Capital Southwest Corporation (Nasdaq: CSWC) is a Dallas-based internally managed business development company focused on providing financing solutions to support the growth of middle-market businesses. It operates primarily with first lien debt and equity co-investments, targeting investments ranging from $5 million to $50 million.

For the fourth fiscal quarter ended March 31, 2025, Capital Southwest reported a total investment portfolio of approximately $1.8 billion, reflecting a 21% increase from $1.5 billion from the previous year. The credit portfolio, which represented 99% of the total, accounted for $1.6 billion, seeing a growth of 19% year-over-year. The fourth quarter saw new commitments amounting to $149.9 million, featuring $146.1 million in first lien debt and $3.8 million in equity co-investments.

During the quarter, pretax net investment income was reported at $28.5 million, or $0.56 per share. After adjusting for onetime expenses related to leadership changes, adjusted pretax net investment income was $31.3 million, or $0.61 per share. Investment revenue for the quarter was reported at $52.4 million, compared to $52.0 million in the previous quarter. This increment stemmed from a $2.8 million rise in interest and dividend income, partially offset by a $2.4 million decrease in fees and other income.

The company declared regular dividends of $0.58 per share and supplemental dividends of $0.06 per share for a total of $0.64 per share for the quarter ending June 30, 2025. The estimated undistributed taxable income stood at $0.79 per share at the end of the quarter, compared with $0.68 the previous quarter. The coverage ratio for regular dividends over the last twelve months reached 110%.

Capital Southwest continued to focus on maintaining a strong balance sheet, ending the quarter with a regulatory debt-to-equity ratio of 0.89:1. The net asset value per share was $16.70, up slightly from $16.59 recorded in the previous quarter. The company’s total net assets amounted to $883.6 million as of March 31, 2025.

The non-accrual rate for loans was noted at 1.7%, a decrease from 2.3% at the close of the previous quarter. In total, the company recorded net realized and unrealized losses on investments of $10.3 million, which included $19.3 million in net appreciation related to the equity portfolio, offsetting losses of $25.7 million in the credit portfolio.

Capital Southwest raised over $300 million in new debt capital commitments during the fiscal year, including a $230 million fixed 5.125% convertible bond issuance, and managed to reduce its weighted average leverage ratio to 3.5x. Further, subsequent to the quarter-end, the company received approval for a second Small Business Investment Company (SBIC) license allowing access to an additional $175 million in debt capital.