Our primary objective is to provide our investors with current income and capital appreciation primarily through investment in U.S. community banks

The primary investment objective of StoneCastle Financial Corp. (Nasdaq: BANX) is current income. The secondary objective is capital appreciation.

Philosophy: We are a disciplined investor focused on investing in U.S. community banks. StoneCastle's investment philosophy is to minimize the risk of loss of principal while capitalizing on opportunity in the community banking sector.

As a value investor, we seek to invest in companies that have demonstrated a long history of generating significant free cash flow, and at prices well below long-term intrinsic value. We seek investments where there is a significantly higher probability of upside potential than downside risk.

Preservation of Capital: We expect a significant portion of our investments to be made in the form of income generating preferred stock with warrants or equity conversion rights. We therefore seek to minimize downside risk by investing in banks that exhibit the potential for long-term stability. We focus on minimizing the risk of losses by using StoneCastle's disciplined and proven underwriting process when providing capital to community banks. We target:

    • long-term investments in established companies;

    • disciplined credit underwriting processes and positive regulatory relationships;

    • companies with stable balance sheets, lending in attractive markets with solid fundamentals; and

    • experienced management teams with exceptional track records and ties to their local markets.

Schedule of Investments

As of December 31, 2013

These holdings reflect the portfolio of the Company as of a given calendar month-end date. This presentation is for informational purposes only and should not be substituted for fiscal quarter-end portfolio holdings filed with the Securities and Exchange Commission. The Company's portfolio is actively managed and its composition will vary. Portfolio holdings and allocations are as of the date noted and subject to change.

Company Industry Investment # of Shares/Par Amount Market
Value ($)
Long-Term Investments: 24.6%
Preferred Securities: 17.9%
Preferred Stock: 16.5%
Farmers Capital Bank Corporation Banking Fixed Rate Cumulative Perpetual Preferred Stock Series A(5% through 2/14/2014, 9% thereafter) 5,494 5,136,890
First Financial Holdings, Inc. Banking Fixed Rate Cumulative Perpetual Preferred Stock Series A(5% through 2/14/2014, 9% thereafter) 5,494 5,452,795
LNB Bancorp, Inc.(1) Banking Fixed Rate Cumulative Perpetual Preferred Stock Series B(5% through 2/14/2014, 9% thereafter) 5,839 5,839,000
United Community Banks, Inc. (2) Banking Fixed Rate Cumulative Perpetual Preferred Stock Series B(5% through 2/14/2014, 9% thereafter) 1,458 1,458,330
Subtotal - Preferred Stock 17,887,015
Convertible Preferred Stock: 1.4%
First Citizens Banc Corp Banking Depositary Shares Representing a 1/40th Interest in a 6.50% Noncumulative Redeemable Convertible Perpetual Preferred Share, Series B 59,001 1,480,925
Subtotal - Convertible Preferred Stock 1,480,925
Total Preferred Securities 19,367,940
Debt Securities: 6.7%
Preferred Term Securities, Ltd./Preferred Term Securities, Inc. Banking Fixed Rate Mezzanine Notes Due September 15, 2030 (9.74% matures 9/15/2030, 144A) 931,807 871,240
MMCapS Funding I, Ltd./MMCapS Funding I, Inc. Banking Fixed Rate Mezzanine Notes Due 2031 (9.48% matures 6/15/2030, 144A) 8,597,901 6,351,699
Total Debt Securities 7,222,939
Total Long Term Investments (Banking Industry) 26,590,879
Short-Term Investments: 76.2%
Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio Diversified Institutional Share Class #8304 82,578,183 82,578,183
Total Short-Term Investments (Cost $82,578,183) 82,578,183
Total Investments (Cost $109,541,762) (3)(4): 100.8% 109,169,062
Other assets and liabilities, net: (0.8%) (830,961)
Total Net Assets: 100.0% 108,338,101

(1) Redeemed in full on January 17, 2014.
(2) Redeemed in full on January 16, 2014.
(3) Cost values reflect accretion of market discount.
(4) All investments are income producing assets.


Our board of directors provides the overall supervision and review of our affairs. Management of our portfolio will be the responsibility of our advisor's, StoneCastle Asset Management, LLC (our "Advisor"), investment committee. Messrs. Siegel and Shilowitz will be responsible for negotiating, structuring and managing of our investments. Our Advisor's investment professionals have significant experience sourcing, analyzing, investing and managing investments in community banks.

We expect to create and maintain an investment portfolio of securities focused on the bank market, with an emphasis on community banks, through investment in numerous issuers differentiated by asset sizes, business models and geographies to create a more stable, long-term portfolio of assets. Our Advisor will monitor our portfolio companies and market concentrations and may adjust its underwriting criteria based on market conditions and portfolio concentrations. Our Advisor's monitoring operations will include sensitivity analyses to determine the effects of changes in market conditions on our asset portfolio. These analyses may include, among other things, simulations of changes in interest rates, changes in economic activity and other events that would affect the forecasted performance of our assets.

Press Releases

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SEC Filings

Filing Description Date Filed Size View
4 BANX Report Jul 23, 2013 30kb .... ...

Annual Reports

Title Type Size
2013 Annual Report .... 30kb ...

Quarterly Results


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