MFICL

• Tanner Powell began by discussing third quarter results, the $97 million net repayment from Merx, and the dividend declaration of $0.38 per share. - Ted McNulty provided an overview of the market backdrop, noting the resilient U.S. economy, Fed rate cuts, and M&A activity. He reviewed third quarter investment activity, with $138 million of new commitments across 21 transactions, and detailed the portfolio, which had 246 companies across 48 industries at fair value of $3.18 billion. - Kenny Seifert reviewed financial results, with total investment income of approximately $82.6 million, net expenses of $47.3 million, and discussed balance sheet activities like amending the revolving credit facility and upsizing the CLO.

• The Board declared a quarterly dividend of $0.38 per share. - Management is actively working on initiatives to offset the impact of declining base rates, including pursuing additional paydowns from Merx and resolving non-accrual and earning assets. - They plan to deploy proceeds from Merx in a deliberate manner and aim to return to target leverage, with the target leverage unchanged and an endeavor to get back to the 1.4 level over time.

During the third quarter, MFIC had net investment income per share of $0.38 and GAAP net income per share of $0.29. The portfolio had a fair value of $3.18 billion. The investment in Merx, an aircraft leasing portfolio company, saw a net repayment of approximately $97 million. MFIC's investment in Merx was $105 million at fair value, representing 3.3% of the portfolio. The direct origination and other segment represented 95% of the total portfolio at fair value, with a weighted average yield at cost of the directly originated lending portfolio being 10.3% for the quarter, down from 10.5% in the prior quarter. Non-accrual investments were 3.1% of the portfolio at fair value, up from 2% at the end of the prior quarter.

• There are company-specific issues leading to increases in non-accrual investments, which do not represent a broader deterioration in credit quality. - Declines in base rates put pressure on net investment income, as a 100 basis point reduction in base rates would reduce MFIC's annual net investment income by approximately $9.4 million or $0.10 per share. - Market conditions, such as changes in M&A activity and spreads, pose risks to the business.

Q: Discuss the increases in non-accrual.

A: Ted McNulty said there's no real theme tying the non-accrual companies together, with some impacted by tariffs and others by weakened consumer sentiment, being very idiosyncratic.

Q: Thoughts on the sustainability of increased M&A activity through 2026?

A: Ted McNulty noted factors like private equity dry powder, muted tariff volatility, and rate certainty contributing to ongoing M&A activity.

Q: Evaluating timing difference of mitigating actions for lower base rates and impact on dividend decisions?

A: Tanner Powell said they will deploy proceeds deliberately, aim for granular portfolio deployment, and will reevaluate the dividend based on the trajectory of rates and the impact of mitigating efforts.

Q: Update on portfolio leverage and share repurchases?

A: Tanner Powell stated target leverage is unchanged and they aim to get back to the 1.4 level, and share repurchases are a compelling tool but weighed against liquidity and deployment opportunities.

Q: Dividend coverage given current rate outlook?

A: Tanner Powell said the dividend was met with the current quarter's dynamics, benefits from Merx proceeds, liability remarks, and non-accrual resolutions, and the Board will reevaluate based on rate trajectory and mitigating levers