Q3 2023 Oaktree Specialty Lending Corporation Earnings Call
Is being recorded at this time all participants are in a listen only mode.
But will be prompted for a question and answer session. Following the prepared remarks.
Now I would like to introduce Michael Most states you head of Investor Relations, who will host today's conference call.
Mr. Mr. Zhu you may begin.
Thank you operator, and welcome to Oaktree specialty lending Corporation's third fiscal quarter conference call our earnings release, which we issued this morning and the accompanying slide presentation can be accessed on the investors section of our website at Oaktree specialty lending dot com or.
Our speakers today are Armen, <unk>, Chief Executive Officer, and Chief Investment Officer, Matt Penndot, President and Chris Macau, Chief Financial Officer and Treasurer.
Also joining us on the call for the question and answer session is Matt Stuart our Chief operating officer.
Before we begin I want to remind you that comments on today's call include forward looking statements, reflecting our current views with respect to among other things the expected synergies and savings associated with the merger with Oaktree strategic income to ink.
The ability to realize the anticipated benefits of the merger and our future operating results and financial performance.
Our actual results could differ materially from those implied or expressed in the forward looking statements.
Please refer to our SEC filings for a discussion of these factors in further detail.
We undertake no duty to update or revise any forward looking statements.
I'd also like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in any Oaktree fund.
Investors and others should note that Oaktree specialty lending uses the investors section of its corporate website to announce material information.
The company encourages investors the media and others to review the information that it shares on its website.
With that I would now like to turn the call over to Matt.
Thanks, Mike and welcome everyone. Thank you for your interest and support of Ocs L. We appreciate your participation on this call.
Produced strong results in our fiscal third quarter bolstered by robust origination activity at attractive yields and the positive impact of a higher base rates on a predominantly floating rate portfolio.
And with the cost synergies arising from the recently closed merger with OSI too we generated strong earnings on behalf of our shareholders.
Third quarter adjusted NII was <unk> 62 per share in line with the prior quarter.
This was supported primarily by higher total investment income and lower operating expenses.
Partly offset by increased interest expense as well as higher management and incentive fees.
We reported NAV per share of $19 58.
Down slightly from $19 66 for the prior quarter.
Decrease reflected a modest decline in the value of certain debt investments and was offset by net investment income in excess or a <unk> 55 per share quarterly dividend.
Given the strong overall earnings our board maintained our quarterly dividend at <unk> 55 per share.
As a reminder, this is nearly double our pre pandemic quarterly dividend run rate of $28.05.
Our investment activity in the third quarter was strong with $251 million of new investment commitments more than double the level of the prior quarter.
The new originations, nearly 90%, where private direct lending opportunities and 90% reversed lien loans, reflecting our emphasis on being at the top of the capital structure.
Weighted average yield on new originations was attractive at 12, 6%.
Paydowns and exits in the quarter were also strong as we received $261 million of proceeds.
While the broader market activity has been slower given higher interest rates and a fewer refinancings. We continued to receive steady levels of pay downs and have also been opportunistically selling out of lower yielding public credit investments importantly, the third quarter marked our first full quarter realizing synergies following the merger with OSI to where.
We're pleased to be on track to achieve $1 $4 million worth of operating expense synergies on an annualized basis.
We've also been focused on streamlining our capital structure, leveraging our CSO is greater scale to improve our financial flexibility.
During the quarter, we increased the size of our syndicated credit facility to $1 $2 billion from 1.0 billion and extended the maturity by two years to 2028, we also consolidated our credit facility acquired for most like to with our existing Citibank facility and pushed out the maturity by two years to 2027.
We appreciate our banking partner support and their confidence in Oaktree as a manager. These improvements further strengthen our funding options and enhance our ability to capitalize on new investment opportunities.
Altogether, our strong balance sheet puts or CSL in excellent shape to continue delivering attractive returns to our shareholders.
Before I turn the call over to Armen on behalf of the team I wanted to congratulate him on being selected as co CEO of Oaktree, along with Bob O'leary, beginning in the first quarter of calendar 2024, well deserved armen.
Thanks, Matt much appreciated and good day everyone.
Current market environment presents a complex landscape on one hand headline inflation has responded to the most aggressive rate hiking cycle in 40 years.
However, core inflation, which excludes food and energy prices has proven more challenging to control.
Meanwhile, unemployment numbers and consumer spending are both relatively stable.
Against the backdrop of rapid rate increases this economic resilience could be at least partially attributed to the U S government's aggressive fiscal policy that is buoyed the economy.
The near term investors have become exuberant the public markets have rallied over the last several weeks.
If inflation continues to turn to the right direction in a recession does not occur.
Likely scenario would be that rates would remain higher for longer.
Such a condition would create elevated default risk above interest rate sensitive assets, such as real estate and highly levered equities, even in a recession does not materialize first.
Many companies have capital structures put in place during the easy button era.
<unk> zero base rates and we have only recently begun to see the elevated impact of higher rates or levered free cash flow.
This might lead borrowers to seek concessions from lenders or additional equity injections for boaters as a result availability of capital for new deals maybe become limited at times benefiting managers like Oaktree, who consider these risks relative merits of that materializing, helping our portfolio's withstand volatility and capitalize on opportunities.
Please.
I don't CFO are timely merger with OSI to provided us with important scale and as Matt noted additional financial flexibility.
Bond with our teams long history of opportunistic investing we believe that we are well positioned to leverage the power of the oaktree platform and to negotiate and structure deals that provide downside risk protection generate excellent risk adjusted returns over the long term.
Now turning to the overall portfolio.
Those are the June quarter, our portfolio was well diversified with $3 1 billion.
At fair value across 156 companies.
88% of the portfolio was invested in senior secured loans with first lien loans representing 76%.
Underscoring our emphasis on being at the top of the capital structure.
We continue to emphasize investing in larger more diversified businesses that are better positioned to weather downturns or market turbulence.
To that end median portfolio company EBITDA as of June 30 was approximately $119 million and leveraging of our portfolio companies was 5.0 times.
Well below overall middle market leverage levels.
The portfolio's weighted average interest coverage based on trailing 12 month performance was steady at two five times.
Turning now to our origination activity, our $251 million of new investment commitments were spread over six to four existing portfolio companies in the quarter.
I'd like to highlight two representative examples from the quarter.
First oaktree, let a direct lending financings.
Melissa, Doug, which sell children's toys to retailers in North America and Europe .
And for re imagining classic educational play patterns to promote creativity imagination, and social connection the company's towards encourage replay and reduce screentime increasingly popular vision.
<unk> approach to sponsor who is originally planning to amend and extend its existing broadly syndicated loan.
Blick market and offered several flexible financing solutions.
This resulted in an arbitrary led transaction consisting of a $260 billion first lien term loan and a $65 million revolving credit facility.
Ocs always allocated 51 $3 billion in total because the deal was priced sofa plus 750.
Second Oaktree originated a $550 billion commitment and allocated 50 billion to <unk> as part of a larger load of the downturn group in India based diversified resources companies.
Its presence spans across the zinc a little bit of oil and gas copper power iron ore and steel industries. The company, we're looking to raise capital to refinance debt that was set to mature in the near term. This first lien loan was priced favorably with the 13% fixed rate carried strong downside protection.
Turning to credit quality, we moved three investments to nonaccrual during the quarter what involved a very small immaterial positioned with a fair value of $325000.
Another all web leads which provides insurance lead services is a noncore position we inherited from the prior manager that has maturity later this year.
While the company is exploring options, including a possible sale of some or all of its assets. We felt it was prudent to place it will dawn accrual at this time.
The other due to an accrual of the investment that we've made in our Phoenix, a biopharmaceutical company dedicated to the discovery development and commercialization of novel therapies for the treatment of cancer and related conditions.
It is very subdivisions correlated assets than it has been selling overtime to pay down our loan to date <unk> has been repaid on roughly 90% of its original funded about $55 billion.
And the position totaled $7 5 million fair value as of June 32023.
The company filed for chapter 11 to facilitate the orderly sale of the wind down of the remaining assets, which we expect to conclude in the near term.
So that added since quarter end, we received an additional paydown of $2 $3 billion.
Altogether, the dude on accruals represented just 1% and 0.8% of the debt portfolio at cost and fair value respectively.
Importantly, our overall portfolio is in solid shape with each of these accruals, we expect to arrive at successful outcomes on behalf of our shareholders.
In summary, our increased scale of experience across various cycles paired with the power of the Roku platform places those CSO, a great shape to close out fiscal 2023 and move into the next year.
Now I will turn the call over to Chris to discuss our financial results in more detail.
Thank you Armen.
<unk> continues to deliver consistently strong financial performance and we demonstrated that again this quarter.
For the third quarter, we reported adjusted net investment income of $47 6 million or <unk> 62 per share up from $45 4 million and consistent with <unk> 62 per share in the second quarter due to the higher share count as a result of the merger with OSI to the.
The increase on a dollar basis was primarily driven by the first full quarter of interest income earned on the assets acquired in the merger the impact of higher base rates on the companys floating rate debt portfolio and lower operating expenses, which were partially offset by higher interest expense management fees and incentive fees.
Net expenses for the third quarter totaled $53 5 million up $3 $2 million sequentially. The increase was mainly driven by three zero million dollars of higher interest expense due to the impact of rising interest rates on the company's floating rate liabilities and an increase in the average borrowings outstanding.
Further contributing to the increase within zero point $8 million increase in base management fees, primarily resulting from the first full quarter of the assets acquired in the OSI to merger as well as zero point $6 million of higher part one incentive fees, resulting from the higher adjusted net investment income during the quarter.
These were partially offset by $1 2 million of lower professional fees and general and administrative expenses, including realized synergies from the OSI to merger.
With respect to interest rate sensitivity or CSL remains well situated to further benefit from the increasing rate environment as of quarter end, 86% of our debt portfolio at fair value was in floating rate investments are strong earnings in the third quarter were again driven by the higher base rates as Matt noted.
Now moving to our balance sheet.
<unk> net leverage ratio at quarter end was one four times consistent with the end of the March quarter and it continues to be within our targeted range of <unk> nine to 125 times.
As of June 30, total debt outstanding was $1 8 billion and had a weighted average interest rate of six 6%, including the effect on our interest rate swap agreement up.
From six 2% at March 31, due to the impact of higher interest rates.
Unsecured debt represented 36% of total debt at quarter end down modestly from the prior quarter.
At quarter end, we had ample liquidity to meet our funding needs with total dry powder of approximately $542 million.
$60 million of cash and $483 million of Undrawn capacity on our credit facilities.
Unfunded commitments, excluding unfunded commitments to the joint ventures were $247 million.
With approximately $185 million eligible to be drawn immediately.
Whereas the remaining amount is subject to certain milestones that must be met by portfolio companies before funds can be drawn.
With respect to our credit facilities during the quarter, we entered into an amendment to our syndicated credit facility that among other things increased the size of the facility from one zero billion to $1 2 billion and extended its maturity by two years to June 2028, with no change in the margin. There are now 20 lenders in the syndicate.
Also during the quarter, we consolidated the <unk> and OSI to SPV facilities with Citibank entering into a new $400 million facility that matures in 2027.
Shifting to our two joint ventures at.
At quarter end, the Kemper JV had $370 million of assets invested in senior secured loans to 52 companies down from $393 million last quarter, primarily as a result of exit exceeding new originations.
The JV generated $3 $4 million of cash interest income for Ocs fell in the quarter up from $3 2 million in the second quarter. As a result of the portfolio is continued strong performance and the impact of rising interest rates on floating rate investments.
We also received a $1 $1 million dividend consistent with the second quarter dividend leverage at the JV was one two times at quarter end down from one four times in the prior quarter.
The Glick JV had $127 million of assets as of June 30 down from $131 million at March 31.
These consisted of senior secured loans to 38 companies leverage at the JV was one two times at quarter end, and we received $1 $7 million of principal and interest payments on OS DSL subordinated notes and the glick JV during the quarter.
Summary, we were very pleased with our financial results and we continue to believe that our strong balance sheet positions us well for the remainder of the fiscal year.
Now I will turn the call back to Matt for some closing remarks.
Thank you, Chris our strong financial results for the quarter enabled us to generate an annualized return on adjusted net investment income of 12, 6% consistent with the prior quarter.
We are very pleased with the growth in our earnings over the past several years and believe that <unk> remains well positioned to continue delivering strong Roe going forward.
First we believe we are well situated for the prevailing higher interest rate environment as Chris noted earlier with 86% of our investment portfolio in floating rate assets, we expect that the July rate hike and future potential increases in base rates will positively impact our net interest margin.
We also continued to benefit from higher ROE generated at our joint ventures.
During the third quarter, both joint ventures delivered row over 14, 5% due to strong credit quality and positive impacts from the rising rate environment as.
As noted earlier, we expect that the synergies, resulting from the OSI to merger will support our returns and generate substantial long term value for our shareholders.
In conclusion, we are very pleased with the continued strength in our results and our ongoing momentum our portfolio is diverse and healthy and we are in excellent financial shape to capitalize on this volatile, but attractive investment environment with a robust liquidity extensive relationships and disciplined underwriting expertise.
We believe that our solid portfolio and strong balance sheet position us favorably for the remainder of the fiscal year.
As always we thank you for joining us on the call today and for your continued interest in Ocs L.
With that we're happy to take your questions operator, please open the lines.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press star two.
At this time, we will pause momentarily to assemble our roster.
And again I remind you to ask a question star one.
Okay.
Our first question comes from Erik Zwick from Javier.
Eric Please go ahead.
Good morning. Thank you I wanted to first just start off.
Very strong quarter in terms of new commitments and curious what that might mean for the pipeline going forward.
And then the next quarter. So if you are seeing a similar strong opportunities at this point.
Yeah.
Hi, Eric it's Orben.
Yeah. It has been a strong quarter in terms of originations.
What you do see in the quarter represents originations that I've been.
In the pipeline now for her.
We used the quarter, if not two or three.
And so there is a little bit of a lag in terms of the actual units.
Particular quarter I would say that generally speaking the next quarter. The September quarter ended September 30 will probably be a little bit lighter just given the fact that the elevated cost of borrowing base rates have risen so much and spreads have widened.
Cause a bit of a decline in M&A volume as well as a little bit of a pause button being hit by non sponsored.
Transactions are non sponsored investment opportunity that we're considering as well so I would expect it to be a little bit lighter over the over the next quarter or so.
Thanks, that's helpful and then permanent in your prepared comments, you mentioned that the higher for longer rate environment can create elevated default risk and you know I know you typically try and focus on you know kind of more conservative.
And.
Just kind of a defensive portfolio, but you have the opportunity to look across a broad number of sector. So I'm curious to know at this point are you seeing any signs of weakness or concern in any particular sectors or is it still kind of too early at this point to.
See how that might play out.
Yeah. It's a good question. So we are I wouldn't say that we're seeing huge alarm bells at the moment, but.
Certainly the stresses.
The early signs of stress I would say are most acute in companies that.
That didn't benefit from Covid and have experienced some inflationary impact of their cost So health care services.
Reductions of an older vintage that are in health care services.
I would say are showing a little bit more stress than the average borrower some.
Technology companies.
Our.
I think see some stress.
Are.
They are.
Working on their cash flow.
Generation potential I think a lot of technology companies or we're actually focusing on generating cash flow are becoming cash flow neutral because of the assumption of having access to the capital markets has has gone away a bit.
And so you are probably more likely to see stress in some.
Technology oriented companies versus the average borrower as well.
But net net I think it is a bit early.
To really.
Tease out in the industry or sector specific trend.
Trends.
That's great color. Thanks for taking my questions today.
And we now have a question from Melissa.
From JP Morgan Melissa. Please go ahead.
Good morning, Thanks for taking my questions today.
Following up on the new activity in the portfolio I was just curious was there anything.
Kind of idiosyncratic around timing.
New deployments versus repayments during the quarter I guess more specifically did you see him.
Repayments earlier in the quarter and put capital to work later.
Hi, Melissa talked about again.
I think that there was any.
Discernible trend that way in terms of timing.
I think we were fairly active in originating throughout the quarter, we had a couple.
Specialty loans that were done in partnership with our opportunistic credit group that it's hard to predict if they close in.
Certain of the week or certain months, they just take longer to document.
So I wouldn't say that there was any sort of trend in that regard.
Okay I appreciate that.
And I do appreciate the detail that you provided on the three new non accruals in the portfolio I was hoping to circle back to the previous two companies that you talk about last quarter I believe.
As I recall.
With regard to both of those companies.
That were already on nonaccrual headed into the June quarter, you had indicated that you expected somewhat near term resolution on those as well.
Just curious if that's still your outlook or thinking about thank you.
So.
The other two one was called the Avery what is S. I O to Avery is a real estate asset in the San Francisco market.
Or could we continue to work with the sponsor there the developer they are very skilled developer and marketer of all types of real estate assets and so we think the highest and best uses to is to have that that developer continue to sell the units. The good news is.
The units are continuing to sell at accretive prices relative to our attachment point on the attachment point on our loan.
So it's just going to take a little bit longer I don't think were going to do a bulk sale of the of the.
Remaining units anytime soon but I think it's kind of steady as it goes and we will take a little bit of time.
To get all of the capital back.
Be surprised that they did a bulk sale, but that's certainly not we're not we're not putting the pressure on them to get the capital back quickly, we'd rather do an orderly liquidation in the case of Sio to the.
The company had his confirmation hearing for emergence from bankruptcy that.
That is an ongoing situation it is going to exit bankruptcy very soon and we will have more to report.
Probably at the end of the fiscal year at the end of the next quarter us too.
An update we have been very heavily involved.
With operational changes for the business during the pendency of the case.
We are also engaging with.
Strategic partners and investors as well as financial investors.
To help.
In terms of the equity infusion that the company would like to engage in to grow there is a lot of interest in the intellectual property and the capabilities of this business and we don't treat or not.
It really have the mindset to grow our equity exposure to the company, but we were happy to have.
Especially strategic investors joined in and help grow that business. So we are cautiously optimistic about that situation, but it is not.
I would say a resolution of a complete resolution of the position over the course of the next few weeks I think it will take at.
At least a few quarters.
To have a a clear path here, but.
We are I think in the thick of the bankruptcy and the operational.
Changes to the business as well as engaged with many investors on the equity side too.
To help kind of take the business to the next level as it emerges from bankruptcy in the coming weeks. So I think the only update there is that it is going to emerge from bankruptcy quickly very quick bankruptcy. We are in control of the business.
We are really setting it up for success, but that successes.
At the at the moment, we're in the near term.
Got it thank you Amit.
And at this time I would like to remind you. If you would like to enter the question queue Press Star one.
We have a question coming from Bryce Rowe from B Riley.
Please go ahead.
Thank you so much.
Good morning.
I wanted to maybe start on some of the repayment activity and then also on.
The portfolios of the JV.
Somewhat elevated repayment activity here this quarter and then the portfolios of the Jv's.
Cell cell.
In terms of <unk>.
In terms of their outstanding so kind of curious if it's more.
That's intentional both with the on balance sheet and the JV portfolios in terms of trying to exit.
With a with a market that might be more active than not.
Yes, hi, its Matt Stuart I would say across both the on balance sheet and the JV is we were better sellers as the syndicated loan market rally during the quarter. If you look at our repayment activity on balance sheet about a third of that was us actively selling.
Some of the positions that we purchased in the secondary market at.
At the end of last year or that came along with the OSI to merger, we were better sellers off.
So we were selling out of those positions and then we did similar themes in the JV as well.
Just given the strength in the loan market, but we continue to monitor the primary market for broadly syndicated loans for the Jv's and then on balance sheet again, we've been rotating out of some of the liquid positions in anticipation of our private pipeline.
Okay, and Matt are there.
Continued opportunities to do that or you know pretty well exhausted at this point.
We worked through.
Most of our liquid positions from the OSI to merger and obviously the balance of our Ocs I'm merger a few years back but there is still some rotation opportunities in the portfolio just not as plentiful as it was.
It was previously.
Okay Alright.
Maybe shifting to capital structure, obviously active with some of the amendments.
With the credit facility is just kind of curious how you're how you're thinking about the unsecured opportunity.
At this point to maybe layer in some more unsecured notes.
And then.
A follow up to that any appetite to use the ATM now that your stock price is over now.
So we're still watching the unsecured market, we feel comfortable where our capital structure is today as you mentioned, we pushed out both our secured facilities by a little over two years or near term maturities of 25, and 26 are now 27% and 28.
We're about 36% unsecured at this point so we're going to continue to watch that market. It's tightened about 100 basis points. If you look at some of the recent prints in the market versus where we were a few quarters ago.
But we do feel comfortable about where we are today.
Our next maturities February of 2025, so we have significant runway.
But we will continue to evaluate that market and see if theres any opportunities, but and then on the ATM side, we've had the ATM in place for about a year and a half now we've accessed at very.
Very little last year, we'll continue to watch that.
And we.
We'll see how.
Dark trades and what our pipeline looks like and if there's any opportunities for ROE in the future there.
Got it okay. Thanks, thanks for taking the questions.
We have a question from Ryan Lynch from Gabe VW Ryan. Please proceed.
Hey, good morning.
First question I had was just you had about $2 6 million of.
Non interest operating expenses this quarter that was a little bit lower than we were expecting I know there was expected to be some synergies is that a pretty good run rate that we should expect going forward or was there anything that kind of lower that or was there anything in other quarters that are expected to kind of make that a little bit higher.
Yeah, Hey, Ryan Chris Mccann here, Thanks for the question.
Yes, we were very happy to realize some of the synergies from the OSI to merger.
Always going to have some puts and takes quarter in quarter out with respect to the operating expenses, but I do think where.
Where we landed this quarter as it was.
A decent run rate again, again counts and puts and takes.
In addition to the synergies we did have some some items or kind of a nonrecurring nature last quarter that also contributed.
The decline.
No.
And then.
Outside of.
Maybe the non accruals that you guys have had a put on this quarter.
Have you guys been receiving many.
Net activity requests from borrowers in your portfolio relative to call it.
Request you would have received.
On a normal basis like a year ago.
Yes, I think it's been pretty light so far.
It's been I would say consistent with what it's been it was in 2022 or 2021, so not really an uptick.
I would expect some of those conversations to happen at some point the market broadly.
But for now.
It's really been pretty pretty quiet on that front.
And then just one final question that I had.
You know kind of a higher level question, but you guys haven't got really good insights on the credit markets.
You mentioned, new higher base rates.
Borrowers are just now starting to feel the effect of higher base rates kind of all in there.
On their financials.
I'm just curious we've heard in the past that that higher base rates alone are probably not going to.
Put a lot of borrowers into default.
Are we going to take some sort of weakness in.
In the business and.
In combination with higher base rates, so I'm just curious.
Do you expect sort of broadly and then maybe with your portfolio specifically.
Because the economy has been so resilient spend uneven in certain areas, but it's been pretty resilient are you expecting sort of a meaningful increase in defaults. Okay.
He does stated are strong and base rates stay this high do you think base rates alone R. R.
<unk> enough.
Kind of meaningfully increase the defaults going forward.
Yes.
It's obviously very hard to predict but.
Youre right the base rates I've been alone are probably not going to result in a wave of default. It should result in an increase in the default rate.
Bye Bye a couple of hundred basis points above historical averages.
And over a over a period of time over an extended period of time.
I think that you will see the big Spike in defaults until you get to.
Closer to a maturity wall, which is the public market to start seeing more heavy maturities in 2025 or 2020 since you don't really see.
A very heavy maturity wall in 2024.
The comment about.
Base rates being problematic is that if base rates would be this elevated for an extended period of time than what you will find us a maturity wall issue potentially you will find some number of company, albeit maybe not.
A big.
A big distress cycle, but we'll see.
Defaults growing.
You will see just asset bubble deflation.
As companies are companies and asset owners need to decide are they going to invest additional equity into these businesses. If they are underwater from a capital structure perspective. So you will see a combination of factors that don't bode well.
Under investment in handsets some level of defaults several requests for picky.
Several requests for amendments and waivers.
It's really hard to see it.
I would say the medium term very positive outlook.
In the case of a higher for longer scenario.
After those businesses that are able to grow the orbital profitability or nominal dollars of profit over the medium to long term then they may be better off.
If they are able to survive. This this capital crunch that is probably going to occur over the next.
Six to 18 months as the guests that I would have as two way.
The impact of the base rates and the access to the capital market for highly Levered capital structure was put in place before the pandemic I think that.
This next year or two is going to be what we see.
Some some pretty key decisions about asset owners support for those businesses.
Okay.
That's all for me thanks.
And we have a question from Kyle Joseph from Jefferies.
Kyle Please go ahead.
Hey, good morning, guys. Thanks for taking my questions I apologize if I missed this too many earnings this morning.
But just it was an active quarter of deployments and repayments and then it looks to me like fee income was a little lighter than I was expecting anything.
Highlight there was it just kind of the nature of some of the repayments there or anything any other nuance.
Hi, It's Amit Stuart.
Not too much to report there I mean, we got some of our repayments were older vintage loans that didn't have a significant call protection or the call protection I had run out.
So there's really not much to report there and to <unk> point around amendment activity the amendment fees during the quarter.
Were insignificant either so not much to report on that line item.
And then is stepping back our men or Matt.
Just wanted to get your thoughts in terms of kind of.
The potential fallout from what's gone on with regional banks and you know rumors.
Rumours and headlines about increasing capital requirements of banks and how big of an opportunity you think that is for the sector and our CSL in particular.
Yeah I.
I mean, I'll feel better about feel free to add.
I do think that it is going to present, a very attractive opportunity.
In some ways it gives us the opportunity to partner with those banks and others and other situations that gives us the opportunity to.
To buy portfolios and then finally I think generally speaking whether there is an increase.
Our required equity capital.
Not I think the higher the higher level of scrutiny from the regulators. We are already seeing good kind of play through with an expansion. The aperture of the possible deals that we'd be that we'd be due.
With or without partnership with the bank. So we're just.
Beginning to see an increase in deal flow, but I think there's also opportunities to work with the banks either as an off taker of some of their assets.
Price or as a partner with them going forward originations, but I think it's early days in terms of figuring that out.
Yes, Matt, it's Matt Pan, Ohio, I think just to Echo <unk> comments.
I do think it's early days that being said I do think it'll be a big opportunity. There's no question that the bank's perspective.
Regulatory oversight capital charges or are increasing and only going to continue to increase and we can really partnered well with banks you know, there's a lot of services and products. They offer that that we don't often we're not interested in but.
We have we have a lot of capital we can structure.
Execute transactions very quickly and thoughtfully, so I think I think that the.
And this trend has been it's been going on for a while and I think it's only going to.
Increase in and the discussions around partnering with banks in and do.
Doing things together, combining our capital and kind of there.
For us in footprint.
I think it's well I will take a while to play out I think it's going to be a positive.
Got it thanks very much for answering my questions.
And we have no further questions at this time, so I'll turn the word back to Mr. Mr. Jim.
Thanks, <unk> and thank you all for joining us on today's earnings conference call. A replay of this call will be available for 30 days I know Csl's website in the investors section or by dialing 870, 734 475 to nine for U S callers or 141 to 3170.
088 for non U S callers with the replay access code 1958, Q2 for beginning approximately one hour. After this broadcast.
Hope you enjoy the rest of the summer. Thank you.
And this concludes this conference. Thank you for attending today's presentation you may now disconnect.