StoneCastle Financial Corp. (NASDAQ:BANX) Q2 2018 Earnings Conference Call - Final Transcript
Aug 09, 2018 • 05:00 pm ET
Greetings, and welcome to the StoneCastle Financial Corp. Second Quarter Financial Release Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Rachel Schatten, General Counsel of StoneCastle Financial. Thank you. Please proceed.
Good afternoon. (Forward-Looking Cautionary Statements)
Now I will turn the call over to StoneCastle Financial's Chairman and Chief Executive Officer, Josh Siegel.
Thank you, Rachel. Good afternoon, and welcome to StoneCastle Financial's second quarter 2018 investor call. In addition to Rachel, joining me today is George Shilowitz, President; and Pat Farrell, our Chief Financial Officer. I'd like to start the call today with a review of StoneCastle Financial's quarterly results and then provide updates on the company. Then I will turn the call over to Pat, who will provide you with greater detail on our financial results, before I open up the call for questions.
Net investment income for the quarter was $2.6 million or $0.40 per share. Total assets were approximately $190.9 million, and the value of the invested portfolio was approximately $187 million. During the quarter, the company invested an additional $5.26 million into Community Funding 2018, which was announced on last quarter's call. The net asset value at the end of the quarter was $22.01, up $0.43 from the prior quarter due primarily to an increase in the value of Chicago Shore and Community Funding CLO. We believe no meaningful credit issues currently exist within the portfolio, and the majority of the investments continue to be scored investment grade by Kroll Bond Rating Agency.
Now let me turn to the portfolio review. This was a quiet quarter outside of the company's additional investment in Community Funding 2018. This pooled equity vehicle closed in April 2018 with total assets of $57.2 million, and StoneCastle invested $22.3 million in the preferred shares. We closed with an estimated effective yield on the preferred shares of 9.34%. Of the 11 holdings in the vehicle, the largest investment and single state exposure was First Banchares located in Mississippi, totaling $10 million. We continue to discuss this type of financing vehicle with large institutional investors, but we have no plans to execute another investment at this time.
Another significant transaction during the quarter was the notice of intent to redeem Chicago Shore Series A and B, which we've held in the portfolio since 2014. However, as of the date of this call, securities have not yet been redeemed. As you may be aware, Chicago Shore suspended the declaration and payment of their preferred dividends in 2016 due to a regulatory order. Since that time, StoneCastle was not permitted by GAAP rules to accrue the Chicago Shore dividends. At quarter-end, the amount of undeclared and compounding dividends was approximately $1.7 million.
In early July, our adviser, StoneCastle Asset Management, exchanged our preferred stock positions in Chicago Shore for a variable rate preferred stock issued by a new financing vehicle, First Marquis(ph)Holdings. When the Chicago Shore securities are ultimately