A n I n te r n a ti o n a l A l t e r n a t i v e A s s e t M a n a g e r FOURTH QUARTER 2025 INVESTOR PRESENTATION TRINITYCAPITAL.COM NASDAQ: TRIN FORWARD-LOOKING STATEMENTS | DISCLAIMER Trinity Capital Inc. (the "Company") cautions that this presentation may contain forward-looking statements that are based on current expectations and assumptions about future events, and which are not based in historical fact. The forward-looking statements in this presentation are based on current conditions as of the da ...

Group 1: Bank of America Initiatives - Bank of America (BofA) has committed $25 billion of its own funds towards private-credit investments, enhancing its direct-lending activities [1] - BofA plans to source these transactions through its capital-markets unit within its investment-banking division [1] - Anand Melvani has been promoted to head of private credit for the global capital market division while retaining his role as head of Americas leveraged finance [1] Group 2: Market Context and Competition - BofA is among the latest Wall Street banks to challenge non-bank lenders amid growing concerns about credit quality and market liquidity [2] - Other banks, including Citigroup, have also committed capital to the private credit sector, with Citigroup entering a strategic partnership with Apollo Global Management to launch a $25 billion private credit and direct lending program [4] - The $1.7 trillion private credit market is facing pressures from higher interest rates and exposure to struggling sectors like enterprise software [4] Group 3: Redemption Issues in Private Credit - Blue Owl Capital announced a change in its method for providing redemptions, which has raised concerns in the market [2] - CEO Craig Packer of Blue Owl Capital clarified that the firm has been tendering 5% of the shares in its private credit fund for eight years and is now accelerating redemptions instead of resuming the previous 5% [3]

Group 1 - The growth in artificial intelligence spending and the private credit market is driving increased borrowing by companies and setting new records for corporate-bond trading [1][3] - An average of $50 billion in investment-grade and high-yield bonds was traded daily last year, a record high, up from $46 billion in 2024, reflecting the benefits of longer-term changes like electronic trading [2] - Major dealers, including Morgan Stanley and JPMorgan Chase & Co., anticipate record issuance of high-grade US corporate debt, partly due to companies funding AI infrastructure investments [3][4] Group 2 - Companies like Meta Platforms Inc. and Blue Owl Capital Inc. raised approximately $27 billion in high-grade debt for a data center project, indicating a trend of borrowing in private markets [4] - The issuance of longer-dated bonds by tech companies and utilities to fund AI-related investments is expected to increase trading activity [5] - The volatility in bond prices, influenced by shifts in the yield curve, is attracting hedge funds and active traders [6] Group 3 - As companies increase borrowing for AI projects, investors are becoming more cautious about their exposure to tech companies and utilities, leading to heightened hedging activity in the credit default swap market [7]

Core Viewpoint - Ares Capital is recognized for its ability to sustain a high dividend yield of 9.6%, significantly higher than the S&P 500's yield of 1.1%, making it an attractive investment option for income-seeking investors [1][8]. Company Overview - Ares Capital is a specialty finance company that provides direct loans and investments to private middle-market companies with annual revenues between $10 million and $1 billion [3]. - The company is part of Ares Management, which manages nearly $600 billion in assets across various sectors, giving Ares Capital access to high-quality investment opportunities [4]. Financial Performance - Ares Capital has a market capitalization of $14 billion and a gross margin of 76.26% [5][6]. - As of the end of the third quarter, Ares Capital has $28.7 billion in total investments across 587 portfolio companies, with 71% of its portfolio consisting of senior secured loans [6]. - The company has maintained a cumulative net realized loss of less than 0% since its inception, indicating a strong risk management profile [6]. Dividend Sustainability - Ares Capital is required to distribute 90% of its taxable income as dividends to comply with IRS regulations, contributing to its high dividend yield [7]. - The company has a track record of 16 years of stable to increasing quarterly dividends, with a current quarterly dividend of $0.48 per share, which is below its GAAP net income level of $0.57 per share [8][9]. - Ares Capital has built a cushion of approximately $1.26 per share of taxable income from the previous year, allowing it to maintain its dividend even in the event of temporary income declines [9]. Growth Opportunities - The company sees significant growth potential due to a decline in the number of banks in the U.S. and an increasing demand for credit, estimating a $3 trillion opportunity for middle-market companies and an additional $2.4 trillion for larger companies [10]. - Ares Capital raised over $1 billion in new debt capital in the third quarter, enhancing its liquidity and enabling it to make $3.9 billion in new investment commitments [11]. Future Outlook - Ares Capital is well-positioned for continued success in 2026, with a strong portfolio and financial profile that supports its high-yielding dividend [12].

Core Viewpoint - The introduction of a 50-year mortgage by the Trump administration is seen as a potential risk for consumers, particularly for those who may not fully understand the financial implications, leading to increased financial disparity [1][2][4]. Group 1: Risks of the 50-Year Mortgage - The 50-year mortgage could trap consumers, especially retirees and first-time buyers, in a "risky" financial situation that is vulnerable to market shifts [1][2]. - Credit solutions expert Micah Smith warns that this mortgage type may attract unsavvy consumers who lack financial literacy, potentially leading to long-term financial difficulties [1][2]. - A UBS analysis indicates that a 50-year mortgage results in total interest payments of approximately 225% of the home's price, significantly higher than a 30-year mortgage, and shows that only about 11% of the principal would be paid down after 20 years [6]. Group 2: Implications for Different Consumer Segments - The 50-year mortgage may exacerbate the wealth gap, benefiting those with substantial future income plans while harming vulnerable groups such as first-time homebuyers, retirees, and military families [2][7]. - The current mortgage regulations limit the qualification of loans longer than 30 years, which may affect the accessibility of this new mortgage type [5].

Core Insights - European banks are facing significant credit concerns as earnings season begins, with heavy losses reported across the sector [1][4] - Major U.S. financial leaders have issued stark warnings about the private credit market, indicating potential risks that could affect European banks [2][4] Earnings Season Overview - The earnings season in Europe will be led by major banks such as Unicredit, Barclays, Lloyds Banking Group, and Natwest [3] - Analysts expect a shift in focus from macroeconomic risks to microeconomic risks during earnings calls, particularly regarding credit quality [4] Credit Quality Concerns - There are worries about the credit quality of corporate and small-to-medium-sized company loan books, with potential impacts from trade tariffs being underestimated [4] - Despite the concerns, some analysts do not foresee a material deterioration in credit quality in the third-quarter results [4] Specific Bank Updates - Unicredit is expected to report subdued third-quarter results due to narrowing net interest margins and higher funding costs [5] - Lloyds Banking Group has announced a £1.95 billion hit to its balance sheet due to a regulatory ruling on mis-sold car finance loans, which could offset strong quarterly performance [6]

Core Insights - U.S. stock indices experienced a sharp decline due to loan losses and fraud allegations disclosed by regional banks Zions Bancorporation and Western Alliance Bancorporation, with Zions and Western Alliance stocks falling 13.1% and 10.8% respectively [1][2] Summary by Sections Regional Banking Sector Concerns - The disclosures from Zions and Western Alliance have reignited investor fears regarding the health of the regional banking sector, leading to a 6.3% drop in the KBW Regional Banking Index [2] Specific Company Revelations - Zions Bancorporation reported a $50 million charge-off related to two troubled commercial loans, which will impact its third-quarter 2025 results, citing borrower misrepresentations and defaults [3] - Western Alliance disclosed a lawsuit against Cantor Group V, LLC for loan fraud and noted exposure to bankrupt auto-related companies, although it reported a decrease in total criticized assets as of September 30, 2025 [4] Broader Credit Quality Issues - JPMorgan's CEO highlighted significant losses from the downfall of Tricolor Holdings, indicating potential widespread issues in the regional banking sector, with JPM reporting a $170 million charge-off [5] - Fifth Third Bancorp also indicated a charge of $170–$200 million related to subprime auto lender Tricolor, affecting its credit loss provisions [5] Implications for Risk Management - The recent disclosures suggest that fraud is now a credit quality issue rather than merely a compliance concern, raising questions about risk management and underwriting standards at regional banks [6] - Investors are increasingly cautious and scrutinizing regional banks for hidden loan problems, viewing recent incidents as warning signs of broader credit deterioration [7] Market Reactions - The surge in loan troubles and fraud risks has placed regional lenders at the center of market turbulence, renewing concerns about overall credit quality and potential ripple effects throughout the U.S. financial system [8]

Core Insights - U.S. bank stocks, including Zions Bancorporation, Jefferies, and Western Alliance, experienced significant declines due to investor concerns over risks in the sector linked to auto bankruptcies [1][2] Company-Specific Summaries - Zions Bancorporation's stock fell by 12% after announcing a $50 million loss in Q3 related to two commercial and industrial loans from its California division [2] - Western Alliance's stock dropped nearly 11% following the initiation of a lawsuit alleging fraud against Cantor Group V, LLC [2] - Jefferies' stock plunged 9% after revealing exposure to bankrupt auto parts maker First Brands, with its shares down over 20% since the bankruptcy announcement [2] Market Reactions - The regional banking index declined by 5.8%, while the S&P 500 lost nearly 1%, indicating broader market impacts from the banking sector's turmoil [5] - Analysts noted that the situation highlighted vulnerabilities in credit quality oversight among banks, drawing parallels to the First Brands collapse [6] Analyst Commentary - Analysts expressed concerns about the implications of poor credit quality at one bank affecting the entire sector, emphasizing the need for improved oversight and transparency in the credit market [3][6] - Comments from JPMorgan Chase's CEO Jamie Dimon underscored the anxiety in the credit market, suggesting that the issues may be more widespread [7]

Core Insights - Fed Governor Chris Waller discussed the challenges of making policy decisions without complete economic data, emphasizing the importance of private sector data to gauge the labor market's health [3][4][5][6][10] Economic Data and Labor Market - Waller noted that while government data is delayed, private sector indicators suggest a weak labor market, with job growth potentially negative in recent months [6][7][14] - Anecdotal evidence from businesses indicates a lack of hiring plans, with many companies not backfilling positions or making new hires [8][14] - The labor market's weakness is a primary concern for policy decisions, as it does not align with GDP growth forecasts, which are close to 4% [20][21] Inflation and Tariffs - Waller expressed that tariff effects are one-time price increases and do not lead to persistent inflation, aligning with historical central bank views [12][13] - He highlighted a two-tier effect in the market where higher-income consumers are more likely to absorb tariff costs, while lower-income consumers are more price-sensitive [18][19] Policy Direction - Waller advocates for cautious rate cuts, suggesting that the Fed should adjust its approach based on incoming data regarding the labor market and GDP growth [20][22] - The market anticipates sequential rate cuts, but Waller emphasizes a measured approach to avoid potential policy missteps [22][23] Private Credit Market - Waller addressed concerns about the private credit market, indicating that it is less risky due to the significant equity positions involved, which provide a buffer against defaults [24][25] - He noted that while losses may occur, it is part of the capitalist system, and it is not the Fed's role to protect individual wealth [26]

Company Overview - Trinity Capital has a diversified financial solution with $4.7 billion in fundings[8] - The company's portfolio includes $1,491.8 million in secured loans across 84 companies[8] - Trinity Capital has $2.3 billion assets under management[8] - The company's annualized dividend yield is 14.5%[8] - Available liquidity stands at $143.3 million[8] Financial Performance (Q2 2025) - Total investment income reached $69.5 million[41] - Net investment income (NII) was $34.8 million[41] - The company reported a net interest margin (NIM) of 11.7%[41] - Debt and equity commitments in 2Q25 totaled $519.8 million[41] - Total debt investments at cost amounted to $1,875.1 million[41]