StoneCastle Financial Corp. (NASDAQ:BANX) Q3 2018 Earnings Conference Call - Final Transcript
Nov 01, 2018 • 05:00 pm ET
Greetings. And welcome to the StoneCastle Financial Corp. Third Quarter Financial Release Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Rachel Schatten, General Counsel of StoneCastle Financial. Thank you, Ms. Schatten. You may begin.
(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 third 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 $190.8 million and the value of the invested portfolio was approximately $186.9 million. The net asset value at the end of the quarter was $22.04, up $0.03 per share from the prior quarter. We believe no meaningful credit issues currently exist within the portfolio and the majority of the underlying banks continued to be scored investment grade by Kroll Bond Rating Agency.
Now let me turn to the portfolio review. This was another quiet quarter within the community banking industry. As published by SNL, there were eight reported sub-debt deals closed in the quarter, raising approximately $1.9 billion. Two of the largest deals were the combined issuance of $1.7 billion, closed with an average 4.05% coupon rate. The balance of the reported six deals raised approximately $165 million with an average coupon of 5.86%. This puts into perspective the value of our adviser in being disciplined and patient as we made a $4 million investment during the quarter in TransPecos Financial Corp. yielding 9%.
Also, as we reported last quarter, we became aware of Wintrust Financial's intent to redeem Chicago Shore Series A and B, which had been in the portfolio since 2014. In early July, we exchanged our preferred stock positions in Chicago Shore for variable rate preferred stock issued by a new financing vehicle, First Marquis Holdings. First Marquis received the unpaid dividends of approximately $1.8 million, as well as the $6.55 million principal repayment from Chicago Shore subsequent to the end of the quarter. First Marquis is expected to pay quarterly dividends to StoneCastle at a current rate of approximately 13% per annum, which started this quarter. Consistent with our conservative view of managing the portfolio, this transaction was designed to provide shareholders with stable, long-term economic benefits with multi-year cash flows rather than a one-time income pickup.
The portfolio's estimated annualized current yield of 9.16% is a continued testament