Private Equity Funds

StoneCastle has focused exclusively on small and middle-market community banking and related opportunities and established itself as a pioneer in the use of Tier 1 regulatory capital to invest in regulated, FDIC insured depository businesses. We seek opportunities to leverage the skills and experience of our investment professionals to reposition and add needed regulatory capital to fund organic growth, fund strategic acquisitions or divest underperforming assets. Leveraging the extensive skills and experience of our team, StoneCastle manages funds that make equity capital investments in (1) small and medium sized FDIC insured community banks and (2) financial services businesses that have synergies to the community banking sector, such as investment advisory, strategic advisory, bank infrastructure, back office technology, leasing, credit scoring and processing services that are providing products or services to community banks.

We pursue investments primarily in the community banking sector to extract “community risk”, the risk of and the risk held by community banks, a $2.9 trillion asset market that has exhibited low volatility performance characteristics that historically been relatively uncorrelated to the capital markets or the national economy as a whole. We seek strong deposit franchises in attractive markets that have the potential to consistent increase earnings and grow book value. These opportunities generally have assets of $100 million to $10 billion.

Our team includes industry executives and consultants with experience developing and implementing operating strategies for some of the world's most successful financial services businesses. StoneCastle is one of the few private equity firms with the depth of investment, strategic, and operating expertise to be successful in this sector. In addition, our team has deep industry relationships that enable us to (a) identify attractive opportunities not seen by the majority of the investment industry and (b) structure those investments to maximize our return and provide some measure of downside risk mitigation.

StoneCastle provides regulatory capital to well established companies in the financial services sector. We strive to partner with strong management teams to assist in the growth of profitable, strong depository franchises, typically institutions with operating histories of over 40 years. We provide a value-added approach to our portfolio companies by bringing together the collective experience of over 20 seasoned financial services professionals to help financial institutions reposition their balance sheet and assist in the disposition of underperforming or non-performing assets, typically at prices more favorable than many institutions can achieve on their own.

Institutional Debt Investors

StoneCastle has invested over $2.2 billion of regulatory capital securities in over 220 FDIC insured depository institutions across six investment vehicles since 2003. These investments typically are in the form of bank trust preferred securities, bank subordinated debt securities and other bank originated financial assets. These investment vehicles are branded under the name “US Capital Funding” and have provided capital to financial institutions in 43 states across the country.

StoneCastle’s management team also pioneered pooled investment strategies in small FDIC insured depository institutions while members of Citigroup Global Markets Inc. in the late 1990s. Their ground breaking research on bank default rates and conversations with bank regulators led to the development and execution of the first bank trust preferred securitization (Regional Diversified Funding I) in March 2000. This landmark transaction ushered in a new era for small financial institutions seeking to raise regulatory capital and opened the door for investors seeking access to this underinvested opportunity.

Given the management team’s history in creating, issuing and investing in these types of securities, StoneCastle is uniquely qualified to source, evaluate and invest in the class of structured securities known as “Trust Preferred Securitizations.”

Managed Accounts

StoneCastle manages capital for institutional investors through Managed Accounts and privately structured investment vehicles. StoneCastle can design an investment strategy within the context of a Managed Account that is tailored to an investor’s specific duration, liquidity, and cash-flow requirements.