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Tanner Powell

Thank you, Elizabeth. Good morning, everyone, and thank you for joining us for MFIC's first quarter earnings conference call. I will begin today's call by providing an overview of MFIC's first quarter results and sharing our perspective on the current volatile and evolving market environment. I will then turn the call over to Ted, who will discuss our investment activity and provide an update on the investment portfolio, including some comments on the impact of tariffs. Greg will then review our financial results and capital position in more detail.
Yesterday after market close, we reported solid first quarter results, including a healthy level of earnings and strong portfolio growth with net investment income or NII per share of $0.37 for the March quarter, which corresponds to an annualized return on equity or ROE of 9.8%. GAAP net income per share was $0.32 for the quarter, which corresponds to an annualized ROE of 8.7%.
NAV per share was $14.93 at the end of March, down $0.05 or approximately 30 basis points. NAV per share benefited by approximately $0.01 from stock repurchases below NAV made during the quarter. We continue to observe stable credit quality trends in our portfolio.
During the quarter, we saw sequential improvements in several credit metrics, including the decline in investments on nonaccrual status, a decline in PIK income and a decline in the weighted average leverage of our borrowers. MFIC has built a well-diversified portfolio of true first lien floating rate direct corporate loans invested in less cyclical industries with granular position sizes.
At the end of March, 99% of our direct origination portfolio was first lien and our average direct lending position was approximately $13.1 million or 0.5% of the total direct lending portfolio. These figures are at fair value. We believe the current uncertain and evolving environment will showcase the advantages of MFIC's portfolio construction and the strength of MidCap Financial's underwriting.
That said, the current uncertainty stemming from the trade tariffs could pose challenges, we expect these potential challenges to be relatively limited, as Ted will discuss later. We continue to be active in our investing and have continued to make progress deploying the capital from the mergers that closed last July.
During the March quarter, MFIC made $376 million of new commitments, while we did observe some spread compression relative to last quarter's commitments, we also saw a slight decline in the net leverage of new commitments, resulting in an attractive spread per unit of leverage. We also continue to sell certain assets acquired in connection with the mergers that do not align with our strategy and prudently deployed the proceeds, along with the investment capacity generated from the mergers into first lien floating rate middle market loans originated by MidCap Financial.
At the end of March, the non-direct origination assets onboarded from the mergers represented just 2% of the total portfolio at fair value. Among the biggest challenges for many market participants in this market environment, MFIC benefits from access to assets sourced by MidCap Financial, one of the largest and most experienced lenders in the middle market and which is consistently ranked near or at the top of lead tables.
Our affiliation with MidCap Financial provides a significant deal sourcing advantage for MFIC. We are fortunate to have access to the necessary origination to deploy this capital given the significant volume of commitments originated by MidCap Financial.
During the March quarter, MidCap Financial closed approximately $6.5 billion of commitments, which is particularly noteworthy given the overall muted sponsor M&A activity in the market. MidCap Financial has what we believe to be one of the largest direct lending teams in the US with close to 200 investment professionals. MidCap Financial was founded in 2009 and has a long track record, which includes closing on over $136 billion of lending commitments since 2013.
This origination track record provides us with a vast data set of middle market company financial information across all industries that we believe this makes MidCap Financial one of the most informed and experienced middle market lenders in the market. Key members of MidCap Financial's management team have been working together for more than 25 years, resulting in strong collaboration and an enhanced ability to navigate challenging market conditions, leading to improved credit quality and risk management.
We believe the core middle market offers attractive opportunities across cycles and does not compete directly with either the broadly syndicated market or the high-yield market. Moving to Merx. At the end of March, MFIC's investment in Merx totaled approximately $185 million, representing 5.8% of the total portfolio at fair value. I'd like to provide an update on Merx's Russia fleet insurance claims.
As a reminder, at the time of Russia's invasion of Ukraine in February 2022 and the imposition of sanctions, Merx's own portfolio included four aircraft on lease to two at Russian airlines. Those aircraft are held in aircraft securitization known as MAPS 2019.
In compliance with EU sanctions imposed on Russia due to the invasion, Merx terminated the leases of those aircraft, but three were not returned and have remained in Russia since then. Merx has brought legal action in the English court seeking payment for those aircraft under both the lessee reinsurance policies and its own contingent policy.
As mentioned on last quarter's call, we settled a portion of our contingent insurance claims with certain insurers during the first quarter. We recently reached a settlement with another insurer bringing Merx's total proceeds to $16.5 million so far. We are currently waiting for final judgment for our remaining claims, which we expect to be made in the very near future.
As mentioned on last quarter's call, Merx has made substantial progress on multiple sales campaign covering a majority of the remaining aircraft on its balance sheet. We look forward to providing further updates on the process as purchase agreements are finalized in the very near future.
The blended yield across our total investment in Merx was approximately 3.2% at fair value and the continued rotation of capital from Merx into directly originated corporate loans should have a beneficial impact on MFIC's income. Assuming we are successful with our sales campaign, we expect MFIC's exposure to Merx to decline in the coming quarters. Now, let me discuss current market conditions.
Market conditions in the first quarter started on a relatively strong note as forward interest rates were expected to be lower but stable, and the economic backdrop was solid. As the quarter progressed, we saw conditions deteriorate amid federal government layoffs, increasing tariff concerns, and their potential negative effects on business fundamentals and economic growth.
Although the trade tariffs were largely expected, their size and scope were far greater than anticipated. Following the US-China tariff truth that was announced yesterday, the probability of a US recession in 2025 has decreased. Lower tariffs are positive for the economy and markets, but there are other headwinds to US economic growth. The key issue for markets is to monitor the speed with which confidence is restored among consumers, corporates, and foreigners.
While markets may recover quickly from this episode, we believe it will take some time before confidence is restored among consumers and corporates. Amid ongoing volatility and uncertainty driven by the trade war and increasing fears of recession, new issue activity has been fairly light as M&A activity remains slow.
Due to the heightened economic uncertainty following the tariff announcements, there has been a lack of investor demand in the syndicated loan market, and banks have become more cautious when launching new syndication transactions. Secondary loan and bond markets have experienced increased volatility and widening spreads. We believe this uncertainty in the public debt markets creates the type of environment that causes borrowers to seek solutions in the private market.
On one hand, we believe direct lenders are particularly well-positioned to benefit in this type of environment as the syndicated loan market has become less certain and accessible for certain borrowers. On the other hand, we believe the trade war-induced uncertainty may further delay the long-awaited anticipated increase in M&A activity.
Depending on the timing and outcome of the tariff policies, it may continue to be a slow year for LBOs, M&A, and IPOs, which would negatively impact sponsor activity. That said, the mounting pressure on financial sponsors to return capital to investors could drive some activity. We believe the core middle market, where we are focused, does not compete directly with either the broadly syndicated loan market or the high-yield bond market.
Additionally, even with the slowdown in M&A activity, we see that many of our borrowers continue to have add-on financing needs. Now turning to our dividend. On May 7, 2025, our Board declared a quarterly dividend of $0.38 per share for shareholders of record as of June 10, 2025, payable on June 26, 2025. With that, I will now turn the call over to Ted.

Ted Mcnulty

Thank you, Tanner. Good morning, everyone. I'm going to spend a few minutes reviewing our first quarter investment activity and then provide some details on our investment portfolio, including some comments on the analysis we've done with respect to tariff-related risks. In the March quarter, we continued to prudently deploy the capital acquired from the mergers into assets with what we believe to be strong credit attributes.
As mentioned, MFIC's new commitments in the March quarter totaled $376 million with a weighted average spread of 513 basis points across 33 different companies. Although we observed the decline in spreads on new commitments compared to the previous quarter, we also observed a slight decline in the net leverage on new commitments. The weighted average net leverage on new commitments was 4.2 times in the March quarter, down from 4.3 times in the prior quarter.
Our fee structure, which is one of the lowest among listed BDCs, allows us to produce attractive ROEs even at current spreads. For the March quarter, gross fundings totaled $357 million, excluding revolvers. Sales and repayments, excluding revolvers, totaled $192 million, including $44 million of liquid assets acquired from the mergers.
Net revolver fundings were approximately $3 million. In total, net fundings for the quarter were $170 million. Given commitments closed so far in the June quarter and our robust pipeline for MidCap Financial, we expect fundings for the June quarter to be strong. Turning to our investment portfolio. At the end of March, our portfolio had a fair value of $3.19 billion and was invested in 240 companies across 49 different industries.
Please note, we have transitioned our industry classification from the Moody's industry system to the Global Industry Classification System, or GICS, beginning this quarter. Direct origination and other represented 92% of the total portfolio, up from 90% last quarter. This quarterly increase is the result of growth in the portfolio from fundings of MidCap Financial source loans and from the sale of non-direct origination positions from the mergers.
At the end of March, the non-directly originated loans acquired from the closed-end funds, which included high-yield bonds, broadly syndicated loans, and structured credit positions, totaled $73 million, representing just 2% of the portfolio. Lastly, Merx accounted for 5.8% of the total portfolio.
All of these figures are on a fair value basis. Specific to the direct origination portfolio, at the end of March, 99% was first lien and 92% was backed by a financial sponsor, both on a fair value basis. Approximately 97% had one or more financial covenants on a cost basis. Covenant quality is a key point of differentiation for the upper middle market, as substantially all of our deals have at least one covenant compared to larger deals, which are generally without covenants. The average funded position was $13.1 million.
The median EBITDA was approximately $46 million. The weighted average yield at cost of our direct origination portfolio was 10.7% on average for the March quarter, down from 11% for the December quarter. The decline in the yield was primarily due to the decline in base rates. At the end of March, the weighted average spread on the directly originated corporate lending portfolio was 569 basis points, down 9 basis points compared to the end of December.
During periods of elevated volatility and uncertainty, we look at the potential impact on our existing portfolio companies. As it relates to the recently announced US tariffs, we've done a comprehensive review on MFIC's portfolio to evaluate their direct impact on our borrowers. As Tanner mentioned, MFIC has been focused on building a well-diversified portfolio of true first lien floating rate local industries.
We primarily lend to US-focused service-oriented businesses, and we're underweight businesses that are heavily dependent on imports and exports. At the end of March, MFIC's top three industry exposures, excluding Merx, were software, health care providers and services and financial services.
MidCap Financial leads and serves as the administrative agent on the vast majority of the MFIC's direct lending deals, which allows us to be in active dialogue with our borrowers and have enhanced information flow, which is particularly valuable during these uncertain periods. Being an agent allows us to detect and address any issues early.
At the end of March, MidCap Financial or Apollo is the agent on 72% of the MFIC's direct lending portfolio at cost and at fair value. We believe the first-order impact of the tariffs to our portfolio is limited. We've defined the first-order impact as businesses that have labor or source products from outside the US
We've categorized our direct lending portfolio into four categories based on what we believe to be the severity of the tariffs: no impact, minimal impact, medium impact, and meaningful impact. We've enhanced our monitoring of companies, which we have identified as having a meaningful impact.
Of course, there could be a second-order impact from an economic slowdown or a recession, which is more challenging to quantify. We've supplemented our underwriting process in response to tariffs. Our underwriting process has always included a downside scenario, such as a mild recession.
As Tanner mentioned, we continue to observe relatively stable credit quality trends in our portfolio, and we continue to believe that we have constructed a senior portfolio built for today's economic uncertainty. We are not observing any signs of general credit weakness. Our portfolio companies continue to show good financial performance as evidenced by a modest improvement in revenue growth with continued positive EBITDA growth.
We saw an improvement in net leverage or debt-to-EBITDA of our borrowers. The weighted average net leverage was 5.25 times at the end of March, down from 5.5 times at the end of December due to lower leverage on new assets and an improvement on certain existing assets.
At the end of March, the weighted average interest coverage was 2.1 times, flat compared to last quarter. This statistic is based on financial information as of the end of December 2024 and therefore, does not reflect the benefit of lower base rates that occurred in the March quarter.
We believe the stable level of revolver utilization we are seeing from our portfolio companies is an additional sign of portfolio health. At the end of March, the percentage of our leveraged lending revolver commitments that were drawn did not change materially from the prior quarter. We believe a steady revolver utilization rate is an indicator of greater financial stability.
The number and dollar amount of investments on nonaccrual status decreased on both a cost and fair value basis compared to the previous quarter. No new positions were placed on nonaccrual status this quarter. Our position in international cruise and excursion was restored to accrual status following a restructuring that occurred in the December quarter.
Additionally, we received a paydown above fair value on a position acquired via the mergers, which exceeded our mark at the end of December. As a result, at the end of March, investments on nonaccrual status were 0.9% of the portfolio at fair value, down from 1.3% last quarter.
After quarter end, we received information about the ongoing restructuring of the New Era Technologies business, which will be reflected in our June results. MFIC's PIK income declined to 4.5% of total investment income, down from 5.7% last quarter as a few borrowers switched to cash pay from PIK during the quarter. Our level of PIK remains well below the average of BDC peers.
That said, we recognize that it makes sense to allow borrowers to elect PIK in certain circumstances. Our underwriting on MidCap Financial source loans has proven to be sound. Based on data since mid-2016, which is the approximate date upon which we began utilizing our co-investment order, our annualized net realized and unrealized loss rate is around 5 basis points on loans sourced by MidCap Financial. We think this performance data shows how well the strategy has performed. With that, I will now turn the call over to Greg to discuss our financial results in detail.

Gregory Hunt

Thank you, Ted, and good morning, everyone. Starting with our operating results. Total investment income for the March quarter was approximately $78.7 million, down $3.5 million or 4.2% compared to the prior quarter. This decline was primarily due to lower fee and prepayment income as well as a decline in asset yield due to the impact of lower base rates on interest income, partially offset by the growth in the size of the portfolio.
Fee income and prepayment income for the March quarter totaled $950,000, down from $2.3 million last quarter. Dividend income was approximately $250,000, essentially flat quarter-over-quarter. As a reminder, there's a lag effect between changes in base rates and their impact to interest income depending on the frequency of loan resets.
During the December and March quarters, three-month SOFR declined by approximately 28 basis points and 2 basis points, respectively, while one-month SOFR declined by 52 basis points and 1 basis point, respectively. MFIC's investments are linked to both one-month and three-month SOFR rates with a greater proportion tied to three-month SOFR. In short, the decline in base rates during the December quarter was a contributor to the decline in interest income recorded in the March quarter.
The average yield at cost on our direct originated portfolio was 10.7% on average for the March quarter, down from 11% last quarter, largely due to lower base rates. Net expenses for the quarter were $44.4 million, down from $45.1 million last quarter. This decline was driven by lower management fees, interest expenses and G&A expenses, partially offset by a higher incentive fee.
Interest expense benefited from the same base rate decline mentioned earlier, partially offset by a higher average debt balance as well as the impact of the CLO, which closed during the quarter. As mentioned in last quarter's call, in late January, MFIC priced a $529 million CLO, which closed on February '24.
We sold through the single A tranche, adding approximately $399 million of relatively low-cost secured debt at a blended spread of 161 basis points. The proceeds from the CLO were effectively used to repay MFIC's $350 million, 5.25% unsecured notes that matured on March 3, 2025.
At today's base rates, the cost of the CLO is slightly higher than the fixed rate debt and effectively replaced. Other G&A expenses totaled $1.2 million for the quarter, down from $1.7 million in the previous quarter. During the March quarter, we received a reimbursement from Merx for certain expenses that MFIC previously incurred on Merx's behalf, which was recorded as a contra expense.
We expect other G&A to average around $1.6 million per quarter going forward. This is in addition to administrative expenses, which are around $1 million per quarter. MFIC's incentive fee rate is 17.5% and is subject to a total return with a 12-month or a 12-quarter look back. Given the total return hurdle feature and the net loss incurred during the look-back period, MFIC's incentive fee for the March quarter was $6.4 million or 15.8% of pre-incentive fee net investment income.
For the March quarter, net investment income per share was $0.37 and GAAP EPS or net income per share was $0.32. These results correspond to an annualized return on equity-based net investment income of 9.8% and an annualized return based on net income of 8.7%. Results for the quarter include a net loss of approximately $4 million or $0.05 per share. The net loss was primarily driven by a few concentrated positions that were already on nonaccrual status.
We ended the quarter with net leverage of 1.31 times, up from 1.16 times last quarter. Our funding activity was weighted toward the second half of the quarter. Average leverage for the March quarter was approximately 1.2 times. During the March quarter, we continued to make progress deploying the capital acquired from MFIC's merger with the closed-end funds, although we are operating below our target leverage of 1.4 times.
Gross and net fundings for the quarter were $357 million and $170 million, respectively. At the end of March, our portfolio had a fair value of $3.19 billion. We had total principal debt outstanding of $1.9 billion and total net assets of $1.39 billion for a NAV of $14.93 per share.
Lastly, during the March quarter, we repurchased approximately 477,000 shares at a weighted average price of $12.75 for a total cost of $6.1 million. These buybacks had an accretive impact on NAV per share of approximately $0.01. This concludes our prepared remarks. Operator, please open the call to questions.

Question and Answer Session

Operator

(Operator instructions)
Mark Hughes, Truist.

Mark Hughes

Yeah, thank you very much. Good morning. The fundings in 2Q, I think you said they're strong so far, kind of interesting to hear given the kind of cautious commentary from you and others around the overall backdrop. Could you talk a little bit more about that, where you're seeing opportunity, what's driving that? And then any comment on the spread trajectory here in 2Q so far relative to 1Q?

Tanner Powell

Yes, sure. Thanks, Mark. And what we say, oftentimes about lag. And so, the activity, and we had a very strong deployment in Q1, the $376 million of new commits we made. And then the strength that we've seen in the quarter-to-date period reflects that level of activity that, frankly, was, in many cases, commenced before the end of the year or early in the year kind of prior to some of the April volatility.
And so, it really is more just a function of that which was already in the pipeline ultimately being brought to a conclusion. And what you're seeing, and this is how we square the seemingly contradictory results, as you alluded to, is that there's reason to believe that there's less auctions to be launched in the back half of the year or even in the back half of the second quarter.
And so, you should start to see that show up. But again, the relatively strong activity that we've seen is really just a holdover from that, which was commenced earlier this year. In terms of spreads, our Q1 spreads declined to 5.13, down from Q4.
We've definitely seen some stabilization more recently, and where we're indicating and where our peers are indicating. And then from here, it's that tension with the technical mark, acknowledging that there's a lot of capital for private transactions out there as well as also it's likely to be a muted M&A environment, creating fewer credit creation opportunities.
And thus, notwithstanding some volatility, it will be the interplay of those, and we would expect some reprieve from that, which we saw in Q1, or some widening, but not materially, and more just stabilization and less deals getting done in the 4s in the broader market.

Mark Hughes

Very good. And then could you talk about the dividend relative to NII, kind of the sustainability, how you think that the underlying trend versus the current dividend as the year progresses, and you're obviously making a lot of updates, changes to the portfolio. What about sustainability?

Tanner Powell

Yes, sure. So, as we alluded to, the activity that we had in the quarter was back-half weighted as well as also we were operating below our leverage level. And then furthermore, many of the aspects of our earnings profile are stable, but the prepayment income in a given quarter can ebb and flow, and we are relatively light in this quarter.
We also mentioned in our prepared remarks about the level of earnings that we're taking from our Merx investment, which is 5.8%, and is only 3.2%. The combination of those gives us a lot of comfort in our ability to increase earnings.
And with the caveat, particularly as it relates to prepayment fees, that will ebb and flow. And so, you're very comfortable in our earnings power and how we've slated our capital plan.

Mark Hughes

Very good, thank you.

Operator

Kenneth Lee, RBC Capital Markets.

Kenneth Lee

Hey, good morning. Thanks for taking my question. Just on originations, given the muted outlook for M&A activity there, could you just remind us again the extent of MFIC's dependence on M&A activity for new originations? What's the outlook for potential add-ons and other activity from incumbents?

Howard Widra

This is Howard. Across MidCap, it is not completely reliant at all on M&A activity. First of all, there is an existing portfolio that continues to grow and there's opportunities there. And we saw that this quarter, and we'll continue to see it in future quarters.
And that also carries on because some of the reduced M&A activity is being replaced by continuation funds, which is also sort of like a captive business, which comes out of the portfolio enables MFIC to sort of step into transactions they weren't in before.
And there are some other products as well. So certainly, more M&A activity drives more volume. But like even in the first quarter, there was not huge volume in the market, and there was $6.5 billion of originations at MidCap, which you saw sort of work its way through to MFIC.
And so, the answer is, we said this before, I think, like if we were a $20 billion BDC, it would be impactful for the amount of assets that MFIC is able to select off what MidCaps originates, it's not that impactful.

Kenneth Lee

Gotcha. Very helpful there. And one follow-up, if I may, just in terms of the dividend coverage there. Could you remind us again of the latest estimate for spill over income? And then perhaps just remind us again what's the overall policy and thoughts around usage of that?

Howard Widra

Yes. When it comes to spill over income, we have minimal spill over income at this point. We provided our shareholders with a dividend following the closed-end funds. And Merx will create it does create at some point additional spill over income, and we'll evaluate that as we continue to reduce that position and move forward.

Kenneth Lee

Gotcha, very helpful there. Thanks again.

Operator

[Healy Seth], Raymond James.

Healy Seth

Hi, good morning. Thanks for the question. So, in your conversations with private equity sponsors and just looking at the current pipeline, what's you sense for M&A recovery and the timeline there? Do you guys feel like it's more 2025 back-end loaded or going into 2026?

Tanner Powell

Yes, sure. I think it's going to be path-dependent. And I think it's very easy to look and survey the sponsor community landscape right now, and it's very hard the calculus is very hard to launch an acquisition right now. And that's what we're seeing, as Howard alluded to, notwithstanding we take comfort in MFIC's position as a relatively small balance sheet amongst a bigger ecosystem and having opportunities for follow-ons within our existing portfolio of companies.
When we look out, and it's hard to project specifically whether it's going to be Q4 2025 or 2026, our peers often point to, which is objective and demonstrable, this significant level of private equity dry powder as well as also a real pressure to return capital to LPs as, again, difficult to predict when it will come, but it needs to come to return that capital and/or deploy that capital that's already been raised.
And then furthermore, we have a lot of dynamics here in the US that notwithstanding currently perhaps sidelined or amidst some volatility, but there's a lot to point to significant capital expenditures and infrastructure spending over the next several years that also will give rise to significant credit opportunities for ourselves and other similarly situated private capital lenders in the market.

Healy Seth

Got it, that's helpful. And a quick follow-up. With your new investments this quarter, can you provide any sort of breakout for how many were incumbent borrowers versus new borrowers?

Tanner Powell

So we did 33 new deals, 19 of which were to new companies and 14 of which were to existing companies.

Healy Seth

Perfect thank you.

Operator

Melissa Wedel, J.P. Morgan.

Melissa Wedel

Good morning. Thanks for taking my questions. Following on your comments about the activity levels through to date, sort of second quarter, does it stand to reason that prepayment income and accelerated OID might remain on the lower end in the near term? I'm curious if you're seeing slower repayment activity like we've heard from a lot of teams. And if I did miss your comment on that, I apologize.
Thank you.

Howard Widra

Melissa, yes, I think consistent with what you're hearing across the industry from our peers, we do expect that given the lack of M&A, that's going to result in fewer prepayments, and that's going to result in lower fees.

Melissa Wedel

Okay, appreciate that clarification. As a follow-up, I appreciate the commentary you've offered about limited direct tariff exposure in the portfolio. On a different but kind of related note, have you assessed the exposure in the portfolio from any government contracts or anything susceptible to lower revenues or reimbursements from those cuts or health care spending cuts?

Howard Widra

It's always part of our underwriting. As a general matter, for years and years, we've limited our exposure to sort of government payments because of sort of stroke of the pen risk. Obviously, it's even more volatile now, but we just don't have that much of it.
Even our health care names are not directly reimbursed by the government and direct government contractors, I don't think we have any. So, always looking at all of those things, but those are sort of underwriting risks regardless of the administration. It's just this one is more tethered.

Melissa Wedel

Got it, thank you.

Operator

Paul Johnson, KBW.

Paul Johnson

Thanks. Good morning. Thanks for taking my questions. Sorry if I missed it, but I was just wondering kind of what the sort of underlying meaningful exposure that you would call it kind of for, any sort of the tariff countries, or any fall under your higher risk tariff classification, kind of what that is roughly within the portfolio?

Tanner Powell

So Paul, single digits. And I think like we said in our prepared remarks, we have the benefit by statute, we need to focus on US companies and the middle market is far less likely to have real diverse supply chains on top of the fact that we're over-indexed to those sectors that are more service-related, less capital intensive.
And I hope we tried to strike this balance within in the portfolio. That number is more important. But as we think about our underwriting, and I think the market has as well, notwithstanding we're not looking at those very, very intently and looking at that single digits part of our portfolio, watching it very closely.
But we're really focused on mentioned confidence on the part of both corporates and consumers and really looking at that second-order effect as being the primary driver for credit performance from here and really occupying the lion's share of our time as we assess the effects of the current environment on our current portfolio.

Paul Johnson

Got it. I appreciate that. And then just on amendment activity, anything to note there in terms of just trends, frequency, how many amendments you were addressed during the quarter in the portfolio?

Howard Widra

So, amendments were relatively flat quarter-over-quarter. And in particular, some of the more involved amendments where you're talking about covenant violations or you're dealing with PIK or forbearance or those types of things. That particular segment was flat quarter over-quarter.

Tanner Powell

And I'd make another comment, Paul, this is the second time I'm going to bring up lag on this call. So we're reporting March financials, and the underlying companies of the amendments performance that we would be assessing within this quarter is Q4, by and large, right?
We get monthlies on certain of our borrowers, but the lion's share is quarterly tests, which is a predictor of amendment activity is from Q4 performance. And so obviously, a different market. So hard to draw too many conclusions from that number, and we weren't surprised to see that, that was flat in the quarter.

Paul Johnson

Thanks again, I appreciate that. And then just on the repurchases going forward, congrats on the repurchases in the quarter, but with leverage kind of around 14 times, stock still trading a little bit below the repurchase price during the first quarter. But how are you kind of thinking about that with deployment of capital and where the stock trades today?

Howard Widra

Well, we hope that question will be irrelevant after this call is over. But we always assess the use of our capital based on sort of the discount in that versus like other choices. And obviously, other choices when we're at our full leverage includes effectively paying down debt and redeploying. So it becomes a higher bogey to buy back shares. But it's always like part of what we do.
The incremental investment would be buying back shares when it makes sense. But I've said this before in a lot of calls, the window of buying is not that many trading days during the quarter.
And so sometimes when like tracking and people looking at how much we're buying back, we're limited by the amount we can buy each day when we can buy, and we're limited the amount of days we can buy. So that also impacts whether we buy back shares, and that is the timing at a time when the stock is trading at a level we want, and our capital opportunities otherwise fit with it.

Operator

(Operator instructions) At this time, we have no further questions. I'll return the call over to management for closing remarks.

Tanner Powell

Thank you, operator. Thank you, everyone, for listening to today's call. On behalf of the entire team, we thank you for your time today. Please feel free to reach out to us if you have any other questions. Please have a good day.

Operator

Thank you. And this does conclude today's program. We thank you for your participation. You may disconnect at any time.