Welcome to the ArrowMark Financial Corp. Q3 2022 Investor Conference Call. Now I would like to turn the call over to Julie Muraco, Investor Relations of ArrowMark Financial Corp.

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, which are 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. ArrowMark Financial has based the forward-looking statements included in this presentation on information available to us as of September 30, 2022, unless otherwise noted. The company undertakes no duty to update any forward-looking statement made herein. In today's call, the management of ArrowMark Financial will be providing prepared remarks. Investors have the opportunity to address their questions directly to management by calling Investor Relations at (212) 468-5441 or e-mailing investorrelations@arrowmarkfinancialcorp.com. Now, I will turn the call over to Sanjai Bhonsle, Chief Executive Officer of ArrowMark Financial.

Thank you, Julie. Good afternoon, and welcome to ArrowMark Financial's investor call for third quarter 2022. Along with Julie, here with me today are Dana Staggs, President; and Pat Farrell, our CFO. 2 In the next few minutes, I will briefly comment on the market environment, including factors affecting the credit markets. Then, I will provide ArrowMark Financial's quarterly results and portfolio review. Dana will provide details on the origination pipeline, and Pat will provide you with greater detail on our financial results. In regards to the markets, both the equity and credit markets continued to experience volatility in the third quarter. Most major indices declined, extending their year-to-date drawdowns as inflation and global recession fears intensified. Despite the risks to the economy, the U.S. Federal Reserve reiterates their commitments to combating inflation. As such, the Fed implemented 275 basis points increases to the Federal funds target rate during the quarter. After the quarter end, the Federal Reserve raised the Fed funds rate an additional 75 basis points, marking a total of 375 basis points increase this year and indicated that additional rate hikes were likely into 2023. With continued inflationary pressures and special focus on a tight labor market, we expect the Fed to continue on its current path of rate increases and anticipate a resulting slowdown in economic growth. Whether there is a hard or soft landing and despite all the volatility as a result of 2022 Fed hikes, we believe that our time-tested portfolio monitoring process enables us to better get ahead of credit concerns in our portfolio and prudently manage our NAV. For example, recently our diligence showed that one of our borrowers shifted its business focus, which deviated from our initial investment thesis. As a result, we reduced our exposure to this particular bank through…

Thank you, Sanjai. In the third quarter, industry-wide regulatory capital origination was steady throughout the quarter with an estimated issuance of $3 billion to $3.5 billion, bringing the year-to-date 2022 issuance to approximately $7 billion to $8.5 billion. The new issue market for reg cap is expected to meet 2021 issuance levels of $11 billion to $13 billion for 2022 as the asset class is increasingly considered a value-add core balance sheet management tool for large global banks. In the third quarter, we saw new issue spreads widened by approximately 150 to 200 basis points relative to the beginning of 2022. Regulatory capital continues to be one of the few asset classes that generated positive returns in the third quarter. However, as Sanjai mentioned, we continue to be opportunistic in our investment strategy to take advantage of volatile markets as we did in 2020 when during a short window, we were able to buy attractive regulatory capital investments at favorable discounts from four sellers in the secondary market. Moving onto community bank investments in the third quarter. The community banking space new issue market was relatively quiet as many banks who were able to take advantage of cheap financing in 2020 and 2021 and appear to be relatively well capitalized. We are waiting for further widening in this mostly fixed rate community banking security space as the Fed continues. Currently, the secondary market in this space is getting more attractive as rates widened to 6% and 7% versus 3% to 4% for most of 2021. Now, I will turn it back to Sanjai.

Thank you, Dana. We firmly believe that during these volatile times, the company is well-positioned to deliver superior financial results, benefiting from the strategic mix or floating rate reg cap and fixed income community bank investments. We believe ArrowMark Financial is the only public company that offers the opportunity to participate in regulatory capital investments. With this strategy and with the stock at a 9.2% yield, we believe ArrowMark Financial continues to offer exceptional value to investors. Now, I want to turn the call over to Pat Farrell, Chief Financial Officer of the company.

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 30th was $20.74 per share, down $0.20 from the prior quarter. The NAV is composed of four 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 $5.3 million or $0.75 per share. Total expenses for the quarter were $2 million or $0.29 per share, resulting in net investment income for the quarter of $3.3 million or $0.46 per share. As is the case every quarter, the timing of calls and paydowns impacts 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 $4.7 million or $0.65 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 quarter, the change in net unrealized depreciation on investments and foreign currency transactions was approximately $6.6 million or $0.92 per share. I want to point out the 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 $0.39 per share. The distribution of $0.39 per share was paid on September 29. In summary, we began the quarter with a net asset value of $20.94 per share. During the quarter, we generated net income…

Thank you, Pat. I would like to thank everyone on the call for listening in today. This will be the last conference call before the holidays. So, I'd like to take the time to wish everyone a wonderful holiday season as we close out 2022. On behalf of the entire team at ArrowMark Financial best wishes for the New Year. Good night and see you in 2023.

The 2022 third quarter financial call for ArrowMark Financial has now concluded. Thank you for attending today's presentation. You may now disconnect. End of Q&A: