Gladstone Capital Q3 2023 Earnings Call Transcript

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July 27, 2023

There are 8 speakers on the call.

Operator

Greetings, and welcome to the Gladstone Capital Corporation Third Quarter Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Gladstone, Chief Executive Officer.

Operator

Thank you, sir. You may begin.

Speaker 1

Thank you, Latanya. That was a nice introduction, and good morning, everybody. This is David Gladstone, Chairman, And this is the earnings conference call for Gladstone Capital for the quarter ending June 30, 2023. Thank you all for calling in. We're always happy to talk to you about all the things going on here.

Speaker 1

We'd like to update our shareholders and analysts and welcome the opportunity to provide the And now we'll hear from our General Counsel, Michael LiCausi, who makes some statements regarding certain forward looking Michael?

Speaker 2

Thanks, David. Good morning, everybody. Today's report may include forward looking statements under the Securities Act of 1933 and the Securities Change Act of 1934, including those regarding our future performance. These forward looking statements involve certain risks and uncertainties that are Our current plans, which we believe to be reasonable, and many factors may cause our actual results to be materially different from any future results Expressed or implied by these forward looking statements, including all the risk factors in our Forms 10Q, 10 ks and other documents we file with the SEC, you can find them on The Investors page of our website, that's gladstonecapital.com. You could also sign up for an e mail notification on the website Or you can find the documents on the SEC's website as well, which is www.sec.gov.

Speaker 2

And we undertake no obligation to publicly update or revise Now today's call is an overview of our results, so we ask that you review our press release and Form 10 Q, both issued yesterday, for more detailed information. Again, you can find them on the Investors page of our website. Now with that, I'll turn the presentation over to Gladstone Capital's President, Bob Marcotte. Bob?

Speaker 3

Good morning and thank you all for dialing in this morning. I'll cover some of the highlights for last quarter and some comments on the outlook for the balance of 2023 Before turning the call over to Nicole Schultenbrand, our CFO, to review the details of our financial results for the period. So beginning with our last quarter results, Originations were $71,000,000 for the period with 3 new platform investments representing the majority of these new investments. Portfolio amortization and repayments were $35,000,000 so our ending investment balance rose by 36,000,000 Higher short term interest rates lifted the weighted average yields on our portfolio by 50 basis points to 13.6%. However, The 6.6% increase in earning assets average earning assets was the primary driver behind the 11.4% increase In total interest income, which rose to $21,800,000 borrowing costs increased by 700,000 With higher SOFR rates and bank borrowings, however, our net interest margin rose by $1,600,000 to $15,900,000 for the quarter.

Speaker 3

Net management fees for the period declined to $4,100,000 or 2.3 percent of assets As deal closing and advisory fee credits more than offset the higher incentive fees associated with the increase in investment yields, Our net investment income increased to $11,700,000 for the quarter or $0.31 per share, Which is up 21% from last quarter and 68% from the same period last year. The net realized and unrealized gain on the portfolio for the period came in at 200,000 Positive. However, undistributed earnings for the quarter lifted NAV per share by $0.08 to $9.27 Combination of increased net interest income and lower net expenses lifted our ROE for the quarter to 13.3%. Based on the portfolio performance and increase in net interest income, we recently announced the monthly dividend Increased to $0.0825 per month. With respect to the overall portfolio, our portfolio continues to perform well With generally modest leverage metrics, favorable liquidity profile and we ended the quarter with only one non earning debt investment Representing $6,100,000 in cost or 0.4 percent of assets at fair value.

Speaker 3

The appreciation for the quarter of $200,000 Was primarily related to offsetting moves in several equity co investment positions as net depreciation On the debt investment portfolio was nominal. The appreciation for the period included a realized gain of $3,700,000 On the exit of our equity interest in PIC 360, which is the legacy investment and capped a very successful outcome. In reflecting on our outlook for the balance of 'twenty three, I'd like to leave you with a couple of comments. While the broader market Deal flow moderated. We're continuing to see attractive investment opportunities within the lower middle market, including follow on investments within our existing portfolio and expect these opportunities to outpace repayments and support further growth of our investment portfolio.

Speaker 3

We have maintained our underwriting rigor in the face of interest rate escalation and continue to focus our investment activity on lower risk Senior secured loans, which make up about 74% of our investments today and with the weighted average overall leverage in the portfolio of 3 point 5 times EBITDA, it has helped mitigate the potential debt service issues associated with and yield erosion associated with non earning assets. We continue to actively manage our balance sheet leverage within our modest leverage target range and market conditions permitting Lastly, with our floating rate investments exceeding our floating rate assets by approximately $450,000,000 And the current floating rates on pace to be up again this quarter, we would expect our net interest income to rise further in the coming quarter. And now, I'd like to turn this call over to Nicole Shelton Brand to provide more details on the Fund's financial results for the quarter.

Speaker 4

Thanks, Bob. Good morning, During the June quarter, total interest income rose $2,200,000 or 11.4 percent to $21,800,000 based on the increase in short term rates And an increase in earning assets. The weighted average yield on our interest bearing portfolio rose 50 basis points to 13.6% with the increase in floating rates on the 92% of the investment portfolio that carries floating rate. The investment portfolio weighted average balance increased to 6 unchanged at $1,000,000 and total investment income rose $2,300,000 or 11 percent to $22,800,000 for the quarter. Total expenses rose by $200,000 quarter over quarter with higher interest expenses as net management fees declined $500,000 with deal closing and advisory fee credits more than offsetting the higher incentive fees paid.

Speaker 4

Net investment income for the quarter ended June 30 was 11 point $7,000,000 which was an increase of $2,000,000 compared to the prior quarter or $0.31 per share, which exceeded the $0.24 share dividends paid in support of the increase to $0.2475 per quarter announced in July. The net increase in net assets resulting from operations was $11,900,000 or $0.32 per share as impacted by the realized and unrealized valuation Appreciation covered by Bob earlier. Moving over to the balance sheet. As of June 30, total assets rose to $730,000,000 consisting of 7 $15,000,000 in investments at fair value and $15,000,000 in cash and other assets. Liabilities rose to $372,000,000 as of June 30 And consisted primarily of $150,000,000 of 5.8% senior notes due 2026, dollars 50,000,000 of 3.75% senior notes due May of 20 And as of the end of the quarter, advances under our line of credit rose to $164,000,000 During the quarter, we successfully renewed our extending the revolving period and final maturity to October 2025 October 2027, respectively.

Speaker 4

The credit facility provides For an accordion of up to $350,000,000 and given our favorable collateral position and the expected growth in our investments, We intend to pursue an increase in the facility commitments in the near term. As of June 30, net assets rose by $16,100,000 from the prior quarter end With the net proceeds from common share issuance under our ATM program of 13,300,000 Nav rose from $9.19 per share as of March 31 to $9.27 per share as of June 30. Our leverage as of the end of the quarter rose with the increase in assets to 104% of net assets. With respect to distributions, our monthly distributions to common stockholders were increased to $0.0825 per common share effective for the month of July, August in September, which is an annual run rate of $0.99 per share. And in light of the accumulation Of undistributed earnings this year, a supplemental distribution of $0.02 per share will be paid in September.

Speaker 4

The Board will meet in October to determine the monthly distribution to common stockholders At the current distribution run rate for our common stock and with the common stock price at about $10.86 per share yesterday, The distribution run rate is now producing a yield of about 9.1%. Now I'll turn it back to David to conclude.

Speaker 1

Thank you. Bob, Nicole, Michael, you all did a great job informing the shareholders and the analysts that follow our company. Summary, another good quarter. Congratulations to Bob and Nicole for really putting on a show of earnings increase. The company delivered net investment income originations of $36,000,000 for the quarter, which lifted the asset growth of the company to Over $125,000,000 or 22 percent in the last 12 months.

Speaker 1

Portfolio is in good shape with modest leverage and very low non performing The net interest income rose 11% to $15,900,000 on a higher rate of earnings Investments in support of the monthly common distribution increased to $0.0825 I just think this has been a stellar quarter. In summary, the company continues to stick with the strategy of investing in growth to support the acquisition and growth of the business, which is what we know how to do. This This gives the company the opportunity to make attractive interest paying loans to support the ongoing commitment to pay cash distributions to our shareholders. And now the operator or the Tonya, if you'll come on and ask the questions about the company from our people listening.

Operator

Thank you. We will now conduct a question and answer session. A confirmation tone will indicate your line is in the question Our first question comes from Mickey Schleien with Ladenburg. Please proceed.

Speaker 5

Yes. Good morning, everyone. Bob, I'm curious about this portfolio company fee credit. Your investment activity was sort of in line with the last several quarters, but the level of fee credit was the highest it's been in a couple of years. Could you tell us about the nature of that portfolio company fee?

Speaker 5

And To the extent possible, any outlook on what these fees could look like in the next few quarters?

Speaker 3

Good morning, Mickey. Good observation. I would say that there are probably 2 unusual events. 1, The exit that I referred to earlier, PIC360, we've been in that business, gosh, it predates me. So it's going over a decade.

Speaker 3

There was an asset sale of the residuals there, which was a decent sized fee on the exit of that small So that was kind of an unusual item. I would also say that there was I think we flagged in our Investment activity, there was a prepayment and a reinvestment in Inspire. And so it was an unusual event. Market conditions were We're positive. We actually got a prepayment fee and a new fee on the new facility.

Speaker 3

So it was kind of a double hit on that particular point, which probably lifted the numbers closer to $1,000,000 for the period. That said, I would also suggest The fee levels that you're referencing from prior quarters, there was probably a lot more competition Driving fee pressures down last year than there is today. I think in this current market environment, we're getting full fees. We are talking about origination fees that are could be 2% or north of 2%. So General fee levels have increased, because the access to capital in the market has gotten tighter.

Speaker 3

So on average, I would say, we'll probably be above where we have been historically, but last quarter was obviously a bit of an anomaly, if that helps.

Speaker 5

Yes, that's helpful. I appreciate that. Bob, one of your new positions is a company called Trowbridge, And I couldn't find anything about them online. Can you just describe what this company does? What sort of business they're in?

Speaker 3

It actually is a business that is buying and accumulating Condo Association Management Companies and HOA Management Companies, It's a very interesting market. When you look at the real estate market today, most community developments Or large multifamily dwellings have some sort of HOA Management role and that includes financial accounting, banking, contracting and other services. It's a growing business. There are several large players in the business, but it's a very broad market And this company is aggregating those businesses and systematizing and institutionalizing those processes. It's a modestly leveraged investment that actually is backed by several very large real estate investors.

Speaker 3

So we view that as a nice services business that is increasing in its Demands and service capabilities in the marketplace today.

Speaker 5

That sounds interesting. Bob, you mentioned that In terms of fees, there's less pressure in the current market. At the same time, I have seen some Spreads on deals, which are actively sought after, perhaps Tightening a little bit. Are you seeing that in the market where you participate or not?

Speaker 3

We really haven't seen that. Your observation, I think, is very correct. I mean, typically, In the marketplace where we're at where rates are higher, there's almost a reverse effect where market multiples go up and that's not because people like paying more for their financing. It has to do with the fact that it's only the strongest of companies that can come to market in an adverse situation and they're growth oriented. So What you're seeing in spreads and in fees has to do with high grading the investment activity.

Speaker 3

So Only the best companies come through and there is always going to be a certain amount of capital available to those good companies. So there is a little bit more of a competitive dynamic. Given what's happening in the regional bank marketplace And the general withdraw at tighter terms and capital position, we're not seeing that In our segment, because the amount of capital that's currently trying to find a home in the segment where we play It doesn't have quite the same overhang that you would have in a larger facilities and a more a broader private capital investor base.

Speaker 5

I understand. That's helpful. My last question, perhaps for Nicole. I think Nicole said that, you're looking to maybe upsize the credit facility as the portfolio grows. But if I'm not mistaken, you just downsized it.

Speaker 5

So Could you just reconcile why you would downsize it and then re upsize it?

Speaker 4

Yes. 1 of our banks fell out of the So we weren't necessarily intending to downsize it. It's just one of the banks was changing their focus. So in light of that and as well as our growth plans, we will continuously look to potentially upsize.

Speaker 3

I think the regional banks are going through a soul search of what their long term strategy is. And the bank that Actually dropped out, exited the lender finance business and it so happens that they recently announced a very large acquisition Believe it or not, a venture lending portfolio from another failed institution. So people trying to figure out where they want to play, where they want to allocate their capital and how they want to how they are going to make their earnings work under a more capital constrained environment. So we felt it prudent to close the facility, Stabilize the framework and move on going into a more positive outlook for the company. Clearly, there are going to be banks that are still out there interested in the kind of financing that we do.

Speaker 3

We just needed to cast a wider net and are currently working with a number of institutions we would expect to bring in.

Speaker 5

And Bob, do you would you consider more unsecured debt to Help expand the balance sheet or are the terms just not economical right now?

Speaker 3

Well, that's a big question. Obviously, doing a term placement In some of the rate environment is a bit of a gamble. I would say we've been watching the momentum and certainly the feeling is that rates Probably our near peak and I think what we're starting to see is investors are starting to creep into the marketplace to recognize that It's time to probably extend maturities and duration. And that's something that we are actively monitoring and would expect to see something in modest size. I would also point you to the fact that We filed a number of months ago the intention to begin to distribute our perpetual preferred, which will begin to Be in the marketplace in relatively short order.

Speaker 3

So we have multiple irons in the fire To begin to build out the debt side, but as I said in my comments, We're going to maintain the leverage in our target zone and it's obviously going to ultimately come back to Continued access to the ATM market on the equity side in order to support that growth. There's clearly more opportunities today than we necessarily have fully capitalized in our Balance sheet today from a capacity perspective.

Speaker 5

Bob, the perpetual preferred you're referring to, that's the 6.25% Yes. And that would seem to be quite a bit below the current market. You're saying you are seeing interest at that Price level?

Speaker 3

It's a bit of an anomaly, Mickey. We can talk about it separately, but It is a stable value security. It is not going to be traded. It is sold to certain accounts that value that. As you may know, There's a few others that we have sold through some of our REIT funds and this is actually Priced wide to those securities.

Speaker 3

I would also point you to the fact that There are other BDCs that have been selling similar securities in very large volumes to some of these same accounts. It tends not to be public. It tends to be high net worth or more RIA distributed networks. And so we are reasonably optimistic that the selling agreements and the comfort with Gladstone Management Companies And some of these similar securities will provide some momentum for us in that marketplace given the story. And frankly, I think what people are beginning to recognize, the banking business is not going to be where these companies are going to be Financed on a go forward basis, we are well positioned to grow with as a player in financing those businesses.

Speaker 3

So It's just a it's a diversity of funding that I think we need to demonstrate as we look to continue to scale the business.

Speaker 5

I understand. That's interesting. Those are all my questions this morning. Thank you for your time.

Speaker 3

Thank you for calling in Mickey. Okay. Next up. We got it.

Operator

Our next question comes from Kyle Joseph with Jefferies. Please proceed.

Speaker 6

Hey, good morning, all. Thank you for taking my questions. Just want to get kind of your thoughts almost on the economy given your portfolio. I know Non accruals were stable quarter on quarter, but just get a sense for revenue and EBITDA growth trends You've been seeing and how those differ between recent quarters.

Speaker 3

Thanks for calling in. When we go through the portfolio, I would say, for the most part, we're very focused on Revenue growth, obviously. And what we're beginning to sense or what we're focusing on right now is The price increases associated with the broad inflationary pressures of the last year have for the most part been positive on a lot of People increased price because people didn't know where things costs were and they wanted to get availability and they wanted to continue They're downstream customers. And so, I think what we're seeing now is Revenue increases in the portfolio are almost 100% price oriented and the volumes are getting So we're very concerned that in the near term, you're going to get some blowback, inflation is going to get Squeeze down and customers are going to resist more vehemently the price increases. So we're very focused on what that revenue growth is going to look Mike, for the most part, I think our portfolios companies are holding together.

Speaker 3

Obviously, the places where people would be impacted most directly are things like consumer, building, Maybe some of the services sides of things, I think right now, we're feeling like It's solid, but we're very cognizant of inflationary pressures pushing down the revenue Trends on some of these companies, but we don't really see any significant fall off. Most of our businesses are businesses that are serving downstream customers. We focus on businesses where there's decent revenue visibility or competitive position or barriers to entry. And so When I look at anybody that's got any measurable level of leverage, the biggest challenges that they face are probably their own Isolated instances or maybe some 1 or 2 where we have Some measure of commercial pressures. The only other comment that I would make is when we think about businesses and some of the trends, We've begun to see some of the withdrawal of the banks From funding companies and it's creating an interesting opportunity for us.

Speaker 3

While we traditionally have done a lot of buyout and leverage financings, We're now seeing folks that lines aren't getting renewed and they're coming in and those companies tend to have lower leverage and Dramatically higher asset coverage. I mean, folks with real asset coverage ratios as opposed to purely cash flow based deals. So I would expect our portfolio will probably migrate to have higher asset coverage, although that's not our primary focus because of some of the movement in the underlying market. So I realize that's a bit of a diversion from your original question, but I hope that gives you some sense of what we're seeing.

Speaker 6

Yes, that's really helpful and kind of a good segue into my follow-up. With everything that's gone on with regional banks and Rumors of increased capital requirements for banks. I know you guys focus on kind of the lower middle market and banks don't necessarily operate there anymore, which is why it's Tracker, but just want to get your sense for potential implications of what's going on with banks in recent months and quarters.

Speaker 3

The interesting thing is when you think about $20,000,000 $30,000,000 $40,000,000 Financings, that's the bread and butter of a lot of the regional banks and their C and I loans. And Many cases, it might be asset backed type financings. And we've seen situations where A bank buys a bank and that bank gets bought and the other bank gets bought and there's an asset backed loan in it and the parent company says, I'm not really in that business anymore. And so where does a $20,000,000 or $30,000,000 asset backed receivable backed loan go in this marketplace When the regional bank that services that area is no longer willing to do that deal And it's not big enough to go to the mega banks that want to do $100,000,000 to $300,000,000 ABLs. So there is a little bit of a vacuum that's created in the market, Such as I'm referring to in the deal that I referenced earlier.

Speaker 3

And so I think it's beginning to happen. I don't think it's I think it may be somewhat temporary. I think you have banks that are probably Managing their capital base and reallocating it based on the strategies where they want to play, but there's also Thousands of banks. So there are others that aren't overexposed to the C and I market or aren't Didn't stretch their loan to deposit ratios. And so what we're finding is we're attracting banks that have capacity, want to grow And not only would they like to finance some of our portfolio companies with us, but they are interested in coming into our bank facilities.

Speaker 3

So we're kind of re honing to look at the folks that are going to be active in the C and I market Going forward, and we'll likely transition some of our relationships in that way. And it's for that reason, I tend to think it's going to be somewhat temporary. We're going through probably a contraction. There's going to be other banks that are that will come in and fill it, whether there's a how long that dislocation exists It's probably a function of the magnitude of capital shortfall that the banks have. I tend to think it will last a little longer Based upon the sheer challenges of losses, of deposits and of regulation, And it will take a while for that to ultimately work through the system and the lending criteria of those banks to come back into a more positive investment mode.

Speaker 3

So I think we probably got, if If I were crystal balling, I think we've easily got a year, but it's probably not multi year scenario Where the banks are generally not active in certain segments of the market for us.

Speaker 6

Got it. Very helpful. Thanks for answering my questions.

Speaker 3

Thank you for calling in.

Operator

Our next question comes from Robert Dodd with Raymond James. Please proceed.

Speaker 7

Hi, good morning and congratulations On the quarter, so

Operator

a couple of questions.

Speaker 7

I mean, first, the simple one, but I'll quit to answer more. Do you have a target size For the preferred equity program, I mean, obviously, it's in principle a maximum 6,000,000 share offering, which will be pretty big. But is there A view of how large or what proportionate capital structure you actually prefer that to be?

Speaker 3

It's a good question since we really haven't brought in a whole lot of it, Robert. I think If we look out 12 months to 18 months from now, given the growth rate that we're experiencing, I would put us at our goal, as I've stated in earlier calls, is to get closer to $1,000,000,000 which would support getting A more traditional major rating agency investment grade rating. And so given our current trajectory, That's kind of where I'm shooting to. Given that we'll be selling that preferred over that period of time, getting it to $100,000,000 to $150,000,000 to be 10% or 15% of our capital base, I don't think is out of line. And it's really doing 2 things.

Speaker 3

It's hedging what we're going to have in the way of maturities as we get out in 'twenty five to 'six We're 26 and 7. And the second is, we need to diversify away from Regional banks that have been traditionally supporting the lower middle market BDCs. So while we might have thought in the past 20% or 25% of our capital base could come from those banks. I think the lessons of the last couple of quarters have suggested That might be high. So I think there will be a lesser reliance on the commercial banks For funding capacity on a permanent basis inside the portfolio.

Speaker 3

So if you were at $1,000,000,000 and we had $100,000,000 $150,000,000 here, having $200,000,000 to $250,000,000 in the banks is a more modest strategy. And beyond that, you have to tell me kind of where the medium term placement market rates are. I think we will go back to that marketplace, but certainly given the current spreads, it's not as attractive as pushing on The perpetual preferred, so 10% to 15% from the perpetual preferred of a pro form a capitalization, I think is where you should think about our target.

Speaker 7

Perfect. Thank you for all that detail. On The portfolio, I mean, average leverage at 3.5%, I mean, interest coverage is going to be very healthy across the bulk of the portfolio. So Can you give us any kind of you talked about inflation, you talked about worries about revenue volumes and things like that. From your perspective, what and also from portfolios company's perspective, what's kind of the primary worry Right now, because at low leverage, it might not be rates like it is for somebody who's got a portfolio with 6.5 times of leverage on it.

Speaker 7

So you just kind of what's the is it the revenue or the unit volumes for these businesses? Or what is it You're worried right now.

Speaker 3

When we start to when we underwrite the credits, Robert, We're trying to find places that there's going to be a market growth opportunity that will drive volume over time. It will attract additional add on investments and it will support an organic deleveraging. So our primary focus is the growth outlook and underwriting strategy intact. And if it's not intact, then the capital structure and the risk profile That we started with is probably something that we have to reevaluate. And when we start to see that growth Our cost of capital and Our discussions with those sponsors tends to go in the direction of What can you do to refinance and deleverage The balance sheets and we do have some investments where growth is just not is going to be harder.

Speaker 3

If you're in an industrial services business and industrial services aren't necessarily growing in a particular segment, We need to make sure the leverage is low enough to sustain and continue to amortize the structure. And If it's not coming down, typically the equity value isn't growing. And in most cases, those equity sponsors, it's probably Time to think about exiting. So we can exit via a refinance because many of these companies have grown to deleverage over time. We can exit when the sponsor seeks to exit, because they've reached the pinnacle or the peak point for them to exit the business.

Speaker 3

And so we're focusing on growth. So I would say right now certain industrial services, Certain consumer services, I think we're also cognizant of things in the health But it's beginning to see some price pressures. It will invariably see some reimbursement pressures And it's certainly seeing costs on the staffing side that are increasing or will continue to increase. And so, we're probably mindful of places where staffing availability and staffing costs May fundamentally impair the margins of the business. So I guess when I kind of Circle back to conclude, I would say, is the growth intact and are there Pricing pressures that are going to make it more difficult for them to sustain their margins and cash flows.

Speaker 3

And those are the sectors where we are probably more Acutely focused on either deleveraging or deemphasizing our investments in those sectors.

Speaker 7

Again, I really appreciate that, Gala. That was very helpful. Last one, if I can. I mean, based on your remarks to when you're Okay. Thanks, Takah.

Speaker 7

If we're going to see the portfolio and the platform is largely been built around to a degree For Gladly's funding out years. Your remarks that you said you might see more asset backed, Etcetera, because the banks withdrawing, which sounds quite attractive, etcetera. But how does that How does your current sourcing effort, which may have may, correct me, have been more focused On sponsors in many cases to find the LBO activity. How does that sourcing transition or not To sourcing more of the direct, basically taking over relationships with banks Rather than building relationships with a new company with a sponsor, I don't know if that made any sense.

Speaker 3

It's interesting. I would say we're probably not going to change our sourcing framework. It's somewhat topical, but we're not going to be able to cover the breadth of where those transactions might come from. It's far too Broad. I will say that what we have seen so far is Good sized companies, I mean, dollars 150,000,000 revenue companies in some cases who have bank issues, They're going to call an investment bank or a regional broker or somebody and I'd say we need help and those intermediaries are going to say who's open.

Speaker 3

And in today's environment, There are a few open BDCs with equity capital and capacity. There may be a few SBICs, But they're obviously a little pricier and a little smaller. And so what we're going to find, I think, is at least in the near term given the dislocations and the need to serve problems. Those companies are going to call who is open to pick up that business. And in some cases, their first commentary is, the banks are in disarray.

Speaker 3

I don't understand what they want to do. They're not acting rationally. Let me find somebody that might understand my business and be a good financial partner to help me grow my business. And so in the near term, I would expect the vast majority of those to come through The intermediary contacts given our position in the marketplace and our I mean, they can be doing this for Quite a while. I know David is here.

Speaker 3

He is not saying a lot, but he has been doing it longer than anybody. So we are going to get our share calls.

Speaker 7

Yes, understood. Thank you. Thank you.

Speaker 1

Okay. Tanya, is there anybody else that would like to ask a question?

Operator

There are no further questions, Mr. Gladstone. So I'll turn it back to you for closing comments.

Speaker 1

Oh, shucks. We wanted more Thanks a lot to all of you for calling in and asking us good questions and we'll see you next quarter. That's the end of this call.

Operator

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.

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Gladstone Capital Q3 2023
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