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Delivered record first-half originations of $2.74 billion, a 35.6% year-over-year increase, driven by robust deal flow and the ability to support portfolio companies as they scale.

Maintained a disciplined underwriting approach with 87% first-lien exposure, intentionally avoiding aggressive deal structures observed among some bank and non-bank competitors.

Benefited from record portfolio capital raising, with 29 companies raising $5.7 billion in Q2, which management views as a supplement to, rather than a replacement for, debt demand.

Leveraged the Hercules Adviser subsidiary to manage approximately $2 billion in private capital, providing the BDC with recurring fee-based income and expense-sharing benefits.

Attributed stable credit quality to proactive monitoring, noting that 93% of PIK income is derived from high-rated loans and 100% of accrual debt investments remain current.

Utilized platform scale to maintain an efficient 2% annualized operating cost ratio, a 70-basis-point reduction since the 2021 launch of the Adviser business.

Expects Q3 originations to follow historical seasonal patterns, being lower than other quarters and more back-end weighted despite a robust current pipeline.

Anticipates prepayment activity will normalize to a range of $200 million-$300 million in Q3, following the record $572.1 million experienced in Q2.

Projects core yields to moderate to a range of 11.8%-12% in Q3 as higher-yielding legacy assets are replaced by new originations at current market rates.

Assumes the impact of future interest rate reductions will be muted, as 75% of prime-based loans are already at their contractual rate floors.

Plans to maintain a nimble capital structure, utilizing the ATM and institutional note markets opportunistically to fund growth without compromising leverage targets.

Completed a leadership transition with Seth Meyer moving to President and Andrew Olson appointed as CFO to support continued platform scaling.

Formalized AI governance through an internal committee to enhance analytical efficiency while explicitly retaining human-led underwriting and investment decisions.

Successfully resolved a Q2 non-accrual loan post-quarter end, resulting in a cash recovery $1 million above the fair value mark and a positive realized IRR.

Issued $325 million of 6.3% unsecured notes due 2031 to strengthen liquidity and address upcoming debt maturities.

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Management observed banks becoming very aggressive recently, potentially driven by a desire for deposits from companies raising record equity.

Stated they will not 'chase the market' on structure and expect bank aggressiveness to be cyclical rather than a permanent shift.

Approximately 60% of prepayments were driven by M&A or balance sheet cash from new equity rounds, which management interprets as a sign of portfolio strength.

Refinancings by other lenders accounted for only 40% of prepayments, a lower percentage than historically observed.

The increase in Grade 3 credits was primarily due to proactive downgrades of companies currently in the market for equity raises, rather than operational underperformance.

Management expects these to move back to Grade 2 once capital raises are finalized, provided performance remains stable.

While AI captured 86% of first-half VC deal value, management noted that non-AI investment levels remain healthy and robust relative to history.

Hercules continues to target a 50/50 allocation between technology and life sciences to avoid over-concentration in any single sub-sector.