FS KKR Capital (FSK) 8-K FS Investment Corporation Reports Third Quarter 2014 Financial Results

www.fsinvestmentcorp.com

FS Investment Corporation

THIRD QUARTER 2014 FINANCIAL INFORMATION

Exhibit 99.2

2

Important Disclosure Notice

This presentation may contain certain forward-looking statements, including statements with regard to the future performance of

FS Investment Corporation (FSIC, we or us). Words such as “believes,” “expects,” “projects” and “future” or similar expressions

are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in

predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these

forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks

associated with possible disruption in FSIC's operations or the economy due generally to terrorism or natural disasters, future

changes in laws or regulations and conditions in FSIC's operating area, and the price at which shares of common stock may trade

on the New York Stock Exchange LLC (NYSE). Some of these factors are enumerated in the filings FSIC makes with the

Securities and Exchange Commission (SEC). FSIC undertakes no obligation to update or revise any forward-looking statements,

whether as a result of new information, future events or otherwise.

This presentation contains summaries of certain financial and statistical information about FSIC. The information contained in this

presentation is summary information that is intended to be considered in the context of FSIC’s SEC filings and other public

announcements that FSIC may make, by press release or otherwise, from time to time. FSIC undertakes no duty or obligation to

update or revise the information contained in this presentation. In addition, information related to past performance, while helpful

as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. Investors should

not view the past performance of FSIC, or information about the market, as indicative of FSIC’s future results.

This presentation contains certain financial measures that have not been prepared in accordance with U.S. generally accepted

accounting principles (GAAP). FSIC uses these non-GAAP financial measures internally in analyzing financial results and

believes that the presentation of these non-GAAP financial measures is useful to investors as an additional tool to evaluate

ongoing results and trends and in comparing FSIC’s financial results with other business development companies.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial

measures, and should be read only in conjunction with FSIC’s consolidated financial statements prepared in accordance with

GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures has been provided in

the table on page 15 included in this presentation and investors are encouraged to review the reconciliation.

Certain figures in this presentation have been rounded.

3

Financial and Portfolio Highlights

Financial Highlights

(all

per

share

amounts

are

basic

and

diluted)

1

Q3-14

Q2-14

Q3-13

9ME-14

9ME-13

Net investment income per share

$

0.25

$

0.23

$

0.26

$

0.69

$

0.76

Adjusted

net

investment

income

per

share

2*

$

0.25

$

0.26

$

0.25

$

0.75

$

0.76

Total

net

realized

and

unrealized

gain

(loss)

on

investments

per

share

$

(0.02)

$

0.04

$

(0.03)

$

0.12

$

(0.01)

Net increase (decrease) in net assets resulting from operations (Earnings per

Share)

$

0.23

$

0.27

$

0.23

$

0.81

$

0.74

Stockholder

distributions

per

share

3**

$

0.3228

$

0.2228

$

0.2093

$

0.7616

$

0.6166

Net asset value per share at period end

$

10.19

$

10.28

$

10.10

$

10.19

$

10.10

Weighted average shares outstanding

239,548,922

255,301,300

256,108,444

251,603,035

254,322,277

Shares outstanding, end of period

240,001,859

239,026,360

257,190,300

240,001,859

257,190,300

Portfolio Highlights

(in thousands)

Q3-14

Q2-14

Q3-13

9ME-14

9ME-13

Purchases

$

432,026

$

737,704

$

875,476

$

1,641,221

$

(2,204,560)

Sales and Redemptions

(348,358)

(609,417)

(668,647)

(1,523,890)

1,974,977

Net Portfolio Activity

$

83,668

$

128,287

$

206,829

$

117,331

$

(229,583)

Total fair value of investments

$

4,316,524

$

4,227,103

$

4,200,801

$

4,316,524

$

4,200,801

Total assets

$

4,570,655

$

4,572,364

$

4,633,585

$

4,570,655

$

4,633,585

*See page 15 hereof for reconciliations between net investment income per share and adjusted net investment income per share.

**On July 1, 2014, the board of directors of FSIC declared a special cash distribution of $0.10 per share, which was

paid on August 15, 2014 to stockholders of record as of the close of business on July 31, 2014.

Endnotes begin on page 16.

4

Select Historical Information

As of

(dollar amounts in thousands)

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

Investments, at fair value

$

4,316,524

$

4,227,103

$

4,077,627

$

4,137,581

$

4,200,801

Portfolio Data

Number of Portfolio Companies

128

125

148

165

182

Average Annual EBITDA of Portfolio Companies

$

148,000

$

181,000

$

174,200

$

190,700

$

252,900

Weighted

Average

Purchase

Price

of

Investments

(as

a

%

of

par

or

stated

value)

97.7%

97.4%

97.1%

97.3%

97.3%

Weighted

Average

Credit

Rating

of

Investments

that

were

Rated

4

B3

B3

B3

B3

B3

%

of

Investments

on

Non-Accrual

(based

on

fair

value)

5

0.5%

0.5%

—

—

—

Asset Class (based on fair value)

Senior Secured Loans—First Lien

54%

54%

50%

51%

51%

Senior Secured Loans—Second Lien

18%

18%

22%

22%

22%

Senior Secured Bonds

8%

9%

10%

9%

9%

Subordinated Debt

11%

10%

10%

10%

11%

Collateralized Securities

3%

3%

3%

4%

3%

Equity/Other

6%

6%

5%

4%

4%

Portfolio

Composition

by

Strategy

(based

on

fair

value)

6

Direct Originations

70%

66%

57%

51%

52%

Opportunistic

20%

22%

26%

28%

25%

Broadly Syndicated/Other

10%

12%

17%

21%

23%

Interest Rate Type (based on fair value)

% Variable Rate

71.4%

71.2%

71.3%

72.2%

70.0%

% Fixed Rate

22.1%

22.9%

22.9%

23.5%

26.3%

% Income Producing Equity or Other Investments

2.5%

2.5%

2.5%

2.4%

2.2%

% Non-Income Producing Equity or Other Investments

4.0%

3.4%

3.3%

1.9%

1.5%

Yields

Gross Portfolio Yield Prior to Leverage (based on amortized cost)

9.9%

9.9%

10.2%

10.1%

10.4%

Gross Portfolio Yield Prior to Leverage (based on amortized cost)—Excluding Non-Income

Producing Assets

10.3%

10.3%

10.3%

10.2%

10.6%

5

Select Direct Origination Information

Three Months Ended

(dollar amounts in thousands)

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

New Direct Originations

Total Commitments (including unfunded commitments)

$

451,931

$

529,871

$

369,033

$

86,913

$

614,862

Exited Investments (including partial paydowns)

(213,837)

(114,422)

(126,964)

(188,718)

(97,561)

Net Direct Originations

$

238,094

$

415,449

$

242,069

$

(101,805)

$

517,301

New Direct Originations by Asset Class (including unfunded commitments)

Senior Secured Loans—First Lien

80%

76%

24%

78%

67%

Senior Secured Loans—Second Lien

11%

—

65%

—

23%

Senior Secured Bonds

—

5%

4%

—

—

Subordinated Debt

9%

12%

2%

—

6%

Collateralized Securities

—

—

—

19%

—

Equity/Other

0%

7%

5%

3%

4%

Average New Direct Origination Commitment Amount

$

37,661

$

44,156

$

28,387

$

21,728

$

55,897

Weighted Average Maturity for New Direct Originations

3/18/2020

1/6/2020

10/12/2020

5/19/2019

7/31/2018

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of New Direct

Originations during Period

9.7%

10.4%

9.1%

9.2%

11.7%

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of New Direct

Originations during Period—Excluding Non-Income Producing Assets

9.7%

11.2%

9.6%

9.5%

11.8%

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations

Exited during Period

10.0%

11.2%

9.4%

16.9%

11.0%

As of

Characteristics of All Direct Originations held in Portfolio

9/30/2014

12/31/2013

Direct Originations, at fair value

$

3,001,347

$

2,096,806

Number of Portfolio Companies

48

35

Average Annual EBITDA of Portfolio Companies

$

48,800

$

34,900

Average Leverage Through Tranche of Portfolio Companies—Excluding Equity/Other and

Collateralized Securities

4.4x

4.0x

% of Investments on Non-Accrual

—

—

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct

Originations

9.8%

9.9%

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct

Originations—Excluding Non-Income Producing Assets

10.1%

10.0%

6

Quarterly Operating Results

Three Months Ended

(dollar amounts in thousands, except per share amounts)

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

Total investment income

$

115,917

$

120,721

$

114,796

$

116,866

$

123,307

Net expenses

(55,814)

(62,748)

(58,919)

(59,446)

(54,793)

Net investment income before taxes

$

60,103

$

57,973

$

55,877

$

57,420

$

68,514

Excise taxes

—

—

—

(5,000)

(742)

Net investment income

$

60,103

$

57,973

$

55,877

$

52,420

$

67,772

Total net realized and unrealized gain (loss) on investments

(4,504)

11,338

24,183

24,388

(8,155)

Net increase (decrease) in net assets resulting from operations

$

55,599

$

69,311

$

80,060

$

76,808

$

59,617

Per

share

1

Net investment income

$

0.25

$

0.23

$

0.22

$

0.20

$

0.26

Adjusted

net

investment

income

2

$

0.25

$

0.26

$

0.23

$

0.24

$

0.25

Net increase (decrease) in net assets resulting from operations

(Earnings per Share)

$

0.23

$

0.27

$

0.31

$

0.30

$

0.23

Stockholder

distributions

3*

$

0.3228

$

0.2228

$

0.2160

$

0.2137

$

0.2093

Weighted average shares outstanding

239,548,922

255,301,300

260,185,661

258,262,842

256,108,444

Shares outstanding, end of period

240,001,859

239,026,360

261,301,955

259,320,161

257,190,300

Nine Months Ended

(dollar amounts in thousands, except per share amounts)

9/30/2014

9/30/2013

Total investment income

$

351,434

$

357,700

Net expenses

(177,481)

(164,402)

Net investment income before taxes

$

173,953

$

193,298

Excise taxes

—

(742)

Net investment income

$

173,953

$

192,556

Total net realized and unrealized gain (loss) on investments

31,017

(3,524)

Net increase (decrease) in net assets resulting from operations

$

204,970

$

189,032

Per

share

1

Net investment income

$

0.69

$

0.76

Adjusted

net

investment

income

2

$

0.75

$

0.76

Net increase (decrease) in net assets resulting from operations

(Earnings per Share)

$

0.81

$

0.74

Stockholder

distributions

3*

$

0.7616

$

0.6166

Weighted average shares outstanding

251,603,035

254,322,277

Shares outstanding, end of period

240,001,859

257,190,300

*On July 1, 2014, the board of directors of FSIC declared a special cash distribution of $0.10 per share, which was

paid on August 15, 2014 to stockholders of record as of the close of business on July 31, 2014.

7

Quarterly Operating Results Detail

Three Months Ended

(in thousands)

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

Investment income

Interest income—unaffiliated

$

104,823

$

102,096

$

104,711

$

109,907

$

109,886

Fee income—unaffiliated

10,606

18,450

10,085

6,903

11,975

Dividend income—unaffiliated

488

175

—

56

1,446

Total investment income

$

115,917

$

120,721

$

114,796

$

116,866

$

123,307

Operating expenses

Management fees

$

20,000

$

22,695

$

22,371

$

22,706

22,720

Capital

gains

incentive

fees

7

(910)

2,268

4,836

4,794

(1,548)

Subordinated income incentive fees

14,794

15,061

15,178

14,303

16,555

Administrative services expenses

1,202

1,189

1,200

1,131

1,243

Stock transfer agent fees

4

546

451

420

610

Accounting and administrative fees

172

320

332

327

343

Interest expense

18,940

14,129

12,700

13,653

13,098

Directors' fees

266

264

265

254

241

Listing advisory fees

—

5,043

—

—

—

Other general and administrative expenses

1,346

4,070

1,586

1,858

1,531

Total operating expenses

$

55,814

$

65,585

$

58,919

$

59,446

$

54,793

Management fee waiver

—

(2,837)

—

—

—

Net expenses

$

55,814

$

62,748

$

58,919

$

59,446

$

54,793

Net investment income before taxes

$

60,103

$

57,973

$

55,877

$

57,420

$

68,514

Excise taxes

—

—

—

(5,000)

(742)

Net investment income

$

60,103

$

57,973

$

55,877

$

52,420

$

67,772

8

Quarterly Gain/Loss Information

Three Months Ended

(in thousands)

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

Realized gain/loss

Net realized gain (loss) on investments—unaffiliated

$

5,421

$

6,716

$

13,822

$

9,794

$

6,602

Net realized gain (loss) on foreign currency

(338)

114

(19)

(79)

70

Total net realized gain (loss)

$

5,083

$

6,830

$

13,803

$

9,715

$

6,672

Unrealized gain/loss

Net change in unrealized appreciation (depreciation) on

investments—unaffiliated

$

(8,901)

$

4,706

$

10,335

$

14,855

$

(14,857)

Net change in unrealized appreciation (depreciation) on

investments—affiliated

(747)

(299)

—

—

—

Net change in unrealized gain (loss) on foreign currency

61

101

45

(182)

30

Total net unrealized gain (loss)

$

(9,587)

$

4,508

$

10,380

$

14,673

$

(14,827)

Total net realized and unrealized gain (loss) on investments

$

(4,504)

$

11,338

$

24,183

$

24,388

$

(8,155)

9

Quarterly Balance Sheets

As of

(in thousands, except per share amounts)

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

Assets

Investments, at fair value—unaffiliated

$

4,299,639

$

4,209,471

$

4,077,627

$

4,137,581

$

4,200,801

Investments, at fair value—affiliated

16,885

17,632

—

—

—

Cash

179,984

244,074

297,685

227,328

290,439

Receivable for investments sold and repaid

9,502

35,592

67,779

26,722

85,341

Interest receivable

52,650

56,362

55,327

47,622

51,075

Deferred financing costs

10,962

7,768

4,845

5,168

5,757

Prepaid expenses and other assets

1,033

1,465

404

156

172

Total assets

$

4,570,655

$

4,572,364

$

4,503,667

$

4,444,577

$

4,633,585

Liabilities

Payable for investments purchased

$

105,425

$

92,522

$

24,321

$

23,423

$

44,648

Credit facilities payable

564,294

965,686

738,482

723,682

986,421

Unsecured notes payable

400,000

—

—

—

—

Repurchase agreement payable

950,000

950,000

950,000

950,000

906,083

Stockholder distributions payable

17,819

17,748

18,814

18,671

17,939

Management fees payable

20,009

19,862

22,375

22,700

22,808

Accrued capital gains incentive fees

36,737

37,647

35,379

32,133

27,339

Subordinated income incentive fees payable

14,794

15,061

15,178

14,303

16,555

Administrative services expense payable

988

1,686

1,820

1,153

1,361

Interest payable

12,801

11,509

10,302

10,563

10,545

Directors' fees payable

292

253

254

254

229

Other accrued expenses and liabilities

1,712

2,823

1,573

6,703

1,967

Total liabilities

$

2,124,871

$

2,114,797

$

1,818,498

$

1,803,585

$

2,035,895

Stockholders' Equity

Preferred stock, $0.001 par value

—

—

—

—

—

Common stock, $0.001 par value

$

240

$

239

$

261

$

259

$

257

Capital in excess of par value

2,256,843

2,246,910

2,487,105

2,466,753

2,451,662

Accumulated undistributed net realized gains on investments and gain/loss on foreign currency

9,431

75,977

69,147

55,344

5,014

Accumulated undistributed (distributions in excess of) net investment income

90,655

36,239

34,962

35,322

72,116

Net unrealized appreciation (depreciation) on investments and gain/loss on foreign currency

88,615

98,202

93,694

83,314

68,641

Total stockholders' equity

$

2,445,784

$

2,457,567

$

2,685,169

$

2,640,992

$

2,597,690

Total liabilities and stockholders' equity

$

4,570,655

$

4,572,364

$

4,503,667

$

4,444,577

$

4,633,585

Net asset value per share of common stock at period end

$

10.19

$

10.28

$

10.28

$

10.18

$

10.10

10

Financing Arrangements

Financing Arrangements as of

September 30, 2014

Type of Financing

Arrangement

Rate

Amount

Outstanding

Amount

Available

Maturity Date

(in thousands)

Broad Street Credit Facility

Revolving Credit Facility

L + 1.50%

$

80,608

$

44,392

December 20, 2014

ING Credit Facility

Revolving Credit Facility

L + 2.50%

$

270,886

$

29,114

April 3, 2018

JPM Facility

Repurchase Agreement

3.25%

$

950,000

$

—

April 15, 2017

Walnut Street Credit Facility

Revolving Credit Facility

L + 1.50% to 2.50%

$

212,800

$

87,200

May 17, 2017

4.000%

Notes

due

2019

9

Unsecured Notes

4.00%

$

400,000

$

—

July 15, 2019

Total debt outstanding under debt facilities

$

1,914,294

Debt/equity ratio

10

78.3%

Weighted average effective interest rate on borrowings (including

non-usage fees)

3.3%

% of debt outstanding at fixed interest rates

70.5%

% of debt outstanding at variable interest rates

29.5%

Financing Arrangements as of

June 30, 2014

Type of Financing

Arrangement

Rate

Amount

Outstanding

Amount

Available

Maturity Date

(in thousands)

Arch

Street

Credit

Facility

8

Revolving Credit Facility

L + 2.05%

$

350,000

$

—

August 29, 2016

Broad Street Credit Facility

Revolving Credit Facility

L + 1.50%

$

125,000

$

—

December 20, 2014

ING Credit Facility

Revolving Credit Facility

L + 2.50%

$

250,886

$

49,114

April 3, 2018

JPM Facility

Repurchase Agreement

3.25%

$

950,000

$

—

April 15, 2017

Walnut Street Credit Facility

Revolving Credit Facility

L + 1.50% to 2.50%

$

239,800

$

60,200

May 17, 2017

Total debt outstanding under debt facilities

$

1,915,686

Debt/equity

ratio

10

78.0%

Weighted average effective interest rate on borrowings (including

non-usage fees)

2.9%

% of debt outstanding at fixed interest rates

49.6%

% of debt outstanding at variable interest rates

50.4%

11

Distribution History

11

•

On October 10, 2014, the board of directors of FSIC declared a regular monthly cash distribution of $0.07425 per share. The regular monthly cash

distribution was paid on November 4, 2014 to stockholders of record as of the close of business on October 27, 2014.

•

On October 10, 2014, the board of directors of FSIC declared a special cash distribution of $0.10 per share, which will be paid on or about November

14, 2014 to stockholders of record as of the close of business on October 31, 2014.

•

On November 6, 2014, the board of directors of FSIC declared a regular monthly cash distribution of $0.07425 per share. The regular monthly cash

distribution will be paid on or about December 2, 2014 to stockholders of record as of the close of business on November 20, 2014.

•

As

of

September

30,

2014,

FSIC

had

approximately

$162.4

million

($0.68

per

share

based

on

shares

outstanding)

of

undistributed

net

investment

income and realized gains on a tax basis.

$0.05

$0.07

$0.07

$0.01

$0.02

$0.015

$0.05

$0.10

$0.10

12

Investment Portfolio

•

As of September

30, 2014, FSIC's three largest industry concentrations based on fair value were Capital Goods (21%);

Consumer Services (17%); and Energy (10%).

•

As of September

30, 2014, FSIC's portfolio assets in Retailing amounted to less than 1% based on fair value.

Industry Diversification

As of September

30, 2014, based on fair value

13

Issuer Concentration

Issuer Concentration

Top

ten

portfolio

companies

as

of

September

30,

2014,

based

on

fair

value

and

excluding

unfunded

commitment

amounts

All other investments

•

FSIC's top ten portfolio companies by fair value represent 35.2% of the company's total portfolio.

14

Portfolio Asset Quality

As of

September 30, 2014

June 30, 2014

September 30, 2013

Investment

Rating

12

Fair Value

% of Portfolio

Fair Value

% of Portfolio

Fair Value

% of Portfolio

1

$

533,141

12%

$

402,787

9%

$

300,405

7%

2

3,386,481

79%

3,450,489

82%

3,551,113

85%

3

359,759

8%

331,225

8%

300,802

7%

4

14,994

0%

15,310

0%

45,326

1%

5

22,149

1%

27,292

1%

3,155

0%

Total

$

4,316,524

100%

$

4,227,103

100%

$

4,200,801

100%

Investment Rating

Summary Description

1

Investment exceeding expectations and/or capital gain expected.

2

Performing

investment

generally

executing

in

accordance

with

the

portfolio

company's

business

plan—full

return

of

principal

and

interest

expected.

3

Performing investment requiring closer monitoring.

4

Underperforming investment—some loss of interest or dividend possible, but still expecting a positive return on investment.

5

Underperforming investment with expected loss of interest and some principal.

15

Reconciliation

of

Non-GAAP

Financial

Measures

1

Three Months Ended

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

GAAP net investment income per share

$

0.25

$

0.23

$

0.22

$

0.20

$

0.26

Plus capital gains incentive fees per share

—

0.01

0.02

0.02

(0.01)

Plus excise taxes per share

—

—

—

0.02

—

Plus

one-time

expenses

per

share

13

0.01

0.02

—

—

—

Adjusted net investment income per share

$

0.25

$

0.26

$

0.23

$

0.24

$

0.25

Nine Months Ended

9/30/2014

9/30/2013

GAAP net investment income per share

$

0.69

$

0.76

Plus capital gains incentive fees

0.02

—

Plus excise taxes per share

—

—

Plus

one-time

expenses

per

share

13

0.03

—

Adjusted net investment income per share

$

0.75

$

0.76

16

End Notes

1)

The per share data was derived by using the weighted average shares of our common stock outstanding during the applicable period. Per share

numbers may not sum due to rounding.

2)

Adjusted net investment income is a non-GAAP financial measure. We present adjusted net investment income for all periods as GAAP net

investment income excluding (i) the accrual for the capital gains incentive fee for realized and unrealized gains; (ii) excise taxes; and (iii) certain

non-recurring operating expenses that are one-time in nature and are not representative of ongoing operating expenses incurred during FSIC's

normal course of business (referred to herein as one-time expenses). We use this non-GAAP financial measure internally in analyzing financial

results and believe that the use of this non-GAAP financial measure is useful to investors as an additional tool to evaluate ongoing results and

trends and in comparing our financial results with other business development companies. The presentation of this additional information is not

meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Reconciliations of GAAP net

investment

income

to

adjusted

net

investment

income

can

be

found

on

page

15

of

this

presentation.

3)

The per share data for distributions reflects the actual amount of distributions paid per share of our common stock during the applicable period.

4)

The

weighted

average

credit

rating

of

investments

is

based

upon

the

investments

in

our

portfolio

that

were

rated,

based

upon

the

scale

of

Moody's Investors Service, Inc. As of September

30, 2014, approximately 27.1% of our portfolio (based on the fair value of our investments) was

rated.

5)

We record interest income on an accrual basis. Generally, investments are placed on non-accrual when the collection of future interest and

principal payments is uncertain.

6)

We have identified and intend to focus on the following investment categories, which we believe will allow us to generate an attractive total return

with an acceptable level of risk.

Direct Originations:

We intend to leverage our relationship with GSO / Blackstone Debt Funds Management LLC and its global sourcing and

origination

platform

to

directly

source

investment

opportunities.

Such

investments

are

originated

or

structured

specifically

for

us

or

made

by

us

and are not generally available to the broader market. These investments may include both debt and equity components, although we do not

expect to make equity investments independent of having an existing credit relationship. We believe directly originated investments may offer

higher returns and more favorable protections than broadly syndicated transactions.

Opportunistic:

We intend to seek to capitalize on market price inefficiencies by investing in loans, bonds and other securities where the market

price of such investment reflects a lower value than deemed warranted by our fundamental analysis. We believe that market price inefficiencies

may occur due to, among other things, general dislocations in the markets, a misunderstanding by the market of a particular company or an

industry being out of favor with the broader investment community. We seek to allocate capital to these securities that have been misunderstood

or mispriced by the market and where we believe there is an opportunity to earn an attractive return on our investment. Such opportunities may

include event driven investments, anchor orders and collateralized securities.

Broadly Syndicated/Other:

Although our primary focus is to invest in directly originated transactions and opportunistic investments, in certain

circumstances

we

will

also

invest

in

the

broadly

syndicated

loan

and

high

yield

markets.

Broadly

syndicated

loans

and

bonds

are

generally

more

liquid

than

our

directly

originated

investments

and

provide

a

complement

to

our

less

liquid

strategies.

In

addition,

and

because

we

typically

receive more attractive financing terms on these positions than we do on our less liquid assets, we are able to leverage the broadly syndicated

portion of our portfolio in such a way that maximizes the levered return potential of our portfolio.

17

End Notes (Cont'd)

7)

During the three months ended September 30, 2014, FSIC reversed capital gains incentive fees of $910 based on the performance of its

portfolio. No such fee is actually payable by FSIC with respect to unrealized gains unless and until those gains are actually realized.

8)

On July 14, 2014, we repaid the Arch Street credit facility in full. In conjunction with the repayment of the Arch Street credit facility, $2,226 of

remaining unamortized deferred financing costs were charged to interest expense. The Arch Street credit facility provided for borrowings in

an aggregate principal amount up to $350,000 on a committed basis.

9)

On July 14, 2014, FSIC and U.S. Bank National Association entered into an indenture and a first supplemental indenture relating to FSIC's

issuance of $400,000 aggregate principal amount of 4.000% notes due 2019. The notes mature on July 15, 2019 and may be redeemed in

whole or in part at FSIC's option at any time or from time to time at the redemption price set forth in the indenture. The notes bear interest at

a rate of 4.000% per year payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2015. The notes are

general unsecured obligations of FSIC that rank senior in right of payment to all of FSIC's existing and future indebtedness that is expressly

subordinated in right of payment to the notes and rank parri passu with all outstanding and future unsecured unsubordinated indebtedness

issued by FSIC. The net proceeds to FSIC from the offering were approximately $394,392 before expenses, after deducting underwriting

discounts and commissions of $3,600. On July 14, 2014, FSIC used $350,000 of the net proceeds from the notes offering to repay the Arch

Street credit facility in full and $44,392 of the net proceeds to repay borrowings under the Broad Street credit facility. For more information

regarding the notes, see Note 8 to FSIC's unaudited consolidated financial statements for the quarterly period ended September 30, 2014.

10) The debt/equity ratio is the ratio of total debt outstanding to stockholder's equity as of the applicable date.

11) To date, no portion of any distributions paid to stockholders have been paid from offering proceeds or borrowings. A portion of future

distributions to stockholders may be deemed to constitute a return of capital for tax purposes due to the character of the amounts received by

FSIC from portfolio companies. Any such return of capital will not reduce the amounts available for investments. The timing and amount of

any future distributions on FSIC's shares of common stock are subject to applicable legal restrictions and the sole discretion of FSIC's board

of directors. Therefore there can be no assurance as to the amount or timing of any such future distributions.

12) Based on the investment rating system as described in FSIC's quarterly report on Form 10-Q for the period ended September 30, 2014,

under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations — Portfolio Asset Quality."

13) FSIC's one-time expenses for the three and nine months ended September 30, 2014 were $1,780 and $7,380, respectively. For the three

months ended September 30, 2014, FSIC incurred $2,226 of remaining unamortized deferred financing costs associated with the closing of

the Arch Street credit facility. These costs were partially offset by a $446 reduction in FSIC's subordinated incentive fee on income due to the

reduction in pre-incentive fee net investment income associated with the one-time expenses.  In addition to these costs, during the nine

months ended September 30, 2014, FSIC incurred expenses of $7,000 in connection with the listing of its shares on the NYSE, including

listing advisory fees of $5,043 and other legal, printing and marketing expenses. These expenses were partially offset by a $1,400 reduction

in FSIC's subordinated incentive fee on income.

18

Corporate Information

Board of Directors

Executive Officers

Investor Relations Contact

Michael C. Forman

Michael C. Forman

Ben Holman

Chairman of the Board

Chief Executive Officer

Chairman of the Board

Chief Executive Officer

Phone: (215)-220-6266

Email: ben.holman@franklinsquare.com

David J. Adelman

Gerald F. Stahlecker

Vice Chairman

President and Chief Executive Officer of Campus Apartments, Inc.

President

Michael J. Hagan

Brad Marshall

Lead Independent Director

Chairman, President and Chief Executive of LifeShield Security, Inc.

Senior Portfolio Manager

Managing Director, GSO / Blackstone

Gregory P. Chandler

Zachary Klehr

Chief Financial Officer of Emtec, Inc.

Executive Vice President

Barry H. Frank

Sean Coleman

Partner with law firm of Archer & Greiner, P.C.

Managing Director

Thomas J. Gravina

William Goebel

Executive Chairman of GPX Enterprises, L.P.

Chief Financial Officer

Jeffrey K. Harrow

Salvatore Faia

Chairman of Sparks Marketing Group, Inc.

Chief Compliance Officer

Michael Heller

Stephen S. Sypherd

President and Chief Executive Officer of Cozen O'Conner

Vice President, Treasurer and Secretary

Paul Mendelson

Senior Advisor for Business Development for Lincoln Investment

Planning, Inc

Pedro A. Ramos

Partner with law firm of Schnader Harrison Segal & Lewis, LLP