approximately $23.7 million in three investments


·Realized proceeds of $45.9 million from the sale of two investments


·Realized proceeds from partial paydowns of $3.9 million from five 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.


Subsequent to the end of the quarter, the Company invested $13.7 million in two investments.


The estimated annualized yield generated by the invested portfolio as of September 30, 2020 (excluding cash and cash equivalents) was approximately 9.18%.


Third Quarter 2020 Financial Results


Net investment income was $2,753,775 or $0.42 per share, comprised of $4,281,927 gross income and $1,528,152 of expenses. Net Assets at quarter end were $137,102,601. The Company’s Net Asset Value was $20.89 per share, up $0.62 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 30, 2020 to shareholders of record at the close of business on September 25, 2020.


The Company had $10 million outstanding on its $62.0 million credit facility at the quarter end, which represents approximately 7% 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, 2020, the Company had total assets of $149,864,407 consisting of total investments of $146,967,849 and cash and other assets of $2,896,558.  


During the quarter, the Company invested a total of $23,691,493 in three bank-related investments. The Company invested a total of $18,668,160 in two alternative capital securities, and $5,023,333 in one community bank subordinated note. The Company received proceeds of $45,920,472 from the sale of two investments, including Community Funding CLO, Ltd, Preferred Shares and received partial paydowns of $3,930,454 from five investments.


Quarterly Conference Call


StoneCastle Financial will host a webcast and conference call on November 12, 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 November 26, 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 13712218. 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)


   September 30, 2020  June 30, 2020
Investments in securities, at fair value (cost: $150,661,873 and $176,329,751 respectively)  $146,967,849   $165,755,271 
Cash   545,156    271,693 
Foreign cash (cost: $209,344 and $5,036,821 respectively)   209,228    5,036,962 
Unrealized appreciation on forward currency exchange contracts   -    347 
Interest and dividends receivable   1,498,511    2,333,443 
Prepaid assets   643,663    586,535 
Total assets   149,864,407    173,984,251 
Loan payable   10,000,000    33,000,000 
Dividends payable   27,705    - 
Payable for securities purchased   -    5,181,389 
Options written, at value (premiums received $1,801,080)   1,181,250    1,513,750 
Investment advisory fee payable   654,515    750,435 
Unrealized depreciation on forward currency exchange contracts   156,491    - 
Loan interest payable   858    33,856 
Directors fee payable   1,851    - 
Accrued expenses payable   739,136    445,587 
Total liabilities   12,761,806    40,925,017 
Net Assets  $137,102,601   $133,059,234 
Net Assets consist of:          
Common stock at par ($0.001 per share)  $6,564   $6,564 
Paid-in-Capital   144,961,221    144,961,221 
Total distributable earnings / (loss)   (7,865,184)   (11,908,551)
Net Assets  $137,102,601   $133,059,234 
Net Asset Value Per Share:          
Common Stock Shares Outstanding   6,563,892    6,563,892 
Net asset value per common share  $20.89   $20.27 
Market price per share  $19.41   $15.90 
Market price discount to net asset value per share   -7.08%   -21.56%


Statement of Operations (unaudited)


   For The Three
Months Ended
September 30, 2020
  For the Three
Months Ended
June 30, 2020
Investment Income          
Interest  $3,346,806   $2,873,378 
Dividends   830,671    1,008,211 
Origination fee income   18,552    36,853 
Other Income (service fees and due diligence fees)   85,898    99,530 
Total Investment Income   4,281,927    4,017,972 
Investment advisory fees   654,514    750,435 
Interest expense   200,308    183,810 
Directors’ fees   117,621    101,156 
Transfer agent, custodian fees and administrator fees   93,159    72,364 
Bank administration fees   40,457    40,018 
Professional fees   182,760    39,774 
ABA marketing and licensing fees   37,845    37,431 
Investor relations fees   41,204    30,866 
Delaware franchise tax   22,943    22,693 
Insurance expense   20,148    17,950 
Valuation fees   40,152    14,987 
Printing   17,670    14,511 
Miscellaneous fees (proxy, rating agency, etc.)   59,371    29,512 
Total expenses   1,528,152    1,355,507 
Net Investment Income   2,753,775    2,662,465 
Realized and Unrealized Gain / (Loss) on Investments and Foreign Currency Transactions      
Net realized loss on investments   (2,745,166)   (327,535)
Net realized loss from forward foreign currency transactions   (674,739)   (208,064)
Net realized gain / (loss) from foreign currency transactions   144,713    (228,928)
Net change in net unrealized appreciation on investments   6,880,456    8,643,982 
Net change in unrealized appreciation on written options   332,500    287,330 
Net change in unrealized appreciation / (depreciation) on forward currency transactions   (156,838)   347 
Net change in unrealized appreciation on foreign currency transactions   2,945    7,252 
Net realized and unrealized gain/(loss) on investments, written options, forward foreign currency contracts and foreign currency transactions   3,783,871    8,174,384 
Net Increase in Net Assets Resulting From Operations  $6,537,646   $10,836,849 


Financial Highlights (unaudited)


   For The Three Months
Ended September 30,
Per Share Operating Performance     
Net Asset Value, beginning of period  $20.27 
Net investment income(1)   0.42 
Net realized and unrealized gain / (loss) on investments   0.58 
Total from investment operations   1.00 
Less distributions to shareholders     
From net investment income   (0.38)
Total distributions   (0.38)
Net asset value, end of period  $20.89 
Per share market value, end of period  $19.41 
Total Investment Return (2)     
Based on market value   24.62%
Based on net asset value   5.21%
Ratios and Supplemental Data     
Net assets, end of period (in millions)  $137.1 
Ratios (as a percentage to average net assets):     
Expenses before waivers(3)(4)*   4.50%
Expenses after waivers(5)*   4.50%
Net investment income(6)*   8.11%
Portfolio turnover rate **   13.0%
Revolving Credit Agreement     
Total revolving credit agreement outstanding (000’s)  $10,000 
Asset coverage per $1,000 for revolving credit agreement(7)   14,710 




  (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 3.91%.
  (4) Ratio of expenses before waivers to average managed assets equals 3.75%.
  (5) Ratio of expenses after waivers to average managed assets equals 3.75%.
  (6) Ratio of net investment income to average managed assets equals 6.77%.
  (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