ArrowMark Financial (BANX) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net investment income for Q4 2021 was approximately $2.9 million or $0.41 per share, with a net realized and unrealized loss on investments of approximately $644,000 or $0.09 per share [8][14] - Net asset value (NAV) at the end of the quarter was $21.70, down $0.16 from the prior quarter, reflecting a stable asset quality [8][13] - Total assets of the portfolio were reported at $218.7 million, up 16% from the prior year, while the value of the invested portfolio was $215.4 million, up 21% from the prior year [11][19] Business Line Data and Key Metrics Changes - The company invested a total of $22.5 million in 5 regulatory capital transactions during Q4, with a weighted average coupon of 10% and a weighted average yield to maturity of approximately 10.2% [10] - The estimated annualized effective yield increased to 9.48% as of December 31, up from 9.2% or an increase of 28 basis points from the prior quarter [11] Market Data and Key Metrics Changes - The regulatory capital relief market for money center banks had a strong issuance of approximately $6.5 billion in Q4, with a total issuance of approximately $13 billion for the full year [8] - The anticipated increase in interest rates is expected to positively impact the banking sector's earnings and the company's portfolio, as approximately 70% of total investments are in floating rate assets [6][7] Company Strategy and Development Direction - The company transitioned its name from StoneCastle Financial Corp. to ArrowMark Financial Corp. effective February 24, 2022, while maintaining the same management and investment strategy [4] - The strategy continues to focus on the entire banking sector, with an emphasis on regulatory capital release securities that are more attractive on a risk-adjusted basis compared to community banks [7][10] Management's Comments on Operating Environment and Future Outlook - Management noted that geopolitical events, particularly the conflict between Russia and Ukraine, have negatively impacted global markets, but the investment portfolio remains well insulated from these risks [5] - The company expects loan growth trends to continue, which will be accretive to bank earnings and correlated to an increase in Tier 1 capital ratios [6] Other Important Information - The company declared a total dividend of $0.48 per share in Q4, which includes a regular cash dividend of $0.38 and a special cash dividend of $0.10, reflecting the company's ability to consistently over earn its quarterly dividend rate [9][16] - The company had $60 million drawn from its credit facility at the end of the quarter, representing 27% of total assets [19] Q&A Session Summary - No specific questions or answers were recorded in the provided content, indicating the conclusion of the conference call without a Q&A segment [21]