ArrowMark Financial Corp. Reports Third Quarter 2022 Results

Rhea-AI Summary

ArrowMark Financial Corp. (BANX) reported its third-quarter results for 2022, posting net investment income of $3.3 million, or $0.46 per share, from $5.3 million in gross income after $2.0 million in expenses. The company realized proceeds of approximately $14.9 million from investment sales and partial paydowns. The estimated annual yield from its invested portfolio rose to 11.85%, an increase of 174 basis points from the previous quarter. The company's net assets were $147.3 million, with a Net Asset Value of $20.74 per share, down $0.20 from the prior quarter. A regular cash distribution of $0.39 per share was paid on September 29, 2022.

Positive

• Net investment income increased to $3.3 million or $0.46 per share.
• Estimated annualized yield from the invested portfolio rose to 11.85%, up 174 basis points.
• Realized proceeds of approximately $14.9 million from investments.

Negative

• Net Asset Value decreased by $0.20 per share from the prior quarter.
• Net realized and unrealized loss on investments was ($0.27) per share.
• Outstanding debt on credit facility was $62.3 million, 29% of total assets.

DENVER, Nov. 09, 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 third fiscal quarter ended September 30, 2022.

Third Quarter 2022 Investment Highlights:

• Invested approximately $17.9 million in four investments
• Realized proceeds of approximately $10.4 million from the sale of three investments
• Realized proceeds from partial paydowns of $4.5 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 September 30, 2022 (excluding cash and cash equivalents) was approximately 11.85%, up 174 basis points from 10.11% in the prior quarter.

Third Quarter 2022 Financial Results

Net investment income was $3.3 million or $0.46 per share, comprised of $5.3 million in gross income and $2.0 million of expenses. The Company also reported a net realized and unrealized loss on investments of ($0.27) per share. Net Assets at quarter end were $147.3 million. The Company’s Net Asset Value was $20.74 per share, down ($0.20) from the prior quarter.

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

The Company had $62.3 million outstanding on its $70.0 million credit facility at the quarter end, which represents approximately 29% 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 $17.9 million in four bank-related regulatory relief capital investments. The Company received total proceeds of approximately $14.9 million, including $10.4 million from the sale of three investments, and $4.5 million from partial paydowns from seven investments.

Quarterly Conference Call

ArrowMark Financial will host a webcast and conference call on November 9, 2022, at 5:00 pm Eastern time. The call will include a presentation hosted by Chairman & CEO, Sanjai Bhonsle, President, Dana Staggs, and Chief Financial Officer, Patrick J. Farrell. 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 investorrelations@arrowmarkfinancialcorp.com to schedule a meeting with the management.

The conference call can be accessed by dialing 1-844-826-3035 for domestic callers or 1-412-317-5195 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 November 23, 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 10171795. 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)
			September 30, 2022				June 30, 2022
	Assets
		Investments in securities, at fair value cost: $209,448,494 and $207,554,612 respectively)	$	193,181,830			$	197,055,807
		Interest and dividends receivable		12,225,520				2,894,419
		Foreign cash (cost: $21,298 and $23,338 respectively)		21,418				22,443
		Cash		5,297,472				127,284
		Unrealized appreciation on forward currency exchange contracts		35,701				-
		Prepaid assets		1,494,260				1,535,171
		Total assets		212,256,201				201,635,124
	Liabilities
		Loan payable		62,300,000				51,500,000
		Investment advisory fee payable		930,951				877,992
		Loan interest payable		296,986				33,990
		Unrealized depreciation on forward currency exchange contracts		1,202,041				399,809
		Accrued expenses payable		199,614				162,644
		Total liabilities		64,929,592				52,974,435
	Net Assets		$	147,326,609			$	148,660,689
	Net Assets consist of:
		Common stock at par ($0.001 per share)	$	7,103			$	7,101
		Paid-in-Capital		156,724,166				156,696,147
		Total distributable earnings / (loss)		(9,404,660	)			(8,042,559	)
		Net Assets	$	147,326,609			$	148,660,689
	Net Asset Value Per Share:
	Common Stock Shares Outstanding			7,102,626				7,101,054
	Net asset value per common share		$	20.74			$	20.94
	Market price per share		$	17.26			$	19.20
	Market price premium/(discount) to net asset value per share			-16.78	%			-8.31	%

ARROWMARK FINANCIAL CORP.
Statement of Operations (unaudited)
			For The Three Months Ended September 30, 2022			For The Three Months Ended June 30, 2022
	Investment Income
		Interest	$	5,130,810		$	4,713,141
		Dividends		146,258			259,077
		Origination fee income		32,278			32,127
		Other income (service fees and due diligence fees)		38,768			32,238
		Total Investment Income		5,348,114			5,036,583
	Expenses
		Investment advisory fees		930,951			877,992
		Interest expense		652,189			486,112
		Directors' fees		104,052			125,152
		Transfer agent, custodian fees and administrator fees		73,159			82,364
		Bank administration fees		76,504			51,772
		Professional fees		79,313			148,450
		Investor relations fees		31,205			29,080
		Insurance expense		18,148			17,951
		Valuation fees		15,152			69,988
		Miscellaneous fees (proxy, rating agency, etc.)		92,165			89,309
		Total expenses		2,072,838			1,978,170
		Net Investment Income		3,275,276			3,058,413
	Realized and Unrealized Gain / (Loss) on Investments and Foreign Currency Transactions
		Net realized gain / (loss) on investments		(110,240	)		(808,687	)
		Net realized gain from forward foreign currency contracts		4,983,569			3,540,799
		Net realized gain / (loss) from foreign currency translations		(184,231	)		(226,172	)
		Net change in net unrealized appreciation / (depreciation) on investments		(5,767,859	)		(6,714,234	)
		Net change in unrealized appreciation / (depreciation) on forward currency contracts		(766,531	)		313,406
		Net change in unrealized appreciation / (depreciation) on foreign currency translations		(22,674	)		(9,092	)
		Net realized and unrealized gain/(loss) on investments, forward foreign currency contracts and foreign currency translations		(1,867,966	)		(3,903,980	)
		Net Increase/(Decrease) in Net Assets Resulting From Operations	$	1,407,310		$	(845,567	)

ARROWMARK FINANCIAL CORP.
Financial Highlights (unaudited)
			For The Three Months Ended September 30, 2022
		Per Share Operating Performance
		Net Asset Value, beginning of period	$	20.94
		Net investment income(1)		0.46
		Net realized and unrealized gain (loss) on investments		(0.27	)
		Total from investment operations		0.19
		Less distributions to shareholders
		From net investment income		(0.39	)
		Total distributions		(0.39	)
		Net asset value, end of period	$	20.74
		Per share market value, end of period	$	17.26
		Total Investment Return (2)
		Based on market value		-8.14	%
		Based on net asset value		1.21	%
		Ratios and Supplemental Data
		Net assets, end of period (in millions)	$	147.3
		Ratios (as a percentage to average net assets):
		Expenses before waivers(3)(4)*		5.55	%
		Expenses after waivers(5)*		5.55	%
		Net investment income(6)*		8.77	%
		Portfolio turnover rate **		9	%
		Revolving Credit Agreement
		Total revolving credit agreement outstanding (000's)	$	62,300
		Asset coverage per $1,000 for revolving credit agreement(7)		3,365
(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 3.80%.
(4	)	Ratio of expenses before waivers to average managed assets equals 4.05%.
(5	)	Ratio of expenses after waivers to average managed assets equals 4.05%.
(6	)	Ratio of net investment income to average managed assets equals 6.39%.
(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 were ArrowMark Financial's (BANX) net investment income results for Q3 2022?

ArrowMark Financial reported a net investment income of $3.3 million, or $0.46 per share, for the third quarter of 2022.

How much did ArrowMark Financial invest during the third quarter of 2022?

In the third quarter of 2022, ArrowMark Financial invested approximately $17.9 million in four investments.

What was the estimated annual yield for ArrowMark Financial's portfolio at the end of Q3 2022?

The estimated annualized yield generated by ArrowMark Financial's invested portfolio was approximately 11.85% as of September 30, 2022.

How did ArrowMark Financial's Net Asset Value change in Q3 2022?

ArrowMark Financial's Net Asset Value for Q3 2022 was $20.74 per share, down $0.20 from the prior quarter.

What regular cash distribution did ArrowMark Financial pay in Q3 2022?

ArrowMark Financial paid a regular cash distribution of $0.39 per share on September 29, 2022.