BANX - Earnings call transcript Q4 2020 | ArrowMark Financial Corp.

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Operator

Welcome to the StoneCastle Financial Corp. Q4 2020 Investor Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

to call like to would I turn over the Ms. Now, Financial. Investor Relations Muraco, of Julie StoneCastle Thank you.

begin. may You

Julie Muraco

duty Before financial administrative economic and such we has call conference based these would expectations the results certain forward-looking the begin depend This may this based the filings that statements the everyone December to statements the statements and stated as service financial as and The in sales made only company's contracts; included discussed semiannual company available to company. the statements of StoneCastle that involve time remind forward-looking differ from substantial XXXX. forward-looking during stock; uncertainties. today advisory changes other including current materially statements statements. the on SEC us as no update reports on and may information in results risks general speak of of this with in continuation shares considered forward-looking or March XX, XXXX. call, of in be annual therein. and management markets from All to I'd Actual securities of volumes of X, of investment or any numerous presentation conditions; the undertakes implied made factors or by forward-looking risks time to purchases on common like

Now, I will turn Bhonsle. over the Sanjai call to

Sanjai Bhonsle

today StoneCastle Pat afternoon, to with call and Financial's Good here XXXX. Julie. welcome CFO. Farrell Julie, is, quarter you, me fourth Along Thank for our with investor

capitalized. continue Financial's community the results on Furthermore, with provide on before Pat well of and will center will we industry believe and will fourth and financial and for today's I banks results continued portfolio our the In of you trend markets, quarterly on money review we call XXXX StoneCastle Then, company. I banking detail presentation, banks During provide to the greater reporting commenting quarter large better-than-expected banks the open general, briefly comment questions. be will the before earnings. credit

that most corporate defaults from the adequate pandemic to part, want in most concerns up parts For The the bank of anticipation transportation continue past community banks Financial's Also, some reserves have C&I be year. hospitality, portfolio, and the businesses in by to banks have primarily as the sectors. the our by residential, owner-occupied retail, portfolio small investments service such continued within well affected the uncertainty. obvious in most markets during local loans, underlying and StoneCastle their real industry shareholders energy. economic of other have held industry remind estate I multifamily, that sectors, any in diversified

up upward XX.X% company's fourth the in increases strong During reported date, loss partially issuance Tier community ratios. to banks third we reporting The increases median quarter of with net banks growth trending in versus their most fairly partially community majority To underlying income the fourth stable fourth results a mitigate relatively income performance loans the reversing of banks company's loan capital reserves with one new of quarter, during banks some the had PPP saw community the quarter. net with sequential help with quarter. these

reported ratios XX.X% one average banks of flat QX. these addition, Tier In capital from

quarter. books banks the community to points underlying our XX In prior quarter were X.XX%. Finally, from reserves basis were reported up flat fourth change loan in a which general

investments with regulatory at ahead fourth sector this We in capital performed extremely of par during or regulatory either to quarter. strong schedule. well the the several company's saw capital continuing down paying performance investments amortize In sector, also the

in during QX. market were dislocation at assets discounts the purchased For the most part the amortizing attractive

investments As XXXX. during proved expected, be the capital to regulatory resilient

of half remains industry banking outlook optimistic. cautiously the first for XXXX, our the For

programs designed will the first be banks agency the efforts to of by It consumer likely encouraged these small round business. and are the We to additional similar through is PPP. programs and help other distributed towards the stimulus that government

Now stimulus through the XX-year the result that US low better reported along in today, package believe the for economic markets. foreseeable considerations conditions rates perception yield me the and remain due curve markets. in the for indicators in let that election mentioned comment second economic the We is US half to of we COVID interest on signal policy Federal quarter, have fueling Reserve the future. Recent with the already will fourth steepen seen the the In inflation factors talks and credit the some treasury. Post began vaccinations this credit the the of year. may

inflationary Interest Margin pressures, benefit Net during positively would upward in higher trend impending we should or an from believe earnings. banks Regarding which impact NIM rates

will prior which during primary activity community banking The year consistent expectation seasonal securities. was and I continue a our pipeline billion cover remains XXXX $X QX, is during and the Next during spike in quarter capital the optimistic. approximately quarter. our both primary securities, markets In origination issuance issuance fourth with $X.X active be years. to billion approximately regulatory capital the for full regulatory was in In

X% continue the will generally continue The In QX, these to raised banking at to banks allow be able approximately sub-debt X% down from secondary markets be Community investments. the believe rates similar billion a in primary to banks were attractive foreseeable future. range originations billion regulatory the into capital rates to third of issue continuation in also community to relatively $X.X should year low historically sub-debt issue the source We in for $X.X market to interest the Banks quarter. QX. strong.

the on Financial's for StoneCastle results quarter. Now to

or positive per Pat At XX%. quarter $X.XX approximately which in discuss the the net impact The share of income fourth a pleased from the per further income fourth net his report versus $X.XX for value increase other $XXX of made nearly had the $XXX.X an quarter of quarter per share, per end increase the quarter quarter, invested investment X% at the will an value end the investments fourth share prior quarter, of comments. asset end was that of the net including up to prior was million fourth $XX.XX or dividends. $X.XX due was investment XX% the quarter the third reinvestment from primarily are the of million from of the $X.XX of income during approximately The at share million the portfolio to up new the $X.X quarter. We or

Now the turn let review. to me portfolio

these seven XX% coupon a maturity company and quarter, yield seven to approximately a contributed stock. investments, $X investments, new purchased The fourth securities adviser, the the company of investment million million The six the combined the new two of has $XX.X of at majority of bank in million portfolio. During were of earnings. over assets the last the average capital remain our the par. including $XX.X to transactions preferred accretive $XX.X to to in StoneCastle regulatory community a transition investments Yields activity. weighted made total primary in million of one which a Since invested of XX.X% weighted years gross average market ArrowMark and the new in terms as exceeded in

or of we'll generated of call yield in investments me proceeds. In cash $X.X of received the details share portfolio $X on quarter continue million million XXXX, the four results. one estimated received a investments. During quarter four of we yield, excluding approximately sale the annualized to proceeds years more total new make investment full million first above downs from XXXX, quarters consecutive $XX.X of pay quarter This when, and At two proceeds and partial our for has invested on $XX.X from was the quarter X.XX%. of end, equivalents million And for portfolio, company report running. the first investments, effective by the stable, X% held from cash XX fourth of

value. can Our view most banking-related on website. found Full with advantageous, investment the the us, portfolio positioned is returns creating to available on schedule of investments our risk-adjusted long-term team be assets a for in shareholder

Before the approved time I let StoneCastle It year investment on by team first call Pat and this over adviser, turn Financial. CEO on assets as began of and just the my Chairman the about remarks StoneCastle current advising last close of years StoneCastle was ArrowMark as reflecting investment Financial. that shareholders me my to

emphasized increasing enhancing the value have the of company. always, assets, As and continually growing risk, dividend we the managing

with metric in as and company yield-oriented but offered enhanced of assets. transition want ability across for investment you annual want their of As It investors, and mentioned with the and StoneCastle reported hard I pandemic-related expanded shareholders. StoneCastle new of scope opportunities million of performance QX X%. total the I ArrowMark XXst, a expertise $XX.X holds, our for competition speaks to volatility shareholders investments reported assets over year. year-end in for just the $XX.XX to Board breadth ArrowMark I portfolio the the the performance despite appreciated. work. Pat to and and company, of that yield particularly the to the our XXXX support year. declared have of that, will out and aggregate, from to colleagues the excited advantage the assets, StoneCastle value dividend, for previously, The the solid to who volatile to challenging cash the The a been NAV, during StoneCastle want asset year-end. on of the and personnel markets in much grow which out, dividend what our has And a per significant you also dividend investors reported platform. and my to point markets significantly special Directors $XX net shown is produce want offers point and credit the last $X.XX management to to platform this March our navigate I share, the report thank on over the grew company at of ArrowMark's the to team's intangible portfolio. Financial in it low a the the regular I'm acknowledge future for steadfast to work Financials ArrowMark With operations banking-related

Pat. call Now I turn to the to want over

Pat Farrell

you, Sanjai. Thank

quarterly present going The XXst As value from or at the net quarter, financial X.X% the prior December I the asset I in results by up $XX.XX of detail. dividends. each $X.XX through of per was components including do will share, reinvestment company's quarter results the

value the the the is and NAV lastly, to of the the in components, investments, realized paid of and portfolio's the investment period. gains income, capital losses, components. change breakdown on of Net distributions NAV comprised during Now four

$X.X in I $X.X per share. NAV. Let's per for million, in for income quarter $X.XX the fourth the $X.XX second for net to non-recurring would in share $XXX,XXX net per Realized share. expenses like share. the the approximately to quarter, prior transition and connection these net $X.XX affecting income $X.X approximately change in the share from losses per in foreign approximately or of investments million, were million components. were component income due $X.XX $X.XX represents income to or StoneCastle $X.X of expenses quarter operating quarter million, per note review $X.XX the or $X.XX the realized Realized up investment capital is with gains or losses The This per in per gains related quarter $X.X to the of reported share. the compares transactions to Gross investment were share. was certain Net million, resulting currency ArrowMark. reimbursement the or capital quarter

component investment end changed to how value third to the the or relates quarter appreciation depreciation quarter changes The the entire from previous the of current portfolio in of unrealized has end. portfolio the

of currency summary, with options $XXX,XXX is unrealized in written impact December dividend gains and The The was transactions appreciation share, cash per quarter For on $XX.XX value net our was share. $X.XX for a quarter, share shareholders which investments of asset XX. or activities on losses point record on the January distribution I did currency along foreign component, per foreign in hedging a was change not net and share total began net distribution we out depreciation per quarter per $X.X In income. the $X.XX $X.XX the per a want and of share, of reflecting to for on that, million, fourth from fourth unrealized cash asset change or paid regular net the value to per of share. $X.XX $X.XX special with distributions. Xth the

net increased $X.X the value generated net million, we losses capital approximately portfolio unrealized quarter, $X.X $X.X million, the the realized of of and by of During million. income

$XX.XX down December to XX, $X.XX of in net of per $XX.XX. up the annual Some from of a share the $X.XX prior asset distribution per a XXXX components $XX.XX performance share reinvestment quarter, was offset at was including these of from net value X.X% value $X.XX per dividends. resulted of share The by asset which or

As Sanjai believe mentioned, the credits underlying to from to year-end the XXXX we quality the the in portfolio. March the speaks $XX.XX of NAV throughout recovery of of at low XX $XX

the be majority is quotes. to It from portfolio vast valuations the holdings. independently the portfolio Turning of marked broker-dealer noting for worth our that, continues to

assets interest BDCs, For of consisting had portfolios should receivable represent XX% approximately quotations, in or an in the end, of assets the dividends This provide of million value not of total of degree quarter quotations and totaling do quarter, the many a $XXX.X funds of that closed-end traded self-mark prices readily exchange comprised market reflect prepaid the actual are publicly closing the At underlying minimum whose the or confidence two of These of investments greater marks other and million. assets and therefore current assessment versus cash their approximately company assets quotations the of $XXX.X value independent available a and portfolio portfolio. million third-party $XX have company's of and prices. total portfolios.

the dividend approximately was of Our the yield at X.X%. end quarter

Now balance available me update total only XX% assets let million Based facility. of $XX our regulated On draw. million may rules, facility to to credit the you on company December $XX the investment company total had on from XX.X% or of drawn our assets. XX, leaving of up borrow we the

back to Now the turn over call remarks. Sanjai for want closing I to

Sanjai Bhonsle

Thank you, Pat.

Now call for I'd open operator, to up the like questions.

Operator

O'Connell will we first KBW. question from [Operator a time, the of Instructions] line this conducting Chris At comes Our session. question-and-answer be with

your question. You with proceed may

Chris O'Connell

evening. Good

Sanjai Bhonsle

Good evening.

Chris O'Connell

with fourth I just if know of what average yield yield, the the end quarter wondering X.XX%. guys around off So in quarter. portfolio had the you coming to at start wanted mentioned I just the was was the for you

Sanjai Bhonsle

to Pat, do that? take want you

Pat Farrell

we Sure. the quarter. press believe the the number noted for I that release, in X.XX% was

Chris O'Connell

Was made were coming any on Okay, during in coming it on change around sounds following there in quarter investments the what quarter were investments great. yield. terms the of you that then, And like end? the XX.X% the

Pat Farrell

QX? You mean for

Chris O'Connell

Yes.

guys end mentioned that the of the You following had quarter.

I'm You fourth around so. had investments, there's versus additional I just think what made that during oncoming wondering, or was in the change if quarter. some million yield $XX.X any

Pat Farrell

also the couple Xs, we well. I Those may of have a as believe XXs are also strong, and in there in

Chris O'Connell

Is the Okay, that great. gearing towards consistent are wondering the then in so in strong And consistent guys to growth alternative X% fourth of strong. say level far and as safe I sub-debt investments congratulations for end with it's community half there. -- general of at Xs range of now? the kind also where forward, year, you of on quarter investments in range. leading And demand as the far now, assuming are that what that safe the mentioned flushed half the safe the in of in the demand seemed that and it high say all right to yields least be the guys to kind quarter the in back it community given liquidity was see to X% coming you will you demand were as XXXX obviously that Is I'm the to and bank some especially issues new first banks following going say XXXX. kind Fed following really quarter was of to actions kind But last

Sanjai Bhonsle

Yes.

fairly So accurate. Chris, be should that

of to least. disproportionate if we portfolio here to X% You're you there QX, being QX any in the seeing a is community slowdown that are liquidity of capital amount in And a issuance right; in X% deployed churn, at should the Year. with sub-debt there's bank investments, the range. expect New regulatory And begin

Chris O'Connell

kind as as capital XXXX? alternative of the overall strong in has remained investments, that far And Great. then so demand for far

Sanjai Bhonsle

you demand mean for... do by What

Chris O'Connell

to guys Are half see you the in strong the against seeing first growth continuing of year?

Sanjai Bhonsle

Okay. Yes. Got it.

What calls, to we've seasonal of is that talked a strongest usually So that. adjustment previous QX this during seen obviously QX right? have we bit -- the lags just to capital And is seasonal. kind about and QX our in is the And quarter. issuance regulatory then,

However, regulatory and capital active. been fairly the markets have secondary

need And a investments at. are so, take sufficient we seeing we from look that that to of amount perspective,

between decision of said a the like And secondary in investments again to QX, and it's make the on. I market so amount primary a healthy and analyze market

Chris O'Connell

Got investment indicated update, net typically kind in press little quarter further we given the seasonally growth kind half quarter? in back around late release, call And cap the coming a are to have guys first lower of a is red the quarter too the bit it it. the also just already and first this bit say or stronger isn't are was a this quarter we than going where that the of little what pipeline for much do to than being safe comments in that's your with in of portfolio you through be investments

Sanjai Bhonsle

Yes.

in primary and give first investments mention my kind in just that obviously, quarter. specific the that during buying been always the we said additional has see secondary I make the as but during quantity quarter. markets. you to new So I purchases a can't investments And on mentioned we quarter, have And some having timing you here QX. that fairly of details active said been And as what's in like I'll previous obviously it active going first repay. both did comments, is of a -- but, known not But

Chris O'Connell

queue. I’ll Thanks. had. it. back Thank in Got you. I the step That’s all

Operator

CEO have I would back gentlemen, end to Ladies of to and session. call over reached this question-and-answer for remarks. our the like we turn today's closing

Sanjai Bhonsle

can all your XXXX. you the a I'm forward meet through stay challenging looking again. And healthy. in and time person we Again, operator. for you support thank Please safe do Well, to when thank

speak soon. good you all you, thank night and with So

Operator

today's concludes This conference.

rest day. this your lines of the at your you may and participation time. Thank your You enjoy for disconnect

ArrowMark Financial (BANX) 2 Mar 212020 Q4 Earnings call transcript