Michael Boyle

Thanks, Michael. Good morning, everyone. I’ll start with our investment activity for the fourth quarter and then provide an update in more detail on our portfolio.
New funding during the fourth quarter were $547 million in 88 portfolio companies, including $317 million into 15 new companies and $230 million into 73 existing companies.
Sales and repayment activity totaled approximately $505 million resulting in net investment funding of $42.7 million quarter over quarter.
For the full year, fundings were $1.7 billion and more than double our volumes in 2023. Total sales and repayment activity for the year were $1.5 billion. As a result of this activity, the size of our total investment portfolio increased 6% year over year.
Our new investing activities for the fourth quarter and full year were comprised of a mix of fundings to new portfolio companies and existing portfolio companies. During the fourth quarter, new investment fundings to new portfolio companies represented 58% of total fundings versus 42% to existing companies. And for the full year, 62% were to existing portfolio companies and 38% to new companies.
In 2024, our platform benefited from its strong sponsor relationships to source new investments and our incumbency advantage from our existing portfolio companies to help them grow.
During the quarter, we remained focused on investing in first lian senior secured loans with 95% of our new investment fundings into first lane structures, 1% into subordinated debt structures, and 4% in preferred and common equity.
Turning now to the investment portfolio. At the end of the fourth quarter, the size of our portfolio at fair value was approximately $2.4 billion across a highly diversified set of 168 portfolio companies operating across 30 different industries.
Our portfolio primarily consists of investments in first li senior secured loans, given our focus on downside management and investing in the top of capital structures.
As of December 30, 64% of the investment portfolio at fair value was invested in first lien debt, 1% in second lian debt, 2% in subordinated debt, 7% in preferred equity, 10% in equity and other interests, and 16% across our joint ventures, including 10% in the ISLP and 6% in the SLP, both of which the vast majority of our underlying investments in those joint ventures are first Bain loans.
As of December 30, 2024, the weighted average yield on the investment portfolio at amortized cost and fair value were 11.7% and 11.8% respectively, as compared to 12.1% and 12.1% respectively as of September 30, 2024. This decline in yields was primarily driven by a decrease in base rates and to a lesser extent spread compression from our new investments.
92% of our debt investments bear interest at a floating rate, positioning the company favorably in today’s higher interest rate environment.
Moving on to portfolio credit quality trends, our credit fundamentals remain healthy.
Media net leverage ratios were 4.8 times across our borrowers, unchanged from the prior quarter end and year-end 2023. The median EBITDA across our portfolio companies was $40 million as of December 31.
We saw stable trends within our internal risk rating scale quarter over quarter, risk rating 1 and 2 investments, which indicate the company was performing in line or better than expectations relative to our initial underwrite, total 96% of the portfolio as of December 31. No change from the prior quarter end.
Risk rating three and four are underperforming investments comprise 4% of our portfolio at fair value.
Investments on non-accrual represented 1.3% and 0.2% of the total investment portfolio amortized cost and fair value respectively as of December 31, a decrease from 1.9% and 1.1% respectively as of September 30.
We did add one name to non accrual this quarter and wrote down this position to a level consistent with our expected recovery. The Ambridge Hospitality secondly loan was impacted by meaningful company underperformance within the third party hotel management industry, and this was the primary driver of BCSF’s modest NAV decline in the four quarter.
Subsequent to quarter end, we exited this name slightly above the fair mark fair value mark as of December 31.
Given the substantial diversity in the portfolio, underperformance of any individual portfolio company has a minimal impact on the performance of the portfolio overall.
Subsequent to quarter end, we did exit this name slightly above the Ferry mark as of December 31.
We would also mention that performance across our 100%, 100 plus companies within our underlying JVs continue to perform well, consistent with our broader portfolio.
Ammit will now provide a more detailed financial review.

Amit Joshi

Thank you, Mike, and good morning everyone. I’ll start the review of our fourth quarter 2024 results with our income statement.
Total investment income was $73.3 million for the three months ended December 31, 2024 as compared to $72.5 million for the three months ended September 30, 2024. The increase in investment income was primarily driven by an increase in the investment portfolio size, which was partially offset by decrease in portfolio yield driven primarily by the lower base rates.
Our investment income continues to benefit from high quality sources of investment income, largely driven by contractual cash income across its investments. Interest income and dividend income represented 94% of our total investment income in Q4.
Total expenses before taxes for the fourth quarter were $38.4 million as compared to $37.5 million in the third quarter.
Net investment income for the quarter was $33.6 million or $0.52 per share as compared to $34 million or $0.53 per share for the prior quarter.
Net investment income for the full year 2024 was $2.09 per share.
During the three months ended December 301, 2024, the company had a net and unrealized losses of $11.5 million. Net losses were primarily driven by a markdown in hospitality, which which Mike mentioned earlier.
Net income for the three months ended December 30, 2024 was $22.1 million or $0.34 per share.
Moving over to our balance sheet, as of December 31st, our investment portfolio at fair value total $2.4 billion in total assets of $2.6 billion.
Total net assets were $1.1 billion as of December 31. NAP per share was $17.65 a slight decrease of $0.11 per share from $17.76 at the end of the third quarter.
At the end of Q4, our debt to equity ratio was 1.22 times as compared to 1.14 times from the end of Q3. Our net leverage ratio, which represents principal debt outstanding, less cash and unsettled rates, was 1.13 times at the end of Q4 as compared to 1.09 times at the end of Q3.
As of December 31, approximately 57% of our outstanding debt was in floating rate debt and 43% in fixed rate debt.
For the three months ended December 31, 2024. The weighted average interest rate on our debt outstanding was 5.1%, unchanged from prior quarter end. The weighted average maturity across our total debt commitment was approximately 4.3 years at December 31, 2024.
Based on our current debt outstanding and assuming holding base rate rate constant, we do not expect our recent unsecured note issuance to materially impact the weighted average interest rate on our debt outstanding as the as the notes ratio near parity to our borrowing on a secured facility, and we converted our fixed rate exposure on new issuances to floating rate at 190 basis point.
Liquidity at quarter and total $520 million, including $412.3 million of unrawn capacity on a revolving credit facility, $99.1 million of cash and cash equivalent, including $45.5 million of restricted cash, and $8.3 million of unsettled rate, net of receivables and payables of investment.
Pro forma for the no total liquidity is $870 million. Given the company’s strong earnings throughout the year, we outturned the dividend paid in 2024, resulting in an increase in our undistributed taxable income or spillover.
We currently estimate that our spillover total approximately $1.36 per share at, reflecting an increase of $0.49 per share from the 2023 levels and currently represents over 3 times of our quarterly regular dividend.
As Mike highlighted earlier, are both declared an additional 2025 dividend totalling $0.12 per share to be distributed in four equal consecutive quarterly payments as a result of company spillover income expansion in 2024.
Overall, we believe having a strong and meaningful amount of undistributed income is beneficial to the stability of a dividend through varying market conditions, and we will continue to monitor our undistributed earnings against prudent capital management considerations.
With that, I sent the call back over to Mike Ewald for closing remarks.

Michael Ewald

Thanks and thanks Mike as well. In closing, we were pleased with the execution of our investment strategy on behalf of our shareholders during the fourth quarter and throughout 2024.
We demonstrated attractive levels of investment income earned across our portfolio and stable credit quality across our middle market borrowers. As we look forward into 2025, we believe we are well positioned to capitalize on attractive growth opportunities.
We remain committed to delivering value for our shareholders by producing attractive returns on equity, and thank you for the privilege of managing our shareholders’ capital.
Erica, please open the line for questions. Thanks.

Operator

(Operator Instructions)
We’ll go first to the line of Finian O’Shea with Wells Fargo. Please go ahead.

Hey everyone, good morning, thanks.
Can you talk about, Michael, the sort of real time, spread dynamic deployment and spread dynamics, how much it’s sort of, just stabilized perhaps or or still tightening, and then what. You know what level the core middle market.
Gets gets you as a premium, to large market now versus historically.

Michael Ewald

Sure.

Michael Boyle

Thanks for the question, Finn.
So if we look at the fourth quarter originations we were originating at a spread over sour of about 560 basis points, and that’s about 20 basis points tighter than where we were on our Q2 originations, which was about 580 basis points over So far.
So the spread tightening that we saw over the course of the last two years has stabilized quite a bit as we look at the numbers and what we’re able to originate today.
If we think about that as a premium versus versus the larger market, we do think it commands a 50 basis points to 75 basis points premium on the spread basis for originating at similar leverage levels to companies north of $100 million of EBITDA.
Which again is why we’ve doubled down in this core middle market because we do think the lender controls we get, as Mike highlighted, we get financial maintenance covenants across all the deals that we do. But also the spread levels we think really highlight the premium that we’re able to get in our market segment.

Yes, it’s a helpful thing just to to clarify like the fourth quarter I think you said. [460 or 480, 460,560 sorry 560.]
Sorry about that it’s been a lot of earnings how does that compare to the to the say term sheets you were, submitted last week, just understanding the fourth quarter, that was probably those were.
Committed in the second and third quarter, right?

Michael Boyle

Sure, yeah, I’d say it’s pretty similar. I’d say we’re in a 550, 525 to 550 level for term sheets depending on the credit risk underlying. So we do think much of the spread tightening that marked a year ago, the course of 2023, we saw a whole lot of spread tightening. I think 2024, particularly Q2 Q4 and what we’re seeing now has been fairly stable.

Okay. And then what’s it like is there Is there a meaningful difference on.
On on a new LBO, or or or platform, a new, a real new money opportunity versus follow on like when when when M&A comes back and whichever one is waiting for, and you have all this, clean well capitalized new paper like is is the stuff that fits in that box.
It really much tighter and blending things down.
If you follow.

Michael Ewald

Yeah, it’s mighty well, but I think generically speaking those sorts of deals might be on the lower end of of what Mike was talking about. Maybe those are the 525 deals and some of the add-on activities, some of the deals that were originated earlier, so that might be the 550 or 575.
But if you think about one of your questions was historical context as well. Clearly the end of 2022, beginning of 2023, were at least in in my career over 25 years of doing this were the highest spread that we’ve ever witnessed.
And something you know in the be it [$500] for a top notch crystal clean company with no EBITDA adjustments, 550, 575 for the more regular way deal.
Those are really levels that we saw in 2017, 2018, 2019, and that’s kind of what we’re back to today. So while there’s been a lot of hand wringing over spread compression, I think we’re pretty much in line today with more historical averages.

Great awesome thanks so much.

Michael Ewald

Thanks man.

Operator

Thank you and again that is the star and one to ask a question star and one.

Michael Ewald

Great. Well, it doesn’t look like there are any other questions at this point. Thanks again for everyone’s time today. We certainly appreciate your continued support and look forward to see you again next quarter.
Do please feel free to reach out in the meantime with any questions and, certainly have a great weekend. Thanks.

Operator

We’d like to thank everybody for their participation on today’s conference. Please feel free to disconnect your line at any time.