8-K
CAPITAL SOUTHWEST CORP (CSWC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 2, 2026
CAPITAL SOUTHWEST CORPORATION
(Exact Name Of Registrant As Specified In Charter)
| Texas | 814-00061 | 75-1072796 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
8333 Douglas Avenue, Suite 1100
Dallas, Texas 75225
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (214) 238-5700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
|---|---|---|
| Common Stock, $0.25 par value per share | CSWC | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 2, 2026, Capital Southwest Corporation (the “Company”) issued a press release, a copy of which has been furnished as Exhibit 99.1 hereto.
The information furnished in this Current Report on Form 8-K under Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), except as shall be expressly set forth by reference in a future filing.
Item 7.01 Regulation FD Disclosure.
The Company expects to hold a conference call with analysts and investors on February 3, 2026. A copy of the investor presentation slides to be used by the Company on such conference call is furnished as Exhibit 99.2 to this Form 8-K and incorporated herein by reference.
The information set forth under this Item 7.01, including Exhibit 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference into any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release issued by Capital Southwest Corporation on February 2, 2026 |
| 99.2 | Investor presentation slides |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 2, 2026
| By: | /s/ Michael S. Sarner |
|---|---|
| Name: Michael S. Sarner | |
| Title: President and Chief Executive Officer |
Document
Exhibit 99.1
| 8333 Douglas Avenue, Suite 1100<br>Dallas, Texas 75225<br>T 214.238.5700<br>F 214.238.5701 |
|---|
Capital Southwest Announces Financial Results for Third Fiscal Quarter Ended December 31, 2025
Dallas, Texas – February 2, 2026 – Capital Southwest Corporation (“Capital Southwest,” “CSWC” or the “Company”) (Nasdaq: CSWC), an internally managed business development company focused on providing flexible financing solutions to support the acquisition and growth of middle market businesses, today announced its financial results for the third fiscal quarter ended December 31, 2025.
Third Quarter Fiscal Year 2026 Financial Highlights
•Total Investment Portfolio: $2.0 billion
◦Credit Portfolio of $1.8 billion
▪99% 1st Lien Senior Secured Debt
▪$241.4 million in new committed credit investments during the quarter
▪Weighted Average Yield on Debt Investments: 11.3%
▪Current non-accruals with a fair value of $29.2 million, representing 1.5% of the total investment portfolio
◦Equity Portfolio of $182.7 million
▪$2.6 million in new equity co-investments during the quarter
•Pre-Tax Net Investment Income: $34.6 million, or $0.60 per weighted average common share outstanding
•Estimated Undistributed Taxable Income ("UTI"): $1.02 per share as of December 31, 2025
•LTM Operating Leverage: 1.7% for the quarter ended December 31, 2025
•Dividends: Paid Regular Monthly Dividends of $0.1934 per share for each of October, November and December 2025 and $0.06 per share Supplemental Dividend in December 2025
◦Total Dividends for the quarter ended December 31, 2025 of $0.64 per share
•Net Realized and Unrealized Depreciation: $1.9 million, or 0.1% of total investments at fair value
◦$9.2 million of net appreciation related to the equity portfolio
◦$8.7 million of net depreciation related to the credit portfolio
◦$2.4 million net realized and unrealized income tax provision
•Balance Sheet:
◦Cash and Cash Equivalents: $42.6 million
◦Total Net Assets: $995.6 million
◦Net Asset Value (“NAV”) per Share: $16.75
In commenting on the Company’s results, Michael Sarner, President and Chief Executive Officer, stated, “The December quarter was another extremely active quarter on the origination front for Capital Southwest, with approximately $244 million of originations in eight new and 16 existing portfolio companies. Our portfolio continued to generate significant income for our shareholders, producing $0.60 of pre-tax net investment income per share. During the quarter, the Board of Directors again declared a regular monthly dividend of $0.1934 for each of January, February and March 2026 and a quarterly supplemental dividend of $0.06 to be paid in March 2026. On the capitalization front, we continued to efficiently raise equity capital during the quarter, raising approximately $53 million through our Equity ATM Program. Subsequent to quarter end, we formed a joint venture with another private credit asset manager, which will be an off-balance sheet private fund that primarily invests in first out senior secured debt opportunities in the lower middle market. We are excited about the opportunities this fund will provide moving forward and believe it will allow Capital Southwest to be competitive on a broader range of investment opportunities.”
Third Quarter Fiscal Year Investment Activities
During the quarter ended December 31, 2025, the Company originated $244.0 million in new commitments, consisting of investments in eight new portfolio companies totaling $199.4 million and add-on commitments in 16 portfolio companies totaling $44.6 million. New portfolio company originations were comprised of $197.3 million in first lien senior secured debt and $2.1 million in equity investments.
During the quarter ended December 31, 2025, the Company received proceeds of $89.1 million from six portfolio company prepayments and exits, generating net realized losses of $0.2 million. Total proceeds were comprised of $88.5 million from debt investments and $0.6 million from equity investments.
Third Fiscal Quarter 2026 Operating Results
For the quarter ended December 31, 2025, Capital Southwest reported total investment income of $61.4 million, compared to $56.9 million in the prior quarter. The increase in investment income was primarily attributable to an increase in interest income due to an increase in the average cost basis of investments held and an increase in arranger fees and prepayment fees received during the quarter.
For the quarter ended December 31, 2025, total operating expenses (excluding interest expense) were $8.8 million, compared to $6.9 million in the prior quarter. The increase was primarily attributable to an increase in accrued bonus compensation.
For the quarter ended December 31, 2025, interest expense was $18.1 million, compared to $16.0 million in the prior quarter. The increase is primarily attributable to an increase in average borrowings.
For the quarter ended December 31, 2025, total pre-tax net investment income was $34.6 million, compared to $34.0 million in the prior quarter.
For the quarter ended December 31, 2025, there was a tax benefit of $2.4 million, compared to a tax provision of $2.0 million in the prior quarter. The benefit includes a $2.4 million deferred tax benefit, which is primarily attributable to an increase in the tax basis of investments held at Capital Southwest Equity Investments, Inc., our wholly owned subsidiary that has elected to be treated as a corporation for U.S. federal income tax purposes.
During the quarter ended December 31, 2025, Capital Southwest recorded total net realized and unrealized losses on investments of $1.9 million, compared to $6.4 million of total net realized and unrealized losses in the prior quarter. For the quarter ended December 31, 2025, the total net realized and unrealized losses on investments reflected net realized and unrealized gains on equity investments of $9.2 million, net realized and unrealized losses on debt investments of $8.7 million and a net realized and unrealized income tax provision of $2.4 million. We also recognized a realized loss on extinguishment of debt of $2.2 million in connection with the redemption of the 3.375% Notes due 2026 (the "October 2026 Notes") and the 7.75% Notes due 2028 (the "August 2028 Notes"). The net increase in net assets resulting from operations was $32.9 million for the quarter, compared to $25.6 million in the prior quarter.
The Company’s NAV at December 31, 2025 was $16.75 per share, compared to $16.62 per share in the prior quarter. The increase in NAV per share from the prior quarter is primarily due to the issuance of common stock at a premium to NAV per share through the Equity ATM Program (as described below) and net appreciation on investments, partially offset by a net realized and unrealized income tax provision.
Liquidity and Capital Resources
At December 31, 2025, Capital Southwest had approximately $42.6 million in unrestricted cash and money market balances and $395.2 million of unused capacity under the Corporate Credit Facility (as defined below) and the SPV Credit Facility (as defined below). The regulatory debt to equity ratio at the end of the quarter was 0.89 to 1.
As of December 31, 2025, Capital Southwest had the following borrowings outstanding:
•$210.0 million of total debt outstanding on the Corporate Credit Facility
•$104.0 million of total debt outstanding on the SPV Credit Facility
•$224.2 million, net of amortized debt issuance costs, of the 5.125% convertible notes due November 2029
•$343.6 million, net of amortized debt issuance costs, of the 5.950% Notes due 2030
•$190.6 million, net of unamortized debt issuance costs, of SBA Debentures (as defined below)
In August 2016, CSWC entered into a senior secured credit facility (the “Corporate Credit Facility”) to provide additional liquidity to support its investment and operational activities. Borrowings under the Corporate Credit Facility accrue interest on a per annum basis at a rate equal to the applicable SOFR rate plus 2.15%. On August 2, 2023, CSWC entered into the Third Amended and Restated Senior Secured Revolving Credit Agreement that (1) increased commitments under the Corporate Credit Facility from $400 million to $435 million; (2) added an uncommitted accordion feature that could increase the maximum commitments up to $750 million; (3) extended the end of the Corporate Credit Facility's revolving period from August 9, 2025 to August 2, 2027 and extended the final maturity from August 9, 2026 to August 2, 2028; and (4) amended several financial covenants. As of December 31, 2025, the total commitments under the Corporate Credit Facility were $510 million provided by 11 lenders.
Capital Southwest SPV LLC ("SPV") is a wholly owned special purpose vehicle that was formed to hold investments for the SPV Credit Facility (as defined below) to support our investment and operating activities. On March 20, 2024, SPV entered into a special purpose vehicle financing credit facility (the "SPV Credit Facility"). The SPV Credit Facility included an initial commitment of $150 million. Pursuant to the terms of the loan agreement, on June 20, 2024, total commitments automatically increased from $150 million to $200 million. The SPV Credit Facility also includes an accordion feature that allows increases up to $400 million of total commitments from new and existing lenders on the same terms and conditions as the existing commitments. Borrowings under the SPV Credit Facility bear interest at three-month Term SOFR plus 2.50% per annum during the revolving period ending on March 20, 2027 and three-month Term SOFR plus an applicable margin of 2.85% thereafter. SPV (i) paid unused commitment fees of 0.10% through April 20, 2024 and (ii) pays unused commitment fees of 0.35% thereafter, on the unused lender commitments under the SPV Credit Facility, in addition to other customary fees. Under the SPV Credit Facility, SPV also pays a utilization fee based on the amount of borrowings utilized. The SPV Credit Facility matures on March 20, 2029.
In September 2025, the Company issued $350 million in aggregate principal amount of 5.950% Notes due 2030 (the "September 2030 Notes"). The September 2030 Notes were issued at a price of 99.345% of the aggregate principal amount of the September 2030 Notes, resulting in yield-to-maturity of 6.104%. The September 2030 Notes mature on September 18, 2030 and may be redeemed in whole or in part at any time prior to August 18, 2030, at par plus a "make-whole" premium, and thereafter at par. The September 2030 Notes bear interest at a rate of 5.950% per year, payable semi-annually in arrears on March 18 and September 18 of each year, beginning on March 18, 2026.
On October 13, 2025, the Company redeemed, in full, $150 million in aggregate principal amount of the issued and outstanding October 2026 Notes and redeemed, in full, $71.9 million in aggregate principal amount of the issued and outstanding August 2028 Notes. Each of the October 2026 Notes and the August 2028 Notes were redeemed at 100% of their principal amount, plus the accrued and unpaid interest thereon, through, but excluding, the redemption date. There was no "make-whole" premium required to be paid in connection with either redemption. The Company recognized a realized loss on extinguishment of debt, equal to the write-off of the related unamortized debt issuance costs, of approximately $2.2 million during the quarter ended December 31, 2025.
The Company has an "at-the-market" offering (the "Equity ATM Program"), pursuant to which the Company may offer and sell, from time to time through sales agents, up to $1 billion of shares of its common stock. During the quarter ended December 31, 2025, the Company sold 2,490,000 shares of its common stock under the Equity ATM Program at a weighted-average price of $21.11 per share, raising $52.6 million of gross proceeds. Net proceeds were $51.8 million after commissions to the sales agents on shares sold. As of December 31, 2025, the Company has $155.4 million available under the Equity ATM Program.
Our wholly owned subsidiaries, Capital Southwest SBIC I, LP (“SBIC I”) and Capital Southwest SBIC II, LP ("SBIC II" and together with SBIC I, the "SBIC Subsidiaries"), each received a license from the Small Business Administration (the
"SBA") to operate as a Small Business Investment Company ("SBIC") under Section 301(c) of the Small Business Investment Act of 1958, as amended, on April 20, 2021 and April 17, 2025, respectively. The SBIC licenses allow the SBIC Subsidiaries to obtain leverage by issuing SBA-guaranteed debentures ("SBA Debentures"), subject to the issuance of a leverage commitment by the SBA. SBA Debentures are loans issued to an SBIC that have interest payable semi-annually and a ten-year maturity. The interest rate is fixed shortly after issuance at a market-driven spread over U.S. Treasury Notes with ten-year maturities. For two or more SBICs under common control, the maximum amount of outstanding SBA Debentures cannot exceed $350 million. As of December 31, 2025, SBIC I had a total leverage commitment from the SBA in the amount of $175.0 million, all of which was drawn, and SBIC II had a total leverage commitment from the SBA in the amount of $40.0 million, of which $20.0 million was drawn.
Share Repurchase Program
On July 28, 2021, the Company's Board of Directors (the "Board") approved a share repurchase program authorizing the Company to repurchase up to $20 million of its outstanding shares of common stock in the open market at certain thresholds below its NAV per share, in accordance with guidelines specified in Rules 10b5-1(c)(1)(i)(B) and 10b-18 under the Securities Exchange Act of 1934, as amended. On August 31, 2021, the Company entered into a share repurchase agreement, which became effective immediately, and the Company will cease purchasing its common stock under the share repurchase program upon the earlier of, among other things: (1) the date on which the aggregate purchase price for all shares equals $20 million including, without limitation, all applicable fees, costs and expenses; or (2) upon written notice by the Company to the broker that the share repurchase agreement is terminated. During the quarter ended December 31, 2025, the Company did not repurchase any shares of the Company’s common stock under the share repurchase program.
Regular Monthly Dividend of $0.1934 Per Share and Quarterly Supplemental Dividend of $0.06 Per Share for Quarter Ended March 31, 2026
On November 19, 2025, the Board declared monthly regular dividends of $0.1934 per share for each of January, February and March 2026 and a quarterly supplemental dividend of $0.06 per share payable in March 2026, each of which is detailed in the table below.
The Company’s regular monthly dividends for the quarter ending March 31, 2026 will be payable as follows:
| Declared | Ex-Dividend Date | Record Date | Payment Date | Amount Per Share |
|---|---|---|---|---|
| 11/19/2025 | 1/15/2026 | 1/15/2026 | 1/30/2026 | $0.1934 |
| 11/19/2025 | 2/13/2026 | 2/13/2026 | 2/27/2026 | $0.1934 |
| 11/19/2025 | 3/13/2026 | 3/13/2026 | 3/31/2026 | $0.1934 |
The Company’s quarterly supplemental dividend for the quarter ending March 31, 2026 will be payable as follows:
| Declared | Ex-Dividend Date | Record Date | Payment Date | Amount Per Share |
|---|---|---|---|---|
| 11/19/2025 | 3/13/2026 | 3/31/2026 | 3/31/2026 | $0.06 |
| Total Regular Dividends per Share for Quarter Ending March 31, 2026: | $0.58 | |||
| --- | --- | |||
| Total Supplemental Dividend per Share for Quarter Ending March 31, 2026: | $0.06 | |||
| Total Dividends per Share for Quarter Ending March 31, 2026: | $0.64 |
When declaring dividends, the Board of Directors reviews estimates of taxable income available for distribution, which may differ from net investment income under generally accepted accounting principles. The final determination of taxable income for each year, as well as the tax attributes for dividends in such year, will be made after the close of the tax year.
Capital Southwest maintains a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of its registered stockholders who hold their shares with Capital Southwest’s transfer agent and registrar, Equiniti Trust Company. Under the DRIP, if the Company declares a dividend, registered stockholders who have opted into the
DRIP by the dividend record date will have their dividend automatically reinvested into additional shares of Capital Southwest's common stock.
Third Quarter 2026 Earnings Results Conference Call and Webcast
Capital Southwest has scheduled a conference call on Tuesday, February 3, 2026, at 11:00 a.m. Eastern Time to discuss the third quarter 2026 financial results. You may access the call by using the Investor Relations section of Capital Southwest's website at www.capitalsouthwest.com, or by using http://edge.media-server.com/mmc/p/dtd67vjy.
An audio archive of the conference call will also be available on the Investor Relations section of Capital Southwest’s website.
For a more detailed discussion of the financial and other information included in this press release, please refer to the Capital Southwest's Form 10-Q for the period ended December 31, 2025 to be filed with the Securities and Exchange Commission (the "SEC") and Capital Southwest’s Third Fiscal Quarter 2026 Earnings Presentation to be posted on the Investor Relations section of Capital Southwest’s website at www.capitalsouthwest.com.
About Capital Southwest
Capital Southwest Corporation (Nasdaq: CSWC) is a Dallas, Texas-based, internally managed business development company with approximately $2.0 billion in investments at fair value as of December 31, 2025. Capital Southwest is a middle market lending firm focused on supporting the acquisition and growth of middle market businesses with $5 million to $50 million investments across the capital structure, including first lien, second lien and non-control equity co-investments. As a public company with a permanent capital base, Capital Southwest has the flexibility to be creative in its financing solutions and to invest to support the growth of its portfolio companies over long periods of time.
Forward-Looking Statements
This press release contains historical information and forward-looking statements with respect to the business and investments of Capital Southwest, including, but not limited to, the statements about Capital Southwest's future performance and financial performance and financial condition, and the timing, form and amount of any distributions or supplemental dividends in the future. Forward-looking statements are statements that are not historical statements and can often be identified by words such as "will," "believe," "expect" and similar expressions and variations or negatives of these words. These statements are based on management's current expectations, assumptions and beliefs. They are not guarantees of future results and are subject to numerous risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement. These risks include risks related to: changes in the markets in which Capital Southwest invests; changes in the financial, capital, and lending markets; changes in the interest rate environment and its impact on our business and our portfolio companies; regulatory changes; tax treatment; our ability to operate the SBIC Subsidiaries as small business investment companies; the uncertainty associated with the imposition of tariffs and trade barriers and changes in trade policy and its impact on our portfolio companies and our financial condition; an economic downturn or recession and its impact on the ability of our portfolio companies to operate and the investment opportunities available to us; the impact of supply chain constraints on our portfolio companies; and the elevated levels of inflation and its impact on our portfolio companies and the industries in which we invests.
Readers should not place undue reliance on any forward-looking statements and are encouraged to review Capital Southwest's Annual Report on Form 10-K for the year ended March 31, 2025 and any subsequent filings with the SEC, including the "Risk Factors" sections therein, for a more complete discussion of the risks and other factors that could affect any forward-looking statements. Except as required by the federal securities laws, Capital Southwest does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.
Investor Relations Contact:
Michael S. Sarner, President and Chief Executive Officer
214-884-3829
| CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES | ||||||||
|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||||||
| (In thousands, except shares and per share data) | ||||||||
| December 31, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Investments at fair value: | ||||||||
| Non-control/Non-affiliate investments (Cost: $1,608,987 and $1,403,623, respectively) | $ | 1,607,833 | $ | 1,436,316 | ||||
| Affiliate investments (Cost: $349,820 and $304,824, respectively) | 350,001 | 292,891 | ||||||
| Control investments (Cost: $72,359 and $70,913, respectively) | 55,371 | 56,092 | ||||||
| Total investments (Cost: $2,031,166 and $1,779,360, respectively) | 2,013,205 | 1,785,299 | ||||||
| Cash and cash equivalents | 42,559 | 43,221 | ||||||
| Restricted cash | 1,650 | 1,650 | ||||||
| Receivables: | ||||||||
| Dividends and interest | 36,801 | 30,303 | ||||||
| Escrow | 1,988 | 1,926 | ||||||
| Other | 2,630 | 2,018 | ||||||
| Income tax receivable | 440 | 94 | ||||||
| Debt issuance costs (net of accumulated amortization of $12,468 and $10,357, respectively) | 7,573 | 9,266 | ||||||
| Other assets | 9,075 | 9,063 | ||||||
| Total assets | $ | 2,115,921 | $ | 1,882,840 | ||||
| Liabilities | ||||||||
| SBA Debentures (net of $4,375 and $4,082, respectively, of unamortized debt issuance costs) | $ | 190,625 | $ | 170,918 | ||||
| October 2026 Notes (net of $0 and $1,154, respectively, of unamortized debt issuance costs) | — | 148,846 | ||||||
| August 2028 Notes (net of $0 and $1,681, respectively, of unamortized debt issuance costs) | — | 70,194 | ||||||
| 2029 Convertible Notes (net of $5,783 and $6,893, respectively, of unamortized debt issuance costs) | 224,217 | 223,107 | ||||||
| September 2030 Notes (net of $6,360 and $0, respectively, of unamortized debt issuance costs) | 343,640 | — | ||||||
| Credit Facilities | 314,000 | 343,000 | ||||||
| Other liabilities | 29,950 | 23,038 | ||||||
| Accrued restoration plan liability | 540 | 555 | ||||||
| Income tax payable | 2,289 | 2,769 | ||||||
| Deferred tax liability | 15,026 | 16,780 | ||||||
| Total liabilities | 1,120,287 | 999,207 | ||||||
| Commitments and contingencies (Note 11) | ||||||||
| Net Assets | ||||||||
| Common stock, $0.25 par value: authorized, 75,000,000 shares at December 31, 2025 and March 31, 2025; issued, 59,456,961 shares at December 31, 2025 and 52,912,796 shares at March 31, 2025 | 14,864 | 13,228 | ||||||
| Additional paid-in capital | 1,057,225 | 959,123 | ||||||
| Total distributable (loss) earnings | (76,455) | (88,718) | ||||||
| Total net assets | 995,634 | 883,633 | ||||||
| Total liabilities and net assets | $ | 2,115,921 | $ | 1,882,840 | ||||
| Net asset value per share (59,456,961 shares outstanding at December 31, 2025 and 52,912,796 shares outstanding at March 31, 2025) | $ | 16.75 | $ | 16.70 | ||||
| CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except shares and per share data) | ||||||||
| Three Months Ended | Nine Months Ended | |||||||
| December 31, | December 31, | |||||||
| 2025 | 2024 | 2025 | 2024 | |||||
| Investment income: | ||||||||
| Interest income: | ||||||||
| Non-control/Non-affiliate investments | $ | 40,987 | $ | 37,789 | $ | 122,971 | $ | 114,346 |
| Affiliate investments | 7,326 | 4,767 | 19,413 | 14,253 | ||||
| Control investments | 500 | 333 | 1,801 | 975 | ||||
| Payment-in-kind interest income: | ||||||||
| Non-control/Non-affiliate investments | 3,513 | 2,717 | 7,262 | 7,025 | ||||
| Affiliate investments | 999 | 529 | 2,864 | 1,670 | ||||
| Control investments | 73 | — | 513 | — | ||||
| Dividend income: | ||||||||
| Non-control/Non-affiliate investments | 199 | 586 | 1,860 | 3,525 | ||||
| Affiliate investments | 3,549 | — | 8,283 | 51 | ||||
| Control investments | — | — | 24 | — | ||||
| Fee income: | ||||||||
| Non-control/Non-affiliate investments | 2,841 | 3,671 | 5,977 | 6,589 | ||||
| Affiliate investments | 690 | 525 | 1,649 | 1,443 | ||||
| Control investments | 27 | 8 | 74 | 75 | ||||
| Other income | 743 | 1,048 | 1,648 | 2,081 | ||||
| Total investment income | 61,447 | 51,973 | 174,339 | 152,033 | ||||
| Operating expenses: | ||||||||
| Compensation | 4,571 | 2,388 | 11,158 | 7,844 | ||||
| Share-based compensation | 1,290 | 1,544 | 3,703 | 4,306 | ||||
| Interest | 18,052 | 14,717 | 49,336 | 39,751 | ||||
| Professional fees | 1,200 | 998 | 3,751 | 3,450 | ||||
| General and administrative | 1,703 | 1,643 | 5,026 | 4,699 | ||||
| Total operating expenses | 26,816 | 21,290 | 72,974 | 60,050 | ||||
| Income before taxes | 34,631 | 30,683 | 101,365 | 91,983 | ||||
| Federal income, excise and other taxes | 2 | 474 | 2,249 | 1,016 | ||||
| Deferred taxes | (2,356) | (107) | (1,743) | 627 | ||||
| Total income tax (benefit) provision | (2,354) | 367 | 506 | 1,643 | ||||
| Net investment income | $ | 36,985 | $ | 30,316 | $ | 100,859 | $ | 90,340 |
| Realized gain (loss) | ||||||||
| Non-control/Non-affiliate investments | $ | (168) | $ | (12,889) | $ | 21,163 | $ | (22,374) |
| Affiliate investments | 1 | 84 | (3,564) | 251 | ||||
| Control investments | — | — | — | (260) | ||||
| Income tax benefit (provision) | 392 | — | (6,596) | — | ||||
| Total net realized gain (loss) on investments, net of tax | 225 | (12,805) | 11,003 | (22,383) | ||||
| Net unrealized (depreciation) appreciation on investments | ||||||||
| Non-control/Non-affiliate investments | 489 | (5,229) | (33,719) | (19,455) | ||||
| Affiliate investments | 170 | 7,745 | 11,984 | 7,193 | ||||
| Control investments | — | (354) | (2,166) | 408 | ||||
| Income tax provision | (2,817) | (3,009) | (287) | (2,720) | ||||
| Total net unrealized (depreciation) appreciation on investments, net of tax | (2,158) | (847) | (24,188) | (14,574) | ||||
| Net realized and unrealized (losses) gains on investments | (1,933) | (13,652) | (13,185) | (36,957) | ||||
| Realized loss on extinguishment of debt | (2,156) | (387) | (2,156) | (387) | ||||
| Realized loss on disposal of fixed assets | — | (9) | (2) | (9) | ||||
| Net increase in net assets from operations | $ | 32,896 | $ | 16,268 | $ | 85,516 | $ | 52,987 |
| Pre-tax net investment income per share - basic | $ | 0.60 | $ | 0.64 | $ | 1.81 | $ | 1.95 |
| Net investment income per share – basic | $ | 0.64 | $ | 0.63 | $ | 1.80 | $ | 1.92 |
| Net increase in net assets from operations – basic | $ | 0.57 | $ | 0.34 | $ | 1.52 | $ | 1.13 |
| Net increase in net assets from operations - diluted | $ | 0.54 | $ | 0.34 | $ | 1.46 | $ | 1.12 |
| Weighted average common shares outstanding – basic | 57,530,942 | 48,315,228 | 55,538,000 | 47,079,617 | ||||
| Weighted average common shares outstanding – diluted | 66,842,796 | 54,121,844 | 64,824,145 | 49,022,194 |
q32026earningspresentati
Q3 2026 Earnings Presentation 8333 Douglas Avenue, Suite 1100 | Dallas, Texas 75225 | 214.238.5700 | capitalsouthwest.com February 3, 2026 Capital Southwest Corporation
Page 2 Important Notices • These materials and any presentation of which they form a part are neither an offer to sell, nor a solicitation of an offer to purchase, any securities of Capital Southwest. • These materials and the presentations of which they are a part, and the summaries contained herein, do not purport to be complete and no obligation to update or otherwise revise such information is being assumed. Nothing shall be relied upon as a promise or representation as to the future performance of Capital Southwest. Such information is qualified in its entirety by reference to the more detailed discussions contained elsewhere in Capital Southwest’s public filings with the Securities and Exchange Commission (the "SEC"). • There is no guarantee that any of the estimates, targets or projections illustrated in these materials and any presentation of which they form a part will be achieved. Any references herein to any of the Capital Southwest’s past or present investments or its past or present performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments by Capital Southwest will be profitable or will equal the performance of these investments. • The information contained herein has been derived from financial statements and other documents provided by the portfolio companies unless otherwise stated. • Past performance is not indicative of future results. In addition, there can be no assurance that unrealized investments will be realized at the expected multiples shown as actual realized returns will depend on, among other factors, future operating results of each of Capital Southwest’s current portfolio companies, the value of the assets and economic conditions at the time of disposition, any related transaction costs, and the timing and manner of sale, all of which may differ from the assumptions on which Capital Southwest’s expected returns are based. In many instances, Capital Southwest will not determine the timing or manner of sale of its portfolio companies. • Capital Southwest has filed a registration statement (which contains the prospectus) with the SEC for any offering to which this communication may relate and may file one or more prospectus supplements to the prospectus in the future. Before you invest in any of Capital Southwest's securities, you should read the registration statement and the applicable prospectus and prospectus supplement(s), including the information incorporated by reference therein, in order to fully understand all of the implications and risks of an offering of Capital Southwest's securities. You should also read other documents Capital Southwest has filed with the SEC for more complete information about Capital Southwest and any offering of its securities. You may get these documents for free by visiting EDGAR on the SEC's website at www.sec.gov. Alternatively, Capital Southwest will arrange to send you any applicable prospectus and prospectus supplement(s) if you request such materials by calling us at (214) 238-5700. These materials are also made available, free of charge, on our website at www.capitalsouthwest.com. Information contained on our website is not incorporated by reference into this communication.
Page 3 • This presentation contains forward-looking statements relating to, among other things, the business, market conditions, financial condition and results of operations of Capital Southwest (including statements about expected improvements to Capital Southwest's operating leverage as well as asset growth), the anticipated investment strategies and investments of Capital Southwest, and future market demand. Any statements that are not statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, preceded by, followed by, or include words such as "believe," "expect," "intend," "plan," "should" or similar words, phrases or expressions or the negative thereof. These statements are made on the basis of the current beliefs, expectations and assumptions of the management of Capital Southwest and speak only as of the date of this presentation. There are a number of risks and uncertainties that could cause Capital Southwest’s actual results to differ materially from the forward-looking statements included in this presentation. • These risks include risks related to: changes in the markets in which Capital Southwest invests; changes in the financial, capital, and lending markets; changes in the interest rate environment and its impact on our business and our portfolio companies; the impact of supply chain constraints on our portfolio companies; elevated levels of inflation and its impact on Capital Southwest's portfolio companies and the industries in which it invests; regulatory changes; tax treatment and general economic and business conditions; our ability to operate our wholly owned subsidiaries, Capital Southwest SBIC I, LP and Capital Southwest SBIC II, LP, as small business investment companies ("SBIC"); the uncertainty associated with the imposition of tariffs and trade barriers and changes in trade policy and its impact on our portfolio companies and our financial condition; and an economic downturn or recession and its impact on the ability of our portfolio companies to operate and the investment opportunities available to us. • For a further discussion of some of the risks and uncertainties applicable to Capital Southwest and its business, see Capital Southwest’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025 and its subsequent filings with the SEC. Other unknown or unpredictable factors could also have a material adverse effect on Capital Southwest’s actual future results, performance, or financial condition. As a result of the foregoing, readers are cautioned not to place undue reliance on these forward-looking statements. Capital Southwest does not assume any obligation to revise or to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, or otherwise, except as may be required by law. Forward-Looking Statements
Page 4 Chris T. Rehberger Chief Financial Officer, Treasurer and Secretary • Joined Capital Southwest in September 2015 • Former VP at American Capital • 20+ years of BDC experience • BS – University of Virginia | MBA – University of Virginia CSWC Senior Management Josh S. Weinstein Senior Managing Director and Chief Investment Officer • Joined Capital Southwest in June 2015 • Former Principal at H.I.G. WhiteHorse • 20+ years of investment experience in middle market debt and equity • BA – Columbia University | MBA – University of Southern California • Chartered Financial Analyst Michael S. Sarner President and Chief Executive Officer • Joined Capital Southwest in June 2015 • Former SVP Treasurer at American Capital • 30+ years of financial, treasury and BDC experience • BA – James Madison | MBA – George Washington University Ryan P. Kelly Managing Director and Investment Committee Member • Joined Capital Southwest in August 2010 • Previous experience at Houlihan Lokey • 15+ years of BDC experience • BBA – University of Texas Tabitha D. Geiger Chief Compliance Officer • Joined Capital Southwest in April 2024 • Former Senior MD at IQ-EQ • 8+ years of compliance experience • BASc – Texas A&M University | JD – South Texas College Amy L. Baker Executive Vice President of Accounting • Joined Capital Southwest in August 2017 • Former Assistant Controller at MoneyGram and former Senior Manager at Deloitte • 20+ years of accounting experience • BS – University of Illinois | MSA – University of Illinois • Certified Public Accountant
Page 5 Michael S. Sarner President and Chief Executive Officer Chris T. Rehberger Chief Financial Officer, Treasurer and Secretary Josh S. Weinstein Senior Managing Director and Chief Investment Officer Amy L. Baker Executive Vice President of Accounting Conference Call Participants
Page 6 • CSWC was formed in 1961, and elected to be regulated as a BDC in 1988 • Publicly-traded on Nasdaq: Common Stock (“CSWC”) • Internally Managed BDC with RIC tax treatment for U.S. federal income tax purposes • 36 employees based in Dallas, Texas • Total Balance Sheet Assets of $2.1 B as of December 31, 2025 • Operate Capital Southwest SBIC I, LP and Capital Southwest SBIC II, LP as wholly-owned subsidiaries • Maintained investment grade issuer ratings of Baa3 from Moody's and BBB- from Fitch CSWC Company Overview CSWC is a middle-market lending firm focused on supporting the acquisition and growth of middle-market companies across the capital structure
Page 7 CSWC leads financing transactions, primarily backing private equity firms that generally fit the following parameters • Flexible financing solutions to fund growth, changes of control, or other corporate events • Investments are diverse among industries, geographic regions, and end markets • Companies with EBITDA between $3 MM and $25 MM • Typical leverage of 2.5x – 4.5x Debt to EBITDA through CSWC debt position and Loan-to-Value of 25% - 50% • Investments generally range in size from $5 MM to $50 MM • Both sponsored and non-sponsored deals • Floating rate first lien debt securities • Frequently make equity co-investments alongside CSWC debt Lower Middle Market Credit Strategy
Page 8 • Q3 2026 Pre-Tax Net Investment Income (“NII”) of $34.6 MM or $0.60 per share • Declared monthly regular dividend of $0.1934 per share for each of January, February, and March 2026 ($0.58 per share quarterly) ◦ In addition, declared a quarterly supplemental dividend of $0.06 per share for the quarter ending March 31, 2026 • Undistributed Taxable Income ("UTI") of $1.02 per share as of December 31, 2025 • Investment Portfolio at Fair Value of approximately $2.0 B • Increased Net Asset Value per share to $16.75 as of December 31, 2025 from $16.62 per share as of September 30, 2025 • Redeemed in full $150 MM October 2026 Notes and $71.9 MM August 2028 Notes • Raised $52.6 MM in gross proceeds through Equity ATM Program during the quarter ◦ Sold shares at weighted-average price of $21.11 per share, or 127% of the prevailing NAV per share • Regulatory Debt to Equity ended at 0.89x for the quarter • $395 MM of total availability under credit facilities, $20 MM available on SBA leverage commitment to SBIC II, and $43 MM in cash and cash equivalents as of quarter end Q3 2026 Highlights Financial Highlights
Page 9 Investment Activity Highlights • During the quarter, CSWC originated $244.0 MM in total new committed investments ($174.7 MM funded at close) to eight new portfolio companies and sixteen existing portfolio companies ◦ Committed investments to new portfolio companies consisted of $197.3 MM in first lien debt and $2.1 MM in equity • During the quarter, CSWC exited five debt investments and one equity investment generating total proceeds of $89.1 MM and a weighted average IRR of 13.1% ◦ Total proceeds were comprised of $88.5 MM from debt investments and $0.6 MM from equity investments • In the last twelve months, CSWC originated $754.6 MM in total new committed investments and generated $235.5 MM in proceeds from portfolio investment exits ◦ In the last twelve months, CSWC has generated net realized gains of $44.5 MM on exits of equity investments • Cumulative weighted average IRR of 13.0% on 108 portfolio company exits, generating $1.4 B in proceeds since launch of credit strategy in January 2015 Q3 2026 Investment Activity
Page 10 $16.62 $0.60 $(0.58) $(0.06) $0.01 $(0.04) $0.17 $0.03 9/30/2025 NAV/Share Pre- Tax Net I nvest ment In come Regular Dividend Supplem ental Dividend Net C hange in In vest ment P ortfo lio Valu e Real ize d/Unrea lize d Tax Accr etio n fro m Equity Iss uance Other Corporat e 12/31/2025 NAV/Share $15.50 $16.00 $16.50 $17.00 $17.50 NAV per Share Bridge for Quarter Ended 12/31/25 Earnings / Dividends ($0.04) per Share Investment Portfolio Performance ($0.03) per Share Other Corporate $0.20 per Share $16.75
Page 11 CSWC Investment Portfolio Composition (1) At December 31, 2025 and September 30, 2025, we had equity ownership in approximately 66% and 66%, respectively, of our investments (2) The weighted-average annual effective yields were computed using the effective interest rates during the quarter for all debt investments at cost as of December 31, 2025, including accretion of original issue discount but excluding fees payable upon repayment of the debt instruments (3) The weighted average annual effective yields on total investments were calculated by dividing total investment income, exclusive of non-recurring fees, by average total investments at fair value (4) Includes CSWC debt investments only. Weighted average EBITDA metric is calculated using investment cost basis weighting. For the quarters ended December 31, 2025 and September 30, 2025, fourteen portfolio companies and thirteen portfolio companies, respectively, are excluded from this calculation due to a reported debt to adjusted EBITDA ratio that was not meaningful. (5) Includes CSWC debt investments only. Calculated as the amount of each portfolio company’s debt (including CSWC’s position and debt senior or pari passu to CSWC’s position, but excluding debt subordinated to CSWC’s position) in the capital structure divided by each portfolio company’s adjusted EBITDA. Weighted average leverage is calculated using investment cost basis weighting. For the quarters ended December 31, 2025 and September 30, 2025, fourteen portfolio companies and thirteen portfolio companies, respectively, are excluded from this calculation due to a reported debt to adjusted EBITDA ratio that was not meaningful. Maintaining appropriate portfolio leverage while receiving attractive risk- adjusted returns Investment Portfolio - Statistics (in $000's) 9/30/2025 12/31/2025 Total CSWC Portfolio Total CSWC Portfolio Number of Portfolio Companies 126 132 Total Cost $1,896,526 $2,031,166 Total Fair Value $1,877,907 $2,013,205 Average Hold Size Debt Investments (at Fair Value) $15,511 $16,199 Average Hold Size Equity Investments (at Fair Value) $2,068 $2,101 % First Lien Investments (at Fair Value) 89.9% 90.0% % Second Lien Investments (at Fair Value) 0.9% 0.8% % Subordinated Debt Investments (at Fair Value) 0.1% 0.1% % Equity (at Fair Value) (1) 9.1% 9.1% Wtd. Avg. Yield on Debt Investments (2) 11.5% 11.3% Wtd. Avg. Yield on Total Investments (3) 12.0% 11.9% Wtd. Avg. EBITDA of Issuer ($MM's) (4) $19.6 $16.1 Wtd. Avg. Leverage through CSWC Security (5) 3.5x 3.6x
Page 12 Approximately 90% of all debt investments are currently rated a "1" or "2" as credit portfolio continues to demonstrate solid performance Investment Rating 9/30/2025 12/31/2025 # of Companies Fair Value ($MM) % of Portfolio (FV) # of Companies Fair Value ($MM) % of Portfolio (FV) 1 18 $340.9 20.0% 17 $328.4 17.9% 2 75 $1,214.2 71.2% 77 $1,314.2 71.8% 3 13 $126.2 7.4% 14 $158.3 8.7% 4 3 $21.2 1.2% 4 $25.8 1.4% 5 1 $3.8 0.2% 1 $3.8 0.2% Total 110 $1,706.3 100.0% 113 $1,830.5 100.0% Quarter-over-Quarter Investment Rating Migration Note: We utilize an internally developed investment rating system to rate the performance and monitor the expected level of returns for each debt investment in our portfolio. The investment rating system takes into account both quantitative and qualitative factors of the portfolio company and the investments held therein. Investment Ratings range from a rating of 1, which represents the least amount of risk in our portfolio, to 5, which indicates that the investment is performing materially below underwriting expectations.
Page 13 History of Value Creation $17.68 $17.38 $18.63 $20.90 $22.71 $21.97 $24.90 $28.27 $30.06 $32.93 $35.40 $35.93 $36.60 $37.37 $17.68 $17.34 $17.80 $19.08 $18.62 $15.13 $16.01 $16.86 $16.37 $16.77 $16.70 $16.59 $16.62 $16.75 $0.26 $0.26 $1.16 $2.31 $2.71 $3.41 $3.66 $3.89 $4.12 $4.18 $4.24 $4.30 $0.04 $0.57 $1.56 $2.93 $4.53 $6.18 $8.00 $10.03 $12.27 $14.58 $15.16 $15.74 $16.32 Net Asset Value Per Share Cumulative Special/Supplemental Dividends Paid Per Share Cumulative Regular Dividends Paid Per Share 9/30/2015 3/31/2016 3/31/2017 3/31/2018 3/31/2019 3/31/2020 3/31/2021 3/31/2022 3/31/2023 3/31/2024 3/31/2025 6/30/2025 9/30/2025 12/31/2025 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 Total Value (Net Asset Value + Cumulative Dividends Paid) Increase of $19.69 per share since Launching Credit Strategy
Page 14 • In the last twelve months ended 12/31/2025, CSWC generated $2.38 per share in Pre-Tax NII and paid out $2.32 per share in Regular Dividends • Cumulative Pre-Tax NII Regular Dividend Coverage of 110% since launch of credit strategy in 2015 • Total of $4.36 per share Special and Supplemental Dividends declared since launch of credit strategy in 2015 • Estimated UTI of $1.02 per share as of December 31, 2025 Track Record of Consistent Dividends Continues Dividend Yield – Quarterly Annualized Total Dividend / CSWC Share Price at Qtr. End D iv id en d Pe r Sh ar e $0.54 $0.97 $0.48 $0.63 $0.50 $0.57 $0.58 $0.59 $0.62 $0.63 $0.63 $0.63 $0.64 $0.63 $0.64 $0.64 $0.64 $0.64 $0.64 $0.44 $0.47 $0.48 $0.48 $0.50 $0.52 $0.53 $0.54 $0.56 $0.57 $0.57 $0.57 $0.58 $0.58 $0.58 $0.58 $0.58 $0.58 $0.58 $0.10 $0.50 $0.05 $0.05 $0.05 $0.06 $0.06 $0.06 $0.06 $0.06 $0.05 $0.06 $0.06 $0.06 $0.06 $0.06 $0.15 Regular Dividend Per Share Supplemental Dividend Per Share Special Dividend Per Share 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 3/31/2025 6/30/2025 9/30/2025 12/31/2025 3/31/2026 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 8.6% 15.3% 8.1% 13.7% 13.3% 13.0% 11.8% 12.0% 10.8% 10.6% 10.1% 9.7% 10.1% 11.5% 11.5% 11.6% 11.7% 11.6%
Page 15 Granular Credit Portfolio Heavily Weighted Towards First Lien Investments 99% of credit portfolio in first lien senior secured loans with an average investment hold size of 0.9% as of 12/31/2025 Credit Portfolio Heavily Weighted to First Lien $ (M illi on s) Average H old S ize % $93 $167 $239 $368 $474 $573 $794 $1,038 $1,345 $1,606 $1,614 $1,706 $1,830 5.6% 3.6% 3.8% 2.8% 2.3% 1.9% 1.5% 1.3% 0.9% 0.9% 0.9% 0.9% 0.9% Sub-Debt Second Lien First Lien Average Hold Size % 3/31/2016 3/31/2017 3/31/2018 3/31/2019 3/31/2020 3/31/2021 3/31/2022 3/31/2023 3/31/2024 3/31/2025 6/30/2025 9/30/2025 12/31/2025 $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 —% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 64% 28% 8% 82% 10% 8% 4% 10% 86% 90% 8% 2% 6% 92% 2% 93% 7% 96% 4% 43% 41% 16% 97% 3% 99% 1% 99% 1% 99% 1% 99% 1%
Page 16 CSWC Portfolio Mix as of December 31, 2025 at Fair Value Current Investment Portfolio (By Type) Current Investment Portfolio (By Industry) Current Investment Portfolio of approximately $2.0 B continues to be heavily weighted towards first lien loans and diversified across industries First Lien 90.0% Second Lien 0.8% Senior Subordinated Debt 0.1% Equity 9.1% Healthcare Services 13% Consumer Products 10% Media & Marketing 9% Consumer Services 9% Transportation & Logistics 6% Food, Agriculture & Beverage 6% Business Services 5% Financial Services 4% Note: Equity represents equity co-investments across 87 portfolio companies.
Page 17 Operating Leverage Trend Continued asset growth should drive further improvements in Operating Leverage Period Ending To ta l A ss et s ( $M M ) O perating Expenses as % of A vg A ssets $284 $326 $417 $552 $585 $736 $974 $1,258 $1,557 $1,883 $1,882 $2,021 $2,116 4.9% 4.2% 3.7% 3.0% 2.8% 2.4% 2.2% 1.9% 1.7% 1.7% 1.7% 1.6% 1.7% FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 Q1 FY 26 Q2 FY 26 Q3 FY 26 $0 $500 $1,000 $1,500 $2,000 $2,500 1% 2% 3% 4% 5% 6% 7% Total Assets Operating Expenses as % of Average Total Assets Note: Operating Leverage calculated as last twelve months operating expenses (excluding interest expense) divided by average annual assets
Page 18 Significant Unused Debt Capacity with Long-Term Duration Debt Obligations Total Commitments Interest Rate Maturity Principal Drawn Undrawn Commitment Corporate Credit Facility $510.0 MM Term SOFR + 2.15% August 2028 $210.0 MM $299.1 MM (1) SPV Credit Facility $200.0 MM Term SOFR + 2.50% March 2029 $104.0 MM $96.0 MM 2029 Convertible Notes (2) $230.0 MM 5.125% November 2029 $230.0 MM N/A September 2030 Notes (3) $350.0 MM 5.950% September 2030 $350.0 MM N/A SBA Debentures - SBIC I (4) $175.0 MM 4.42% (5) September 2031 (6) $175.0 MM $0.0 MM SBA Debentures - SBIC II (4) $40.0 MM 4.54% (7) N/A (8) $20.0 MM $20.0 MM P rin ci pa l P ay m en ts ($ M M ) Long-Term Debt Obligations (Calendar Year) $210.0 $334.0 $545.0 $104.0 $210.0 $230.0 $350.0 $175.0 $20.0 SPV Facility Corporate Credit Facility 2029 Convertible Notes 2030 Convertible Notes SBA Debentures - SBIC I SBA Debentures - SBIC II CY 2025 CY 2026 CY 2027 CY 2028 CY 2029 CY 2030 - Thereafter $0 $150 $300 $450 $600 (1) Net of $0.9 MM in letters of credit outstanding (2) Redeemable in whole or in part at Capital Southwest's option on or after November 20, 2027 or before the 45th scheduled trading day immediately prior to the maturity date if the price of CSWC common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (3) Redeemable in whole or in part at Capital Southwest's option any time prior to August 18, 2030, at par plus a “make-whole” premium, and thereafter at par (4) Current statutes and regulations permit SBIC I and SBIC II to borrow up to $175 million in SBA Debentures, subject to SBA approval (5) Weighted average interest rate of all SBA Debentures for SBIC I for the three months ended December 31, 2025 (6) First SBA Debentures for SBIC I mature on September 1, 2031 (7) Weighted average interest rate of all SBA Debentures for SBIC II for the three months ended December 31, 2025 (8) Subject to upcoming SBA Debentures pooling date
Page 19 Balance Sheet (In Thousands, except per share amounts) Quarter Ended 3/31/2025 Quarter Ended 6/30/2025 Quarter Ended 9/30/2025 Quarter Ended 12/31/2025 Assets Portfolio Investments $1,785,299 $1,780,198 $1,877,907 $2,013,205 Cash & Cash Equivalents 43,221 46,889 87,429 42,559 Restricted Cash 1,650 1,650 1,650 1,650 Other Assets 52,670 53,675 54,338 58,507 Total Assets $1,882,840 $1,882,412 $2,021,324 $2,115,921 Liabilities SBA Debentures $170,918 $171,115 $170,912 $190,625 October 2026 Notes 148,846 149,038 149,231 — August 2028 Notes 70,194 70,320 70,446 — 2029 Convertible Notes 223,107 223,477 223,847 224,217 September 2030 Notes — — 343,322 343,640 Credit Facilities 343,000 312,000 77,000 314,000 Other Liabilities 43,142 39,988 39,562 47,805 Total Liabilities $999,207 $965,938 $1,074,320 $1,120,287 Shareholders Equity Net Asset Value $883,633 $916,474 $947,004 $995,634 Net Asset Value per Share $16.70 $16.59 $16.62 $16.75 Regulatory Debt to Equity 0.89x 0.82x 0.91x 0.89x
Page 20 Income Statement (In Thousands, except per share amounts) Quarter Ended 3/31/2025 Quarter Ended 6/30/2025 Quarter Ended 9/30/2025 Quarter Ended 12/31/2025 Investment Income Interest Income $44,619 $47,115 $48,258 $48,813 PIK Interest Income 3,982 3,260 2,794 4,585 Dividend Income 970 3,677 2,742 3,748 Fees and Other Income 2,835 1,895 3,151 4,301 Total Investment Income $52,406 $55,947 $56,945 $61,447 Expenses Cash Compensation $3,299 $3,956 $2,631 $4,571 Share Based Compensation 2,657 1,143 1,270 1,290 General & Administrative 2,778 2,867 3,007 2,903 Total Expenses (excluding Interest) $8,734 $7,966 $6,908 $8,764 Interest Expense $15,208 $15,264 $16,020 $18,052 Pre-Tax Net Investment Income $28,464 $32,717 $34,017 $34,631 Income Tax (Expense) / Benefit ($622) ($828) ($2,033) $2,354 Net Investment Income $27,842 $31,889 $31,984 $36,985 Net Realized and Unrealized Losses $(10,281) $(4,888) $(6,365) ($1,933) Realized Loss on Extinguishment of Debt — — — (2,156) Net increase in Net Assets Resulting from Operations $17,561 $27,001 $25,619 $32,896 Weighted Average Basic Shares Outstanding 50,654 53,517 55,544 57,531 Pre-Tax NII Per Basic Weighted Average Share $0.56 $0.61 $0.61 $0.60 NII per Basic Weighted Average Share $0.54 $0.59 $0.57 $0.64 Net Increase in Net Assets Per Basic Wtd. Average Share $0.34 $0.50 $0.46 $0.57 Note: For the quarter ended 3/31/2025, Total Expenses include one-time net expenses of $2.8 million, or $0.05 per share, related to the departure of the former President and Chief Executive Officer
Page 21 Portfolio Statistics Continuing to build a well performing credit portfolio (In Thousands) Quarter Ended 3/31/2025 Quarter Ended 6/30/2025 Quarter Ended 9/30/2025 Quarter Ended 12/31/2025 Portfolio Statistics Fair Value of Debt Investments $1,605,906 $1,613,985 $1,706,251 $1,830,458 Average Debt Investment Hold Size $14,870 $14,807 $15,372 $16,199 Fair Value of Debt Investments as a % of Par 96% 96% 96% 96% % of Investment Portfolio on Non-Accrual at Fair Value 1.7% 0.8% 1.0% 1.5% Weighted Average Yield on Debt Investments 11.68% 11.83% 11.54% 11.28% Fair Value of All Portfolio Investments $1,785,299 $1,780,198 $1,877,907 $2,013,205 Weighted Average Yield on all Portfolio Investments 11.50% 12.16% 12.00% 11.91% Investment Mix (Debt vs. Equity) at Fair Value 90% / 10% 91% / 9% 91% / 9% 91% / 9%
Page 22 Investment Income Detail Constructing a portfolio of investments with recurring cash yield (In Thousands) Quarter Ended 3/31/2025 Quarter Ended 6/30/2025 Quarter Ended 9/30/2025 Quarter Ended 12/31/2025 Investment Income Breakdown Cash Interest $42,985 $44,689 $46,823 $46,988 Cash Dividends 970 3,677 2,742 3,748 PIK Income 3,982 3,260 2,794 4,585 Amortization of Purchase Discounts and Fees 1,922 2,712 2,053 2,568 Management/Admin Fees 535 525 584 637 Fees & Other Income 2,013 1,084 1,949 2,921 Total Investment Income $52,407 $55,947 $56,945 $61,447 Key Metrics Cash Income as a % of Investment Income (1) 92% 94% 95% 93% % of Total Investment Income that is Recurring 96% 95% 92% 90% (1) Includes Purchase Discounts and Fees previously received in cash
Page 23 Key Financial Metrics Strong Pre-Tax Net Investment Income and Dividend Yield driven by net portfolio growth and investment performance (1) Return on Equity is calculated as the quarterly annualized Pre-Tax NII, Realized Earnings, or Total Earnings, respectively, divided by equity at the end of the prior quarter Quarter Ended 3/31/2025 Quarter Ended 6/30/2025 Quarter Ended 9/30/2025 Quarter Ended 12/31/2025 Key Financial Metrics Pre-Tax Net Investment Income Per Wtd Avg Basic Share $0.56 $0.61 $0.61 $0.60 Pre-Tax Net Investment Income Return on Equity (ROE)(1) 13.30% 14.59% 14.57% 14.22% Realized Earnings Per Wtd Avg Basic Share $0.01 $0.88 $0.48 $0.60 Realized Earnings Return on Equity (ROE)(1) 0.27% 21.22% 11.59% 14.39% Earnings Per Wtd Avg Basic Share $0.34 $0.50 $0.46 $0.57 Earnings Return on Equity (ROE)(1) 8.20% 12.04% 10.97% 13.51% Regular Dividends per Share $0.58 $0.58 $0.58 $0.58 Supplemental / Special Dividends per Share $0.06 $0.06 $0.06 $0.06 Total Dividends per Share $0.64 $0.64 $0.64 $0.64
Page 24 Note: Illustrative change in annual NII does not adjust for potential changes in the credit market, credit quality, size and composition of the assets in the portfolio. It also does not adjust for other business developments, including future originations and repayments. Accordingly, no assurances can be given that actual results would not differ materially from the table above. Interest Rate Sensitivity Fixed vs. Floating Credit Portfolio Exposure Change in Base Interest Rates Illustrative Annual NII Change ($'s) Illustrative Annual NII Change ($ Per Share) (75 bps) (11,072,459) (0.19) (50 bps) (7,381,639) (0.12) (25 bps) (3,690,820) (0.06) 25 bps 3,690,820 0.06 50 bps 7,381,639 0.12 75 bps 11,072,459 0.19 5.0% 95.0% Fixed Floating
Page 25 Corporate Information Board of Directors Senior Management Fiscal Year End Inside Director Michael S. Sarner March 31 Michael S. Sarner President & Chief Executive Officer Independent Directors Independent Auditor David R. Brooks Chris T. Rehberger RSM US LLP Chicago, ILChristine S. Battist Chief Financial Officer, Secretary & Treasurer Jack D. Furst William R. Thomas Josh S. Weinstein Ramona Rogers-Windsor Senior Managing Director & Chief Investment Officer Corporate Counsel Eversheds Sutherland (US) LLP Corporate Offices & Website Ryan P. Kelly 8333 Douglas Avenue Managing Director & Investment Committee Member Suite 1100 Dallas, TX 75225 Amy L. Baker http://www.capitalsouthwest.com Executive Vice President of Accounting Transfer Agent Equiniti Trust Company, LLC Investor Relations Tabitha D. Geiger www.equiniti.com Michael S. Sarner Chief Compliance Officer Capital Southwest Securities Listing 214-884-3829 Nasdaq: "CSWC" (Common Stock) msarner@capitalsouthwest.com Industry Analyst Coverage Firm Analyst Contact Information Citizens JMP Brian McKenna Direct: 585-217-7407 B. Riley Securities Sean-Paul Adams Direct: 415-229-4851 Jefferies, LLC Matthew Hurwit Direct: 415-419-9644 Lucid Capital Markets, LLC Erik Zwick Direct: 917-658-3982 Oppenheimer & Co., Inc. Mitchel Penn Direct: 212-667-7136 Raymond James & Associates Robert Dodd Direct: 901-579-4560 UBS Securities, LLC Douglas Harter Direct: 212-882-0080