February 20, 2020 FOURTH QUARTER 2019 INVESTOR PRESENTATION Financing the Growth of Tomorrow’s Companies Today TM
IMPORTANT NOTICE: FORWARD LOOKING STATEMENTS This presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act. The information disclosed in this presentation is made as of the date hereof and reflects Hercules’ current assessment of its financial performance for the period reported. Actual financial results filed with the Securities and Exchange Commission in the future may differ from those contained herein in the event of additional adjustments recorded prior to the filing of its financial statements. This presentation may contain “forward-looking statements.” These forward-looking statements include comments with respect to our financial objectives, loan portfolio growth, strategies and results of our operations. However, by their nature, these forward-looking statements involve numerous assumptions, uncertainties and risks, both general and specific. The risk exists that these statements may not be fulfilled. We caution readers of this presentation not to place undue reliance on these forward-looking statements as a number of factors could cause future Company results to differ materially from these statements. Forward-looking statements may be influenced in particular by factors such as fluctuations in interest rates and stock indices, the effects of competition in the areas in which we operate, and changes in economic, political and regulatory conditions. We caution that the foregoing list is not exhaustive. When relying on forward-looking statements to make decisions, investors should carefully consider the aforementioned factors as well as other uncertainties and events. Historical results discussed in this presentation are not indicative of future results. This presentation should be read in conjunction with our recent SEC filings. 2
HERCULES CAPITAL Structure Internally Managed Business Development Company (BDC) IPO Date June 9, 2005 HTGC (NYSE) – Common Stock Institutional Notes PAR $1000.00 • 4.625% Notes due 2022 • 4.77% Notes due 2024 • 4.28% Notes due 2025 Retail Notes (Baby Bonds) PAR $25.00 Investment Options • HCXY (NYSE) 6.25% Notes due 2033 • HCXZ (NYSE) 5.25% Notes due 2025 Convertible Notes • 4.375% Notes due 2022 Securitization Notes • 4.605% Asset-backed Notes due 2027 • 4.703% Asset-backed Notes due 2028 (1) Annualized Dividend Yield 9.1% as of December 31, 2019 $0.32 per share for Q4 2019 Distributions Declared $0.08 per share supplemental for Q4 2019 1.45x - as of February 14, 2020 Price to NAV ~1.3x to ~1.6x historical range (1) Annualized based on the $0.32 distribution declared for Q4 2019 and a closing stock price of $14.02 as of December 31, 2019 3
FOURTH QUARTER 2019 INVESTOR PRESENTATION Key Performance Highlights Company & Strategic Overview Financial Highlights Portfolio Highlights Venture Capital Market Opportunity Analyst Coverage Supplemental Information
KEY PERFORMANCE HIGHLIGHTS
Q4 2019 HIGHLIGHTS • Net Investment Income (“NII”) of $40.1M, up 31.1% Y-Y Total Investment Income of $70.6M, up 24.1% Y-Y • Robust Earnings NII per share of $0.38 and 119% distribution coverage • 58 consecutive quarters of distributions since June 2005 IPO • 1YR/3Yr/7YR Total Shareholder Returns (1) : 38.4%/25.9%/103.1% • ROAE (1,2,) : 15.4% • Strong Shareholder Returns • ROAA (1,2,) : 7.3% Net Interest Margin (“NIM”): 11.0% • • Total Debt Investments (at cost): $2.17B High-Yield Portfolio of Earning Assets Total Investments (at cost): $2.40B • Effective Yield: 13.0% • • $10.0B in total debt commitments since inception (as of 1/14/20) Cumulative Total Net Realized (Loss) since inception of ($23.6M) • Industry-Leading Originations Platform Total debt & equity commitments: $283.9M • Debt & equity fundings: $240.8M • $235.5M available liquidity • Strong Liquidity and Balance Sheet GAAP and regulatory leverage: 115.0% and 101.8% (3) • Price-to-NAV: 1.45x (4) • Strong Capital Raising Position “ATM” Equity Distribution Agreement • Investment Grade Credit Ratings: DBRS: BBB | KBRA: BBB+ • (1) Source: S&P CapIQ as of 12/31/19 (2) Based on NII, excludes realized and unrealized gains/losses (3) Regulatory leverage is defined as GAAP leverage excluding SBA debentures (4) As of February 14, 2020 6
TOTAL SHAREHOLDER RETURN (TSR)vs. BDCs & WELLS FARGO INDEX (b) 100% 80% 60% 40% 20% 38.4% 19.7% 31.7% 25.9% 20.0% 19.1% 36.1% 29.7% 42.0% 103.1% 26.9% 52.4% 0% 1- Year 3-Year 5-Year 7-Year (a) HTGC Peer Group Wells Fargo BDCS Index (a) Peer Group: AINV, ARCC, BKCC, OCSL, FSK, GBDC, GSBD, MAIN, NMFC, OXSQ, PNNT, PSEC, SLRC, BBDC, TCPC, TCRD, TSLX (b) TSR is defined as stock appreciation plus distributed dividend distributions Source: S&P Capital IQ as of December 31, 2019 7
DELIVERING STRONG SHAREHOLDER RETURNS Return on Average Equity % (ROAE) Return on Average Assets % (ROAA) 18% 8% 16% 7% 14% 15.4% 7.3% 7.2% 6% 6.8% 12% 13.6% 6.3% 12.6% 6.1% 6.1% 12.0% 5% 5.8% 11.7% 10% 5.7% 5.7% 11.3% 10.4% 10.2% 4% 8% 9.6% 4.3% 8.5% 3% 6% 2% 4% 1% 2% 0% 0% 2015 2016 2017 2018 Q4 2019 2015 2016 2017 2018 Q4 2019 HTGC Peer Group (a) HTGC Peer Group (a) Source: S&P Capital IQ as of 12/31/19 for HTGC and Peer Group. Return on Average Assets excluding cash. NII divided by Source: S&P Capital IQ as of 12/31/19 for HTGC and Peer Group. Return on Average Equity based on NII. NII divided by average of beginning of period total assets excluding cash and end of period total assets excluding cash. average of beginning of period equity and end of period equity. (a) Peer Group: AINV, ARCC, BKCC, OCSL, FSK, GBDC, GSBD, MAIN, NMFC, OXSQ, PNNT, PSEC, SLRC, BBDC, TCPC, TCRD, TSLX $18 $0.40 $16.70 per share or ~$962.0 million in Historical Cumulative Distributions Since June 2005 IPO Cumulative Distributions Paid $16 Supplemental Distributions Paid $16.22 $16.54 $14 $0.30 $14.95 $12 $13.71 (per Share) $12.47 $10 (per Share) $11.23 $0.20 $9.99 $8 $8.75 $6 $7.64 $6.69 $0.08 $0.10 $4 $5.81 $0.06 $5.01 $1.23 $2 $3.75 $0.02 $0.33 $0.04 $2.43 $0 $0.00 (1, 2) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Base Distribution Supplemental Distribution (1) Q1 09 distribution was paid in 10% cash and 90% stock; (2) Includes special $0.04 distribution paid in December 2009 (2) Note: The Yield Calculation may include a potential tax return of capital. Any portion of a distribution that is ultimately deemed to be a tax return of capital should not be considered. The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of its distributions for a full year. The tax attributes of its distributions for the years ended December 31, 2008 through December 31, 2019 were paid 100% from earnings and profits; however, there can be no certainty to shareholders that this determination is representative of the tax attributes of the Company’s 2020 full year distributions to stockholders. 8
AVAILABLE LEVERAGE FOR POTENTIAL EARNINGS GROWTH (1) Leverage to Return on Average Equity % (ROAE) 18% 140% 16% 115.0% 120% 14% 102.6% 101.8% 95.5% 100% 12% 87.0% 84.7% 96.2% 83.7% 80% 72.9% 10% 84.7% 70.4% 83.4% 8% 60% 62.0% 60.6% 6% 40% 43.9% 4% 20% 2% 11.7% 12.6% 12.0% 13.6% 15.4% 0% 0% 2015 2016 2017 2018 Q4 2019 ROAE GAAP Leverage Regulatory Leverage (2) Net Regulatory Leverage (3) (1) Source: S&P Capital IQ as of 12/31/19. Return on Average Equity based on NII. NII divided by average of beginning of period equity and end of period equity. (2) Excludes SBA (3) Excludes SBA and cash 9
HERCULES CONSISTENTLY MAINTAINS A PREMIUM TO NAV CREATES A STRONG CAPITAL RAISING POSITION TO SUPPORT GROWTH 1.7 $16 1.56 1.46 1.5 1.43 Price to NAV Multiple (x) 1.33 $14 1.32 Net Asset Value (NAV) 1.3 1.23 1.14 1.11 1.07 1.1 $12 0.96 0.96 1.07 0.92 0.92 0.86 0.86 0.9 $10 0.7 $9.75 $10.51 $10.18 $9.94 $9.90 $9.96 $9.90 $10.55 $8 0.5 2012 2013 2014 2015 2016 2017 2018 Q4 2019 (a) Hercules NAV Hercules Price to NAV Peer Group Price to NAV (a) Peer Group: AINV, ARCC, BKCC, OCSL, FSK, GBDC, GSBD, MAIN, NMFC, OXSQ, PNNT, PSEC, SLRC, BBDC, TCPC, TCRD, TSLX Source: S&P CapIQ as of 12/31/19 for HTGC and Peer Group. Stock price based on closing price on last trading day of each calendar year or relative quarter. 10
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