stonecastle investment management llc

odyssey investment partners aum water

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Stonecastle investment management llc

We believe that few institutional investors have developed infrastructure comparable to that of StoneCastle Partners and its affiliates. Our Advisor's senior investment professionals have substantial experience structuring investments that balance the needs of community banks with appropriate levels of risk control. Our Advisor's investment approach for us emphasizes current income and, to a lesser extent, capital appreciation through common equity, warrants, options and conversion features.

We believe that several factors render many U. Historically, the relatively small size of individual community banks and certain regulatory requirements limiting control have deterred many institutional investors, including private equity investors, from making those investments. We believe that, as a consequence, few institutional investors have developed and possess the specialized skills and infrastructure to efficiently analyze and monitor investments in community banks on a large scale.

Based on the experience of our management team, investing in community banks requires specialized skills and infrastructure, including: i the ability to analyze small community banking institutions and the local economies in which they do business; ii specialized systems to analyze and track vast amounts of bank performance data; iii a deep understanding and working relationship with state and federal regulators that oversee community banks; and iv brand awareness within the community banking industry and a strong reputation as a long-term partner that understands the needs of community banks to originate investment opportunities successfully.

Unlike private equity investors, we are not subject to standard periodic capital return requirements. These provisions often force private equity investors to seek returns on their investments through mergers, public equity offerings or other liquidity events more quickly than they otherwise might prefer, potentially resulting in a lower overall return to investors.

We believe that our flexibility to make investments with a long-term view, and without the capital return requirements of traditional private investment funds, provides us with the opportunity to generate attractive returns on invested capital. Targeted Investment Characteristics. Our business strategy focuses on minimizing risk by using a disciplined underwriting process in providing capital to community banks. We expect to continue to focus on investing in community banks that exhibit the following characteristics:.

We seek to invest in community banks with management teams or sponsors that are experienced in running local banking businesses and managing risk. We seek community banks that have a particular market focus, expertise in that market and a track record of success. Further, we actively seek to invest in banks with senior management teams with significant ties to their local communities.

We seek to invest in community banks with the potential to generate stable cash flows over long periods of time, and therefore we presently seek out institutions that have a defined lending strategy and predictable sources of interest revenues, stable sources of deposits and predictable expenses. We seek to invest in community banks whose core business is conducted in one or more geographic markets that have sustainable local economies.

The market characteristics we seek include stable or growing employment bases and favorable long-term demographic trends, among other characteristics. We seek to invest in healthy community banks headquartered in markets which provide significant organic growth opportunities or headquartered in highly fragmented markets where industry consolidation is likely providing the opportunity for community banks to grow through acquisitions of smaller competitors.

We focus on community banks that have developed strong market positions within their respective markets and that are well positioned to capitalize on growth opportunities. We seek to invest in companies that demonstrate competitive advantages that should help to protect and potentially expand their market position and profitability.

Typically, we do not expect to invest in newly organized institutions or community banks having highly speculative business plans. When investing in common equity, we seek investments that we expect to result in an exit opportunity. Exits may come through the conversion of an investment into public shares; an initial public offering of shares by the bank; the sale of the bank; or the repurchase of shares by the bank or another financial investor.

We invest in accordance with our Advisor's investment policy in primarily the following assets:. TARP Assets: We own and may continue to own one or more portfolios of perpetual preferred stock issued by community banks under the U.

Department of the Treasury's "U. The U. Treasury is in the process of selling its TARP Preferred holdings through an auction process in which we will seek to participate; however, in light of the limited number of TARP Preferred held by the U. Treasury we believe our ability to participate in the U. Treasury's auction process is likely to diminish significantly in the future.

We intend to purchase these securities through secondary market transactions. Preferred stock may have fixed or variable dividend rates, which may be subject to rate caps and collars. In connection with our investments, we may also receive options or warrants to purchase common or preferred equity.

Regardless of the type of capital security, we intend to invest the majority of our portfolio in institutions that are currently paying dividends or interest on their securities, that our Advisor believes have the ongoing ability to pay dividends or interest on their securities, and that are not currently a party to any regulatory enforcement actions that would limit or hinder their ability to pay dividends or interest.

From time to time, we may also invest in Tier 2 qualifying debt securities long term subordinated debt securities and other debt securities or hybrid instruments issued by community banks or their holding companies. Additionally, we may invest in Tier 1 qualifying debt securities. These debt securities may have fixed or floating interest rates. We expect that the majority of the new issue preferred stock in which we invest will be non-cumulative. While these existing and any future regulatory capital requirements may cause community banks to raise additional capital, these regulations may make some community banks less likely to pay dividends on preferred stock and common stock.

In addition, future changes in regulatory capital regulations may negatively or positively affect our investments and may subject us to additional pre-payment and capital redeployment risk. Most of our assets are and, we expect, will be illiquid, and their fair value may not be readily determinable. Accordingly, there can be no assurance that we will be able to realize the value at which we carry such assets if we need to dispose of them.

As a result, we can provide no assurance that any given asset could be sold at a price equal to the value at which we carry it. We believe that a majority of the investments we will make will not be rated by a nationally recognized statistical rating organization "NRSRO".

We have borrowed funds and expect to continue to borrow to fund our investment activities, which is also known as utilizing leverage. While we may enter into borrowing arrangements with banks or other lenders that are unsecured, we currently fund a portion of our investments with a secured debt facility. We will operate with. Additionally, we may create one or more wholly-owned special purpose subsidiaries to facilitate secured borrowing structures.

We have borrowed to fund a portion of our assets and intend to limit our overall borrowing to meet the limitations set forth under the Investment Company Act. Although we have no present intention to do so, we may also operate with leverage by issuing preferred stock. We seek a leverage ratio, based on a variety of factors including market conditions and our Advisor's market outlook, where the rate of return, net of applicable expenses, on the Company's investment portfolio investments purchased with leverage exceeds the costs associated with such leverage.

Following the completion of the offering, we may increase the amount of leverage outstanding. Leverage creates a greater risk of loss, as well as a potential for more gain, for the common stock than if leverage was not used. Interest on borrowings may be at a fixed or floating rate, and the interest at a floating rate generally will be based on short-term rates.

The costs associated with our use of leverage, including the issuance of such leverage and the payment of dividends or interest on such leverage, will be borne entirely by the holders of common stock. As long as the rate of return, net of our applicable expenses, on our investment portfolio investments purchased with leverage exceeds the costs associated with such leverage, we will generate more return or income than will be needed to pay such costs.

In this event, the excess will be available to pay higher dividends to holders of common stock. Conversely, if the return on such assets is less than the cost of leverage and our other expenses, the return to the holders of our common stock will diminish. To the extent that we use leverage, the NAV and market price of our common stock and the yield to holders of common stock will be more volatile. Our leveraging strategy may not be successful. Because our Advisor's fee is based on total assets including certain leverage and any assets acquired with the proceeds of leverage , our Advisor's fee will be higher if we utilize leverage.

In order to reduce the interest rate and credit risks associated with our investments and use of leverage, we expect to utilize derivatives including interest rate swaps, caps, floors and forward transactions and credit default swaps, total return swaps and credit-linked notes. In addition, we may utilize futures and warrants in order to hedge against changes in market prices of the securities of the publicly-traded banks in which we invest. Conflicts of Interest.

Our Advisor is subject to certain conflicts of interest in our management. These conflicts arise primarily from the involvement of our Advisor and its affiliates in other activities that may conflict with our activities. Our Advisor and its affiliates engage in a broad spectrum of activities.

In the ordinary course of their business activities, they may engage in activities where their interests or the interests of their clients may conflict with our interests and the interest of the holders of our common stock. Other present and future activities of our Advisor. Our Advisor's compliance department and legal department oversee its conflict-resolution system. This system emphasizes the principle of fair and equitable allocation of appropriate opportunities to our Advisor's clients over time.

As a result of our Advisor's allocation policies, we may not be able to invest in all opportunities that are appropriate for us and this may have the effect of reducing our potential earnings. Although our Advisor has agreed with us that it will allocate opportunities among its clients pursuant to its written policies and procedures, there is no assurance that these policies and procedures will work as intended or that we will be allocated our fair share of investment opportunities over time.

Corporate Information. Our telephone number is Advisor Information. The telephone number for our Advisor is Who May Want to Invest. Investors should consider their investment goals, time horizons and risk tolerance before investing in our common stock.

An investment in our common stock is not appropriate for all investors, and our common stock is not intended to be a complete investment program. Our common stock is designed as a long-term investment and not as a trading vehicle. Our common stock may be an appropriate investment for investors who are seeking:.

An investment in our common stock involves risk, and we urge you to consult your tax and legal advisers before making an investment in our common stock. You could lose some or all of your investment. See "Risk Factors. An investment in our common stock involves significant risks, including:.

Risks Related to Our Operations. In particular, our investments in subordinated or unsecured debt securities that are perpetual or have maturities in excess of ten years subject us to a high degree of interest rate risk. If the amount of any distribution exceeds our net investment income or capital gains, then all or a portion of such distribution could constitute a return of capital to stockholders rather than dividend income for tax purposes.

A return of capital distribution has the effect of lowering stockholders' basis in their shares, which will result in higher tax liability when the shares are sold, even if such shares have not increased in value or have, in fact, lost value. A substantial portion of the distributions to stockholders that we have made to date in consisted of a return of capital, and not income or gains generated from our investment portfolio.

Risks Related to Our Use of Leverage. We also have authority to issue preferred stock or engage in reverse repurchase agreements to finance investments. In addition, we agreed not to purchase assets not contemplated by the investment policies and restrictions in effect when the Credit Facility became effective unless changes to these policies and restrictions are consented to by the Syndicate.

Furthermore, non-compliance with such covenants or the occurrence of other events could lead to the cancellation of the Credit Facility. We do not anticipate that such guidelines will have a material adverse effect on the holders of our common stock or on our ability to achieve our investment objectives.

We may also consider alternative measures of obtaining leverage in the future. Bank Regulatory Risk. Risks Related to this Offering. Risks Related to Taxation. Stockholder will depend upon the Non-U. Stockholder's particular circumstances and whether certain temporary tax provisions are extended. We strongly urge you to review carefully the discussion under "U.

Federal Income Tax Considerations" and to seek advice based on your particular circumstances from an independent tax adviser. We have granted the Underwriters an option to purchase up to an additional , shares of our common stock within 45 days of the date of this prospectus to cover any over-allotments.

See "Underwriting. We expect to use the net proceeds of this offering to make investments in accordance with our investment objectives and to pay our operating expenses. We anticipate that it may take up to six months to invest substantially all of the net proceeds of this offering in securities meeting our investment objectives. Pending investment, we intend to invest the net proceeds of this offering, and any liquid assets we subsequently hold, in temporary investments that may include cash or other temporary investments, including readily marketable interest-bearing and dividend paying securities which may be outside of the community banking industry.

Following the completion of an offering, we may increase the amount of leverage outstanding. See "Use of Proceeds. See "Closed-End Fund Structure. Our board of directors will determine the amount of our quarterly distributions out of assets legally available, including net investment income, capital gains, paid-in capital and borrowings. Each of these distributions was paid during the current fiscal year ending December 31, To the extent our net investment income or capital gains fall below the total amount of our distributions for any given fiscal year, a portion of those distributions may be deemed to be a return of capital to our stockholders.

The specific tax characteristics of each distribution will be reported to stockholders on Form DIV after the end of each calendar year. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gains. The management agreement with our Advisor will remain in effect for a period of two years from the date of effectiveness, unless earlier terminated, and will continue in effect from year to year thereafter, but only so long as each continuance is specifically approved by i our board of directors or the vote of a majority of our voting securities and ii the vote of a majority of our independent directors.

The Company adopted the management agreement with our Advisor prior to the date of this prospectus. Discussion regarding the basis for the approval of the management agreement by the board of directors is available in our annual report to stockholders for the period ended December 31, The management agreement with our Advisor may be terminated at any time, without payment or penalty, by vote of our board of directors, by vote of a majority of our voting securities, or by our Advisor, in each case on not less than 60 days' written notice.

As required by the Investment Company Act, the management agreement with our Advisor will terminate automatically in the event of its assignment. See "Management" and "Portfolio Management. The management fee is paid quarterly in arrears and equals 0.

The term "Managed Assets" means our total assets including cash and cash equivalents and any assets purchased with or attributable to any borrowed funds. During periods in which we are utilizing leverage, the management fee will be higher than if we did not utilize a leveraged capital structure because the management fee is calculated as a percentage of the Managed Assets, including those purchased with leverage.

In addition, we reimburse our Advisor for fees and expenses incurred on our behalf, including our pro rata portion of its administrative expenses. While we enter into borrowing arrangements with banks or other lenders that are unsecured, we may also fund a portion of our investments by creating one or more wholly-owned special purpose subsidiaries to facilitate secured borrowing structures. The Investment Company Act limits our total debt securities to one-third of our total assets, including the proceeds of such debt securities.

In addition, our certificate of incorporation authorizes us to issue preferred stock. The Investment Company Act limits the amount of the preferred stock that we may issue. To obtain and maintain RIC status, we must meet specific requirements, including on the income we earn, the assets we hold and the amounts we distribute. We may utilize derivatives in order to hedge against interest rate changes associated with our use of leverage.

Federal Income Tax Considerations," and we urge you to consult your tax adviser regarding the U. This structure is intended to provide us with a greater likelihood of continuity of management, which may be necessary for us to realize the full value of our investments. A staggered board of directors also may deter hostile takeovers or proxy contests, as may certain provisions of Delaware law, our certificate of incorporation or bylaws or other measures adopted by us. In addition, our certificate of incorporation and bylaws contain provisions that could prevent a change in our control or management.

Our plan is an "opt out" dividend reinvestment plan. As a result, if we declare a distribution after the plan is effective, a stockholder's cash distribution will be automatically reinvested in additional common stock, unless the stockholder specifically "opts out" of the dividend reinvestment plan so as to receive cash distributions. Stockholders who receive distributions in the form of common stock will generally be subject to the same U. See "Dividend Reinvestment Plan" and "U.

Federal Income Tax Considerations. We will post our annual and semi-annual reports to stockholders and other information on our website at www. In addition, the SEC maintains an Internet website, at www. You should carefully consider the full text of the risk factors outlined below beginning on page 55 of this prospectus, together with the other information contained in this prospectus, before investing in our common stock. In connection with the forward-looking statements that appear in this prospectus, you should also carefully review the cautionary statement referred to below under "Cautionary Statement Concerning Forward-Looking Statements.

Net assets means the value of our total assets the value of the securities held plus cash or other assets, including interest accrued but not yet received less: i all of our liabilities including accrued expenses ; ii accumulated and unpaid dividends on any outstanding preferred stock; iii the aggregate liquidation preference of any outstanding preferred stock; iv accrued and unpaid interest payments on any outstanding indebtedness; v the aggregate principal amount of any outstanding indebtedness; and vi any distributions payable on our common stock.

We caution you that certain of the indicated percentages in the table below indicating annual expenses are estimates and may vary. Stockholder Transaction Expenses as a percentage of offering price :. Sales Load. Dividend Reinvestment Plan Expenses 3. Total Stockholder Transaction Expenses. Annual Expenses as a percentage of net assets attributable to common stock :.

Management Fees 4. Interest payments on borrowed funds 5. Other Expenses estimated for the current fiscal year 6. Total Annual Expenses. Our Advisor has agreed to waive the management fee that would otherwise be payable in respect of net proceeds to the Company obtained through the issuance of the shares of common stock in this offering through August 30, We have assumed that we will utilize leverage for the entire year for purposes of these expense estimates.

We bear all expenses incurred in our operations, and we will bear the expenses related to this offering. The following example demonstrates the hypothetical dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock.

The purpose of the table and example above is to assist you in understanding the various costs and expenses that an investor in this offering will bear directly or indirectly. The example and the expenses in the tables above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown.

In addition, while the example assumes reinvestment of all distributions at NAV, participants in our dividend reinvestment plan may receive common stock valued at the market price in effect at that time. This price may be at, above or below NAV. See "Dividend Reinvestment Plan" for additional information regarding our dividend reinvestment plan. As of the date of this prospectus, we have not yet completed a full year of investment operations.

The "Other Expenses" shown in the table and related footnote above are based on estimated amounts for our current fiscal year of operation unless otherwise indicated and assume that we will issue approximately 1. If we issue fewer shares of common stock, all other things being equal, certain of these percentages would increase. For additional information with respect to our expenses, see "Management" and "Dividend Reinvestment Plan. The financial highlights table is intended to help you understand the Company's financial performance.

Information is shown for the Company's initial period of operations from November 13, to December 31, and the six months ended June 30, Certain information reflects financial results for a single share of common stock.

Per Share Operating Performance:. Net Asset Value, beginning of period. Net realized and unrealized gain loss on investments. Total from investment operations. Dividends from net investment income. Distributions to shareholders in excess of net investment income. Total Distributions. Net Asset Value, end of period. Net Assets, end of period in millions. Market value, end of period. Total investment return based on market value.

Ratio of operating expenses. Ratio of net investment income loss. Portfolio turnover rate 6. Not Annualized. Investment return does not reflect any sales load. Past performance is not indicative of future results. Total return does not include sales load and offering expenses. The matters discussed under "Prospectus Summary," "Risk Factors," "Distribution Policy," "The Company" and elsewhere in this prospectus, as well as in future oral and written statements by our management, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.

Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words.

Important assumptions include our ability to originate new investments and achieve certain levels of return, the availability to us of additional capital and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a forward-looking statement in this prospectus should not be regarded as a representation by us that our plans or objectives will be achieved.

Statements regarding the following subjects are forward-looking by their nature:. Our beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements.

You should carefully consider these risks before you make an investment decision with respect to our common stock, along with the following factors that could cause actual results to vary from our forward-looking statements:. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

You should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. We are not obligated, and do not undertake an obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following table sets forth, for the quarters indicated, the highest and lowest daily closing prices on the NASDAQ Global Select Market per share of common stock, and the NAV per share and the premium to or discount from NAV, on the date of each of the high and low market prices.

During Quarter Ended. Volume 4. March 31, June 30, Our shares have historically traded at a premium to NAV. Shares of closed-end funds frequently trade at a market price that is less than the value of the net assets attributable to those shares a "discount".

The possibility that our shares will trade at a discount from NAV is a risk separate and distinct from the risk that our NAV will decrease. The risk of purchasing shares of a closed-end fund that might trade at a discount or unsustainable premium is more pronounced for investors who wish to sell their shares in a relatively short period of time after purchasing them because, for those investors, realization of a gain or loss on their investments is likely to be more dependent upon the existence of a premium or discount than upon portfolio performance.

Our shares are not redeemable at the request of stockholders. We may repurchase our shares in the open market or in private transactions, although we have no present intention to do so. Stockholders desiring liquidity may, subject to applicable securities laws, trade their shares on the NASDAQ Global Select or other markets on which such shares may trade at the then current market value, which may differ from the then current NAV.

We anticipate that it may take up to six months to invest substantially all of the net proceeds of this offering in securities meeting our investment objectives described in this prospectus. We intend to hold a certain portion of the net proceeds in cash or other temporary investments, including readily marketable interest-bearing and dividend paying securities which may be outside of the community banking industry.

We may also initially invest the net proceeds which we receive from this offering in cash, cash equivalents, securities issued or guaranteed by. In either event, due to these investments, we expect that our return on the investments will be lower than what we will realize after investment in accordance with our investment objective and strategies. We intend to pay quarterly distributions to our stockholders in an amount, and on a timely basis, sufficient to obtain and maintain our status as a RIC; investment company taxable income includes, among other items, dividends, interest and the excess of any net short-term capital gains over net long-term capital losses, reduced by deductible expenses.

We have elected to be treated, and intend to comply with the requirements to qualify annually, as a RIC. For federal income tax purposes, as a RIC we are required to distribute substantially all of our net investment income each year both to avoid federal income tax on our distributed income and to avoid a potential excise tax.

If our ability to make distributions on our common stock is limited, such limitations could, under certain circumstances, impair our ability to maintain a qualification for taxation as a RIC, which would have adverse consequences for our stockholders. See "U. We will pay all dividends at the discretion of our board of directors, and the dividends we pay will depend on a number of factors, including:. If a stockholder's common stock is registered directly with us or with a brokerage firm that participates in our dividend reinvestment plan, distributions will be automatically reinvested in additional common stock under the dividend reinvestment plan unless a stockholder elects to receive distributions in cash.

If a stockholder elects to receive distributions in cash, payment will be made by check. See "Dividend Reinvestment Plan. We were formed as a Delaware corporation on February 7, We are registered as an investment company under the Investment Company Act and have elected to be treated, and intend to comply with the requirements to qualify annually, as a RIC. We have and intend to primarily invest in securities issued by community banks, including securities of private, thinly traded or micro-cap public companies, cash and cash equivalents such as U.

We do not expect to be regulated as a bank holding company or a savings and loan holding company by the Federal Reserve. Pending such investments, we intend to invest the proceeds of this offering initially in a combination of U. Government securities and high quality, short-term money market instruments. This offering will provide us with capital to implement our strategy.

We intend to generate revenue in the form of dividends on dividend-paying equity securities as well as interest payable on the debt investments that we hold. In addition, we intend to generate revenue in the form of capital gains through equity securities, warrants, options and other equity interests.

We expect to invest the majority of our assets in preferred equity, subordinated debt, convertible securities and common equity that pay cash dividends and interest on a recurring or customized basis. We may invest in unsecured debt issued by community banks, and we currently expect these investments to have maturities in excess of ten years to enable our borrowers to obtain favorable regulatory capital treatment.

We currently intend to structure our investments to provide for quarterly dividend and interest payments. To meet certain regulatory requirements of the banks in which we invest, we may structure investments to provide that dividends may be deferrable on a cumulative or non-cumulative basis. Based upon management's prior experience, we may receive up-front fee revenue from the community bank issuers in connection with newly originated securities.

We also may receive fee income from underlying community banks in connection with our investments. Our primary operating expenses will include the payment of management fees and operating expenses, including a portion of any overhead expenses of the Advisor and its affiliates that are allocable to us by our Advisor upon its reasonable determination that such expenses provided a benefit to us, and the services fees payable to CAB Marketing, LLC and CAB, L.

The management fees are limited to a fixed percentage of our assets. Pursuant to the management agreement, our Advisor also furnishes us with office facilities and clerical and administrative services necessary for our operation other than services provided by our custodian, accounting agent, administrator, dividend and interest paying agent, transfer agent and other service providers.

We bear all expenses not specifically assumed by our Advisor and incurred in our operations, and we bear the expenses related to this offering. We expect to reimburse our Advisor to the extent these expenses are paid by our Advisor. Our Advisor is not paid an incentive fee and does not participate in our profits in its capacity as Advisor.

We may, but are not required to, enter into interest rate hedging agreements to hedge interest rate risk associated with any indebtedness we may incur. Such hedging activities, subject to compliance with our exemption from registration under the Commodity Exchange Act of , as amended the "CEA" , may include the use of interest rate transactions such as swaps, caps, floors, repurchase agreements and reverse repurchase agreements.

We will bear any costs incurred in entering into and settling such contracts. There is no assurance that any hedging strategy we may employ will be successful. Financial Condition, Liquidity and Capital Resources. We generate cash primarily from: i the net proceeds of offering our common stock, including this offering and any future debt or equity securities offerings and ii cash flows from operations, including interest earned from the temporary investment of cash.

We also fund a portion of our investments through borrowings from banks or other lenders. In the future, we may also fund a portion of our investments by creating a wholly-owned subsidiary to facilitate secured borrowing structures. We believe that the use of special purpose entities to hold our assets will permit us to potentially obtain less expensive leverage than we might otherwise be able to obtain because it will facilitate our ability to obtain favorable ratings, which in turn may reduce the cost of leverage.

However, the lenders to these special purpose entities typically impose substantial restrictions on the assets contained in such special purpose entities such as restrictions on our ability to encumber them. There can be no assurances that a wholly-owned subsidiary will be able to obtain more favorable borrowing terms. We do not expect to incur such indebtedness through special purpose entities until we have substantially invested the proceeds of this offering in securities that meet our investment objective.

Our primary use of funds has been and will continue to be to make investments in companies, pay expenses and pay cash dividends to our stockholders. Distribution Policy. We intend to pay quarterly distributions to our stockholders in an amount, and on a timely basis, sufficient to obtain and maintain our status as a RIC.

Investment company taxable income includes, among other items, dividends, interest and the excess of any net short-term capital gains over net long-term capital losses, reduced by deductible expenses. We have elected to be treated, and intend to comply with the requirements to qualify annually as an RIC. Contractual Obligations. We have entered into a management agreement with our Advisor pursuant to which our Advisor has agreed to: i serve as our investment adviser in exchange for the consideration set forth therein; and ii furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and to provide on our behalf managerial assistance to certain of our portfolio companies.

Payments under the management agreement consist of a management fee based on a percentage of the value of our Managed Assets, as well as reimbursement of expenses of the Advisor. The compensation and allocable routine overhead expenses of all investment professionals of our Advisor and its staff, when and to the extent engaged in providing us investment advisory services, are provided and paid for by our Advisor or one of its affiliates and not us, although we reimburse our Advisor an amount equal to our allocable portion of overhead.

The management agreement with our Advisor was initially approved by our board of directors on September 4, The management agreement continues in effect for a period of two years from the effective date and thereafter must be approved annually by our board of directors. StoneCastle Partners has licensed the "StoneCastle" name to us on a non-exclusive, royalty-free basis. We have the right to use the "StoneCastle" name so long as our Advisor or one of its approved affiliates remains our investment adviser.

Critical Accounting Policies. The preparation of our financial statements in conformity with accounting principles generally accepted in the United States or "US GAAP" requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported.

Actual results could differ from those estimates. Valuation of Portfolio Investments. The preparation of our financial statements requires us to estimate the value of our investments and the related amounts of unrealized appreciation and depreciation of investments recorded. We invest primarily in illiquid securities, including debt and equity securities of primarily privately-held or thinly-traded public companies. Our investments generally are subject to restrictions on resale and in the case of privately-held companies, generally, will have no established trading market.

We value all of our privately-held investments at fair value. We determine fair value of our privately-held investments to be the amount for which an investment could be exchanged in an orderly disposition over a reasonable period of time between willing parties, other than in a forced or liquidation sale. If market quotations become readily available for an investment, we will use such market quotations to value the investment.

We have engaged regionally or nationally recognized independent valuation firms to assist in determining the fair value of our investments that do not have readily available market prices or quotations. In the event an investment does not have a readily determinable price, our board of directors reviews valuations from one or more regionally or nationally recognized independent valuation firms along with a valuation provided by our Advisor.

Our board of directors regularly reviews and evaluates our valuation methodology and any such valuation service it uses and the historical accuracy of such valuation methodologies. Our board of directors reviews all valuation recommendations including those provided by our Advisor and assigns the valuation it determines to best represent the fair value for such investment. The methods for valuing these investments may include fundamental analysis, market prices of similar securities, purchase price of securities, subsequent private transactions in the security or related securities, discounted cash flow analysis, multiple analysis, or discounts applied to the nature and duration of restrictions on the disposition of the securities, as well as a combination of these and other factors.

Because such valuations, and particularly valuations of privately-held securities and private companies, are inherently uncertain, may fluctuate over short periods of time, and may be based on estimates, our determinations of fair value have, and may in the future differ materially from the values that would have been used if a ready market for these securities existed.

Our NAV could be adversely affected if our determinations. Our preferred and common equity investments as well as our equity-related investments including warrants and options in portfolio companies collectively, "Equity Investments" for which there is no liquid public market are valued at fair value, which are determined using a range of valuation techniques. The determined fair values generally are discounted to account for restrictions on resale and minority ownership positions.

The value of our Equity Investments in public companies for which market quotations are readily available will be based upon the closing public market price on the measurement date. Securities with sale restrictions will typically be valued at a discount from the public market value of the security. Our board of directors may consider other methods of accounting to value our investments as appropriate in conformity with US GAAP.

Dividend and Interest Income. We record dividend income on the ex-dividend date. We record interest income, which reflects the amortization of premiums and includes accretion of discounts for financial reporting purposes, on an accrual basis. To the extent we receive dividends that are eligible for qualified dividend income treatment if received by a noncorporate holder or the dividends received deduction if received by a corporate holder , we report such information to our stockholders so that they can take advantage of the preferential income tax rules that would apply to the portion of our distributions that correspond to such income.

Fee Income. Fee income includes our fees, if any, for due diligence, structuring, commitment and facility fees, and fees, if any, for transaction services, consulting services and management services rendered to portfolio companies and other third parties.

We recognize commitment and facility fees for debt generally as income over the life of the underlying loan, and we recognize commitment and facility fees for perpetual stock generally as income in the year the investment is consummated. We recognize due diligence, structuring, transaction service, consulting and management service fees generally as income when services are rendered.

Our investment objective is to provide stockholders with current income and, to a lesser extent, capital appreciation. We attempt to achieve our investment objectives through preferred equity, subordinated debt, convertible securities and common equity investments in the U. We may also invest in similar securities of larger U. We seek to enhance our returns through the use of warrants, options and other equity conversion features.

The banks in which we invest may include, as part of the consideration of any new issuance of capital stock to us, a grant of warrants or options to increase our investment in such banks or options to convert our investment from a preferred security to common equity in the event we believe we can increase the returns for our investors through such conversion.

If we enter into derivatives for the purpose of hedging, and such derivatives constitute a senior security under the Investment Company Act, the rules thereunder or applicable guidance from the SEC and its staff, we intend to include that position in our leverage calculation.

Warrants, options and conversion features attached to preferred. We seek to structure our investments to avoid being regulated by various banking authorities. Therefore, we do not currently expect to be regulated by any state or federal banking regulatory bodies and expect to have significant flexibility with respect to the products we can offer our community banking clients and the manner in which we operate.

In the future, we may be subject to such regulation if regulations change or if certain regulated institutions are deemed to control us. Further, while we have no current intent to do so, we may become subject to such federal and state banking regulations if we change our business strategy in a manner that subjects us to such regulation.

Each of our Advisor's investment decisions is reviewed and approved for us by our Advisor's investment committee, which may also act as the investment committee for other investment vehicles managed by our Advisor and its affiliates. Community banks generally have simple, straight-forward business models and geographically concentrated credit exposure.

Community banks typically do not have exposure to non-U. Many of these community banks are well established, having been in business on average for more than 75 years and have survived many economic cycles, including the most recent financial crisis. We expect to create a portfolio within the community bank market focused on the bank market, with an emphasis on community banks, through investments in numerous issuers differentiated by asset sizes, business models and geographies.

Recent Developments. First Quarter Investment Highlights. Total assets includes investments, other assets and any proceeds from borrowings used to make a portfolio investment. Financial Results. The net increase in net assets resulting from operations is comprised of net investment income and net realized and unrealized gains on investments. Investment Policy Changes. On May 12, our board of directors approved amended investment policies to clarify our investment objective, policy and strategy.

Second Quarter As of June 30, , our long term investment portfolio consisted of 48 securities from 35 issuers. As of June 30, our portfolio investments consisted of the following:. Debt Securities. Trust Preferred Securities. Preferred Stock. Common Equity.

Total Long Term Investments. Total Cash and Short-Term Investments. Total Investments. Credit Facility. The Credit Facility is secured by substantially all of our assets. A substantial portion of the committed funds under the Credit Facility has been deployed pursuant to our investment objective and strategies and invested in capital securities issued by banks or their related holding companies.

Management Fee Waiver. Our Advisor has agreed to waive the management fee that would otherwise be payable in respect of net proceeds to the Company obtained through the issuance of shares of common stock in this offering through August 30, Third Quarter Preliminary Financial Results. Set forth below are preliminary estimates of our financial condition for the quarter ended September 30, These estimates are subject to completion of our financial closing procedures and are not a comprehensive statement of our financial results for the three months ended September 30, We advise you that actual results may vary materially from these estimates as a result of the completion of our financial closing procedures, final adjustments and other developments arising between now and the time our financial results for the three months ended September 30, are finalized.

The preliminary financial estimates provided under this "Recent Developments" section have been prepared by, and are the responsibility of, management. Neither our former or current independent registered public accounting firm, nor any other independent accountants, have yet audited, reviewed, compiled, or performed any procedures with respect to the preliminary financial data set forth herein.

Accordingly, such firms have not expressed an opinion or any other form of assurance with respect thereto. Given that community banks do not typically have access to different forms of capital from the public markets, most equity in community banks is comprised of common equity, a form.

This requirement creates what we believe to be strong demand for capital in the form of preferred equity, subordinated debt, convertible securities and, to a lesser extent, common equity. We believe that many investors historically have avoided investing in community banks due to the small size of these banks, their heavy regulation, the Bank Holding Company Act, which imposes ownership restrictions and the perception that community banks are riskier than larger financial institutions.

Bank failures and unprecedented losses by large money-center banks and investment banks related to sub-prime mortgages and other higher risk financial products have negatively affected the view of all banks even those smaller banks not engaged in such activities. As a consequence, valuations of financial institutions have declined substantially, allowing potential investors to dictate favorable terms.

In order to execute our business strategy, we currently rely on what we believe to be our Advisor's and its affiliates' strong reputations and deep relationships with issuers, underwriters, financial intermediaries and sponsors, as well as our exclusive investment referral and endorsement relationships with CAB, subsidiaries of the ABA. Any forward-looking statements speak only as of the date of this communication.

You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. In connection with the proposed transaction, StoneCastle Financial Corp. Investors and stockholders may also obtain free copies of the proxy statement when it becomes available and other documents filed with the SEC by StoneCastle Financial Corp. Investors and stockholders are urged to read the Proxy Statement and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed new investment advisory agreement.

Information regarding StoneCastle Financial Corp. These documents may be obtained free of charge from the sources indicated above. Subscribe via RSS. Subscribe via ATOM. StoneCastle Financial Logo. Register Sign In. Email Print Friendly Share. Formats available: Original Medium Small. GlobeNewswire is one of the world's largest newswire distribution networks, specializing in the delivery of corporate press releases financial disclosures and multimedia content to the media, investment community, individual investors and the general public.

Investment Company.

123 pattern forex mq4 sensor On May 12, our board of directors approved amended investment policies to clarify our investment objective, policy and strategy. The board will also review valuations fidelity investments 401k qdro such investments provided by the Advisor. Stonecastle investment management llc terms of the proposed investment advisory agreement between the Company and StoneCastle-ArrowMark are materially the same as the existing agreement between SAM and the Company and the advisory fees remain unchanged from the current investment advisory agreement. Following the completion of an offering, we may increase the amount of leverage outstanding. Shares of closed-end funds frequently trade at a market price that is less than the value of the net assets attributable to those shares a "discount".
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Gci financial forex reviews Pursuant to the management agreement, our Advisor will also furnish us with office facilities and clerical and administrative services necessary for our operation other than stonecastle investment management llc provided by our custodian, accounting agent, administrator, dividend and interest paying random trading forex and other service providers. We intend to pay quarterly distributions to our stockholders in an amount, and on a timely basis, sufficient to obtain and maintain our status as a RIC; investment company taxable income includes, among other items, dividends, interest and the excess of any net short-term capital gains over net long-term capital losses, reduced by deductible expenses. Our board of directors may consider other methods of accounting to value our investments as appropriate in conformity with US GAAP. Historically, the relatively small size of individual community banks and certain regulatory requirements limiting control have deterred many. We have the right to use the "StoneCastle" name so long as our Advisor or one of its approved affiliates remains our investment adviser.
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This estimated NAV is not a comprehensive statement of our financial condition or results for the month ended October 31, We advise you that our NAV per share for the fourth quarter ending December 31, may differ materially from this NAV, which is given only as of October 31, To learn more, visit www. Disclaimer and Risk Factors:. There is no assurance that StoneCastle Financial will achieve its investment objective.

StoneCastle 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.

We work together with the goal of bringing solutions that help community banks grow and compete with the larger money center banks. We are proud to be an industry-recognized thought-leader by actively sharing our insights, knowledge through discussions, conferences and forums. Eric brings over 20 years of cash management experience to StoneCastle, with deep experience in sales, marketing, and new product development. During his tenure at USA Mutuals, he introduced an FDIC insured deposit program for registered investment advisors, high-net-worth individuals and institutions which was recognized as a leading cash management vehicle for institutional clients.

Before joining USA Mutuals in , Eric was managing director of Reserve Management Company, where he oversaw all aspects of sales and marketing within the company, including brokerage, bank and institutional sales initiatives. While at Nomura, he was responsible for the marketing of financial products to institutional markets and through brokerage channels.

Eric is often quoted in the media and speaks at industry conferences. She helped revolutionize the wholesale CD market by introducing non-brokered listing service deposits to community banks. Kim also piloted a startup company that became a nationally recognized corporation in two years. In addition to her management responsibilities at StoneCastle, Kim personally consults with numerous community banks across the U.

A highly regarded speaker, Kim has presented at numerous national and state banking conferences. Bruce Hinkle brings over two decades of experience working in the financial industry to StoneCastle Partners. While there, Bruce was one of the main architects in delivering wholesale funding alternatives to community bankers.

He also has served on the Strategic Issues Committee for the Financial Managers Society and several state advisory boards. He brings more than 40 years sales experience to StoneCastle, beginning in the municipal bond industry in Prior to joining StoneCastle, Bill worked in bank consulting. During this period, he was employed by QwickRate and managed the iFeds online fed funds platform for ICAP, an international brokerage firm.

Bill began his sales career in the bond business in Texas in , continuing in Colorado through

RECHT UNRECHT WEI CHEN INVESTMENTS

Eastern Time on December 10, to provide an update on the Company. The conference call will be accessible by telephone and the Internet. To access the call, participants from within the U. The replay of the call will be available from approximately p.

To access the replay; the domestic dial-in number is , the international dial-in number is , and the passcode is To learn more, visit www. All references to asset amounts herein are as of September 30, Such forward-looking statements reflect current views with respect to future events and financial performance.

All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Additional risk factors that may affect future results are contained in the StoneCastle Financial Corp.

Any forward-looking statements speak only as of the date of this communication. You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. In connection with the proposed transaction, StoneCastle Financial Corp. Investors and stockholders may also obtain free copies of the proxy statement when it becomes available and other documents filed with the SEC by StoneCastle Financial Corp.

Undervalued Investments. We will focus on those investments that appear undervalued. Table of Contents Sensitivity Analyses. We typically perform sensitivity analyses to determine the effects of changes in market conditions on any proposed investment. These sensitivity analyses may include, among other things, simulations of changes in interest rates, changes in unemployment rates, changes in home prices, changes in economic activity and other events that would affect the performance of our investment.

In general, we will not commit to any proposed investment that will not provide at least a minimum return under any of these analyses and, in particular, the sensitivity analysis relating to changes in interest rates and unemployment rates. Business Combinations.

We will seek to invest in community banks whose business models and expected future cash flows make them attractive business combination transaction candidates, either as buyer or seller. These companies include candidates for strategic acquisition by other industry participants and companies that may conduct an initial public offering of common stock.

Investment Process and Due Diligence. In many cases, our Advisor will also compile private information obtained pursuant to confidentiality agreements about the institution, its portfolio of loans and securities, its customers and related deposits, compliance information, regulatory information and any such additional information that could be necessary to complete its due diligence on the company.

Our Advisor will seek to exercise discipline with respect to the pricing of its investments and institute appropriate structural protections in our investment agreements to the extent banking regulations permit. The due diligence process typically includes many of the following:. Additional due diligence with respect to any investment may be conducted on our behalf by our legal counsel and accountants, as well as by other outside advisers and consultants, as appropriate.

Table of Contents Investment Structure and Investments. Once we have determined that a prospective community bank is suitable for a newly originated direct investment, we will work with the management of that company to structure an investment that the parties believe is suitable from an economic and regulatory perspective. We anticipate structuring our direct investments in a variety of forms to meet our investment criteria and to meet the capital needs of the community banks in which we invest.

Banking is a highly regulated industry and investments in these institutions must be tailored to adhere to various regulatory standards, which change from time to time. Typically, FDIC-insured banks are wholly-owned by a regulated holding company, and the primary asset of the holding company is the stock of the bank s.

We intend to invest in both community banks and their holding companies. We anticipate structuring the majority of our direct investments as preferred stock, subordinated debt, and common equity that pay cash dividends and interest on a recurring or customized basis. In conjunction with our preferred stock and to a lesser extent, our debt investments.

In addition, we intend to obtain warrants or equity conversion options by which we may increase our investments in banks. We do not intend to become regulated as a bank holding company or savings and loan holding company and intend to structure our investments such that they represent less than The types of securities in which we may invest include, but are not limited to, the following:.

We anticipate receiving warrants or options to buy minority equity interests in connection with our direct subordinated debt and preferred equity investments. As a result, as a portfolio company appreciates in value, we may achieve additional investment return from these equity interests. We may structure such warrants to include provisions protecting our rights as a minority-interest holder.

Monitoring of Investments. The investment professionals of our Advisor and its affiliates will maintain a continuous relationship with the management teams of the companies in which we invest and will monitor each individual portfolio company relative to performance benchmarks set by our investment professionals.

Our Advisor has adopted a grading scale developed by StoneCastle Partners that is designed to provide initial and on-going support. Our Advisor uses this scale to assess investment performance and highlight investments that may require additional attention. Our Advisor monitors and, when appropriate, changes the investment ratings assigned to each investment in our portfolio. Our Advisor will review these investment ratings on at least a quarterly basis and may modify a rating at any time. Valuation Process.

Our primary competitors in providing financing and capital to community banks include, but are not limited to, public and private funds, commercial banks, investment banks, correspondent banks, commercial financing companies, high net worth individuals, private equity funds and hedge funds. Some of our competitors are substantially larger and may have considerably greater financial, technical and marketing resources than we do.

For example, we believe that some competitors have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assumptions, which could allow them to consider a wider variety of investments than us. Also, certain of our competitors may be better able to hedge against these risks due to having a more diversified portfolio or being registered as a commodity pool operator.

We also believe that many of our competitors are established bank holding companies, which allows them to make investments that are in excess of Further, many of our competitors are not subject to the regulatory restrictions that the Investment Company Act imposes. Table of Contents on us as an investment company or to the source-of-income, asset diversification and distribution requirements we intend to satisfy to qualify as a RIC. Brokerage Allocation and Other Practices.

Because most of the assets that we hold will be illiquid, we will generally acquire and dispose of our investments in privately negotiated transactions, and we may use brokers in the course of our business. While we will generally seek reasonably competitive trade execution costs, we will not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements, we may select a broker based partly on brokerage or research services provided to us.

In return for such services, we may pay a higher commission than other brokers would charge if we determine in good faith that such commission is reasonable in relation to the services provided. We do not currently have or expect to have any employees. Employees of StoneCastle Partners and its affiliates will provide the services necessary for our business pursuant to the terms of the Staffing Agreement.

Our Advisor will enter into a shared facilities and services agreement with StoneCastle Partners pursuant to which StoneCastle Partners will provide us and our Advisor with office space. Legal Proceedings. We are not currently a party to any material legal proceedings.

StoneCastle Partners believes that the claims are without merit and intends to vigorously defend the action. Furthermore, we would not bear any expenses relating to this legal proceeding or any damages or settlement amounts relating to this legal proceeding, if any.

Neither we nor our Advisor is a party to this litigation or will have any reimbursement obligation in respect thereof. Apart from the forgoing, neither we, our Advisor, nor StoneCastle Partners is currently subject to any material legal proceedings. Portfolio Turnover. Our annual portfolio turnover rate may vary greatly from year to year. Portfolio turnover rate is not considered a limiting factor in the execution of investment decisions for us. A higher turnover rate results in correspondingly greater brokerage commissions and other transactional expenses that we bear.

Table of Contents Proxy Voting Policies. Subject to its oversight, our board of directors has delegated responsibility for implementing the Proxy Policy to our Advisor. In the event requests for proxies are received to vote equity securities on routine matters, such as ratification of auditors, the proxies usually will be voted in accordance with the recommendation of our management unless our Advisor determines it has a conflict or our Advisor determines there are other reasons not to vote in accordance with the recommendation of our management.

On non-routine matters, such as elections of directors, amendments to governing instruments, proposals relating to compensation, corporate governance proposals and stockholder proposals, our Advisor will vote, or abstain from voting if deemed appropriate, on a case-by-case basis in a manner it believes to be in the best economic interest of our stockholders. In the event requests for proxies are received with respect to fixed income securities, our Advisor will vote on a case-by-case basis in a manner it believes to be in the best economic interest of our stockholders.

We are not responsible for voting proxies we do not receive, but we will make reasonable efforts to obtain missing proxies. We may determine not to vote a particular proxy if the costs and burdens exceed the benefits of voting e. Our board of directors will provide the overall supervision and review of our affairs. Siegel and Shilowitz will be responsible for negotiating, structuring and managing of our investments.

We expect to create a 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.

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. Use of Leverage. Under normal circumstances, we will not employ leverage above one-third of our total assets at time of incurrence. The borrowing of money and the issuance of preferred securities represent the leveraging of our common stock. We generally will not use leverage unless our board of directors believes that leverage will serve the best interests of our stockholders.

The principal factor used in making this determination is whether the potential return is likely to exceed the cost of leverage. Therefore, in making the determination whether to use leverage, we must rely on estimates of leverage costs and expected returns. Actual costs of leverage vary over time depending on interest rates and other factors, and actual returns vary depending on many factors.

We do not anticipate using leverage where the estimated costs of using such leverage and the on-going cost of servicing the payment obligations on such leverage exceed the estimated return on the proceeds of such leverage. Our board of directors will also consider other factors, including whether the current investment opportunities will help us achieve our investment objectives and strategies. Leverage creates a greater risk of loss, as well as potential for more gain, for our common stock than if leverage is not used.

Leverage capital would have complete priority upon distribution of assets on liquidation or otherwise over common stock. We expect to invest the net proceeds derived from any use or issuance of leverage capital according to the investment objectives and strategies described in this prospectus.

As long as our leverage capital is invested in securities that provide a higher rate of return than the dividend rate or interest rate of the leverage capital after taking its related expenses into consideration, the leverage will cause our common stockholders to receive a higher rate of income than if we were not leveraged.

Conversely, if the return derived from such securities is less than the cost of leverage including increased expenses to us , our total return will be less than if leverage had not been used, and, therefore, the amount available for distribution to our common stockholders will be reduced. In the latter case, our Advisor in its best judgment nevertheless may determine to maintain our leveraged position if it expects that the long term benefits to our common stockholders of so doing will outweigh the current reduced return.

There is no assurance that we will utilize leverage or, if leverage is utilized, that we will be successful in enhancing the level of our total return. We do not intend to use leverage until the proceeds of this offering are fully invested in accordance with our investment objectives. There is no assurance that outstanding amounts we borrow may allow prepayment by us prior to final maturity without significant penalty, but we do not expect any sinking fund or mandatory retirement provisions.

Outstanding amounts would be payable at maturity or such earlier times as we may agree. We may be required to prepay outstanding amounts or incur a penalty rate of interest in the event of the occurrence of certain events of default. We may be expected to indemnify our lenders, particularly any banks, against liabilities they may incur related to their loan to us. Utilizing leverage may also restrict our ability to pay dividends, which could lead to a loss of our RIC status.

We may also be required to secure any amounts borrowed from a bank by pledging our investments as collateral. Leverage creates risk for holders of our common stock, including the likelihood of greater volatility of our NAV and the value of our shares, and the risk of fluctuations in interest rates on leverage capital, which may affect the return to the holders of our common stock or cause fluctuations in the distributions paid on our common stock.

The fee paid to our Advisor will be calculated on the basis of our Managed Assets, including proceeds from leverage capital. During periods in which we use leverage, the fee payable to our Advisor will be. Table of Contents higher than if we did not use leverage. Consequently, we and our Advisor may have differing interests in determining whether to leverage our assets. Our board of directors will monitor our use of leverage and this potential conflict.

We may, as a result of market conditions or otherwise, be required to purchase or redeem preferred stock, or sell a portion of our investments when it may be disadvantageous to do so, in order to maintain the required asset coverage. Furthermore if we redeem any preferred stock, it would result in a long-term decrease in cash available to be distributed to holders of our common stock in the form of dividends.

Common stockholders would bear the costs of issuing preferred stock, which may include offering expenses and the ongoing payment of dividends. Under the Investment Company Act, we may only issue one class of preferred stock. Stated another way, we may not issue debt securities in a principal amount of more than one third of the amount of our total assets, including the amount borrowed, less all liabilities and indebtedness not represented by senior securities.

Under the Investment Company Act, we may only issue one class of senior securities representing indebtedness. Effects of Leverage. As the table shows, leverage generally increases the return to holders of common stock when portfolio return is positive and greater than the cost of leverage and decreases the return when the portfolio return is negative or less than the cost of leverage.

The figures appearing in the table are hypothetical and actual returns may be greater or less than those appearing in the table. Corresponding Common Stock Return. Table of Contents Derivative Transactions. Interest Rate Derivative Transactions. In an attempt to reduce the interest rate risk arising from our investments and use of leverage, we may use interest rate transactions such as swaps, caps, floors, forwards, swaptions and rate-linked notes. The use of interest rate transactions is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions.

The payment obligations would be based on the notional amount of the swap. In an interest rate cap, we would pay a premium to the counterparty up to the interest rate cap and, to the extent that a specified variable rate index exceeds a predetermined fixed rate of interest, would receive from the counterparty payments equal to the difference based on the notional amount of such cap.

In an interest rate floor, we would be entitled to receive, to the extent that a specified index falls below a predetermined interest rate, payments of interest on a notional principal amount from the party selling the interest rate floor. In a forward rate agreement, we would be entitled to receive or be obligated to pay the difference between the interest rate on the amount specified in the forward rate agreement and the interest rate on such amount on the date the agreement expires.

Depending on the state of interest rates in general, our use of interest rate transactions could affect our ability to make required interest payments on any outstanding fixed income securities or preferred stock. To the extent there is a decline in interest rates, the value of the interest rate transactions could decline.

If the counterparty to an interest rate transaction defaults, we would not be able to use the anticipated net receipts under the interest rate transaction to offset our cost of financial leverage. So long as we maintain this exclusion, neither we nor our Advisor will be deemed a commodity pool operator under the CEA, and we anticipate that neither we nor our Advisor will be subject to regulation or registration as a commodity pool operator or commodity trading advisor under the CEA.

If, however, we exceed either of these thresholds, we and our Advisor will no longer qualify for this exclusion and will need to register as a commodity pool operator under the CEA. Credit Derivative Transactions. A credit default swap is an agreement between two parties to exchange the credit risk of a particular issuer or reference entity. In a credit default transaction, we as buyer would pay periodic fees in return for payment by the seller which is contingent upon an adverse credit event occurring with respect to the underlying issuer or reference entity.

The seller collects periodic fees from us and profits if the credit of the underlying issuer or reference entity remains stable or improves while the swap is outstanding, but the seller would be required to pay an agreed upon amount to us as buyer which may be the entire notional amount of the swap in the event of an adverse credit event in the.

Table of Contents issuer or reference entity. A credit-linked note is structured as a security with an embedded credit-default swap. Total return swap agreements are contracts in which one party agrees to make periodic payments to another party based on the change in market value of the assets underlying the contract, which may include a specified security, basket of securities or securities indices during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets.

Equity Derivative Transactions. In order to hedge against changes in the market prices of bank securities in which we invest, we may engage in equity derivatives transactions, including the use of futures, options and warrants. Options, futures and warrants are contracts involving the right to receive or the obligation to deliver assets or money depending on the performance of one or more underlying assets, instruments or a market or economic index.

We may purchase or sell options on the publicly traded bank securities in which we may invest. When we purchase an over-the-counter option, it increases our credit risk exposure to the counterparty. Futures are standardized, exchange-traded contracts that obligate a purchaser to take delivery, and a seller to make delivery, of a specific amount of an asset at a specified future date at a specified price.

No price is paid upon entering into a futures contract. Each day thereafter until the futures position is closed, we will pay additional margin representing any loss experienced as a result of the futures position the prior day or be entitled to a payment representing any profit experienced as a result of the futures position the prior day. Warrants are securities that entitle the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiration date of the warrant.

While we may or may not exercise our rights under such instruments, we do not otherwise intend to trade in these warrants, options or other equity conversion features or otherwise use them to leverage our capital. Directors and Officers. Our business and affairs are managed under the direction of our board of directors.

Accordingly, our board of directors provides broad supervision over our affairs, including supervision of the duties performed by our Advisor. Our Advisor is responsible for our day-to-day operations. Director Compensation. No compensation has been paid to our independent directors to date. During the current fiscal year our independent directors will be paid the pro rata portion of their annual fees following the effectiveness of this registration statement.

Directors will not receive any pension or retirement plan benefits and are not part of any profit sharing plan. Interested directors will not receive any compensation from us. Investment Committee. George Shilowitz is the chairperson of the investment committee. Table of Contents Members of our Investment Committee. Joshua Siegel. George Shilowitz. Erik Eisenstein. Robert McPherson. Biographical Information. The following sets forth certain biographical information for our investment committee members:.

Joshua S. With over 20 years of experience in financial services, 17 of which have been spent advising clients and investing in financial institutions or assets, he is widely regarded as a leading expert and investor in the banking industry and is often quoted in financial media, including The Wall Street Journal, The New York Times, American Banker, and CNNMoney. A creative instructor with a passion for teaching, Joshua has regularly been invited to educate government regulators about the specialized community banking sector.

Immediately prior to co-founding StoneCastle, Joshua was a co-founder and Vice President of the Global Portfolio Solutions Group at Citigroup, a group organized to finance portfolios of financial assets for corporations and to invest in the sector as a principal and market maker. He later assumed responsibility for developing new products, including pooled investment strategies for the community banking sector. Joshua originally joined Salomon Brothers in which was merged into Travelers in and into Citigroup in in the tax and lease division, providing financing and advisory services to government-sponsored enterprises and Fortune corporations.

Prior to his tenure at Citigroup, Joshua worked at Sumitomo Bank where he served as a corporate lending officer, as a banker managing equipment lease and credit derivative transactions, and as a member of the New York Credit Committee and at Charterhouse, carrying out merchant banking and private equity transactions.

Joshua has provided strategic advice to the Global Food Banking Network. He holds a B. Table of Contents George Shilowitz. President and Director. Shilowitz has two decades of fixed income and principal investment experience. Shilowitz worked with StoneCastle since its founding in and became a partner in Prior to joining StoneCastle, Mr.

Shilowitz was a senior executive at Shinsei Bank and participated in its highly successful turnaround, sponsored by J. At Shinsei, Mr. Prior to Shinsei, Mr. Shilowitz was a senior member of the Principal Transactions Group at Lehman Brothers in Asia from , focusing on proprietary investments and debt portfolio acquisitions from distressed financial institutions.

Shilowitz began his career in at First Boston Corporation now Credit Suisse as a member of the fixed income mortgage arbitrage group and also held positions in the financial engineering group and in asset finance investment banking where he focused on banks and specialty finance companies. Prior to joining StoneCastle in , Mr. Prior, he spent three years as Underwriter and Underwriting Manager of management liability insurance products at American International Group and two years as a practicing attorney.

Eisenstein hold a B. Robert Wayne McPherson, Esq. McPherson is a business, banking and securities lawyer with thirty-one years of experience: twenty years in private practice; ten years as Corporate Counsel; and one year of government service. In private practice, Mr. McPherson has handled business formation, planning, purchase and sale, business litigation, Chapter 11 bankruptcy, banking and lender liability litigation and regulation, securities and broker dealer litigation and regulation and private placements.

He has also completed the sale of mortgages and other loans on secondary markets. McPherson has worked on bank mergers and acquisitions and many other facets of banking law. McPherson worked with bank holding companies, community banks, broker-dealers, investment advisors and others to provide Tier 1 and Tier 2 capital to bank holding companies and banks.

McPherson received his undergraduate degree from the University of Alabama, and received his law degree and M. Management Agreement. Management Services. StoneCastle Asset Management LLC will serve as our investment adviser, subject to the overall supervision and review of our board of directors. Pursuant to a management agreement, our Advisor will provide us with investment research, advice and supervision and will furnish us continuously with an investment program, consistent with our investment objective and policies.

Our Advisor also will determine from time to time what securities we shall purchase, and what securities shall be held or sold, what portions of our assets shall be held uninvested as cash or in other qualified short-term investments or liquid assets, will maintain books and records with respect to all of our transactions and will report to our board of directors on our investments and performance. Our Advisor was formed in November Capital Funding I, Ltd.

Capital Funding II, Ltd. Capital Funding IV, Ltd. Capital Funding V, Ltd. Capital Funding VI, Ltd. Capital Funding companies are securitization vehicles created to invest primarily in trust preferred securities issued by public and private community banks in the United States.

StoneCastle Advisors also manages the investments of several separate accounts. Our Advisor has no full time employees and relies on the officers, employees and resources of certain affiliated entities pursuant to the Staffing Agreement. All of the members of the investment committee of our Advisor are affiliates of, but not employees of, our Advisor, and each has other significant responsibilities with StoneCastle Partners and its subsidiaries.

Our Advisor intends to allocate investment opportunities in a fair and equitable manner consistent with our investment objectives and strategies so that we will not be disadvantaged in relation to any other client of the Advisor. Administration Services. Our Advisor is authorized to cause us to enter into agreements with third parties to provide such services.

To the extent we request, our Advisor will:. Management Fee. Pursuant to the management agreement, we will pay our Advisor a fee for the management and administration services described above. The management fee will be 0. The management fee for any partial quarter will be appropriately prorated. Table of Contents Payment of Our Expenses. Subject to the overall supervision of our board of directors, the investment adviser will manage our day-to-day operations and provide us with investment management services.

We will reimburse our Advisor to the extent our Advisor pays these expenses. The compensation and expenses borne by us may include, but are not limited to, the following:. We anticipate that expenses that are reimbursable to our Advisor will be submitted to the independent members of our board of directors for their approval prior to reimbursement thereof. Allocation Policy. Our Advisor will allocate investment opportunities among client accounts on a fair and consistent basis, and will not favor any one client or account over any other.

In certain cases, investment opportunities may be made by our Advisor other than on a pro rata basis. In determining to which accounts our Advisor will allocate investment opportunities, and in determining the shares to allocate to a particular account, our Advisor will not consider:. Pursuant to the agreements governing these relationships, CAB Marketing, LLC will assist us with the promotion and identification of potential investment opportunities.

In addition, CAB, L. Table of Contents Most capital raising activities by community banks are conducted through privately-negotiated transactions that occur outside of traditional institutional investment channels, including the capital markets. The ABA and its subsidiaries have not endorsed this offering, and you should not construe references to them in this prospectus as such an endorsement. Duration and Termination. Our board of directors and sole stockholder approved the management agreement with our Advisor prior to the date of this prospectus.

Liability of Advisor and Indemnification. The management agreement provides that our Advisor will not be liable to us in any way for any default, failure or defect in any of the securities comprising our portfolio if it has satisfied the duties and the standard of care, diligence and skill set forth in the management agreement. As a result, our Advisor may not be liable to us for breaches of its duty of care, diligence or skill.

Board Approval of the Management Agreement. Our board of directors, including our independent directors, reviewed and approved the management agreement prior to the date of this prospectus. In considering the approval of the management agreement, our board of directors evaluated information provided by our Advisor and legal counsel and considered various factors, including the following:.

Provisions of Management Agreement. Our board of directors considered the extent to which the provisions of the management agreement other than the fee structure which is discussed above were. In addition, our board of directors concluded that the services to be provided under the management agreement were reasonably necessary for our operations, and the payment terms were fair and reasonable in light of usual and customary charges.

Based on the information reviewed and the discussions among the members of our board of directors, our board of directors, including all of our independent directors, approved the management agreement and the administration agreement and concluded that the management fee rates were reasonable in relation to the services to be provided. The basis for subsequent continuations of our management agreement will be provided in annual or semi-annual reports to the common stockholders for the periods during which such continuations occur.

License Agreement. This right will automatically terminate if the management agreement were to terminate for any reason, including upon its assignment. Purchase of Common Stock. We have entered into the management agreement with our Advisor, an entity in which certain of our officers and directors have ownership and financial interests. It is thus possible that our Advisor might allocate investment opportunities to other entities, and thus might divert attractive investment opportunities away from us.

However, our Advisor intends to allocate investment opportunities consistent with our investment objectives and strategies in a fair and equitable manner in accordance with its allocation policy. Brokers affiliated with StoneCastle Partners may provide investment leads to us, and we may pay a portion of the fee income that we receive from community banks in connection with our investments in such banks to one or more affiliated brokers.

Furthermore, entities affiliated with StoneCastle Partners may receive fees from us or from issuers in which we invest in respect of structuring investments that we may make. In addition, our affiliate StoneCastle Cash Management, LLC provides various cash management products to its clients that involve depositary relationships with community banks and services to community banks with respect to their cash management products.

Other affiliates of StoneCastle that exist today, or that may exist in the future, may provide products or service to community banks. Indemnification Agreements. To the fullest extent permitted by law, we will indemnify our directors and officers if they are made, or threatened to be made, a party to any action or proceeding including an action by or in the right of an affiliate , whether civil or criminal, by reason of the fact that any of them is or was a director or officer of our company, or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against any judgments, fines, amounts paid in settlement and reasonable expenses which they incur.

We will also advance the expenses of such persons in any such action or proceeding. We will maintain liability insurance covering our directors and officers. StoneCastle Partners currently does, and our Advisor and StoneCastle Partners in the future may, manage funds and accounts other than ours that have similar investment objectives.

The investment policies, advisor compensation arrangements and other circumstances of ours may vary from those of these other funds and accounts. Accordingly, conflicts may arise regarding the allocation of investments or opportunities among us and those other accounts. In certain cases, investment opportunities may be made available to us by our Advisor other than on a pro rata basis.

For example, we may desire to retain an asset at the same time that one or more of those other funds or accounts desires to sell, or we may not have additional capital to invest at the same time as such other funds and accounts. Our Advisor intends to allocate investment opportunities to us and those other funds and accounts in a manner that they believe, in their good faith judgment and based upon their fiduciary duties, to be appropriate considering a variety of factors such as the investment objectives, size of transaction, investable assets, alternative investments potentially available, prior allocations, liquidity, maturity, expected holding period, diversification, lender covenants and other limitations of ours and other funds or accounts.

To the extent that investment opportunities are suitable for us and for one of these other funds or accounts, our Advisor intends to allocate investment opportunities pro rata among us and them based on the amount of funds each then has available for such investment, taking into account these factors.

There may be situations in which one or more funds or accounts managed by our Advisor or its affiliates might invest in different securities issued by the same company. In such situations, our Advisor would review the conflict on a case-by-case basis and implement procedures consistent with its fiduciary duties to enable it to act fairly to each of its clients in the circumstances.

Any steps by our Advisor will take into consideration the interests of each of the affected clients, the circumstances giving rise to the conflict, the procedural efficacy of various methods of addressing the conflict and applicable legal requirements. The board will utilize the services of one or more regionally or nationally recognized independent valuation firms to help it determine the value of each investment for which a market price is not available.

The board will also review valuations of such investments provided by the Advisor. The board will regularly review and evaluate our valuation methodology and any such valuation service it uses and the historical accuracy of such valuation methodologies. The board will also review valuations of such investments provided by the Advisor and will assign the valuation they determine to best represent the fair value of such investments. During periods in which we use leverage, the fee payable to our Advisor will be higher than if we did not use leverage.

Our board of directors will monitor our use of leverage and this potential conflict; however, certain members of our board of directors also serve as investment professionals for our Advisor, which may create inherent conflicts of interest. Table of Contents Approval of Conflicts. Our board of directors, including a majority of our directors who are independent, is responsible for reviewing and approving the terms of all transactions between us and our Advisor or its affiliates or any member of our board of directors, including when applicable the economic, structural and other terms of our investments and investment transactions and the review of any investment decisions that may present potential conflicts of interest among our Advisor and its affiliates, on one hand, and us, on the other.

In addition, we anticipate that expenses that are reimbursable to our Advisor will be submitted to the independent members of our board of directors for their approval prior to reimbursement thereof. Our Advisor has agreed with us that it will allocate opportunities, fees and expenses among its clients pursuant to its written policies and procedures.

An investment in our common stock involves a high degree of risk. You should carefully consider the following information, together with the other information contained in this prospectus, before investing in our common stock. We have no operating history; our Advisor has no advisory experience, and there can be no assurance that we will achieve our business objectives.

We are a newly formed corporation organized under the laws of the State of Delaware. As a result, it is difficult to evaluate our business and future prospects. The results of our operations will depend on many factors, including, but not limited to, the availability of opportunities for the acquisition of assets, the level and volatility of interest rates, readily accessible short- and long-term funding alternatives, conditions in the financial markets, general economic conditions and the performance of our Advisor.

There can be no guarantee that we will have similar opportunities to invest in securities that generate similar risk-adjusted returns as the other clients and accounts. Further, differences between the structure, term and investment objective and policies of our company and the other clients and accounts, including different performance-related fee arrangements, may affect their respective risk-adjusted returns.

If we do not implement our investment strategy successfully, our business could be harmed or fail entirely, with the consequence that our net income and therefore the level of dividends payable on our common stock, could be adversely affected, and our common stock could be worth less than the initial investment. Our performance is highly dependent on our Advisor. We will depend on the diligence, expertise and business relationships of the senior management of our Advisor and its affiliates.

Our future success will depend on the continued service of this senior management team of our Advisor. All of these individuals will devote significant amounts of their time to non-Company related activities of our Advisor. To the extent these individuals are unable to, or do not, devote sufficient amounts of their time and energy to our affairs, our performance may be adversely affected.

In addition, to the extent that our assets continue to grow, our Advisor may have to source additional personnel, and to the extent it is unable to source qualified individuals, our growth may be adversely affected. As a result, we can provide no assurance that any given asset could be sold at a price equal to value at which we carry it. Our Advisor may rely on assumptions that prove to be incorrect. To the extent such models or the assumptions underlying them do not prove to be correct,.

Table of Contents we may not perform as anticipated, which could result in material losses. All models ultimately depend upon the judgment of the investment professionals and the assumptions embedded in the models. To the extent that, with respect to any investment, the judgment or assumptions are incorrect, we can suffer material losses. The models that our management team uses to assess and control our risk exposures reflect assumptions about the degrees of correlation or lack thereof among prices of various asset classes or other market indicators, and in times of market stress or other unforeseen circumstances previously uncorrelated indicators may become correlated, or conversely previously correlated indicators may move in different directions.

These types of market movements may at times limit the effectiveness of any hedging strategies that we may employ and cause us to incur material losses. Our Advisor and its affiliates may serve as investment adviser to other funds, investment vehicles and investors, which may create conflicts of interest not in the best interest of us or our stockholders.

StoneCastle Partners and its affiliates were formed in to provide investment management services to institutional and high-net worth investors. Our Advisor was organized in November to provide investment advice to us and to continue the investment strategies of StoneCastle Partners and its affiliates.

Our Advisor may advise clients in addition to us in the future. Our Advisor and its affiliates intend to allocate investment opportunities and collective expenses among their respective clients fairly and equitably and in accordance with their allocation policies.

We will operate with leverage, which may adversely affect our return on our assets and may reduce cash available for distribution. Leverage, also known as debt financing, may include contractual terms that are unfavorable to our stockholders, including limitations on our ability to declare and distribute dividends.

Such terms will likely also contain restrictive covenants that impose asset coverage requirements, voting right requirements and restrictions on the composition of our assets, and limit the use of our investment techniques and strategies, any or all of which may have an adverse effect on us and our ability to pay dividends.

If we are unable to repay or refinance maturing debt on the date it is due, we may be forced to seek other sources of capital to repay the maturing debt that may be expensive or dilutive to existing stockholders. To the extent that we are unable to find additional financing or extend or refinance our debt when it becomes due and we do not have sufficient cash to redeem such debt, we may be required to liquidate assets that are illiquid and difficult to sell for fair value and the sale of assets may occur at a time when it would not otherwise be desirable to do so.

Failure to meet any contractual term set forth by our lenders, including maturity, may result in a default and may result in a forced sale of assets or reduced operational flexibility, and may result in significant loss or complete loss for our stockholders. If the return on assets acquired with borrowed funds or other leveraged proceeds does not exceed the cost of the leverage and our cost of operations, the use of leverage could cause us to lose money.

Table of Contents of our cash flows. Our return on our assets and cash available for distribution to our stockholders may be reduced to the extent that changes in market conditions cause the cost of these financings to increase relative to the income that can be derived from our assets.

Defaults and lower than expected recoveries, as well as delays in recoveries on defaults, could rapidly erode our equity. Debt service payments will reduce cash flow available for distributions to stockholders. In addition, lenders from whom we may borrow money or holders of our debt securities will have claims on our assets that are superior to the claims of our common stockholders, and we may grant a security interest in our assets when we undertake leverage.

In the case of a liquidation event, those lenders or note holders would receive proceeds before our common stockholders. Our investment portfolio is recorded at fair value, with our board of directors having final responsibility for overseeing, reviewing and approving, in good faith, our estimate of fair value and, as a result, there is uncertainty as to the value of our investments. Under the Investment Company Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determined by us in accordance with our written valuation policy, with our board of directors having final responsibility for overseeing, reviewing and approving, in good faith, our estimate of fair value.

Typically, there will not be a public market for the securities of the privately-held companies in which we invest. As a result, we value these securities quarterly at fair value based on input from our Advisor, third party independent valuation firms and our audit committee, with the oversight, review and approval of our board of directors.

The determination of fair value and, consequently, the amount of unrealized gains and losses in our portfolio are to a certain degree subjective and dependent on a valuation process approved by our board of directors. Certain factors that we may consider in determining the fair value of our investments include estimates of the collectability of the principal and interest on our debt investments and expected realization on our equity investments, as well as external events, such as private mergers, sales and acquisitions involving comparable companies.

Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates. Our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed.

Due to this uncertainty, our fair value determinations may cause our net asset value on a given date to materially understate or overstate the value that we may ultimately realize on one or more of our investments. As a result, investors purchasing our common stock based on an overstated net asset value would pay a higher price than the value of our investments might warrant.

Conversely, investors selling securities during a period in which the net asset value understates the value of our investments will receive a lower price for their securities than the value of our investments might warrant. Our board will utilize the services of one or more regionally or nationally recognized independent valuation firms to help it determine the value of each investment for which a market price is not available.

Our board will also review valuations of such investments provided by the Advisor. Furthermore, we will rely heavily on the investment committee of our Advisor in making determinations of the fair value of our investments. Our board will regularly review and evaluate our valuation methodology and any such valuation service it uses and the historical accuracy of such valuation methodologies.

Our board will also review valuations of such investments provided by the Advisor and will assign the valuation they determine to best represent the fair value of such investments. Table of Contents Our investments will be subject to dividend and interest rate fluctuations, and we may incur interest rate risk. Our investments are likely to include preferred stock with variable dividend rates and may include debt or hybrid instruments with floating interest rates.

Variable rate and floating rate investments earn interest at rates that adjust from time to time typically monthly based upon an index. Fixed dividend rate and interest rate investments, however, do not have adjusting rates and the relative value of the fixed cash flows from these investments may decrease as prevailing interest rates rise or increase as prevailing interest rates fall, causing potentially significant changes in our net asset value.

We may employ various hedging strategies to limit the effects of changes in interest rates and in some cases credit spreads , including engaging in interest rate swaps, caps, floors and other interest rate derivative products. No strategy can completely insulate us from the risks associated with interest rate changes and there is a risk that our strategies may provide no protection at all and will potentially compound the impact of changes in interest rates.

Hedging transactions involve certain additional risks such as counterparty risk, leverage risk, the legal enforceability of hedging contracts, the early repayment of hedged transactions and the risk that unanticipated and significant changes in interest rates may cause a significant loss of basis in the instrument and a change in current period expense.

We cannot assure you that we will be able to enter into hedging transactions or that such hedging transactions will adequately protect us against the foregoing risks. We may compete with a number of other prospective investors for desirable investment opportunities. There may be a number of investors in the community banking sector, including high net worth individuals, publicly traded investment companies, hedge funds and private equity funds.

In addition, competition among institutional investors and investment managers for community bank related investments has significantly increased during the past few years. In addition to established competitors, new competitors may be established at any time. These competitive conditions may adversely impact our ability to meet our business objectives, which in turn could adversely impact our ability to meet debt service obligations or make dividend payments to our stockholders.

Some of our competitors may have a lower cost for borrowing funds than us or greater access to funding sources not available to us. We may initially generate low or negative rates of return on capital, and we may not be able to execute our business plans as quickly as expected, if at all. We anticipate that it may take up to six months to utilize fully the net proceeds received from this offering; however, we may take longer to utilize such proceeds fully.

This initial six-month period and any additional delay may result from a lack of attractive investment opportunities or from competition with other market participants in the community banking sector. Along with the TARP Preferred securities we intend to purchase under the purchase and sale agreement, we may initially invest in cash, cash equivalents, securities issued or guaranteed by the U.

Because these temporary investments may generate lower projected returns than our core business strategy, we may experience lower returns during this period, which may result in low distributions in this initial period, or possibly no distributions at all. For example, the seller under the purchase and sale agreement is permitted to sell the securities to third parties.

In addition, except for the foregoing agreement, we have not entered into any other agreements for specific investments in which to invest the net proceeds of this offering. As a result, you will not be able to evaluate the economic merits of investments we make with the net proceeds of this offering prior to your purchase of common stock in this offering. We will have significant flexibility in deploying the net proceeds of this offering and may make investments with which you do not agree or do not believe are consistent with our business strategy.

Our business model depends to a significant extent upon strong referral relationships, and our inability to maintain or develop these relationships, as well as the failure of these relationships to generate investment opportunities, could adversely affect our business.

We expect that our Advisor and its affiliates will maintain their relationships with intermediaries, financial institutions, investment bankers, commercial bankers, financial advisers, attorneys, accountants, consultants and other individuals within their networks, and we will rely to a significant extent upon these relationships to provide us with potential investment opportunities.

If our Advisor fails to maintain its existing relationships or develop new relationships with sources of investment opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom our Advisor and its affiliates have relationships are not obligated to provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.

If we are unable to source investments effectively, we may be unable to achieve our investment objective. To grow, our Advisor and its affiliates may need to continue to hire, train, supervise and manage new employees and to implement computer and other systems capable of effectively accommodating our growth.

However, we cannot provide assurance that any such employees will contribute to the success of our business or that we will implement such systems effectively. Failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.

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George has two decades of the Young Presidents Organization and. PARAGRAPHHe is a member of. By Design, Our Focus Is Our Strength StoneCastle and its subsidiaries provide access to fixed the fixed overseas property investment 2021 electoral votes mortgage arbitrage by the insights, innovations and in the stonecastle investment management llc engineering group managed by our deep bench of investment professionals. George began his career at First Boston Corporation now Credit Suisse as a member of income investments that are informed group and also held positions process driven strategies developed and and asset finance investment banking. About StoneCastle Financial Corp fixed income and principal investment. Llc trinity 3 investment aflac to break into investment banking kia kuwait investment authority citigroup garwood investments definition free capital investment tutorials pdf mlc investments advisors limited too what is free kuwait investment authority linkedin forex indicator predictor review journal. Investors should review and consider carefully StoneCastle Financial's investment objective. Shares of StoneCastle Financial may not be appropriate for all. ltd janey investments ridgeworth investments spins out of suntrust banks. George Shilowitz serves as a senior member of the Principal and has direct responsibility for where he focused on proprietary all aspects of the company and is the chairman of Asia.

Stonecastle Asset Management LLC operates as an investment management firm. The Company offers portfolio management and advisory services to. Our objective is to deliver exceptional investment fund performance while protecting capital, building assets, and rigorously managing risk. StoneCastle connects investors to depository institutions via innovative investment and cash management solutions.