Greetings. Welcome to Gladstone Capital's Second Quarter Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.
I will now turn the call over to Mr. David Gladstone, Executive Officer. Mr. Gladstone, please go ahead.
Well, thank you, Rob. Nice introduction. Good morning, everybody. This is David Gladstone, Chairman. This is the quarterly earnings conference call for Gladstone Capital for the quarter ending March 31, 2021.
Thank you all for calling in. We're always happy to talk with our shareholders and those analysts that follow us. Welcome the opportunity to give you an update. Bob Marcotte, the President will be on in a minute, but first we're going to need to hear from our General Counsel to talk to you about the legal warnings About this presentation, Michael?
Thanks, David, and good morning. Today's report may include forward looking statements of the Securities Act of 1933 and the Or you can find the documents on the SEC's website and that's at www.sec. GOV. Now we undertake no obligation to publicly update or revise any of these forward looking statements whether as a result of new information, future events or otherwise As required by law, today's call is an overview of our results. So we ask that you review our press release and Form 10 Q both issued yesterday More detailed information, again, you can find these on the Investors page of our website.
With that, I'll turn the presentation over to Gladstone Capital's President, Bob
Thank you, Michael. Good morning and thank you all for dialing in this morning to discuss the results for Gladstone Capital for the quarter ended March 31, 2021. Originations for the quarter were strong, totaling $72,000,000 including 3 new proprietary investments. However, we had 3 exits during the period, which totaled $48,000,000 so net originations came in at $24,000,000 for the period. Interest income declined slightly to $11,900,000 over the prior quarter, driven mainly by a slight decrease in the weighted average Prepayments and dividend income rose with repayments and lifted total investment income to $12,900,000 which was unchanged relative to last quarter.
Add on to our 5 year senior notes offered last quarter. The add on was attractively priced to yield 4.28 percent And while it reduced our lower cost floating rate line borrowings, we expect floating rate borrowings to increase with asset growth And should we elect to call our higher cost senior notes due in 2024 later this year. In addition, we have now eliminated much of the risk associated with rising short term interest rates given most of our assets are currently supported by interest rate floors. Administrative costs and net management fees declined, which contributed to a drop in total expenses And net investment income rose to $6,400,000 or $0.195 per share. Net assets from operations rose to 21 $300,000 or $0.65 per share, which included $16,000,000 of net unrealized portfolio appreciation on the quarter And $1,200,000 in realized loss associated with the call of our 2023 senior note issue.
For the period, NAV rose $0.50 per share or 6.6 percent to $8.11 per share as of March 31. With respect to the portfolio, our portfolio continues to perform well And most of our investments are passed in a COVID related effects as indicated by the broad based asset appreciation last quarter. In addition, While our weighted average risk rating for the portfolio dropped slightly on the quarter, this was primarily due to Repayment of 2 very highly rated credits during the period. For the quarter, we did not experience any payment defaults in our 1 non Accrual investment, which represents 1.5% of our portfolio at fair value, has seen a material uptick In business volumes and we're optimistic that it will transition to earnings status this quarter. For the quarter, 3 of the top 4 appreciation contributors which represent roughly 60% of the appreciation on the quarter are associated with our equity positions in these businesses and are supported by pending sales.
The asset mix at the end of the quarter shifted materially in favor of 1st lien loans, which rose 8 points to 58% at cost, While second lien exposure declined to 32% of the portfolio at cost. Looking forward, Last quarter was active for originations as we absorbed a number of expected repayments and we were pleased to be able to achieve net Investment Portfolio Growth. We expect much of the same in the near term as market valuations and private market liquidity are driving an elevated level of refinancing and recapitalization activity and several sales processes deferred from 2020 Our nearing conclusion. As we have reiterated in the past couple of quarters, you can expect us to continue to target leverage Contributed to our leverage remaining below our target range. Based on our modest leverage position and reduced secured line borrowings, Now I'd like to turn the call over to Nicole Schultenbrand, the CFO for Gladstone Capital to provide details of the quarter's financial funds financial results for the quarter.
Nicole?
Thanks, Bob. Good morning, everyone. During the March quarter, Total interest income declined $200,000 or 1.6 percent to $11,900,000 primarily due to a small decline in the weighted average yield. The invested portfolio weighted average balance increased slightly by $10,700,000 or 2.4 percent to $454,100,000 compared to the The weighted average yield on the interest bearing portfolio declined by about 20 basis points to 10.6% compared to the prior quarter with the increased population of 1st lien loans. Other income rose by $200,000 compared to last quarter with the elevated level of Total expenses were largely unchanged declining $100,000 or 1.8 percent as higher interest costs associated with note offering were mitigated by a decline in administrative expenses and a reduction in management fees associated with the elevated originations during the quarter.
Net investment income for the quarter ended March 31 was $6,400,000 which was an increase of $100,000 compared to the prior quarter or $0.195 per share and covered 100 percent of our shareholder distribution. The net increase in net assets resulting from operations was $21,300,000 or $0.65 per share for the quarter ended March 31, 2021 compared to 12,300,000 or $0.38 per share for the quarter ended December 31, 2020. The current quarter increase was driven by $16,000,000 of net portfolio Appreciation as Bob covered earlier and a $1,200,000 loss that we recognized associated with the early redemption of our 2023 notes. Moving over to the balance sheet. As of March 31, total assets were $504,000,000 consisting of $493,000,000 in investments at fair value And $11,000,000 in cash and other assets.
Liabilities rose to $233,000,000 at March 31st And consisted primarily of $150,000,000 of newly issued 5.8% senior notes due 2026 $38,800,000 of 5.3% senior notes 2022. As of the end of the quarter, the advances under our line of credit were $41,000,000 and our weighted average borrowing cost was 4.6%. Net assets rose by $23,800,000 from the prior quarter end with $14,900,000 of net realized and unrealized portfolio appreciation And the issuance of approximately 906,000 common shares under our ATM program, which generated net proceeds of 8,900,000 NAV rose 6.6 percent from $7.61 per share at December 30 to $8.11 as of March 31, 2021. Our leverage as of March 31 was unchanged from the prior quarter end at 86% of net assets. And we currently have in excess of $100,000,000 of borrowing availability under our line of credit and expect to be able to announce the renewal and extension of our credit facility in coming weeks.
With respect to distribution, Gladstone Capital has remained committed to paying its stockholders in cash distribution And in April, our Board of Directors declared monthly distributions to our common stockholders of $0.685 per common share per month for April, May June, which is an annual rate of $0.78 per share. In addition, effective April 1, 2021, the advisor through March 31, 2022. This incentive fee reduction serves to increase the net earnings available for stockholder distribution And as the prevailing interest rates recover, we expect to revisit the level of distribution and restoration of the hurdle rates and incentive fees with the management company. The Board will meet in July to determine the monthly distribution to common stockholders for the following quarter. At the The distribution rate for our common stock and with the stock price at about $10.95 per share yesterday, the distribution run rate is now producing a yield of about 7 And now I'll turn it back to David to conclude.
All right. Thank you, Nicole. That was a good presentation. Bob and Michael all did a great job in informing our Stockholders and analysts that follow our company. In summary, it was a very busy first half of the fiscal year for Gladstone Capital and Company did well, had a busy 6 months.
For the 3 months, the team originated about $72,000,000 of new attractively priced Investments and lifted the asset base now over $500,000,000 Bob and the team also managed to keep non performing assets low at 1.5 of investments and posted a substantial level of assets appreciated, which lifted the net asset value, sometimes considered our book By $0.50 to about 6.6% in the last quarter. Enhancing the stability of the company's capital position and flexibility by issuing another $50,000,000 of very attractive priced senior term loans. It's nice to be in this position because you never know what the economy is going to turn and do. Maintaining leverage at a low end The company's peers provides the capacity to take additional middle market investment opportunities and grow their earnings in the coming quarters. In summary, the company continues to invest in midsized private businesses with good management.
Many of these investments are supported by midsized private Funds that are looking for experienced partners like our team here and this helps them get their acquisitions done and grow their businesses And that we've and they have invested in. This gives us an opportunity to make attractive interest paying loans to support our ongoing commitment to pay cash Distributions to shareholders. In short, it was a very good quarter. Now Rob, if you'll come on and tell callers how they can ask questions
Hello.
Yes, we're on the call. No questions?
No questions at this time, Mr. Gladstone.
Okay. So you'll just have to wait till
Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.