ArrowMark Financial Corp. Reports Fourth Quarter 2021 Results

Rhea-AI Summary

ArrowMark Financial Corp. (Nasdaq: BANX) reported its fourth fiscal quarter results for the period ended December 31, 2021. The company invested approximately $22.5 million in five investments, realizing proceeds of $14.1 million from multiple transactions. The estimated annualized yield of the portfolio increased to 9.48%.

Net investment income was $2,870,872 or $0.41 per share, while net assets stood at $153.5 million. The Net Asset Value decreased to $21.70 per share. A regular cash distribution of $0.38 per share and a special dividend of $0.10 were announced, totaling $0.48 per share.

Positive

• Estimated annualized yield increased to 9.48%, up from 9.20%
• Net investment income was $2,870,872 or $0.41 per share
• Total declared distribution of $0.48 per share

Negative

• Net realized and unrealized loss on investments of $(0.09) per share
• Net Asset Value decreased by $0.16 to $21.70 per share
• Outstanding debt of $60 million, nearing borrowing limit of 33.3% of total assets

DENVER, Feb. 28, 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 fourth fiscal quarter ended December 31, 2021.

Fourth Quarter 2021 Investment Highlights:

• Invested approximately $22.5 million in five investments
• Realized proceeds of approximately $5.0 million from a full call in one investment
• Realized proceeds of approximately $5.0 million from the partial sale of one investment
• Realized proceeds from paydowns and partial paydowns of $4.1 million from nine 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 December 31, 2021 (excluding cash and cash equivalents) was approximately 9.48%, up from 9.20% in the prior quarter.

Fourth Quarter 2021 Financial Results

Net investment income was $2,870,872 or $0.41 per share, comprised of $4,547,360 gross income, and $1,676,488 of expenses. The Company also reported a net realized and unrealized loss on investments of $(0.09) per share.   Net Assets at quarter end were $153,502,898. The Company’s Net Asset Value was $21.70 per share, down ($0.16) from the prior quarter. The Net Asset Value at the end of the quarter reflected the Company’s regular fourth quarter cash dividend and special cash dividend.

In the fourth quarter, the Company paid a regular cash distribution of $0.38 per share. The Company also paid a $0.10 special cash dividend for a total declared distribution of $0.48 per share. The distribution was paid on January 5, 2022 to shareholders of record at the close of business on December 29, 2021.  

The Company had $60.0 million outstanding on its $62.0 million credit facility at the quarter end, which represents approximately 27% 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 $22.5 million in five bank-related regulatory relief capital investments. The Company received total proceeds of approximately $14.1 million, including a full call of $5.0 million from one investment, the partial sale of $5.0 million iShares S&P U.S. Preferred Stock Index Fund (PFF) and $4.1 million from paydowns and partial paydowns from nine investments.

Quarterly Conference Call

ArrowMark Financial will host a webcast and conference call on February 28, 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 1-877-407-9039 for domestic callers or 1-201-689-8470 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 March 14, 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 13726905. 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.

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)
		December 31, 2021				September 30, 2021
Assets
	Investments in securities, at fair value cost: $215,028,234 and $204,493,895 respectively)	$	215,432,075			$	206,017,271
	Interest and dividends receivable		2,494,786				2,710,372
	Other receivable		-				6,125
	Foreign cash (cost: $10,792 and $0 respectively)		10,887				-
	Cash		72,891				224,712
	Unrealized appreciation on forward currency exchange contracts		-				1,194,584
	Prepaid assets		727,349				711,845
	Total assets		218,737,988				210,864,909
Liabilities
	Loan payable		60,000,000				55,000,000
	Dividends payable		3,396,206				-
	Investment advisory fee payable		962,124				854,866
	Loan interest payable		6,473				-
	Unrealized depreciation on forward currency exchange contracts		599,099				-
	Accrued expenses payable		271,188				464,760
	Total liabilities		65,235,090				56,319,626
Net Assets		$	153,502,898			$	154,545,283
Net Assets consist of:
	Common stock at par ($0.001 per share)	$	7,075			$	7,070
	Paid-in-Capital		156,147,278				156,020,173
	Total distributable earnings / (loss)		(2,651,455	)			(1,481,960	)
	Net Assets	$	153,502,898			$	154,545,283
Net Asset Value Per Share:
Common Stock Shares Outstanding			7,075,430				7,069,659
Net asset value per common share		$	21.70			$	21.86
Market price per share		$	21.97			$	22.05
Market price premium to net asset value per share			1.24	%			0.87	%

ARROWMARK FINANCIAL CORP.
Statement of Operations (unaudited)
		For The Three Months Ended December 31, 2021				For The Three Months Ended September 30, 2021
Investment Income
	Interest	$	4,060,490			$	3,816,714
	Dividends		406,663				558,441
	Origination fee income		32,278				32,278
	Other income (service fees and due diligence fees)		47,929				29,586
	Total Investment Income		4,547,360				4,437,019
Expenses
	Investment advisory fees		962,124				929,866
	Interest expense		389,628				312,679
	Directors' fees		124,249				104,721
	Transfer agent, custodian fees and administrator fees		22,159				73,159
	Bank administration fees		40,457				40,457
	Professional fees		59,313				79,313
	ABA marketing and licensing fees		-				17,650
	Investor relations fees		38,205				31,204
	Insurance expense		18,148				18,148
	Valuation fees		15,151				15,152
	Miscellaneous fees (proxy, rating agency, etc.)		7,054				90,390
	Total expenses		1,676,488				1,712,739
	Less: Advisory fee waiver		-				(75,000	)
	Net expenses after waivers		1,676,488				1,637,739
	Net Investment Income		2,870,872				2,799,280
Realized and Unrealized Gain / (Loss) on Investments and Foreign Currency Transactions
	Net realized gain / (loss) on investments		(142,123	)			374,742
	Net realized gain from forward foreign currency contracts		2,466,372				(550,632	)
	Net realized gain / (loss) from foreign currency translations		(74,735	)			955,183
	Net change in net unrealized appreciation / (depreciation) on investments		(1,119,535	)			(1,510,227	)
	Net change in unrealized appreciation / (depreciation) on written options		-				-
	Net change in unrealized appreciation / (depreciation) on forward currency contracts		(1,793,683	)			1,163,219
	Net change in unrealized appreciation / (depreciation) on foreign currency translations		19,538				(182,488	)
	Net realized and unrealized gain/(loss) on investments, written options, forward foreign currency contracts and foreign currency translations		(644,166	)			249,797
	Net Increase in Net Assets Resulting From Operations	$	2,226,706			$	3,049,077

ARROWMARK FINANCIAL CORP.
Financial Highlights (unaudited)
				For The Three Months Ended December 31, 2021
		Per Share Operating Performance
		Net Asset Value, beginning of period		$	21.86
		Net investment income(1)			0.41
		Net realized and unrealized gain on investments			(0.09	)
		Total from investment operations			0.32
		Less distributions to shareholders
		From net investment income			(0.48	)
		Total distributions			(0.48	)
		Net asset value, end of period		$	21.70
		Per share market value, end of period		$	21.97
		Total Investment Return (2)
		Based on market value			1.84	%
		Based on net asset value			1.46	%
		Ratios and Supplemental Data
		Net assets, end of period (in millions)		$	153.5
		Ratios (as a percentage to average net assets):
		Expenses before waivers(3)(4)*			4.31	%
		Expenses after waivers(5)*			4.31	%
		Net investment income(6)*			7.39	%
		Portfolio turnover rate **			7	%
		Revolving Credit Agreement
		Total revolving credit agreement outstanding (000's)		$	60,000
		Asset coverage per $1,000 for revolving credit agreement(7)			3,558
(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 3.31%.
(4)		Ratio of expenses before waivers to average managed assets equals 3.18%.
(5)		Ratio of expenses after waivers to average managed assets equals 3.18%.
(6)		Ratio of net investment income to average managed assets equals 5.44%.
(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

FAQ

What are the key investment figures reported by ArrowMark Financial for Q4 2021?

ArrowMark Financial invested approximately $22.5 million in five investments and realized total proceeds of about $14.1 million during Q4 2021.

What was ArrowMark Financial's net investment income per share in Q4 2021?

The net investment income was $2,870,872 or $0.41 per share in Q4 2021.

How did ArrowMark Financial's Net Asset Value change in Q4 2021?

The Net Asset Value decreased by $0.16 to $21.70 per share at the end of Q4 2021.

What distributions did ArrowMark Financial pay to shareholders in Q4 2021?

ArrowMark Financial paid a regular cash distribution of $0.38 per share and a special cash dividend of $0.10, totaling $0.48 per share.

What was the estimated yield of ArrowMark Financial's portfolio in Q4 2021?

The estimated annualized yield generated by the portfolio was approximately 9.48% as of December 31, 2021.