Financial Data and Key Metrics Changes - In Q4 2025, core earnings per share were reported at $0.02, while the full-year core loss per share was $0.35 [13] - Total expenses for 2025 were $438 million, a decrease of nearly 50% compared to 2023, with Q4 total core operating expenses at $88 million, a 40% improvement year-over-year [24][26] - The adjusted tangible equity ratio stood at 9.1% [25] Business Line Data and Key Metrics Changes - Earnest achieved its highest-ever refi loan origination volume of $634 million in Q4 2025, bringing full-year refi originations to $2.1 billion, more than doubling from the previous year [8][15] - In-school lending originated $401 million in new loans in 2025, marking a significant increase [9] - Consumer lending segment net income for Q4 was $25 million, down from $37 million in Q4 2024, primarily due to lower outstanding balances [18] Market Data and Key Metrics Changes - The delinquency rate for private loans increased from 2.48% in Q3 to 2.24% in Q4, while 31+ day delinquency rates rose from 6.1% to 6.3% [19] - The total delinquency rate for federal education loans improved slightly from Q3, declining from 18.1% to 17.5% [21] Company Strategy and Development Direction - The company is targeting total loan originations of $4 billion in 2026, representing a growth of approximately 60% over 2025 [9][26] - A shift towards a holding company management structure is underway, with a focus on reducing central costs and improving operational efficiency [11][12] - The company continues to invest in capabilities at Earnest and aims to leverage existing capital for growth [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's prospects for 2026, citing strong momentum in loan origination and improved capital efficiency [12][17] - The macroeconomic environment remains a concern, with management noting a deterioration in the economic outlook impacting delinquency rates [32][69] Other Important Information - The company completed its fourth securitization of the year in Q4 2025, totaling nearly $2.2 billion in term ABS financing [25] - Share repurchases totaled 2.1 million shares at an average price of $12.67, with a total of $41 million returned to shareholders through repurchases and dividends [25][26] Q&A Session Summary Question: What prompted the increase in reserves for the private legacy portfolio? - Management indicated that a comprehensive review of assumptions regarding life of loan cash flows led to adjustments, with a significant portion of the provision related to the macroeconomic scenario and delinquency trends [30][32] Question: What is the outlook for the personal loan product? - The personal loan product is still in a pilot phase, with initial results being encouraging, but it is not expected to impact financials significantly in 2026 [41] Question: What are the macro assumptions underpinning the guidance? - The guidance reflects consensus macroeconomic assumptions for unemployment and interest rates, which will be provided offline [62] Question: What is driving the deterioration in the private legacy portfolio? - Management noted that various factors, including macroeconomic conditions and borrower challenges, have contributed to the higher delinquency rates in the legacy portfolio [68][69]

Company Overview and Strategy - Main Street Capital Corporation (MAIN) focuses on Lower Middle Market (LMM) debt and equity investments, differentiating itself through its asset management business and internally managed structure[7] - The company targets LMM companies with annual revenue between $10 million and $150 million and annual EBITDA between $3 million and $20 million[8] - MAIN aims to provide shareholders with sustainable growth in net asset value and recurring dividends per share[9] Dividend and NAV Growth - MAIN has increased its monthly dividends by 136% from $0.33 per share in Q4 2007 to $0.78 per share declared for Q1 2026[11, 14] - Supplemental dividends of $1.20 per share were paid or declared during the last twelve months[11] - Net Asset Value (NAV) has grown by $19.93 per share (155%) since 2007[13] Investment Portfolio - The total investment portfolio consists of approximately 54% LMM, 37% Private Loan, 2% Middle Market, and 7% other investments at fair value[42] - The weighted-average effective yield of the total investment portfolio is 11.8%[45] - The LMM investment portfolio has debt yielding 12.7% and an average equity ownership of 38%[53] Financial Performance - Distributable Net Investment Income (DNII) for the year-to-date 2025 is $420.9 million[80] - The company's operating expense to assets ratio is approximately 1.3%[13, 85] - The contribution to net investment income from the Asset Management Business was $8.8 million in Q3 2025 and $25.4 million for the nine months ended September 30, 2025[28]