Thank you, Holly. Good morning, everyone, and thank you for joining the call.

Welcome to our conference call covering the quarter ended March 31st, 2026. We have six topics to cover this morning: first, the financial results for the quarter; portfolio and asset quality; outlook update; opportunities with RidgePost Capital; our share buyback program; and future growth in the portfolio.

Joining me this morning is Todd Huskinson, our Chief Financial Officer, who will cover important information about forward-looking statements as well as an overview of our financial information.

Thank you, Rob. I'd like to remind everyone that today's call is being recorded.

Please note that the call is the property of Stellus Capital Investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone number and PIN provided in our press release announcing this call.

I'd also like to call your attention to the customary safe harbor disclosure in our press release regarding forward-looking information. Today's conference call may also include forward-looking statements and projections, and we ask that you refer to our most recent filing with the SEC for important factors that could cause actual results to differ materially from these projections.

We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.stelluscapital.com under the Public Investors link, or call us at 713-292-5400.

Now I'll cover our operating results for the quarter, but would like to start with our life-to-date activity. Since our IPO in November 2012, we've invested approximately $2.8 billion in over 225 companies and received approximately $1.8 billion of repayments while maintaining stable asset quality.

We've paid $339 million of dividends to our investors, which represents $18.49 per share to an investor in our IPO in November 2012. In the first quarter, we generated 26 cents per share of GAAP net investment income, and core net investment income was 27 cents per share, which excludes estimated excise taxes.

During the quarter, we also realized gains of $750,000 on one equity position, which resulted in total realized income for the quarter of 29 cents per share. Net asset value decreased 28 cents per share during the quarter from two components.

The first was 8 cents per share of dividend payments that exceeded earnings, which was necessary to continue to pay out the spillover balance from 2025. The second was a net realized and unrealized loss of 20 cents per share, related primarily to two debt investments.

We ended the quarter with an investment portfolio at fair value of $990 million across 116 portfolio companies, a decrease from $1.01 billion across 115 portfolio companies as of December 31st, 2025. During the first quarter, we invested $18 million in three new portfolio companies and had $9 million in other investment activity, at par.

We also received three full repayments totaling $35 million, one equity realization, which resulted in a realized gain of $750,000, and received $6.6 million of other repayments, also at par. At March 31st, 99% of our loans were secured and 92% were priced at floating rates.

The average loan per company is $9 million, and the largest overall investment is $18.5 million, both at fair value. Substantially all of our portfolio companies are backed by a private equity firm.

Overall, our asset quality is slightly better than plan. At fair value, 81% of our portfolio is rated a 1 or a 2, or on or ahead of plan, and 19% of the portfolio is marked at an investment category of 3 or below, meaning not meeting plan or expectations.

We added one new loan to our non-accrual list during the quarter. Currently, we have loans to six portfolio companies on non-accrual, which comprise 9.2% of the total cost and 5.2% of the fair value of the total investment portfolio, respectively, which represents a slight increase from the prior quarter.

We recognize that the level of non-accrual loans is higher than we would like. We're focused on reducing the number and dollar magnitude of these loans.

We're actively working each position and are making progress in exiting the positions or bringing them back on to an accrual status. There's been much speculation about the impact of artificial intelligence on the large-scale SaaS software industry.

As we mentioned on our last call, Stellus does not have exposure to the large-scale SaaS software sector. We do have portfolio companies and the software and information they provide in many cases deal with proprietary data.

We believe AI will enable these and many of our portfolio companies across a variety of industry sectors to improve the speed information. Each of these companies is rated on our risk rating system as either a 1 or 2, meaning on plan or ahead of plan.

Now I'd like to turn the call back over to Rob to cover a number of other topics.

Thank you, Todd. As we look ahead to the second quarter of 2026, I'll cover four topics: the outlook for Q2; our advisor's plans to join the RidgePost Capital platform; our $20 million share buyback program; and opportunities for growth.

First, with respect to outlook: As of today, our portfolio is approximately $970 million across 117 portfolio [companies?] .

For the balance of the quarter, we would expect repayments to equal new fundings, thus ending the quarter approximately where we are today. We expect continued realizations throughout the year.

At this point, we estimate $9 million for the balance of the year, with approximately $6 million of this in realized gains. Regarding dividends: In April, we declared the dividends for the second quarter of this year of 34 cents per share in the aggregate, payable monthly.

Looking forward, we are making progress in reducing the amount of spillover income, and we expect that over time our dividend will approximate our net investment income plus realized gains. At this point, that would be at a lower level than the current dividend.

Now turning to RidgePost: We look forward to our external advisor, Stellus Capital Management, joining the RidgePost Capital platform this summer. We've been impressed with the RidgePost Capital organization.

They have excellent leadership, and we should benefit from meaningful new investment opportunities working with them, particularly through their lower middle market private equity fund of funds strategy known as RCP Advisors. RCP has relationships with over 200 private equity firms, and with their focus on the lower middle market, many of these sponsors are candidates for us to provide financing for their portfolio companies.

We think this could provide hundreds of millions of dollars of new lending possibilities across the entire Stellus platform each year. Now turning to the share repurchase program: We recently announced a common stock repurchase program of up to $20 million.

This decision reflects the current trading level of our shares, which are approximately a 25% discount to net asset value. Historically, our stock has traded at or above NAV for many years.

At the current price levels, we believe repurchasing shares represents a good opportunity to generate value for our shareholders. Now, opportunities for growth: I'd like to conclude our remarks by outlining the opportunity to grow our portfolio.

We project that we have the capacity to increase our investment portfolio by $75 million to $100 million from here. This opportunity comes from two sources: the first is from the third SBIC license, which we're optimistic will be awarded this summer; and the second is from recycling equity gains and non-accrual loans that have been resolved.

As a reminder, a dollar of an equity position or a non-accrual loan that turns to cash can be reinvested into a new loan of close to $3 through our leverage facilities. In closing, let me thank everyone for your continued support, and we'll now turn to the Q&A session.

Good morning, Erik. Hey,

good morning, Rob and Todd. Wanted to start just to make sure I understood some of the commentary there in the prepared remarks with relation to the expectation for kind of dividends to be in line with NII plus realized gains.

Did I understand that you kind of mentioned that the way it was lined up currently that the NII plus realized gains would be kind of lower than the current dividend level, just trying to figure out are you expecting to be able to grow NII over time or potentially think about resetting the dividend level as well? Just trying to kind of hone in on that a little bit.

Sure. I'd say that, although we'd like to grow the NII per share from here, we think we're probably at a level that we'll be at for a while.

Our expectation is that the dividend will be coming down associated with that.

Got it. That's helpful.

That's what I thought I heard. Then just with regard to share repurchases, I know you talked about it last quarter as well in terms of being attractive given where the stock is trading today.

Correct me if I'm wrong, I don't think you repurchased anything in 1Q. Is anything that kept you out of the market potentially the pending acquisition of the advisor by RidgePost or anything else?

No. Good question.

Good point. We did not repurchase any shares after the previous quarter end, but a reminder, when issuing a K, we have a short period from the issuance of the K to the end of the quarter, there's just limited periods we can be repurchasing.

We will have a much longer window this quarter, and it was strictly tied to the timing of that and nothing else.

Got it. Okay.

Understood. Thank you.

Last one for me, wondering if you can just talk about the pipeline a little bit. I know you expect it to grow in the back half of the year post the RidgePost tie-up.

Curious from a spread perspective, if you can talk about where you're seeing spreads in the pipeline today relative to 90 days ago, and also kind of compared to the current existing portfolio yield.

Yeah. Relative to spreads, as the private credit has been disrupted a little bit, we are seeing some I'd say steadiness in spreads.

We've not seen the same widening that the upper market is seeing, but I think we've certainly seen stabilization. I'd say our average deal we're looking at today is approximately a 5% spread over SOFR.

It could be higher, but it's stabilized, but not meaningfully wider yet.

Good to hear that it's at least stabilized, and hopefully some widening going forward. Great.

That's all for me today. Thank you so much.

Many thanks, Erik.

Hey, guys. I guess for Todd.

Todd, I know your regulatory leverage ratios are low, but when including the SBA, it's somewhat higher. Does the SBA in any way restrict what your regulatory leverage ratios can be?

No, the SBA leverage is excluded from regulatory leverage, it's a 2 to 1 regulatory leverage, and our regulatory leverage is around one times, and then it's two times with the SBA debentures. A little bit less than two times now because we've paid off a number of debentures.

Your unsecured notes and so forth doesn't put any sort of restrictions on your total leverage, just on your regulatory leverage, correct?

Correct. Yep, that's right.

The notes and the credit facility are part of regulatory leverage, and then the debentures are in addition to that as total leverage.

Got it. We can see your regulatory leverage ratios are impressively low, we can just see that you guys have a fair amount of balance sheet flexibility from that.

Is that a fair interpretation?

That's correct.

I think that's correct. It's, of course, limited by borrowing base, but that's right.

We have a lot of running room with respect to that.

Okay. Then I guess you mentioned in your comments that you didn't have much software exposure, but in your industry list, is it buried into another industry like high-tech industries?

It would be in several. Could be in high tech, it could be in the industry it serves, because as I mentioned, those software products are very industry-specific, and could be like a service as well that might be industry-specific, and those might be in different industry categories.

We've seen with other BDCs where they've had to take down unrealized depreciation on software positions. Have you guys experienced that as well?

We have not.

Those positions are marked approximately where they were at last quarter end, and are basically marked close to par, yeah.

They're all good solid performing loans. As I mentioned, they're either a 1 or a 2 on our risk rating scale, all doing fine.

Thank you.

Thank you,

Chris.

Good morning, Robert.

Morning. Just sticking with the marks.

On the quarter, you said there was 22 cents in NAV attrition primarily markdowns in debt investments. Can you give us how much of that was spread versus just mark-to-market versus actual company-specific elements?

I would say, Robert, most of that is coming from kind of net company movements. Most of those markdowns were on two specific positions, we did have certainly some spread markdowns in terms of just the models, but the majority of that was coming from two two equity positions.

We also had a little bit of write-down on equity as well. Two debt positions

and

a bit of write-down on the equity as well.

Got it. Thank you.

On going back to Eric's question on spreads, and you said you've seen some stability. Sometimes obviously can be a lag between how the smaller end of the market, to speak, responds to spread movements versus the upper end of the market, to your point.

Do you think the spread stability rather than expansion you're seeing right now is more a function of just things lagging what's going on in the upper market, or do you think it is just that the competitive environment in your end of the market has just not moved and you just don't expect those spreads to widen materially or at all?

Robert, I would say that it's driven by the latter, that still a competitive space that we're in, and think we're seeing things getting done in the high 4s up to the mid to high 5s. I'd say it's a competitive nature.

Things are slower in terms of deal flow. I think as you see deal flow pick up, there's certainly the opportunity to have the spreads also widen some, but so far I think it's not a lag, I think it's just the competitive nature of where we are.

Appreciate that. Thank you.

Then just one more on the non-accruals. You addressed this, that they are a little elevated.

You want to work that down, rotate those into either back onto accrual or into income-producing assets. Any color you can give on you think you've mentioned here making some progress, how it's a slow process.

I wouldn't say fast. I don't mean fast.

What kind of timeline do you think that could go noticeably lower than where it is currently, in terms of the non-accrual and non-income-producing debt capital assets?

We discussed this on the last call, and I think I would say the same thing. I think not going to be immediate.

I would be thinking toward the end of the year, this year, and then these are generally 12- to 24-month resolution, to speak. Just we wanted to make sure that we're very focused on it, but I think it's going to take some more time, but we are seeing some progress in some.

The other thing that you've noted and I've mentioned in my remarks is that as we get some of these equity realizations in, and we have some larger positions, this is a great opportunity to recycle what are non-earning assets—they could appreciate, but non-current earning assets—to put leverage on them and grow the portfolio again. We think we'll start to see that come to fruition toward the end of this year.

Those two things combined, think of it more toward the end of this year into first of next year, but not immediately.

Got it. Thank you.

Thank you, Robert.

Good morning, Paul.

Good afternoon, guys. Thanks for taking my questions.

Just a little bit more on the non-accruals. As Robert said, those are elevated.

I think they're probably as high as they've ever been for Stellus. I'm just curious what I guess has been kind of the weakness there?

Is it just been kind of a challenging vintage, or has there been something maybe more specific in terms of kind of what's driven the more recent, I guess, increase in non-accruals?

Good question, Paul. I'd say they're all company-specific, not driven by any kind of a macro trend or an underwriting trend.

All of our businesses when we underwrite them, they're a few key characteristics. One, they have substantial equity harder behind in a private equity firm.

Two, the equity component to the company is at least or typically at least 50% of the capital structure. Each has serious covenants, traditionally a fixed-charge coverage and a leverage test.

When we go into it, we're not expecting problems, but we certainly underwrite if we went through a recession, how would this company do? We've ended up having not a recession, but again company-specific issues that have made some of them challenging.

Also it's worth noting that because there's a private equity sponsor beyond substantially all of these, it is typical that a private equity firm will put in capital at least twice to solve problems. If that's helpful to say, that if we have something on non-accrual, the sponsor/owner has supported this over time and just got to the point where they're not able to support it anymore.

Again, company-specific, nothing we could tie down to anything that would be a overall trend. Part of it, too, is in the past, we've had things come off non-accrual or be resolved, and we're having some slowness in that activity, and that's why I noted that we're working at it and working hard to get that to reduce over time.

I think we haven't been able to take as many off as we've added. Anyway, thanks for the question, and that's where we are.

Got it. Okay.

Appreciate that. Then, it sounds if I'm not mistaken, your 1 to 2 rated names, roughly around 19% of the portfolio, I believe, last quarter.

I don't think there's too much change quarter-over-quarter in terms of the internal watchlist with the new addition here to non-accrual. I believe that may have already been captured within your internal watchlist.

Is that safe to say that any of the addition here to the non-accrual is not necessarily a surprise and was more or less kind of within the bucket of underperforming rated names, and that's relatively unchanged quarter-over-quarter?

That's right, Paul. Again, I think so it's 19% that is risk grade 3 or below, and you're right, that number didn't change.

No worries. That the one that did move to non-accrual was already a risk grade 3 before.

Got it. Thanks.

That's all for me.

Thanks so much, Paul.

Thanks again, Holly. Thanks for your help, and thanks, everyone, for participating, your support over many years for our company.

We look forward to giving you an update again in early August relative to the second quarter. Thank you.