Welcome to the StoneCastle Financial Corp. Q3 2021 Investor Conference Call. . Now I would like to turn the call over to Julie Muraco, Investor Relations of StoneCastle Financial. Please go ahead.

Before we begin this conference call, I'd like to remind everyone that certain statements made during the call may be considered forward-looking statements based on current management expectations that involve substantial risks and uncertainties. Actual results may differ materially from the results stated in or implied by these forward-looking statements. This would depend on numerous factors, such as changes in securities or financial markets or general economic conditions; the volume of sales and purchases of shares of common stock; the continuation of investment advisory, administrative and service contracts; and other risks discussed from time to time in the company's filings with the SEC, including annual and semiannual reports of the company. StoneCastle Financial has based the forward-looking statements included in this presentation on information available to us as of September 30, 2021. The company undertakes no duty to update any forward-looking statements made herein. All forward-looking statements speak only as of today, November 10, 2021. In today's call, StoneCastle Financial's management will be providing prepared remarks and commencing with this call, investors will have the opportunity to address their questions directly to Investor Relations and management via phone and e-mail through the contact information on our website. We will not have a formal Q&A following management's remarks. Now I will turn the call over to Sanjai Bhonsle.

Thank you, Julie. Good afternoon, and welcome to StoneCastle Financial's Third Quarter Investor Call for 2021. Along with Julie, here with me today is Pat Farrell, our CFO. During today's presentation, I will briefly comment on the banking industry and the credit markets before commenting on the company. Then I will provide StoneCastle Financial's quarterly results and portfolio review, and Pat will provide you with greater detail on our financial results. Turning off with the banking industry. Banks continue to show improvement in financial performance. In fact, during the third quarter, loan balances grew across the industry. Looking at the banking industry as a whole, reported net increases in total loans are being driven primarily by auto lending and credit cards. We hope the loan growth trends will continue. It will not only be accretive to bank earnings, but also it should be correlated to an increase in Tier 1 capital ratios. The community banks within the StoneCastle portfolio continue to be well capitalized into the third quarter with median common equity Tier 1 capital ratios reported at 13.09%. Now let me comment on the credit markets. Last week, the Federal Reserve announced that tapering would begin later this month through 2022. With a such continued stance on the transitory nature of inflation, short-term interest rates were held at current levels. However, the markets are beginning to factor in interest rate increases starting by mid-2022. The 10-year U.S. treasury yield ticked up slightly in the third quarter to end at 1.52% after starting the year below 1%. Corporate credit spreads were relatively stable in the third quarter, as was the case in Q2. As we have mentioned previously, our risen interest rate should also be accretive to bank earnings, all other things being constant. Our risen base rates should also…

Thank you, Sanjai. As I do each quarter, I will present the financial results by going through the components of the company's quarterly results in detail. The net asset value on September 30 was $21.86 per share, up $0.06 from the prior quarter. Now on to the breakdown of the NAV components. The NAV is comprised of 4 components: net investment income; realized capital gains and losses; the change in value of the portfolio's investments; and lastly, distributions paid during the period. Let's review these components. Gross income for the quarter was approximately $4.4 million or $0.63 per share. Net expenses for the quarter were $1.6 million or $0.23 per share, resulting in net investment income for the quarter of $2.8 million or $0.40 per share. As is the case every quarter, the timing of calls and paydowns impact the income generation of the company. Realized capital gains and losses in the quarter is the second component affecting the change in NAV. The net realized capital gains from investment activities were approximately $780,000 or $0.11 per share. The third component, changes in unrealized appreciation or depreciation of the portfolio, relates to how the value of the entire investment portfolio has changed from the previous quarter end to the current quarter end. For the third quarter, the change in net unrealized depreciation on investments and foreign currency transactions was approximately $530,000 or $0.07 per share. I want to point out that gains and losses from foreign currency hedging activities do not impact our net income. The fourth component affecting the change in net asset value is distributions. The regular cash distribution for the quarter was $0.38 per share, which was paid on September 28 to shareholders of record on September 21. In summary, we began the quarter with a net asset…

Thank you, Pat. I'd like to thank everyone on the call for listening in today. As always, if you have questions or would like to speak to us, please reach out to Julie, and she will schedule it. Have a good night and have a safe and healthy holiday season.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day. End of Q&A: