Robert T. Ladd, Chief Executive Officer of Stellus PBDC, stated, "We are pleased to report solid operating results in the first quarter in which we generated $0.30 per share of net investment income and maintained a stable net asset value. During the quarter, we funded $27 million of investments and received $22 million of repayments, bringing the total portfolio to $405 million at fair value. On April 14, 2026, we declared our 2026 second quarter monthly dividend of $0.34 per share in the aggregate."
FINANCIAL HIGHLIGHTS
($ in millions, except data relating to per share amounts and shares outstanding)
Three Months Ended
March 31, 2026
March 31, 2025
Amount
Per Share
Amount
Per Share
Net investment income
$3.97
$0.30
$3.31
$0.31
Net realized gain on investments
0.02
—
—
—
Net unrealized (depreciation) appreciation included in earnings
(0.19)
(0.01)
1.19
0.10
(Provision) benefit for taxes on net unrealized (appreciation) depreciation on investments
(0.14)
(0.01)
0.06
0.01
Net increase in net assets resulting from operations
$3.66
$0.28
$4.56
$0.42
Distributions
(4.60)
(0.35)
(3.88)
(0.36)
Net asset value
$196.45
$15.14
$165.48
$15.22
Weighted average shares outstanding
13,114,007
10,767,600
PORTFOLIO ACTIVITY
($ in millions)
As of
As of
March 31, 2026
December 31, 2025
Investments at fair value
$405.4
$400.1
Total assets
$410.6
$404.7
Net assets
$196.4
$199.6
Shares outstanding
12,973,271
13,121,397
Net asset value per share
$15.14
$15.21
Three Months Ended
March 31, 2026
March 31, 2025
New investments
$27.4
$36.8
Repayments of investments
(22.4)
(4.3)
Net activity
$5.0
$32.5
As of
As of
March 31, 2026
December 31, 2025
Number of portfolio company investments
76
74
Number of debt investments
72
71
Weight average yield of debt and other income producing investments(1)
Cash
8.8 %
9.3 %
Payment-in-kind ("PIK")
0.2 %
0.1 %
Fee amortization
0.3 %
0.4 %
Total
9.3 %
9.8 %
Weighted average yield on total investments(2)
Cash
8.5 %
9.0 %
PIK
0.2 %
0.1 %
Fee amortization
0.3 %
0.3 %
Total
9.0 %
9.4 %
(1)
The dollar-weighted average annualized effective yield is computed using the effective interest rate for the Company's debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors of our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expense or any sales load that may be paid by investors.
(2)
The dollar weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights such yields to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing equity positions and debt investments on non-accrual status.
Results of Operations
Investment income for the three months ended March 31, 2026 and 2025 totaled $9.5 million and $8.1 million, respectively, most of which was interest income from portfolio investments.
Gross operating expenses for the three months ended March 31, 2026 and 2025 totaled $6.3 million and $5.3 million, respectively. For the same periods, base management fees totaled $1.4 million and $1.0 million, income incentive fees totaled $0.7 million and $0.6 million, respectively; capital gains incentive (reversals) fees of $0.0 million and 0.2 million, which are not currently payable, respectively; fees and expenses related to the Company's borrowings totaled $3.5 million and $3.0 million (including interest and amortization of deferred financing costs), respectively; administrative expenses totaled $0.2 million and $0.1 million, respectively and other expenses totaled $0.5 million and $0.4 million, respectively. For the three months ended March 31, 2026 and 2025, the Company's investment advisor, Stellus Private BDC Advisor, LLC (the "Advisor"), waived $0.5 million and $0.3 million of management fees, respectively; $0.2 million of income incentive fees for both periods (waived as our shares were not listed on a national exchange), and $0.1 million and $0.1 million of expenses pursuant to expense support and conditional reimbursements from the Advisor, respectively, for net operating expenses of $5.5 million and $4.7 million, respectively.
For the three months ended March 31, 2026 and 2025, net investment income was $4.0 million and $3.3 million, or $0.30 and $0.31 per common share based on weighted average common shares outstanding of 13,114,007 and 10,767,600, respectively.
The Company's investment portfolio had a net change in unrealized (depreciation) appreciation of ($0.2) million and $1.2 million for the three months ended March 31, 2026 and 2025, respectively.
For the three months ended March 31, 2026 and 2025, net increase in net assets resulting from operations totaled $3.7 million and $4.6 million, or $0.28 and $0.42 per common share, based on weighted average common shares outstanding of 13,114,007 and 10,767,600, respectively.
Liquidity and Capital Resources
On September 30, 2022, the Company entered into a senior secured revolving credit agreement with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders (the "Credit Facility"). The Credit Facility, as amended, provides for borrowings up to a maximum of $300.0 million on a committed basis. As of March 31, 2026 and December 31, 2025, the Company had $137.5 million and $128.6 million in outstanding borrowings under the Credit Facility, respectively.
On August 1, 2024, the Company entered into a Loan Financing and Servicing Agreement (the "Loan Agreement") by and among Stellus Private Credit BDC SPV LLC ("PBDC SPV"), as borrower, the Company, as equityholder and servicer, Deutsche Bank AG, New York Branch, as facility agent, Citibank, N.A., as collateral agent and collateral custodian, Alter Domus (US) LLC, as collateral administrator, and the lenders that are party thereto from time to time (the "SPV Facility"). The SPV Facility, as amended, provides for $75.0 million of initial commitments with an accordion feature that allows for an additional $25.0 million of total commitments from new and existing lenders on the same terms and conditions as the existing commitments. As of both March 31, 2026 and December 31, 2025, the Company had $75.0 million in outstanding borrowings under the SPV Facility.
For the three months ended March 31, 2026, the Company sold 185,211 common shares of beneficial interest at a weighted-average price of $15.21 per share for aggregate net proceeds of $2.8 million, which included less than $0.1 million of organizational expense allocation pursuant to subscription agreements entered into between the Company and investors during the three months ended March 31, 2026. Additionally, the Company purchased 357,092 common shares of beneficial interest were validly tendered and not withdrawn prior to the expiration of the tender offer during the three months ended March 31, 2026 at a price equal to $15.21 per Share for an aggregate purchase price of approximately $5.4 million.
Distributions
During the three months ended March 31, 2026 and 2025, the Company declared aggregate distributions of $0.35 per share and $0.36, respectively ($4.6 million and $3.9 million in the aggregate, respectively. Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year. None of these dividends are expected to include a return of capital.
Recent Portfolio Activity
The Company invested in the following portfolio companies for the three months ended March 31, 2026:
Activity Type
Date
Company Name
Company Description
Investment Amount
Instrument Type
Add-On Investment
January 2, 2026
Bart & Associates, LLC*
Provider of content, information, tech-enabledservices, and hosts competitions for the U.S. equine industry
$
1,000,000
Senior Secured, First Lien
$
32,595
Equity
New Investment
January 9, 2026
Silver Corporate Holdings LLC
Senior-care focused placement platform
$
4,611,400
Senior Secured, First Lien
$
1,006,422
Revolver Commitment
$
387,436
Equity
Add-On Investment
January 15, 2026
GRC Java Holdings, LLC*
Specialty coffee platform
$
17,332
Equity
Add-On Investment
January 21, 2026
evolv Holdco, LLC*
Digital transformation consulting firm
$
4,530
Equity
Add-On Investment
February 2, 2026
BI Investors, LLC*
Provider of center-based applied behavioral analysis therapy services
$
4,467
Equity
Add-On Investment
February 3, 2026
Green Topco Holdings, LLC*
Cyber-security focused value-added reseller andassociated service provider
$
11,896
Equity
Add-On Investment
February 6, 2026
SP MWM Holdco LLC*
Provider of test and measurement services andequipment
$
113,721
Equity
Add-On Investment
February 9, 2026
Michelli, LLC*
Provider of test and measurement services andequipment
$
4,000,000
Delayed Draw Term Loan Commitment
New Investment
March 3, 2026
Precision Strategies, LLC
Strategic communications and marketing agency
$
4,524,350
Senior Secured, First Lien
$
1,177,716
Revolver Commitment
New Investment
March 6, 2026
Synergy Health Partners MSO, LLC
Provider of orthopedic and musculoskeletal care
$
7,274,448
Senior Secured, First Lien
$
1,866,885
Delayed Draw Term Loan Commitment
$
962,920
Revolver Commitment
$
300,126
Equity
Add-On Investment
March 24, 2026
Eskola LLC*
Provider of commercial re-roofing services
$
56,852
Equity
* Existing portfolio company
The Company realized the following portfolio companies for the three months ended ...
