Good day, ladies and gentlemen, and welcome to the Hercules Capital Second Quarter 2018 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference Mr. Michael Hara, Senior Director of Investor Relations. Sir, you may begin.

Thank you, Joel. Good afternoon, everyone, and welcome to Hercules' conference call for the second quarter of 2018. With us on the call today from Hercules are Manuel Henriquez, Founder, Chairman and CEO; David Lund, our Interim Chief Financial Officer and Gerald Waldt, our Corporate Controller and Interim Chief Accounting Officer. Hercules' second quarter 2018 financial results released just after today's market close and can be accessed from Hercules' Investor Relations section at htgc.com. We have arranged for a replay of the call on Hercules' webpage or by using the telephone number and passcode provided in today's earnings release. During this call, we may make forward-looking statements based on current expectations. Actual financial results filed with the Securities and Exchange Commission may differ from those contained herein due to timing delayed between the date of this release and in the confirmation in the final audit results. In addition, the statements contained in this release that are not purely historical are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including, without limitation, the risks and uncertainties, including the uncertainties surrounding the current market turbulence, and other factors we identified from time-to-time in our filings with the Securities and Exchange Commission. Although we believe that the assumptions on which these forward-looking statements are reasonable, any of those assumptions can be proved to be inaccurate, and as a result, the forward-looking statements based on those assumptions also can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained in this release are made as of the date hereof, and Hercules assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of related SEC filings, please visit sec.gov or our website, htgc.com. With that, I will turn the call over to Manuel Henriquez, Hercules Chairman and Chief Executive Officer.

Thank you, Michael, and good afternoon, everyone, and thank you for joining us today on the call today. We have plenty of outstanding news to share with you today about our very strong and record-breaking start to the first half of 2018 and our continued optimism and strong outlook for the remainder of 2018. Assuming reports the current market just remained as stable as they are currently throughout the second half of 2018. First regarding our strong earnings performance in the second quarter 2018, we achieved another strong quarterly performance with an adjusted net investment income of $0.29 per share after adding back the previously announced $0.03 non-cash expense related to the retirement of our $100 million bond of the 2024 notes, which on a GAAP basis would have equaled to about $0.26 and NII after taking effect of the $0.03 impact of the retirement of those bonds. In addition, given our strong loan portfolio growth and core yield growth during the quarter we now expect to cover our dividend from net investment income beginning in Q3 2018, a quarter sooner than we had anticipated and even after including the impact a higher share count from our previously issued equity offering ensuring us to maintain our leverage levels below 1 to 1. We also achieved another milestone during the quarter as a company thanks to our tremendous team of employees who made it possible at our growing brand within the venture capital industry as a venture lender of choice among many other venture capital firms and their portfolio companies. I am proud to share with you today that because of our strong new origination activities in the second quarter, we now have surpassed a major milestone of $8 billion in total commitments it's a start of Hercules in December 2013.…

Thank you, Manuel and good afternoon ladies and gentlemen. Today we are pleased to report our second quarter results. This afternoon I will focus on the following financial areas. Our origination platform, income statement performance NAV performance and realize and unrealize activity and credit outlook. With that, let's turn our attention to the origination platform. Origination performance continues to demonstrate our strength as the market leading platform in venture landing. We had a record quarter for total investment fundings of $327.5 million. These investments came from a total of 29 portfolio companies 15 of which were new portfolio company. This investment activity brings our fundings for the first six months of 2018 to a total of $563.7 million putting us on pace for a record year. This investment activity was offset by early repayments during the quarter of $114.3 million and amortization of $16.7 million. As a result of this activity, on a cost basis our debt investment portfolio balance ended at $1.55 billion representing an increase of approximately 13.6% from the first quarter. Our core yields increased 12.7% which was up from 11.9% in the prior quarter. The increase in core yields was primarily attributed to early origination activity during the quarter, the weighted average yield of loans onboarded during the quarter of approximately 12.7% and the impact of the full quarters prime rate increase in March. Moving into Q3, we expect our core yields to be between 12.4% to 12.7%. With that, I'd like to discuss our income statement performance for the second quarter. On a GAAP basis, our net investment income was $22.8 million in the second quarter or $0.26 per share. On a proforma basis our NII per share was $0.29 after taking into account the acceleration of $2.4 million a one-time unamortized fees and interest…

Thank you. [Operator Instructions] Our first question comes from John Hecht with Jefferies. Your line is now open.

Thanks guys and congratulations. Big origination numbers, that's a good growth. Related to the origination, I'm wondering Manuel can you tell us I guess the pace during the quarter was spread out over the quarter or were they back road just so we can kind of think about what that means to the upcoming quarters dollar interest income?

Yes. As we have indicated since inception, the third quarter is simply our slowest quarter which is why we're only forecasting probably net up $50 million plus or minus $20 million. It's now plus or minus $20 million - but the typical deal size is twice. So, one deal flows and one deal sliding can make an impact on that. With that said, we will expect to do more funding in August. So, you go, July strong, quiet August, and then you pick up the second week or so of September in the third quarter. So, it's going to be more lumpier. As to your question in Q2, it was fairly ratably distributed throughout the quarter. So, you saw a nice cadence of fundings taking place. In fact, you saw the average inter-quarter way to balance was pretty tight compared to historical levels. So, we saw pretty good activities in the second quarter keeping that breach steadily across which ended up with a weighted average, as you'll see in press release page 4. You'll see that we had an inter-quarter weighted average about $1.47 billion and we ended the quarter with $1.55 billion. So, you'll see there was good cadence inter-quarter activity of fundings.

And then I'm wondering can you talk about what the average investment size at this point in time given the size of balance sheet are you willing to go larger and obviously given which is making more as you are not protected with the larger average sizes as well?

We are. Okay Hercules comfort zone is doing transactions from $3 million to $80 million in size. We can handle and hold on balance sheet that level quite comfortably and in fact we have the capabilities give our strong origination team to do deals in that range of that sizes. I think to answer your question, the arithmetic average today is approximately $18 million is a whole position that we have an arithmetic average on the median, it's probably little higher than that but that said $18 million is because arithmetic average we have there.

Okay. And final question, I think David mentioned some comp numbers, the [indiscernible] numbers for Q3 and Q4 and I heard that. Yes, how I guess the capacity organization and if this type of environment persisted which you need to add a lot of bodies to just manage the pipeline?

Well, as I think we said earlier and to answer your question I think Dave's number I believe that 13.5 to 14 is what we believe the SG&A number will be in interest expense and fees. We think at that level, we feel comfortable that the next two quarters are sustaining and maintaining those levels as probably within the range of tolerance that will come to with.

Okay. Thanks very much guys.

Thank you. Our next question comes from Ryan Lynch with KBW. Your line is now open.

Good afternoon guys and thanks for taking my questions. In the last quarter and actually I guess in Q1 you guys had very strong prepayment. You guys had a little bit heavier prepayment this quarter those are going to abate. I know part of those prepayments were driven by you guys wanting to prune some of the weaker investment from your portfolio. You talked about this still being a very robust VC environment. So, as you look through the back half of the year, you still looking to kind of prune or rotate out of some of those weaker credits or is that largely been completed the first half of the year?

So, they are not actually weak credit. So, I just want to make an adjustment to that. I think that we were taking a more exantus [ph] view on consumer related industries is an area I think that we had some concern about it, if the economy were to turn if you will. So, we decided to kind of sector out portfolio rotate, in sectors I would say. As the salient point of your question, we think that we're pretty much done with any sector rotations that we're looking for the second half of 18. So, we do not expect any anomalies above the $100 million per quarter, early payoff activities. Now obviously one deal that we're not aware of could pop-up. $10 million $15 million in either direction. But I think that we have enough cover right now, what we are seeing the activity that we think that $100 million for the next two quarters. For each quarter, it's probably in a good level. Now, that said this sounds very conservative but when you actually add up together the first two quarters plus another $200 million for the next two quarter, it's going to be in excess of $500 million and I'm not aware many VC's can still absorb $500 million plus of early payoff and then a $100 million plus in amort and still grow the loan portfolio which we're going to do. We feel very comfortable with our strong brand and leadership position and the venture industry that we are seeing tremendous amount of deal flow right now.

Okay. That's helpful. And then I know effective yields can kind of be all over the place depending on prepayments but core yields are typically little more steadier. They jumped about 80 basis points in the quarter and your guidance for Q3 was for the core yield mentality. Can just talk about what is driving core yields to stay at this kind of elevated level?

Yes. It's one is our leadership position in the category. Having a balance sheet that we have and the capabilities really makes the venture capital partners and their underlying portfolio companies have lot more confidence when they look at our balance sheet, and look at our access to liquidity that we are a capital partner that they can rely on and therefore get comfortable with. Number two, it has to be an arithmetic issue where in Q1 part of that sector rotation that we talked about was vacating or cycling out few obligors that had a prevailing lower interest rate but had larger dollar size and when you remove that weight of larger dollars and lower yield you automatically get this balance back up again in your overall portfolio core yields. And so, I think that what we're saying now is that we feel comfortable that core yields in Q3 and probably Q4 will sustain themselves after considerably 12.5% to 12.7% level in the next few quarters.

Okay. And then one more on the right side of the balance sheet, you guys and in the third quarter or I guess in the second quarter you guys paid down some bonds and the third quarter you guys are paying down your SPI C debentures. I know this quarter you guys had about $60 million. Draw on your credit facility. I know in the past you have typically wanted to not draw significant amounts on those and kind of use those as a temporary funding vehicle. Can you just talk about your plans for maybe the right side of the balance sheet as we look into the back half of 2018?

I mean, look it's no secret when you actually do the math. The reason why we did a $100 million plus equity raise in Q2 was a mere fact that we were at a GAAP leverage at 95% in Q2. We actually went above that intra-quarter and because we have said we want to maintain leverage at 0.9 or 0.95 or below for the time being. We wanted to stay true to our word and maintain leverage levels in those areas which is why we did the equity raise which was a very great capital raise and ended up being quite accretive top of that. That said, there is no question that the bank lines continue to serve the purpose which are intra-quarter short-term funding vehicles. As we look at the capital markets and we look at our leverage position to either proceed forward with an additional equity offering and proceed forward with a longer duration debt facility. I will say as we've said multiple times in the past, we are evaluating additional bond offering whether in the formal securitization or other bond offerings in the near term, as we continue to drive growth in our book and yes, we will consume the 221 liquidities, so you can expect us to continue that for the liquidity into the equation as we go into the later of the second half of 18 to position us for continued growth in 2019. We are seeing unprecedented demand for loan capital and we wanted to take advantage of that. Market prices that we have. However, I will tell you that our screens have not changed, we remain highly selective. But because we have such a strong demand for capital, we're continuing to able to maintain our underwriting parameters of discipline and in some cases actually raise pricing that you can't always say in a market that we're seeing the opportunities in venture lending right now.

Okay. Those are all my questions thank you for your time and good quarter.

Thank you very much.

Thank you. Our next question comes from Casey Alexander with Compass Point. Your line is now open.

Hi good afternoon. I just want to make sure that I understand the operating expense guidance and I hate to ask you to go over this again. But I assume when you're guiding over the next couple of quarter to $13.5 million or $14 million if I understand it right, what we're talking about is G&A plus compensation and benefits in stock-based comp. Those three put together?

Ten-fourth.

Okay. Alright, that's great. Secondly, and then I'll jump out. The repayment in the third quarter of the SBA debentures. Did you fund that with the credit facility?

No, we took some of the excess cash flows that we had and did that. But the truth be told, cash is fungible. So, let's be realistic about that, but the answer is that it came off of some proceeds but yes, the borrowing on the bank line. So again, cash is fungible either way but we used early payment activities and amortization.

Okay. Great. All right thanks. Appreciate it.

Thank you. Our next question comes from Tim Hayes with B. Riley FBR. Your line is now open.

Hi guys. Good evening. Can you talk a little bit more about the drivers behind the favorable market conditions you're seeing? You talked about the robot VC capital investment but as it relates to the competitive environment are you still seeing newer entrants leave the market and is there still in absence in bank participation or anything else driving the demand?

I think that Tim you've been on some calls, or seen some of our smaller venture lenders out there. I mean some reported $30 million some reported $50 million a quarter. That's one deal for us. I think that you're seeing that you know that our size and our balance sheet really affords the ability to kind of look at multiple different transactions and have the underlying venture capital partners and the end underlying entrepreneurs really see the strength of our balance sheet and our partnership and our success with what we have done. So, we're very grateful for that recognition. As to competition, we don't see any sustained consistent player in the market. I think that it's both regional and sector driven competition as opposed to a national competition. We of course continue to see the standard usual suspects which are the venture banks they're out there but size also makes differentiation that we see lots of competition about $20 million and we see fierce competition below $6 million [ph].

Okay. Got it. Thanks for the color there, switching gears a little bit. How productive have talks been with the rating agencies over the past couple of months? Do you feel any better today about potentially being able to increase leverage while maintaining your investment grade rating than you did say month or two ago?

You know in fairness the rating agencies, I think that they are all have taken a more thoughtful process and I think that they're evaluating the obligors or the issuers independently now from each other and I think that I would kind of characterize my conversation as constructive but ongoing and it is certainly our hope to continue to work with the rating agencies to sustain and maintain our investment grade ratings. I suspect that that will probably happen, but I don't know until those conversations conclude which is why we expect to report sometime in late September on what the outcome on those conversation our position is. That said it's important to note that we don't have the same conflicts and challenges that other VCs do because we're not in the highly competitive lower middle market lending. Number two, we have ample access to the equity capital markets because they trade above net asset value, we have an ATM program and we're internally managed. So, there's a lot of differences that we the Hercules platform has that we're encouraged that the rating agencies are taking into account in understanding our business as an internally managed VC and our hyper focus on credit and credit quality that we have earned over the last 13 plus years. We think all that should get back into the ultimate decision, but again it's an ongoing conversations, they are very positive and very supportive. But I cannot speak for them nor do I know where they are going to end up. But we are surely going to work hard as we can to maintain our invested grade ratings if and when we seek higher leverage. But I will also say, if and when we see higher leverage, it's not going to go from zero to two to one immediately. No, in fact it's going to be a very gradual methodical process via the prepayment and the sheer nature of venture leading is the short duration asset. We don't anticipate, if we go on higher leverage it will probably take us 24 to 36 months. So, you can get to 1.3 times leverage if you will or higher. It's going to be difficult. So, to answer the very methodical slow process and we're hoping the rating agencies will take that into account.

Got it. Appreciate the color there. And then on the early repayments obviously more moderate activity there, but if you look back early payoffs in one Q and three Q of last year they were roughly around the same levels yet contributed more to the GAAP effective yield. I'm just wondering if that's a function of the credit this quarter being more seasoned and older not driving as much the income from that standpoint?

Usually on the high. Once a credit breaks over 24 months there's not a lot of acceleration of unamortized income and the prepayment oftentimes collapses in some cases zero or less than 1% or so. So yes, it has to do with the longevity of the credit. We saw older credits kind of cycle off and that kind of draw a little bit of that distribution.

Okay. Got it. And then just one more for me. You almost had a full quarter of Gibraltar on the books now. Maybe you started to really reap the benefits from that acquisition and do you think that had any impact on the lower level of repayments during the quarter?

So, we are yet to integrate and work with the Gibraltar team. The Gibraltar team on their own are doing a tremendous and frankly a great job. We are very very delighted as partners and owner of that franchise and how well they are doing. It's being run by a highly credit won and focused guy over there Scott. And I think that we are without giving specific, I think we've enjoyed in a short time that we've acquired them. I believe the number are 35%, 40% loan growth already and we're seeing equally growth on our income numbers and they have yet to hit the gas for its acquisition. So, I think that the Gibraltar acquisition has been fantastic. It's contributing to our earnings as we expected in Q2, in the second half of 18. And they are ahead of schedule as we expect them to be and we're very delighted with the continued discipline and growth that they are doing that property.

Okay. Thank you for taking my questions.

Thank you. Our next question comes from Aaron Deer with Sandler O'Neill. Your line is now open.

Good afternoon guys.

Hi Aaron.

I think you actually addressed pretty much all my questions maybe just one kind of modelling kind of question. What's the scheduled amortization that you guys are looking at for the next couple of quarters?

I think because of the newness to the other portfolios since we have been originating so robustly over the last three quarters. I think you're going to see a marginally level probably around $20 million to $25 million for each of the next two quarters as opposed to a typical $35 million to $40 million. Because now you have a portfolio, which is what gives us comfort on lower early prepayment. The portfolio itself on a season weighted basis is somewhere around 13 months to 14 months in duration. So, we typically don't see portfolio activity percolating [ph] upward until you cross over that month 16 and 18. So, we don't expect much more early payoff activity as I said, but $100 million in the next two quarters because of the young seasoned portfolio it is.

Okay. That's great. Thanks for helping me out there. I appreciate it.

Thank you. Our next question comes from Christopher Nolan with Ladenburg Thalmann. Your line is now open.

Hi, guys. - income.

I'm sorry, it's spillover income.

Yes.

We're at $21 million as of the end of Q2, but I got to remind everybody intra-year spillover income has a lot of variability for realized gains or realized losses that may have between now and year-end, but yes, it's $21 million at the second quarter mark, but if you move up or down quite dramatically later on in a year by those activities.

And what was cost of debt excluding the non-recurring items?

No, no. 5.2% excluding the one-time events. So, our spreads are nice. As you'll do the calculation.

Final question, why haven't you seen, are you seeing more new comers come into debt market to you for the venture debt?

As always said the water is warm and everyone is welcome. It's a very hard asset class with a lot of various entry. We make it look easy, it's anything but that. It's a very hard asset class I think that there are new entrants that always come in from time to time but very few have the scale and the capabilities that we do.

Correct. Okay. Thanks for taking my questions.

Thank you. Our next question comes from Henry Coffey with Wedbush. Your line is now open.

Yes. Good afternoon and let me add my congratulations. I haven't seen you guys this excited about where the business is going since the ancient days. And when I look around and I made this maybe on fair assessment, but the large identified competitors that we saw back in the 00's. I don't hear them or maybe they are out there and I just don't know who they are but the growth opportunity is fairly large. And then the only other question I'd sort of throw into this discussion is the access to a robust source of financing with sub 5% is there such a beast out there that you can find that doesn't have any negative features or past facilities like that? Were you part of a conduit or something or is it just the nature of the credits such that you get the yields, you get but you have to suffer the higher funding cost?

Okay. We said this all along, scale in this business is very critical whether you are Aries Capital or Apollo, TPG, scale does matter in VC world and it certainly has a huge significance and importance venture lending because exactly your point. When you have the largest scale, you can access a wide array of different types of capital. You can laterite your maturities, you can kind of blend your different cost of funds to get to be very effective as we've been managing since 2011 with a treasury function. Our cost of funds are now are hovering around 5.2%, while our total yields are 12.7% and effective yields higher than that. So you can use the spread. So when you look at leverage in this business and we're operating at historically at about a 75% leverage level, when you actually maintain that discipline without changing any of your investment parameters and start adding gradual leverage of 1 to 1, or 1 to 1.15 or 1.20 to 1 it only magnifies the strong credit performance you've had into strong ROE's. So scale is a big driver in that issue and maintain a discipline. But no Henry, to your point we are not aware of nor do we see any competitive threat of our size anywhere in the marketplace aside from one or two of the large venture banks. But beyond that no, we don't see that.

And when you think about leveraging in 2019 and 2019. Is it going to be more likely to be some form of unsecured rated term debt or do you think there is room for an asset based facility?

As we all know, the yield curve right now is signaling some complex mixed messages with the inversion that some people argue it [indiscernible] earlier this week. But looking at the elongated part of the yield curve it's actually more economical for me to later our maturities to 10-15 year levels. Then it is to do near term bonds at the three to five-year level right now because of the yield curve. It's a very good instrument for the rating agencies and also for ourselves to maintain a wide distribution or diversifying liquidity structure or capital stack. So, we always like to have bank lines. We like to have the SBA, the SBA has been a great partner of ours for over a decade. We want -- we've now done two securitization, we'll probably do a third securitization. We've access to the invested grade bond market, we have accessed the five year retail market, the five and the seven year retail market and the 10 year retail market and we do a convert. So we have a pretty robust treasury function to manage the cost of capital and natural liquidities that we're looking for a lathering out maturities and that's part of the overall corporate strategies that we have here given our size is managing that cost of funds and managing the different levels and maturities and different maturity dates one has out there.

So, it's going to be a complex structure going forward?

I would argue that we already have one now, but yes it will somewhat what we have now and probably even further enhanced.

Great. Thank you.

Thank you. Our next question comes from Robert Dodd with Raymond James. Your line is now open.

Hi guys, two questions. First on kind of the core yield. The 12.7 very good number, historically for 17, even though that's 19 you are talking about kind of the range typically being 11.5 to 12.5. Is this quarter, the 12.7 kind of obviously base rates have moved higher. You'd talked about the advantages you've gotten the credibility in the market. Is this 12.7 an indicator of kind about a structural shift that maybe you are going to live at the high end of the range or maybe above the high end of the historic range of is it just? We've seen high quarters and poor yields before as it's just a good quarter but not indicative of some kind of overall trend?

So, I think in fairness to your question with all the above. There's certainly embedded benefits for now nearly four rate increase that occurred and the portfolio now stabilizing without having a lot of release activation. Again, to reap the benefits of that lower portfolio turn were some of the earlier assets are benefitting through those rate increases. So yes, that's [indiscernible] factor to that increase of 12.7 and the second part of your question there's no structural change in what we're doing, it happens to be a benefit of the market catching up with where the core yields are now in the marketplace they are originating and the benefit of those four previously increases in the overall rate. We do not anticipate us going much below 12% for quite some time in our modeling right now. In fact, as I said at the earlier part of the call 12.5 or 12.7 is a range that we're pretty comfortable looking at for Q3 right now from what we're seeing in the portfolio on a core basis.

Got it. I appreciate. And maybe just one more if I can. You just mentioned obviously the diversity of the funding sources so do you want to utilize. You just paid off all the debentures in HT2 any update on or where you are on getting the next license if the application is still outstanding I don't even know?

I think that we have begun that process. I don't want to handicap that or speculate as for the time being. But I would say to you that given that we've been great partners with the SBA that we have paid back the debentures. We continue to find the economic hub zones, but they want us to be invested in, and helping American companies and helping American employment and American innovation. I think that we remain and continue to be one of the poster child of what the SBA program stands for and helping them advance American ingenuity. So, we're very hopeful and remain optimistic that the SBA will move quickly and also grant us our license. If it happens in 18, that's the cherry on the sundae. If it happens early 19, that the beans on the ice cream.

Appreciate it. Thank you.

Thank you. Our next question comes from Finian O'Shea with Wells Fargo Securities. Your line is now open.

Hi guys, good afternoon. Thanks for taking my question and congratulations on the pretty good quarter on originations and gains we saw. They've been a lot of questions today, I'll do a higher level one on the $1.55 billion to $1.65 billion year-end target. Let's assume you hit this and raise it again, given the opportunities that remains large, which I believe it does given your deployment. Can you give us just some color on the conversations you have say in January regarding the year-end targets just assuming you still value growing the might of Hercules? Where are you in the lifetime context as to turning to optimize the ROE profile for example run higher leverage, kind of focus on asset yields as Robert was just touching on et cetera.

So, I assume you are referring to fiscal January 19?

Yes. Just I guess I can ask or work that much more shortly how big do you want to grow given the current opportunity set. And I recognize you continually, you do this in a measured pace but you look on pace to hit the year-end target just trying to get a feel of how big Hercules gets.

I think that we're comfortable saying for the time being is that one of the drivers on growth is certainly the vibrancy of the venture capital industry. Because we are directly correlated with venture capital investments in new activities and funding of those companies. So we have a great slide in our investor deck that actually points to that we typically represent about 1.4% of the total venture equity dollars that are invested are matched by Hercules debt capital out there. So by extrapolation, if you assume that the venture capital industry would do $100 billion in fiscal 18 and you keep that same percentage of 1.4% participation that Hercules Capital has had historically, you would see that that would be great about $1.4 billion. Now would you probably do that, but what I'm not comfortable and we're not comfortable going to that level. I think we much more prefer to be at the $1.2 billion level of the commitment this fiscal 2018. So that means that I think that we're not just looking to grow to grow because that's something we don't believe in. We grow when the asset quality makes sense and the deals and yields make sense. That is to grow to grow, is what we don't get paid for AUM. So, it doesn't matter us, we get paid for strong asset performance. So that means is you got to distill all that down. I think that we're comfortable saying that the loan book grow on a net basis on an annual level between $250 million and $350 million is kind of the cadence that we would like to see the loan portfolio grow on a year-over-year basis. And so, in fiscal 2018 you're probably somewhere in that $250 million to $350 million on a net base that we talked about and that's kind of the way we look at on how we want to grow the loan book and a much more controlled in a slow and steady growth that we talked about earlier.

Very well. I thank you for the color. And thanks again for taking my question.

Thank you. I am not showing any further questions at this time. I would now like to turn the call back over to Manuel Henriquez for closing remarks.

Thank you, operator. Thank you all for joining us today. We will probably going out and having non-deal roadshows over the next couple of months. We're scheduled conferences are not to begin probably till late September early October, at which point we'll make those announcements. With that, thank you everybody for joining on the call today. And thank you very much for continuing support and being a Hercules shareholder and bondholder. Thank you everybody and have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a great day.