Fidus Investment - Q4 2023

Transcript

Operator (participant)

Good morning and welcome to the Fidus fourth quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing * then 0 on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press * then 1 on your telephone keypad. To withdraw your question, please press * then 2. Please note this event is being recorded. I would now like to turn the conference over to Jody Burfening. Please go ahead.

Jody Burfening (Managing Director)

Thank you, Drew, and good morning, everyone. Thank you for joining us for Fidus Investment Corporation's fourth quarter 2023 earnings conference call. With me this morning are Ed Ross, Fidus Investment Corporation's Chairman and Chief Executive Officer, and Shelby Sherard, Chief Financial Officer. Fidus Investment Corporation issued a press release yesterday afternoon with the details of the company's quarterly financial results. A copy of the press release is available on the investor relations page of the company's website at fdus.com. I'd also like to call your attention to the customary Safe Harbor disclosure regarding forward-looking information included on today's call. The conference call today will contain forward-looking statements, including statements regarding the goals, strategies, beliefs, future potential, operating results, and cash flows of Fidus Investment Corporation.

Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, March 1, 2024, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to the factors set forth in the company's filings with the Securities and Exchange Commission. Fidus undertakes no obligation to update or revise any of these forward-looking statements. With that, I would now like to turn the call over to Ed. Good morning, Ed.

Edward P. Ross (Chairman and CEO)

Good morning, Jody, and good morning, everyone. Welcome to our fourth quarter 2023 earnings conference call. On today's call, I'll start with a review of our fourth quarter performance and our portfolio at quarter end, and then share with you our outlook for 2024. Shelby will cover the fourth quarter financial results and our liquidity position. After we have completed our prepared remarks, we'll be happy to take your questions. Our strong fourth quarter performance reflects the benefits to FDUS of our strategy of both serving the lower middle market, which has remained reasonably active in a less robust environment, and selectively investing in companies that possess resilient and strong cash flow-generating business models and positive long-term outlooks. Our patience during the year has paid off.

With the typical year-end push in deal activity, originations totaled $132.7 million, and proceeds from repayments and realizations totaled $112.5 million for a net origination of $20.2 million, and we grew the total portfolio to $957.9 million on a fair value basis. Adjusted net investment income increased 49% to $18.8 million in Q4 compared to $12.6 million last year. As was the case for each quarter in 2023, interest income growth drove this year-over-year increase, reflecting both higher average debt balances and higher weighted average yields. Taking into account the higher average share count resulting from the equity raises we completed during the year, adjusted net investment income on a per-share basis increased 27.5% to $0.65 from $0.51. We paid dividends totaling $0.80 per share, including a base dividend of $0.43 per share.

For the year, we distributed a total of $2.88 per share to shareholders consisting of regular dividends of $1.66 per share, supplemental dividends of $0.82 per share, and special dividends of $0.40 per share. Adjusted NII of $2.56 per share comfortably covered base dividends. As a reminder, we distributed a special cash dividend of $0.10 per share each quarter of 2023 to satisfy RIC requirements and to bring our spillover income in line with our target level, which is roughly the equivalent of the base dividend for three quarters.

For the first quarter of 2024, the board of directors declared dividends totaling $0.65 per share consisting of a base dividend of $0.43 per share and a supplemental dividend of $0.22 per share equal to 100% of the surplus in adjusted NII over the base dividend from the prior quarter, which will be payable on March 27, 2024, to stockholders of record as of March 20, 2024. Net asset value quarter end was $589.5 million or $19.37 per share, a meaningful increase as compared to $548.6 million or $19.28 per share as of September 30, 2023. During the quarter, we grew our portfolio, investing, as always, in high-quality companies that generate excess levels of cash flow to service debt and structuring our investments with a high level of equity cushion to give us an added margin of safety.

Originations totaled $132.7 million consisting of $123.5 million in debt and $9.2 million in equity. First Lien investments accounted for $110.5 million or approximately 90% of the additions to the debt portfolio. We invested $94.6 million or about three-quarters of total originations in six new portfolio companies, which were added to the portfolio through financing of M&A transactions. The remaining $38.1 million was invested in add-ons in support of existing portfolio companies, almost all of which was M&A-driven. Proceeds from repayments and realizations totaled $112.5 million for the fourth quarter, reflecting exits and some strategic pruning of the portfolio on our part. We received $87.2 million in debt repayments, primarily due to M&A activity, and received proceeds of $25.3 million from the sale of equity investments, resulting in net realized gains of $19.8 million.

Our portfolio of debt investments on a fair value basis was $832.8 million or 87% of the total portfolio at quarter end. First Lien investments continue to account for the largest portion of the debt portfolio, now at 69%. Including the fair value of our equity portfolio of $125.1 million, the fair value of the total portfolio at quarter end stood at $957.9 million equal to 102.3% of cost. We ended the fourth quarter with 81 active portfolio companies. Subsequent to quarter end, we invested $17 million in First Lien debt and equity in two new portfolio companies, and we had a debt repayment and equity realization in one company generating net proceeds of approximately $24.3 million and a realized gain of $1.5 million. Overall, our portfolio, from a credit quality perspective, remained solid. As of December 31, we had two operating companies on non-accrual, unchanged from the third quarter.

Non-accruals represented approximately 1% of the total portfolio on a fair value basis. The vast majority of our portfolio companies continue to capture growth opportunities and sustain profitability, supported by resilient business models. We do, of course, have a few companies that are experiencing difficulties for a variety of reasons, but there is no one market condition that is weighing on their operations. Looking ahead, we are well positioned to build on our successes in 2023. During 2023, we expanded our portfolio of debt and equity investments on a fair value basis by nearly $100 million to $957.9 million, despite subdued levels of M&A activity in the lower middle market. This performance speaks to our experience, our relationships with financial sponsors, and industry knowledge that together enable us to remain highly selective, investing in high-quality companies that meet our investment criteria.

By building our portfolio of income-producing assets and with an assist from widened spreads, we enhance the earnings power of our healthy and high-performing portfolio, generating a 46.4% increase year-over-year in adjusted NII to $67.5 million. Our strategy of co-investing in equity investments continued to work well for us, producing approximately $22.4 million in net realizable gains for the year. Finally, we continue to deliver value to our shareholders, distributing 100% of our earnings and demonstrating our ability to generate gains in excess of losses while maintaining an overall healthy portfolio, thanks to our rigorous underwriting standards. While we are positioned to build on our successes of 2023, we remain committed to managing the business for the long term, to our underwriting disciplines in selecting investments, and to our long-term goals of growing net asset value over time, preserving capital, and generating attractive risk-adjusted returns for our shareholders.

Now I'll turn the call over to Shelby to provide some details on our financial and operating results. Shelby?

Shelby Sherard (CFO)

Thank you, Ed, and good morning, everyone. I'll review our fourth quarter results in more detail and close with comments on our liquidity position. Please note, I will be providing comparative commentary versus the prior quarter, Q3 2023. Total investment income was $36.3 million for the three months ended December 31, a $2.1 million increase from Q3 primarily due to a $0.4 million increase in interest income, including PIK, a $1.3 million increase in fee income due to higher levels of investment activity, and a $0.5 million increase in interest income on excess cash. The increase in interest income was driven by an increase in average debt investment balances outstanding, partially offset by a decrease in yield on new debt investments and the repayment of two higher-yielding debt investments.

Total expenses, including income tax provision, were $19.4 million for the fourth quarter, $1.8 million higher than Q3, driven primarily by a $1 million increase in income taxes related to the annual excise tax accrual, a $0.3 million increase in professional fees, and a $0.4 million increase in the capital gains fee accrual. We ended the quarter with $475.9 million of debt outstanding, comprised of $210 million of SBA debentures, $250 million of unsecured notes, and $15.9 million of secured borrowings. Our debt-to-equity ratio as of December 31 was 0.8 times or 0.5 times statutory leverage, excluding exempt SBA debentures. The weighted average interest rate on our outstanding debt was 4.3% as of December 31, 2023. Net investment income, or NII, for the three months ended December 31 was $0.58 per share versus $0.63 per share in Q3.

Adjusted NII, which excludes any capital gains incentive fee accruals or reversals attributable to realized and unrealized gains and losses on investments, was $0.65 per share in Q4, which includes a $0.03 per share excise tax accrual versus $0.68 in Q3. For the three months ended December 31, we recognized approximately $19.8 million of net realized gains related to the sale of our equity investments in Power Grid Components, Aerionics, Road Safety Services, and Comply365, offset by realized losses on the exit of our debt investment in K2 and equity investment in Techniks Industries. As Ed mentioned, in 2023, we paid total cash dividends of $2.88 per share versus $2.00 in cash dividends in 2022. Turning now to portfolio statistics. As of December 31, our total investment portfolio had a fair value of $957.9 million.

Our average portfolio company investment on a cost basis was $11.6 million, which excludes investments in one portfolio company that sold its operations and is in the process of winding down. We have equity investments in approximately 79.3% of our portfolio companies, with an average fully diluted equity ownership of 3%. Weighted average yield on debt investments was 14.2% as of December versus 14.6% at September 30. The weighted average yield is computed using effective interest rates for debt investments at cost, including the accretion of Original Issue Discount and loan origination fees, but excluding investments on non-accrual, if any. Now I'd like to briefly discuss our available liquidity. In Q4, we issued approximately 2 million shares under our ATM program at an average share price of $19.79, raising net proceeds of approximately $38.7 million.

As of December 31, our liquidity and capital resources included cash of $119.1 million and $100 million of availability on our line of credit, resulting in total liquidity of approximately $219.1 million. Subsequent to year-end, we repaid the remaining $35 million of outstanding SBA debentures in our second SBIC fund. We have submitted a new license application to the SBA for a fourth SBIC license, which, subject to SBA approval, will provide us with access to $175 million of additional SBA debentures. Now I will turn the call back to Ed for concluding comments.

Edward P. Ross (Chairman and CEO)

Thanks, Shelby. As always, I'd like to thank our team and the board of directors at Fidus for their dedication and hard work, and our shareholders for their continued support. I will now turn the call over to Drew for Q&A. Drew?

Operator (participant)

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're 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 then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Robert Dodd with Raymond James. Please go ahead.

Robert Dodd (Managing Director, Equity Research)

Good morning and congratulations on another very good quarter. A couple of questions. Ed, you mentioned strategic pruning of the portfolio during the opening remarks. Could you give us any more color on that? I mean, a decent chunk of that sounds like it was equity. Was it people requesting dividend recaps you weren't comfortable with that drove you to prune it? Or can you give us any color on the reasons that you decided to do that?

Edward P. Ross (Chairman and CEO)

Sure. There was one equity investment that you could argue was strategic pruning in nature, Robert, and that was I mean, it was an equity investment that we did very well on. I think we made 8x our money or something like that. So we had an opportunity to stay in, and we chose to go ahead and exit and saw risks greater than the opportunity, quite frankly. But really, what that was kind of meaning to talk about was a couple of debt investments. They weren't huge, but there were ones that risk levels were higher than we were comfortable with. And so we made kind of the strategic decision to work to exit those investments. And in both cases, we were able to accomplish it in Q4. So it was more debt-oriented than equity. But there was one equity investment where we did make that decision.

Robert Dodd (Managing Director, Equity Research)

Got it. Got it. Thank you. On the credit situation, it seems I mean, obviously, there's clearly no broad-based problems, so you wouldn't be lighting up anything. And you said the vast majority of portfolio companies performing fine. No single reason for the maybe handful that aren't. Are those idiosyncratic issues for the company, or is it the labor market or anything? Could you give us more color on how comfortable you are that those problems are being managed and aren't showing rapid signs of deterioration maybe or something like that?

Edward P. Ross (Chairman and CEO)

Sure. And the ones I was really kind of generally referencing are the non-accruals, which have been there for a few quarters. And those are companies that are both supported by private equity groups. They are going through idiosyncratic-type situations and, in both cases, improving. But we got a ways to go. So that's really what we were referencing primarily. In terms of other companies that are underperforming, again, kind of one-off-type reasons for it. And we feel very good about our portfolio. There's always a chance for another non-accrual, but that's not our expectation. And we clearly hope that we can keep managing the rest of the businesses in the way that we have in the past.

Robert Dodd (Managing Director, Equity Research)

Okay. Appreciate it. And again, congrats on the quarter. Thank you.

Edward P. Ross (Chairman and CEO)

Thanks, Robert. Appreciate it. Good talking to you.

Operator (participant)

The next question comes from Bryce Rowe with B. Riley. Please go ahead.

Bryce Rowe (Senior Equity Research Analyst)

Thanks. Good morning, Ed and Shelby.

Edward P. Ross (Chairman and CEO)

Good morning, Bryce. How are you?

Bryce Rowe (Senior Equity Research Analyst)

I'm good. Thank you. Hey, maybe I'll start on the capital structure. I mean, Shelby, appreciate the commentary around SBA license number 2 and kind of trying to re-up with a fourth license. How do you think about kind of timing of that fourth license and maybe access to that additional capital kind of relative to where the balance sheet, well, how the balance sheet looks today? You're sitting on a lot of cash. And so just trying to think about how you work through that cash with the pipeline that you see in front of you.

Edward P. Ross (Chairman and CEO)

Sure. Great question, Bryce. As we think about the SBIC fund that we apply for, as you know, that takes some time. I think about it in terms of kind of a six-month window or so. That's what our expectation is. Our hope is that in 2024, we'll be able to start utilizing that license. But obviously, we're still in the application mode. With regard to the cash, obviously, we did prepay debentures and Fund II. But the other piece of the puzzle is this quarter is actually shaping up from our perspective. Assume things go as we expect to be a very active investment quarter, but it is going to primarily be in March. And so we are currently in the execution phase, diligence and final execution phase of numerous investment opportunities. I would also say our portfolio continues to exhibit acquisition-type activity as well.

So it's shaping up to be a pretty active new investment quarter. And then from a repayment perspective, we actually think it's probably going to shape up to be a lighter quarter. We've obviously had one sizable realization, I mean, almost $25 million. But it doesn't appear that the calendar is very robust the rest of the quarter. We do have a few companies that are evaluating strategic alternatives. At the moment, we view those investments as probably more Q2 realizations. And they also aren't the ones that we're aware of, they aren't very large investments at the same time. So we think a fair bit of the cash that we have on the balance sheet today will actually go to new investments here as we move forward here over the next four to eight weeks.

Bryce Rowe (Senior Equity Research Analyst)

Okay. That's helpful. And Ed, beyond, I guess, we've heard M&A activity picking up from many of your peers in the lower middle market. Does that M&A trend that you're seeing and experiencing, does that continue beyond this March period? Are we going to continue to see it into second, third quarter just based on kind of what you're hearing at this point?

Edward P. Ross (Chairman and CEO)

It's a really good question, Bryce. I think it's a little unclear. I mean, look, in the lower middle market, one of the reasons we like it, there's more activity than the broader market. In terms of number of deals, it's fragmented, which we like. Gives us a chance to kind of choose what we really are interested in. But activity levels are still well below 2021, and I'd say below normal activity levels. But there has been a little bit of an uptick here in Q4 and Q1 as well. In January, we obviously had some pretty robust deal flow and some high-quality situations. I think it's unclear on how long, how sustainable that is. But the expectations, so more of a market expectation, is for continued M&A activity at reasonable levels and above last year. And so that's our hope. And so that's what we're planning for.

But there's no guarantee of that, obviously.

Bryce Rowe (Senior Equity Research Analyst)

Got it. All right. Last one for me, Ed. It looks like the new activity in the fourth quarter, from a, I guess, pricing perspective, it looked like most of those debt investments were straight up First Lien, no last-out structure to them. I might be wrong there, but that's the way I read the schedule of investments. Anything to kind of read into that, or is that more just kind of flow of what happened in the quarter relative to kind of what we've seen over the last couple of years in terms of structuring those debt investments?

Edward P. Ross (Chairman and CEO)

Sure. No, nothing strategic. It's more we start with, I think, as you know, just what's the quality of the underlying business and then try to figure out what the opportunity is. And in this case, it was more just a mix towards dollar-one type investments. The other thing I would say, we are very focused on quality, right? And so we're willing to sacrifice a little yield if we find the right quality investment, if you will. And so I'd say there's a little bit of both of those that go into the decision-making. But it starts with trying to find very high-quality businesses to invest in, and then we figure out how we can do it. And so hopefully, that's helpful.

Bryce Rowe (Senior Equity Research Analyst)

That is. Thanks for the time.

Edward P. Ross (Chairman and CEO)

Yeah. Thank you. Appreciate it. Good talking to you, Bryce.

Bryce Rowe (Senior Equity Research Analyst)

You too. Thanks.

Operator (participant)

The next question comes from Mickey Schleien with Ladenburg. Please go ahead.

Mickey Schleien (Managing Director and Senior Analyst)

Yes. Good morning, everyone. Ed, it sounds like some of the repayment activity in the fourth quarter was due to refinancings, which certainly is in line with what we're seeing broadly. So I'd like to get your take on how much more prepayment risk you see in the portfolio.

Edward P. Ross (Chairman and CEO)

Sure. It's a great question, Mickey. I think in terms of repayments, we haven't seen a lot of repayments that are just trying to get a lower price. In fact, I look at the three companies that were repayments for us. Two of them were strategic in nature by us. And then one of them was a very large acquisition, and we just chose to exit that situation from a debt and equity perspective. So we haven't seen a lot of just getting taken out, if you will, of our debt investments. Having said that, I think we're in an environment where competition has increased over the last 12 months. Yields have come down a little bit. And so I would expect that piece of the puzzle to show its face a little bit here in 2024, more so than the last couple of years.

That's how we currently think about it.

Mickey Schleien (Managing Director and Senior Analyst)

I understand. Thanks for that. I just wanted to follow up on the fourth SBIC license. I'm not clear on exactly what's going on because Fund III already has regulatory capital of $175 million. So what debt commitments has the SBA made to fund three, and why does that necessitate a fund four?

Edward P. Ross (Chairman and CEO)

Sure. Shelby, do you want to take that one?

Shelby Sherard (CFO)

Sure. So let me just start. Let's talk about fund two. And so I made the comment that we repaid $35 million of SBA debentures. And that was really just to avoid a situation where we would end up with trapped cash. And so given some of the repayments that we had in 2023 and, quite frankly, a subsequent event in 2024, our second SBIC license had a fair amount of excess cash. And so the best way to utilize that cash was just to repay $35 million. That completes the wind-down of fund two. Any further repayments in that fund, we can fully redeploy cash on a go-forward basis, whether it be making investments out of the BDC or using some equity capital to contribute to a new fourth SBIC license once it's approved by the SBA.

So with that repayment, that leaves us with one SBIC license, Fund 3 that has been fully deployed, meaning we've fully borrowed and invested the $175 million cap per SBIC license for Fund 3. So that necessitated the need to go ahead and get another SBIC license. So we submitted that application at the end of December. And as Ed mentioned, we'd kind of like to think that hopefully, that'll definitely be in 2024. My hope would be first half, if not shortly thereafter of 2024, so we can start deploying new capital into that fourth SBIC license because of the attractive rates on SBA debentures, given other alternatives in this market environment. So it's really just more.

Mickey Schleien (Managing Director and Senior Analyst)

Yeah. No, I agree that the rates are attractive. So fund three is limited to debt to equity of only 1x rather than 2x?

Shelby Sherard (CFO)

No, it's 2x. So we have the 2x fully deployed. The $175 million is the 2x.

Mickey Schleien (Managing Director and Senior Analyst)

Okay. Thanks for that, Shelby. How has the increased allocation to First Lien and Unitranche over time impacted your target debt to equity number?

Edward P. Ross (Chairman and CEO)

Great question, Mickey. At the moment, we're kind of sticking with our 1-to-1 target leverage from a GAAP perspective. We are okay if, from time to time, we go above that. But generally, the target would be 1-to-1. And so it really hasn't changed our focus. Clearly, we have the ability. And as you know, the SBIC funds, as dropdowns are levered more 2-to-1, we feel very comfortable with higher leverage. But from just a strategy perspective and how we think about it, I think being kind of more conservative and just thinking about 1-to-1 makes more sense to us at this juncture.

Mickey Schleien (Managing Director and Senior Analyst)

Ed, does that reflect some concern you have about the economy? You still have a meaningful allocation to second lien and subordinated debt, or is it something else that's on your mind?

Edward P. Ross (Chairman and CEO)

No. I think we prefer to operate in a kind of less-than-market leverage. We don't think we need to use leverage to perform well. And so we kind of like a little bit less-than-market leverage just overall. But it's not a reflection of concerns in the portfolio or recession or what have you. It's more just kind of how we've operated in the past. And we don't see a need to change that at this point.

Mickey Schleien (Managing Director and Senior Analyst)

Okay. Appreciate that. Those are all my questions. Thanks for your time.

Edward P. Ross (Chairman and CEO)

Thank you, Mickey. Good talking to you.

Operator (participant)

Again, if you have a question, please press star, then one. The next question comes from Erik Zwick with Hovde Group. Please go ahead.

Erik Zwich (Managing Director)

Good morning. Wanted to start first with just a question on the PIK income. It looks like it was down quarter over quarter in Q4. So wondering if it's just maybe some positive development with a company or two that had been paying PIK income before and returned to cash pay or kind of maybe what moved that quarter over quarter?

Edward P. Ross (Chairman and CEO)

Sure. Great question. I think the primary driver there was exactly what you just said. One of our strategic pruning situations was a company that had moved to PIK during the third quarter. We obviously worked to try to exit that credit, and we're successful in doing so. That's the biggest driver. I'm not sure there are other big drivers in there. I think that's the main one.

Erik Zwich (Managing Director)

Got it. That makes sense. Thanks, Ed. And then just turning to kind of the pipeline and opportunities you're seeing today, we've heard from other BDCs that operate further up market, the upper middle market and middle market, that competition has become a little bit more intense. Curious what you're seeing kind of in your lower middle market focus in terms of spread, leverage, covenants relative to maybe 6 or 12 months ago. Have you noticed a market change there?

Edward P. Ross (Chairman and CEO)

I do think relative to 12 months ago, I mean, it's a different environment. 12 months ago, there were a lot of folks that were thinking about banks, quite frankly, a fair number of private lenders that were not far from just being on the sidelines. That situation has changed. I think most people, other than certain banks that have retracted, are in the market. So there is an increased level of competition from 12 months ago. I think you are seeing that in spreads. Spreads, if I were to pick a number, it's probably 50 basis points. It depends on what structure, right, for us, whether it's a dollar-one first lien investment or if it's a first-out, last-out structure.

Generally speaking, there is an increase in the level of competition because I think people a year ago were very, very worried about what's next. Now, just given the resiliency of the economy, I think folks are more both from an acquisition and M&A perspective on the equity side as well as the lending side. I think folks are more interested in transacting and kind of see the resiliency economy and are comfortable with that.

Erik Zwich (Managing Director)

Got it. And then last one, just thinking about interest rate sensitivity. I know you've got a portion of the debt investments that are fixed. So I think the market's still trying to figure out exactly when the shape of the kind of curve or the kind of short-rate interest rates go down, but it seems to be that that's more likely than going up. So wondering if you could just kind of remind me the sensitivity to earnings for maybe each 25 basis points potential cut, how that would impact earnings?

Edward P. Ross (Chairman and CEO)

Shelby, do you want to take this one? You want me to do it? Either.

Shelby Sherard (CFO)

Why don't you take a crack at it? And then the other thing, Eric, I would point out, for more details we do have a sensitivity chart disclosed in our 10-K where you can kind of see some calibrations based off of various increases or decreases in underlying interest rates.

Edward P. Ross (Chairman and CEO)

So Eric, just taking a shot at it. So 25 basis points would probably create a reduction of, call it, $1.25 million. These are estimates. Reduction in our NII, assuming no movements in the incentive fees. So if you doubled that to 50 basis points, it'd be $2.5 million. And 100 basis points would be $5 million. So that's how I hopefully, that's helpful. And I do think there's a sensitivity table in the 10-K that hopefully will be helpful as well.

Erik Zwich (Managing Director)

Yeah. That's great. I'll definitely add that into the table.

Shelby Sherard (CFO)

Yeah. And the only thing I would add, Eric, is that it's not entirely linear just because we do have some floors on a variety of our debt investments.

Erik Zwich (Managing Director)

No, that's great color too. I'll check out the table. And I always like to ask too just because, as we know, those sensitivity analyses, you've got to make some assumptions in terms of if it's a shock or more gradual and then if there's twists in a curve, things of that nature. So I appreciate the commentary. Thanks, Ed Ross. That's all for me today.

Edward P. Ross (Chairman and CEO)

Yep. Thank you, Eric. Good talking to you.

Operator (participant)

This concludes our question and answer session. I would like to turn the conference back over to Edward Ross for any closing comments.

Edward P. Ross (Chairman and CEO)

Thank you, Drew. Thank you, everyone, for joining us this morning. We look forward to speaking with you on our first quarter call in early May. Have a great day and a great weekend.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.