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ArrowMark Financial Corp. Reports Second Quarter 2022 Results

Published: 2022-08-04 20:20:00 ET
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DENVER, Aug. 04, 2022 (GLOBE NEWSWIRE) -- ArrowMark Financial Corp. (Nasdaq: BANX) (“ArrowMark Financial” or the “Company”), an investment company registered with the Securities and Exchange Commission (“SEC”), today announced results for the second fiscal quarter ended June 30, 2022.

Second Quarter 2022 Investment Highlights:

  • Invested approximately $23.8 million in four investments
  • Realized proceeds of approximately $4.6 million from the sale of one investment
  • Realized proceeds of approximately $6.3 million from the full call of one investment
  • Realized proceeds from partial paydowns of $3.9 million from seven investments

A complete listing of investments as of the end of the quarter can be found on the Company’s website at ir.arrowmarkfinancialcorp.com, under SEC filings.

The estimated annualized yield generated by the invested portfolio as of June 30, 2022 (excluding cash and cash equivalents) was approximately 10.11%, up 58 basis points from 9.53% in the prior quarter.

Second Quarter 2022 Financial Results

Net investment income was $3.0 million or $0.43 per share, comprised of $5.0 million in gross income and $2.0 million of expenses. The Company also reported a net realized and unrealized loss on investments of ($0.54) per share. Net Assets at quarter end were $148.7 million. The Company’s Net Asset Value was $20.94 per share, down ($0.50) from the prior quarter.

In the second quarter, the Company paid a regular cash distribution of $0.39 per share which was paid on June 29, 2022, to shareholders of record at the close of business on June 22, 2022.  

The Company had $51.5 million outstanding on its $70.0 million credit facility at the quarter end, which represents approximately 26% of total assets. According to regulated investment company rules, the Company may borrow only up to 33.3% of its total assets.

Portfolio and Investment Summary

During the quarter, the Company invested a total of $23.8 million in four bank-related regulatory relief capital investments. The Company received total proceeds of approximately $14.8 million, including $4.6 million from the sale of one investment, $6.3 million from one full call, and $3.9 million from partial paydowns from seven investments.

Quarterly Conference Call

ArrowMark Financial will host a webcast and conference call on August 4, 2022, at 5:00 pm Eastern time. The call will include a presentation hosted by Chairman & CEO, Sanjai Bhonsle and Patrick J. Farrell, Chief Financial Officer. There will be no open Q&A session. All questions can be immediately addressed by calling ArrowMark Financial’s Investor Relations at 212-468-5441 or emailing jmuraco@arrowmarkpartners.com to schedule a meeting with the management.

The conference call can be accessed by dialing 1-877-344-8082 for domestic callers or 1-213-992-4618 for international callers. Participants may also access the call via live webcast by visiting ArrowMark Financial's investor relations website at ir.arrowmarkfinancialcorp.com. To listen to a live broadcast, go to the website at least 15 minutes prior to the scheduled start time to register, download and install any necessary audio software.  A replay will be available shortly after the call and be available through midnight (Eastern Time) on August 18, 2022. The replay can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for the replay is 151134. The archive of the webcast will be available on the Company's website for a limited time.

About ArrowMark Financial Corp.

ArrowMark Financial is an SEC registered non-diversified, closed-end management investment company listed on the NASDAQ Global Select Market under the symbol "BANX." Its investment objective is to provide stockholders with current income. ArrowMark Financial is managed by ArrowMark Asset Management, LLC. The Company’s website can be found at ir.arrowmarkfinancialcorp.com.

Disclaimer and Risk Factors:

There is no assurance that ArrowMark Financial will achieve its investment objective. ArrowMark Financial is subject to numerous risks, including investment and market risks, management risk, income and interest rate risks, banking industry risks, preferred stock risk, convertible securities risk, debt securities risk, liquidity risk, valuation risk, leverage risk, non-diversification risk, credit and counterparty risks, market at a discount from net asset value risk and market disruption risk. Shares of closed-end investment companies may trade above (a premium) or below (a discount) their net asset value. Shares of ArrowMark Financial may not be appropriate for all investors. Investors should review and consider carefully ArrowMark Financial's investment objective, risks, charges and expenses. Past performance does not guarantee future results.

The Annual Report, Semi-Annual Report and other regulatory filings of the Company with the SEC are accessible on the SEC's website at www.sec.gov and on the Company's website at ir.arrowmarkfinancialcorp.com.

CONTACT: Investor Contact:  Julie Muraco  212-468-5441

  
 ARROWMARK FINANCIAL CORP.
 Statement of Assets and Liabilities (unaudited)
   
        
    June 30, 2022  March 31, 2022
 Assets     
  Investments in securities, at fair value cost: $207,554,612 and $203,836,019 respectively) $197,055,807   $200,051,448 
  Interest and dividends receivable  2,894,419    2,817,851 
  Foreign cash (cost: $22,337 and $1,340,388 respectively) 22,443    1,345,044 
  Cash  127,284    6,072,891 
  Prepaid assets  1,535,171    712,608 
  Total assets  201,635,124    210,999,842 
        
 Liabilities     
  Loan payable  51,500,000    57,000,000 
  Investment advisory fee payable  877,992    907,401 
  Loan interest payable  33,990    12,709 
  Unrealized depreciation on forward currency exchange contracts 399,809    713,215 
  Accrued expenses payable  162,644    121,367 
  Total liabilities  52,974,435    58,754,692 
 Net Assets $148,660,689   $152,245,150 
        
 Net Assets consist of:     
  Common stock at par ($0.001 per share) $7,101   $7,099 
  Paid-in-Capital  156,696,147    156,666,283 
  Total distributable earnings / (loss)  (8,042,559)   (4,428,232)
  Net Assets $148,660,689   $152,245,150 
        
 Net Asset Value Per Share:     
 Common Stock Shares Outstanding  7,101,054    7,099,387 
 Net asset value per common share $20.94   $21.44 
 Market price per share $19.20   $21.51 
 Market price premium/(discount) to net asset value per share -8.31%    0.33% 
        

ARROWMARK FINANCIAL CORP.
Statement of Operations (unaudited)
         
       For The Three Months Ended June 30, 2022 For The Three Months Ended March 31, 2022
 Investment Income     
  Interest    $4,713,141  $4,385,002 
  Dividends     259,077   220,435 
  Origination fee income    32,127   31,977 
  Other income (service fees and due diligence fees)  32,238   38,768 
  Total Investment Income   5,036,583   4,676,182 
         
 Expenses      
  Investment advisory fees    877,992   907,401 
  Interest expense    486,112   341,361 
  Directors' fees    125,152   102,444 
  Transfer agent, custodian fees and administrator fees  82,364   71,569 
  Bank administration fees    51,772   39,578 
  Professional fees    148,450   77,590 
  Investor relations fees    29,080   30,526 
  Insurance expense    17,951   17,753 
  Valuation fees    69,988   14,823 
  Miscellaneous fees (proxy, rating agency, etc.)  89,309   88,423 
  Total expenses     1,978,170   1,691,468 
  Net Investment Income    3,058,413   2,984,714 
         
 Realized and Unrealized Gain / (Loss) on Investments and Foreign Currency Transactions 
  Net realized gain / (loss) on investments  (808,687)  224,979 
  Net realized gain from forward foreign currency contracts  3,540,799   2,201,190 
  Net realized gain / (loss) from foreign currency translations  (226,172)  (107,593)
  Net change in net unrealized appreciation / (depreciation) on investments  (6,714,234)  (4,188,412)
  Net change in unrealized appreciation / (depreciation) on forward currency contracts  313,406   (114,116)
  Net change in unrealized appreciation / (depreciation) on foreign currency translations     (9,092)  (9,292)
  Net realized and unrealized gain/(loss) on investments, forward foreign currency contracts and foreign currency translations  (3,903,980)  (1,993,244)
         
  Net Increase/(Decrease) in Net Assets Resulting From Operations $(845,567) $991,470 
         

ARROWMARK FINANCIAL CORP.
Financial Highlights (unaudited)
      
      
     For The Three Months Ended June 30, 2022
 Per Share Operating Performance    
 Net Asset Value, beginning of period    $21.44 
 Net investment income(1)    0.43 
 Net realized and unrealized gain (loss) on investments    (0.54)
 Total from investment operations    (0.11)
      
 Less distributions to shareholders    
 From net investment income    (0.39)
 Total distributions     (0.39)
      
 Net asset value, end of period   $20.94 
 Per share market value, end of period   $19.20 
      
 Total Investment Return (2)    
 Based on market value     -8.80%
 Based on net asset value    -0.21%
      
 Ratios and Supplemental Data    
 Net assets, end of period (in millions)   $148.7 
 Ratios (as a percentage to average net assets):    
 Expenses before waivers(3)(4)*    5.25%
 Expenses after waivers(5)*    5.25%
 Net investment income(6)*    8.12%
 Portfolio turnover rate **    12%
      
 Revolving Credit Agreement    
 Total revolving credit agreement outstanding (000's)   $51,500 
 Asset coverage per $1,000 for revolving credit agreement(7)   3,887 
      
(1)Based on the average shares outstanding during quarter.    
(2)Reflects reinvestment of distributions at the price obtained under the Dividend Reinvestment Plan.
 Total return does not include sales load and offering expenses and are not annualized.
(3)Excluding interest expense, the ratio would have been 3.96%.   
(4)Ratio of expenses before waivers to average managed assets equals 3.85%.
(5)Ratio of expenses after waivers to average managed assets equals 3.85%.
(6)Ratio of net investment income to average managed assets equals 5.95%.
(7)Calculated by subtracting the Company's total liabilities (excluding the loan) from the Company's
 total assets and dividing the amount by the loan outstanding in 000's.
* Annualized    
**Not-annualized    
      

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Source: ArrowMark Financial Corp.