Q1 2024 Trinity Capital Inc Earnings Call

Participants

Ben Malcolmson; Head of Investor Relations; Trinity Capital Inc

Kyle Brown; President, Chief Executive Officer, Chief Investment Officer, Director; Trinity Capital Inc

Michael Testa; Chief Financial Officer, Treasurer; Trinity Capital Inc

Gerald Harder; Chief Operating Officer; Trinity Capital Inc

Ron Kundich; Chief Credit Officer; Trinity Capital Inc

Bryce Rowe; Analyst; B. Riley Securities, Inc.

Kyle Joseph; Analyst; Jefferies

Vilas Abraham; Analyst; UBS Securities LLC

Paul Johnson; Analyst; Keefe, Bruyette & Woods, Inc.

Casey Alexander; Analyst; Compass Point Research & Trading, LLC

Finian O'Shea; Analyst; Wells Fargo

Christopher Nolan; Analyst; Ladenburg Thalmann Financial Services

Presentation

Operator

Good afternoon. My name is Jamie, and I will be your conference operator today. At this time, I would like to welcome everyone to Trinity Capital's first-quarter 2024 earnings conference call. This call is being recorded and will be available for replay beginning at approximately 3:00 PM eastern time and the replay dial number is 18008392389. And no conference ID is required for access. (Operator Instructions)
It is now my pleasure to turn the call over to Ben Malcolmson, Head of Investor Relations for Trinity Capital. Please go ahead.

Ben Malcolmson

Thank you, Jamie, and welcome to Trinity Capital's earnings conference call for the first-quarter 2024. Today we are joined by Kyle Brown, Chief Executive Officer; Michael Testa, Chief Financial Officer; and Gerry Harder, our Chief Operating Officer. Also joining us for the Q&A portion of the call are Ron Kundich, Chief Credit Officer; and Sarah Stanton, Chief Compliance Officer and General Counsel.
Trinity's financial results were released earlier today and can be accessed from our Investor Relations website at ir.trinitycap.com. A replay of the call will be available on our website or by using the telephone number provided in today's earnings release.
Before we begin, I would like to remind everyone that certain statements that are not based on historical facts made during this call, including any statements relating to financial guidance may be deemed forward-looking statements under federal securities laws.
Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. We encourage you to refer to our most recent SEC filings for information on some of these risk factors.
Trinity Capital assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, May 1, 2024. And therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay listening or transcript reading.
Now, please allow me to turn the call over to Trinity Capital, CEO, Kyle Brown.

Kyle Brown

Thank you, Ben, and thanks, everyone, for joining us today. First quarter was a strong start to the year for Trinity. We remain opportunistic opportunistic in the current market by investing in our platform as we continue to scale and deliver value to our shareholders.
Notable highlights during the quarter include $243 million of gross fundings across 8 new portfolio companies and 12 existing portfolio companies platform AUM growth of 38% year over year, pushing our assets under management to $1.6 billion, record net investment income of $25.2 million, a 30% increase versus Q1 of last year in return of equity of 16.1%.
Our performance allowed us to increase our quarterly dividend to $0.51 per share in the first quarter, making this the 13th consecutive quarter, we've increased our dividend credit underwriting and portfolio management continue to remain fundamental to our success. We maintain rigorous standards and original patient diligent and portfolio management to position us to effectively navigate a dynamic market.
Our team of nearly 80 professionals as the quarter cornerstone of Trinity's track record as the key to our trajectory going forward, we're committed to creating a unique culture here of excellence that is built around six pillars humility, integrity, trust, uncommon care, continuous learning and an entrepreneurial spirit, all of which create the differentiated lending platform that we build here at Trinity, we strive to provide value above and beyond expectations to every part of the Trinity platform, whether that's employees, clients or investors.
And as an internally managed BDC, our employees and management owns the same shares as our investors shareholders own a pool of assets as well as the management company, which maximizes returns and maintain strong alignment of interest with our shareholders. Our commitment to expanding the platform as highlighted by our investments in strategic growth initiatives across the platform.
In the first quarter, Trinity solidified its position as a diversified lender by further growing our four distinct business verticals, equipment financing, life sciences, warehouse lending and tech lending, each with their originations, their own originations, credit and portfolio management teams, our exceptional relationships with portfolio companies and industry partners have also been pivotal in achieving our strong performance in the first quarter. An aggregate of $1.2 billion of equity was raised by 21 of our portfolio companies demonstrating that our portfolio companies are able to secure the funding they seek.
We ended the quarter with a strong investment pipeline, including $405 million of unfunded commitments leaving us well-positioned for continued growth in 2024. As a reminder, all of Trinity's unfunded commitments are subject to ongoing diligence and approval by our investment committee.
Turning to macro-environment activities picking up in venture capital and private equity world. Exceptional levels of dry powder remain and BDCs and nonbank lenders continue to be vehicles of choice for sponsor-backed companies. With this high demand for capital. We maintain our selective approach with new opportunities as a direct lender.
We own our pipeline and have originators strategically located in major markets around the country to further build deep relationships with sponsors, banks and operators. We pride ourselves on three core principles here at Trinity, exhibiting uncommon care for our employees and our partners serving our clients by being partners rather than just money and providing outsized returns for our shareholders.
We're bullish about future. We plan to continue to invest in our teams, systems, diversifying our investments to build a best in class direct lending platform. We're just getting started. And we look forward to extending this momentum in the quarters to come as we continue to grow and maximize value for our shareholders.
So with that, I'll turn the call over to Michael Testa, our CFO, to discuss financial results in more detail.

Michael Testa

Thank you, Karl. In Q1, we achieved record total investment income of $50.5 million, a 21.5% increase over the same period in 2023. Our effective yield on the portfolio for Q1 was once again strong at 15.8%. Our core yield, which excludes fee and prepayment income, was 15.3%, mostly consistent with the prior quarter.
Net investment income for the first quarter was $25.2 million or $0.54 per basic share, an increase of 30% compared to $19.3 million were $0.55 per basic share in the same period of the prior year. Our net investment income represents 106% coverage of our quarterly distribution and our undistributed income is approximately $55 million or $1.33 per share.
Our platform continues to generate strong returns for our shareholders with ROE based on net investment income over average equity of 16.1% in ROA based on net investment income over average total assets of 7.5%. As of March 31, 2024. Our NAV was $626 million, which increased from $611 million as of December 31, 2023.
Our corresponding NAV per share was $12.88 per share at the end of Q1, which decreased from $13.19 per share as of December 31, 2023. The decrease in NAV per share this quarter was primarily attributable to the issuance of restricted stock awards that enable us to continue to grow our platform as well as net unrealized depreciation that Gerry will discuss in more detail later in the call.
Under our ATM program in Q1, we raised approximately $24.3 million in (technical difficulty) pr all our (inaudible) premium to NAV to fund our ongoing portfolio growth. As of March 31, 2024, we had total liquidity of $172 million, comprised of $160 million of undrawn capacity under our credit facility and $12 million in unrestricted cash and cash equivalent.
But we continue to realize the benefits of our co-investment joint venture, which in Q1 provided $1.3 million or $0.03 per share of interest, dividend and fee income to the BEC. During the quarter, the joint venture also expanded its revolving credit facility and as of March 31, 2024, had more than $200 million of assets under managed.
This off-balance sheet vehicle provides incremental capital for growth and accretive returns to our shareholder. At the end of the quarter, we raised $115 million unsecured notes that mature in 2029, further enhancing our balance sheet and liquidity position and extending our maturity ladder. We believe our current debt funding mix, which is currently 74% unsecured debt, is appropriate, and we remain consistent with managing the right side of the balance (technical difficulty) .
We intend to repay $30 million over 2025 notes in May, our weighted average cost of debt was in line with prior quarter at 7.4%, and we continue to benefit from low fixed rate debt, having access to unsecured market during a period of lower interest rates.
Our net leverage ratio, which represents principal debt outstanding with cash on hand was 1.16 times as of March 31. Both our strong liquidity position and the fact that we're operating within our targeted leverage range provides Trinity with the flexibility manage a strong pipeline and be opportunistic in the marketplace.
I'll now turn the call over to our COO, Gerry harder to discuss our portfolio performance and platform in more detail. Gerry?

Gerald Harder

Thank you, Michael. At the end of Q1, on a cost basis, our total portfolio consisted of 74.3%, secured loans, 19.7%. Equipment financing, 3.7% equity and 2.3% warrants. The composition of our portfolio remained consistent with prior quarters, with diversification across investment types, transaction size, industry and geography.
Our portfolio is segmented across 21 industry categories with our largest industry exposure, finance and insurance, representing 13.3% of the portfolio at costs. Growth in this industry sector was driven by investments in three new portfolio companies in the quarter. Our next largest industry concentrations are green technology and Space Technology, representing 10.5% and 8.7% of the portfolio at cost, respectively.
Life Sciences related industries, including health care, tech, medical devices, biotechnology and diagnostics and tools collectively made up 18.2% of our total portfolio on a cost basis. As of the end of Q1, our largest debt financing is to rocket lab USA Incorporated and represents 3.9% of our debt portfolio and 3.6% of our total portfolio on a cost basis, our 10 largest debt investments collectively represent 25.8% of our total portfolio on a cost basis.
Moving on to credit. The credit quality of our portfolio companies remained stable with approximately 97.6% of our portfolio performing on a fair value basis. Our average internal credit rating for the first quarter stood at 2.7 based on our one to five rating system with five indicating very strong performance.
This rating is in line with our average credit rating in each of the last four quarters and reinforces Trinity's track record of low loss rates. The total number of credits in our lowest two credit tiers did not change from Q4 to Q1, but was reduced on both the cost and a fair value basis. Quarter over quarter, we remained consistent with five portfolio companies on nonaccrual.
Core scientific was removed from nonaccrual in Q1 following its emergence from bankruptcy and our election to receive shares of its common stock in lieu of our debt investments. However, one additional credit was added to nonaccrual status as Michael mentioned earlier in his prepared remarks, our decrease in net asset value per share in Q1 was a function of expenses related to growth of the platform as well as unrealized depreciation in the portfolio out of approximately $12 million in unrealized depreciation within the portfolio, approximately $9 million is due to the single credit mentioned above.
Additionally, approximately $5 million of unrealized depreciation was due to a decrease in the publicly traded share price or our common share holdings in core scientifics. Outside of these two positions, the fair value of the balance of our debt and equity portfolio was slightly up for the quarter. At the end of Q1, our nonaccrual accrual credits had a total fair value of approximately $30.4 million, representing 2.4% of the total debt portfolio.
At quarter end, 75% of our total principal outstanding. It was backed by first position liens on enterprise equipment or both the weighted average loan to value of our entire portfolio sits at just under 19%, demonstrating that our portfolio companies are generally not over-levered, and we are in a healthy position to service the debt, even if our loan is not in first position.
In closing, I'd like to remind our investors that our team is made up of dozens of veteran investment professionals who are solely focused on portfolio management and asset quality. They continue to take a vigilant approach to the overall health of our portfolio companies. And when necessary work tirelessly to find resolutions to benefit both the portfolio company and Trinity shareholders.
At this time, we'd like to open the question open the line for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions)
Bryce Rowe, B. Riley.

Bryce Rowe

Thanks. Good afternoon from the East Coast. Maybe I wanted to start with some just some of the comments you made about activity picking up. You've seen your unfunded levels kind of go up as well as we've progressed here over the last couple of years or so. Is that a function of just the again, the market picking up or the, I guess, the broader capabilities that you've been working on there at Trinity over in over the last year or so?

Kyle Brown

Yes. So I just I just got back last night from an off-site with our sales team in our San Diego office, 25 professionals covering four different business verticals, life science, financing, tech lending, warehouse lending, and these are people that we've recruited over multiple years of seasoned veterans, 20-plus years of experience most of them, they're fired up. I wouldn't want to be competing against them.
They're out there building the business, very excited tons of opportunities. And yes, it is it is exactly what you said. A lot of great people who are very good at what they do and then it's also it speaks to the diversification of our business. We have continued to grow above and beyond just doing technology venture loans, we'd have multiple businesses, multiple products, and we are seeing growth in those different business verticals.
So yeah, it's very active right now. This is the most robust pipeline we've ever had, and it's looking really exciting going forward.

Bryce Rowe

And as I recall, as you think about it against that backdrop, there's a lot of planning that needs to go go on the kind of the right side of the balance sheet you've taken some steps with some equity being raised. You've got the JVs and ROA that I would assume is kind of getting up to speed and you've raised some debt here.
How do you think about kind of managing the right side of the balance sheet and especially with with interest rates being a little bit higher, I guess debt markets are a bit open at this point. Are you going to trying to take advantage of lock in some debt financing for for the right side of the balance sheet?

Kyle Brown

Yes, we're not we're not going to kind of the market, right? So we're going to we're going to be opportunistic and going to raise debt and equity as it makes sense to the most efficient way we can. And I think that you saw that with the bond deal we did recently. Do you see that with the ATM through the efficient way to work to raise capital.
But we start each one of those conversations price with is this growth going to be accretive for our investors? Again, we have to it should not be a mystery. And what we're trying to do at this point, we are 17 quarters now the public reporting company of steady and growing returns for shareholders, increasing the dividend 13 straight times.
I don't need to predict the future for a year. We have laid out what we're doing and where we're going and how we're doing it. So we're not raising capital for the sake of AUM growth. It has not that it makes zero sense as an internally managed BDC. I don't want to see my shares diluted and which is the same shares that your investors have not it makes no sense.
So we're going to build the balance sheet in a way that's accretive and good for investors. We're going to raise equity opportunistically. We're going to raise debt opportunistically. If our team has the ability to grow and build and continue to take market share, then we're going to deploy that capital. And to the extent it it makes sense to raise equity or debt and it's good, we can put it to work and raise returns for investors. We're going to keep doing it.

Bryce Rowe

Excellent. I'll jump back in queue and give somebody else a chance. Thanks.

Operator

Kyle Joseph, Jefferies.

Kyle Joseph

Hey, good morning, guys. Thanks for taking my questions. And just given where we are in the year, we're thinking back to where we were last year at this point and given your expertise and venture, but just give us kind of an update on the competitive environment now that we're kind of and a year out from, call it that and the regional bank fall out.

Kyle Brown

So I think there's been less competition. If you're talking about, you know, our venture business, it's been less competition. You've seen returns. You've seen equity dollars start to flow from venture firms. I think you're back to 2019 levels, which were at the time historic levels, right from a deployment standpoint. And we are a top of funnel seeing more deal flow.
We've tightened up. We've actually seen the amount of deals from a percentage standpoint, top of funnel, the funding go down. That's just a testament to our underwriting, making sure we're funding the right deals. We've seen some we've seen a runway of those venture-backed companies continued increase in the barrier and threshold for us to fund companies.
We've gotten tighter there on making sure they have the equity support, but should the investment that we're making right now. These are companies that are growing the face of headwinds. These are great investments at much lower valuations than they saw a couple of years ago.
So we are we are seeing growth. We are seeing some competition, I'd say a little bit less competition, particularly from the banks think they're pulling back a little bit that's created more opportunities for us to swim upstream and even have some higher quality credits that many might have been able to get bank financing before that are now open to the idea of kind of alternative bank financing like Trinity.

Kyle Joseph

Got it. Very helpful. And then just shifting to credit. All the other metrics you highlighted seems things that are relatively relatively stable. Companies have adapted to the rate environment.
And could you give us a sense for kind of the growth rates you guys track and where those are trending versus that in the past. It's a months ago versus a year ago.

Kyle Brown

I think you're talking about our hub. What is a good core yield is that we are talking about right now.

Kyle Joseph

I apologize that I'm talking about at credit broadly, and you guys mentioned it's very stable, but just wanted to get a sense for the growth rate that you have portfolio companies and how that compares to call it six months ago or a year ago.

Kyle Brown

(inaudible) Ron, do you to touch on that?

Ron Kundich

Sure. Yes, pickup around midyear some, as Tyler mentioned in his answer just now. I mean, the top of the funnel is very active. We're seeing companies of all shapes and sizes. We're focused on the companies that are growing growth-stage companies. The companies that we're lending to are growing at a still at a relatively healthy clip. We're not focused on, yes, flat to non-growth companies. So broadly speaking, the industry is mixed. But yes, we're laser-focused on on the growth stage there.

Gerald Harder

And you know, the majority of our portfolio is now made up of investments made post that banking volatility. And so you're looking at companies that have figured out a way to grow and perform with headwinds. And those are the investments in the companies. We're put capital into So and things haven't changed really for a lot of those investments since since we made them.

Kyle Joseph

Got it. Very helpful. Thanks for taking my questions and congrats on another strong quarter.

Kyle Brown

Thanks, Kyle.

Operator

Vilas Abraham, UBS.

Vilas Abraham

Hey, everyone, and thanks for taking the question on. And just in terms of the pipeline you mentioned, I was just wondering on on mix, Tom, we looked at the Q1 look like about [$88 million] venture loan, $50 million equipment finance, is that the kind of mix we should think about throughout this year? Or is it going to be some kind of more opportunistic quarter by quarter?

Kyle Brown

So I'll let Gerry give some more specifics, but I'll maybe I'll just start high level. We've got an AOP. that we are sticking to the plan this out well in advance. We're very strategic about each of those verticals. How much they're going to deploy annually quarterly what that pipeline needs to look like to achieve it. We feel like we're on plan for the year.
And so it's not just opportunistic No, it's we've each of these business verticals has their own contribution margin. They're focused on I mean, they know exactly what they need to deploy exactly what they can spend and we're not just winging it tied. We're not just being opportunistic. We want to add to that, Gerry?

Gerald Harder

Yes, I mean at a high level, Vilas, us we're looking at, you know, somewhere between 40% to 45% of the deployment across the year ought to be in the tech lending and then 25% to 30% in life sciences and equipment and maybe 10% or so in asset-based or warehouse. So this is on an annual level, it is blocky, right?
And so in a given quarter, you can get the wrong signal of percentages based on what we happen to close just within that quarter versus what pushes, but at a high level annually. And you will see tech lending be our largest deployments. But life sciences and equipment, we're also posting very strong.

Vilas Abraham

Okay. And then on the venture lending side, do you have a line of sight into healthy companies that may or may not or not may, but may not have come to the home market over the last couple of years that you may be hiring later on this year as potential opportunities like is there is there anything there that kind of gives you a sense of optimism as to the quality of investment time on that side of your deployment that you'll be able to do for a few,

Kyle Brown

You mean for potential investments?

Vilas Abraham

potential investment? Yeah.

Kyle Brown

Yeah. Well, yeah, I think particularly because we do a lot on the venture debt side, we're doing mostly later-stage companies, right? And so I think what you're seeing there is a lot of companies who have remained private hoping for that IPO or exit type opportunity.
They're seeing the they're seeing that window start to open up. We're having different conversations with companies internally externally about financings kind of leading up to it. So I think I think that what you're seeing is a new exit opportunity, which is creating new investment opportunities, kind of leading towards that, which is new for 2024.

Vilas Abraham

Okay, makes sense. And just one more on credit in your prepared remarks, you mentioned a you nonaccrual. I think you were alluding to to next car. I was just wondering if there was any kind of commentary you could give there and what you're seeing given it seems like and the market have there by 50% of cost, a bit more cautious than the one of your peers that that's looking at the same same company. So is there any color you can provide there and how to think about that?

Gerald Harder

Yes. I mean, the, you know, we tried to be very rigorous and process-oriented and our valuation methodology. Great. And so we repeat this quarter on quarter and we follow a rigorous methodology. We use third party collaboration. We happen to have third party collaboration of our mark to next car just this quarter.
And you know, for a scenario like this, we're very often going to do profitability weighted outcome analysis and we're going to lean heavily on, you know, the experience of our portfolio management staff in doing that. I can tell you that account is managed by our most senior portfolio manager with 25, 30 years experience in the banking industry. So he is going to call it as he sees it, forgetting third-party cooperation. And we're going to be very consistent in following that process quarter on quarter.

Vilas Abraham

Got it. Very helpful. Thank you.

Operator

(Operator Instructions)
Paul Johnson, KBW.

Paul Johnson

Yes, thanks for taking my question. In terms of like when you guys are making loans on the platform, whether it be from any of the verticals that you have warehousing equipment leasing during the quarter, whether it's intra-quarter or going over reporting period? I mean, how much do you have any kind of limits or, you know, I guess any sort of limit on what sort of hold sizes you're willing to take for any given loan in the BDC or like how much?
No credit, I guess you're essentially you're kind of willing to extend to any single borrower?

Kyle Brown

So I think historically, we've tried to stay below that 4% total assets. I think what average were significantly lower than that, but that's kind of the that's the threshold in those. And we don't want any one deal to cause too much volatility for Trinity. And so we're going to continue to have a really, very granular portfolio diversified across the verticals and then diversified within the verticals with no one company having the ability to take us down or, you know, he can add to that your.

Gerald Harder

Yes, I'd further add, right, is as we look to grow and expand the platform at Trinity we're going to do this very thoughtfully, but by we are providing additional value products to our growth stage companies and not by increasing our hold sizes, right? That's not the approach we intend to take.
So Kyle mentions that you have 4% line. I think over time you can see that drop rate as our platform continues to expand, and that's at the BDC level one when we talk about that 4%, not of the total aggregated holdings across balance sheet.

Paul Johnson

Got I appreciate that. Thanks for the color on that. And then you guys continue to grow. You're building out the platform with the JV in the RA, eventually some you know, you're building up underwriting teams, distinct underwriting teams under each of these verticals of the business and obviously headcount's been and growing pretty fast since you guys have come into the space.
And I was curious, so what is there a point kind of where, yes, head count or maybe AUM gets to a certain point where you think you've kind of fully built out business and maybe you start to kind of build scale from there.

Kyle Brown

So I mean, I think you ended with what we're trying to do, which is build and scale. The internally managed BDC has not reached efficiencies, right? We are going to continue to get to scale as we do. So you'll start seeing some efficiencies in some of our cost ratios, expense ratios on. We have a long ways to go before we hit a ceiling on what we can deliver for shareholders just at the internally managed BDC. That does not include our off-balance sheet activity.
And again, I said it before, it should not be a mystery at this point about how we're what we're doing and how we're going to do it. We now own in RA. We now manage money off balance sheet we have been for multiple quarters now generating fee income, and we are intending to generate more fee income off balance sheet above and beyond the interest we can generate of our loans and equipment financings, et cetera.
And so, you know, at what scale can we get us to the numbers, the numbers significantly past where we are right now, we're going to see what this team is capable of. We're not going to grow for the sake of growth. We have a five-year plan that we are very honed in on that we think is very achievable growth in a way that's accretive and good for investors and then further diversify and not just from a return standpoint, I think that that model I just had just talked about with generating fee income above and beyond our loans.
That's great for generating new income, but we also have the ability to grow and diversify the portfolio across multiple verticals, which creates further diversification of the portfolio, which I think is a way to mitigate risk. Right? And so I don't that's not a specific answer with some numbers for you but we have our eye on the ball. And as a public company, we are growing and we're going to do in a way that's really good and accretive for investors.

Paul Johnson

Thanks appreciate Kyle.

Kyle Brown

(multiple speakers)

Operator

Casey Alexander, Compass Point.

Casey Alexander

I'm just wondering any update on the on the launch and funding of the RIA.

Kyle Brown

So we've been we've been talking about deploying capital in Q2, and that is still the target Casey.

Casey Alexander

Okay. That's my only question. Thank you.

Kyle Brown

Okay.

Operator

Finian O'Shea, Wells Fargo.

Finian O'Shea

Good afternoon. A question as you there's a lot of discussion of scaling and growth to new heights for the business. Can you talk about your expected loss rate on the portfolio, understanding you're originating or lending out at 10% over so for whatnot.
But net earnings net income have been, you know, consistently pretty well below NI. So seeing what you have for updated thoughts there in today's market and how we should think of the portfolio loss rate going forward? Thank you.

Kyle Brown

I think Mike maybe you can pull up the exact loss rate.

Michael Testa

Loss rates been very consistent for 16 years for those, of course, have been as a publicly reporting company from 32 basis points. I mean the loss rate in our world is 26 basis points. Sorry, it's less than what I thought. And we have consistently been able to keep that loss rate low and the upside that we get in our investments via warrants and those realized gains, they offset those losses and deliver a little upside for investors. We've seen that play out for 16 years.
We intend to just keep doing what we've been doing. So I do not see for any reason why that loss rate should increase our underwriting and our thesis on how we invest has not evolved or changed. And so I think that should stay steady, fed and over time.
And I and particularly with the season right now with valuations dramatically increasing and that that creates some really interesting upside potential on our warrants. And so I think there's some upside that we're starting to see and hopefully baking into that the long-term plan here with the investments we're making today.

Finian O'Shea

Awesome, it's helpful. Thanks so much.

Operator

Christopher Nolan, Ladenburg Thalmann.

Christopher Nolan

I appreciate the comments on mitigating risks and so forth. Like to turn that around a little bit. And I'd like to get a better understanding how you're mitigating risk in your funding base, particularly your debt funding. You've got a number of maturities in 2025, 2026.
You have a credit facility account for 26% of total borrowings by my calculation with a single bank, but my estimate has roughly 70% of its loan in commercial related on the investments that they're on. And here, that's a risk profile for the company, which known as talking about like, let's get your thoughts on that.

Michael Testa

Hey, Mike here. I just wanted to talk a bit about like why we went into the unsecured market. I think in the past quarter, we were pleased with execution on that deal and that size and that, again, it was really the consistent approach of laddering out our maturities.
We're going to continue to tap the market, whether it's secured or unsecured and saw in our revolver with KeyBank. We have 10 other banks in there. So we have happy having that diversified across that also the liquidity through a joint venture, and we upsized the facility from across two additional banks in the JV facility. So we look at that as a risk mitigant to diversify our funding sources and then long term, the vehicles under the REA, adding to that flexibility of multiple funding sources, debt and equity.

Christopher Nolan

Great. And thanks for the detail, Mike, on is the plan to replace these maturing notes with secured borrowings when they mature.

Michael Testa

Sorry, can you repeat the question?

Christopher Nolan

Yeah. Are you going to use more secured funding as these unsecured notes mature?

Michael Testa

Yeah, that's definitely an opportunity for us. We've been in discussions. We've seen some of our peers use a CLO structure Fund four for securitizing and increasing our leverage. I think we have room with our current leverage range that we're operating in. But again, I think diversifying our lendings or borrowing sources is important and I think having the ability across 10 different banks currently in our syndicate and in discussions, expanding that through the current revolver or additional revolvers in the future.

Christopher Nolan

Okay.

Kyle Brown

The key point that I think, Chris, that you'd mentioned before about having exposure to one bank. We've actually we have 10 banks in that syndicate that's growing. We've got close remote relationships with all of those banks that was strategic. We want that to be diversified across multiple banks.

Christopher Nolan

Okay. thanks for detail.

Ben Malcolmson

Yeah.

Operator

And it appears that we have no additional questions at this time.

Kyle Brown

Okay. Well, we're really proud of our first quarter results, and we look forward to updating you on our next call in August. And we would like to just thank everybody for participating the call today and appreciate your interest and investment Trinity Capital. Have a great rest of your day.