Specialty Finance Industry Insights - William Blair

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March 2015

Specialty Finance Industry Insights A review of M&A activity and public market valuation in the consumer and commercial specialty finance sectors

William Blair

Table of Contents Introduction .....................................................................................................................................................................................................................................................1 Consumer Specialty Finance .....................................................................................................................................................................................................................2 M&A Trends.................................................................................................................................................................................................................................................2 Select M&A Transactions .......................................................................................................................................................................................................................3 Public Valuation Update .........................................................................................................................................................................................................................4 Commercial Specialty Finance..................................................................................................................................................................................................................7 M&A Trends.................................................................................................................................................................................................................................................7 Select M&A Transactions .......................................................................................................................................................................................................................8 Public Valuation Update .........................................................................................................................................................................................................................9 Capital Markets Transactions ................................................................................................................................................................................................................ 12 Recent Equity Offerings ....................................................................................................................................................................................................................... 12 Recent Debt Offerings .......................................................................................................................................................................................................................... 14 Recent Preferred Equity Offerings .................................................................................................................................................................................................. 15 Financial Services & Technology Analysts and Coverage .......................................................................................................................................................... 16 Investment Banking Team Biographies ............................................................................................................................................................................................ 17 Select William Blair Transactions ........................................................................................................................................................................................................ 18 Notes ................................................................................................................................................................................................................................................................ 19 Disclosures..................................................................................................................................................................................................................................................... 20

Specialty Finance Industry Insights Table of Contents

William Blair

Introduction Specialty finance can be broadly defined as any financing activity that takes place outside the traditional banking system. Typically, specialty finance firms are thought of as non-bank lenders that make loans to consumers and small to midsize businesses that cannot otherwise obtain financing. This report covers trends in M&A activity, transaction multiples, and public company valuations in the consumer and commercial specialty finance sectors. Specifically, consumer specialty finance includes auto finance, collection, alternative financial services, credit card, and mortgage companies. Commercial specialty finance includes business development companies (BDCs), commercial finance, commercial real estate lending, and leasing companies. We hope you enjoy this report, and we welcome any feedback.

Summary of M&A Activity

Both the M&A and equity markets performed strongly in the first quarter. Total global year-to-date M&A volume is over $400 billion, up more than 5% from the corresponding period last year, and over the same period the total disclosed dollar volume of new equity issuances (both initial public offerings and follow-on offerings) is up more than 17%. While some industry veterans believe valuations are ahead of themselves, deal activity suggests otherwise.

This theme persists within the specialty finance sector and we believe 2015 M&A activity will remain strong for high quality companies in this sector. Large strategic acquirers with healthy war chests will likely continue to pursue companies with differentiated solutions, go-to-market strategies, and proven strong growth and profitability. In addition, private-equity firms remain highly active in the specialty finance sector. Aging portfolio companies of private-equity firms – in particular, specialty finance businesses purchased before or during the downturn – may create liquidity opportunities in the near to midterm and will continue to fuel middle-market M&A activity.

Specialty finance companies generate high margins and recurring cash flows. In addition, these companies have meaningful operating leverage. As a result, M&A transactions in the sector are generally completed at attractive multiples. Since 2002, approximately 53% of the aggregate deals in the consumer specialty finance sector have been completed at above 10.0 times LTM net income, and approximately 18% have been completed at more than 3.00 times LTM book value. In the commercial specialty finance sector, approximately 46% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 22% have been completed between 1.50 and 3.00 times LTM book value. Acquirers in the sector are most often strategic parties that are able to pay more because of the significant revenue synergies generated by pushing new or stronger finance products through an established distribution platform. In addition, many private-equity funds have developed a differentiated level of industry knowledge and expertise, and as a result have established strong reputations in the sector. In 2015 thus far, M&A activity in the sector has been strong, driven primarily by strategic acquirers looking for new products and segments, differentiated platforms, and additional avenues for growth. Examples include New Residential Investment Corporations' acquisition of Home Loan Servicing Solutions and Huntington Bancshares’ acquisition of Macquarie Equipment Finance. While global economic uncertainty may cause the broad universe of buyers and sellers to proceed more cautiously in 2015, we remain optimistic that both M&A and capital markets activity will remain strong for solidly performing businesses.

Robert Metzger +1 312 364 8517 [email protected]

J.P. Young +1 312 364 8160 [email protected]

Kegan Greene +1 312 364 8113 [email protected]

Specialty Finance Industry Insights Introduction 1

Consumer Specialty Finance Sector

William Blair

Consumer Specialty Finance M&A Trends •

Year-to-date aggregate M&A transaction volume is running slightly ahead of the comparable period in 2014, though disclosed dollar volume is meaningfully lower over the same period.



Approximately 53% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 18% have been completed at more than 3.00 times LTM book value.



Transactions less than $50 million were completed at an average of 5.9 times LTM net income, meaningfully lower than LTM net income multiples on deals above $50 million.

Historical Transaction Volume 100 80 60 40 20 0

Average: 49

79

47

41

2002

2003

75

53

2004

2005

2006

54

2007

32

33

46

50

2008

2009

2010

2011

25.0%

42

47

39

2012

2013

2014

10

8

2014 YTD

2015 YTD

Historical Transaction Dollar Volume ($ in millions) ($ in millions) $60,000 $40,000 $20,000

-

$17,055

$26,075

2002

2003

$51,379 $8,866 2004

Average: $16,322

$16,926

2005

2006

$2,090 2007

$3,299

LTM Net Income Multiple Breakdown

14.5%

32.3%

10.0x 5.0x 0.0x

5.9x $100mm

18.2%

Greater than 3.00x 1.50x to 3.00x

27.3%

Less than 1.50x

LTM Book Value Multiple by Transaction Size 1.50x 1.40x 1.30x 1.20x 1.10x 1.00x 0.90x

1.36x

$100mm

William Blair

Select M&A Transactions Transaction Value / Announced Date

Sub-Sector

Buyer Name / Target Name

03/10/15

Mortgage

The J.G. Wentworth Company/ Weststar Mortgage, Inc.

02/23/15

Mortgage

Investor group/ FBC Mortgage, LLC

03/03/15 02/22/15 02/18/15 02/10/15 02/09/15 02/09/15 01/28/15 01/28/15 01/27/15 01/12/15 01/08/15 12/18/14 12/15/14 12/10/14 12/10/14 12/01/14 11/24/14 11/13/14 11/10/14 11/07/14 10/21/14 10/08/14 09/24/14 09/23/14 09/16/14 09/11/14 09/09/14 08/25/14 08/06/14 08/01/14 07/07/14 07/02/14 06/05/14 05/05/14 04/17/14 04/16/14 04/15/14 04/02/14 03/27/14 03/26/14 03/03/14 03/01/14

AFS

Collection Collection Mortgage Mortgage Mortgage Mortgage Mortgage AFS

Mortgage Mortgage AFS

Mortgage Mortgage Mortgage Mortgage AFS

Mortgage AFS

Mortgage Auto

Mortgage

Collection Auto Auto

Mortgage AFS AFS

Mortgage

Collection Auto

Mortgage Mortgage Mortgage AFS AFS AFS AFS

Auto

Mortgage Mortgage Mortgage

Transaction Value $54.0

LTM Net Income -

LTM Book Value -

Springleaf Holdings, LLC/ OneMain Financial Holdings, Inc.

$4,250.0

7.5x

1.30x

New Residential Investment Corp./ Home Loan Servicing Solutions, Ltd.

$1,296.1

7.6x

1.02x

$7.0

-

-

Cerberus Capital Management, L.P./ Gescobro Collection Services

Cherry Hill Mortgage Investment Corporation/ Aurora Financial Group, Inc. Legal & General Group/ New Life Mortgages Ltd.

Wilshire Bancorp, Inc./ Bank of Manhattan's mortgage lending division Skipton Building Society/ Topaz Finance Limited

Paragon Financial Resources/ Houston Capital Mortgage, Inc. EZCORP, Inc./ Twelve pawn store operations

Citizens Financial Corp./ Reliance Mortgage Company

Impac Mortgage Holdings, Inc./ Mortgage operations of CashCall, Inc. BNP Paribas/ JD Group's consumer finance business Aquiline Holdings LLC/ LenderLive Network, Inc.

Academy Mortgage Corporation/ Republic Mortgage Home Loans, LLC

Open Mortgage, LLC/ 360 Mortgage Group's reverse mortgage origination business MidAmerica Mortgage, Inc./ Affinity Lending Soultions. LLC

-

$5.0

-

$19.3

-

$398.0

-

-

-

Tiptree Financial Inc./ Reliance First Capital, LLC

$34.7

Nishi-Nippon City Bank, Ltd./ Nishi-Nippon Credit Guarantee Co., Ltd.

$24.3

5.2x

0.70x

-

-

-

loanDepot.com LLC/ Mortgage Master, Inc.

Bankers Bancorp of Oklahoma, Inc./ Advance Mortgage Corporation Fortress Investment Group LLC/ Omnisure Group, LLC

Morrison Grove Capital Advisors/ MMA Financial TC LLC

-

$15.9

-

-

-

-

Arrow Global Group PLC/ Capquest Group Limited

$258.2

Banco Santander SA/ Carfinco Financial Group Inc.

$297.8

13.8x

4.08x

GoldenTree Asset Management LP/ Origen Financial, Inc.

$483.3

-

2.91x

$63.0

5.7x

-

-

-

Mint Leasing, Inc./ Investment Capital Fund Group, LLC Home Point Capital/ Maverick Funding Corp.

First Cash Financial Services, Inc./ CAMex Holding, LLC ZAIS Financial Corp./ GMFS, LLC

Encore Capital Group, Inc./ Atlantic Credit & Finance, Inc. Milestone Partners/ PayLink Payment Plans, LLC

MutualFirst Financial, Inc./ Summit Mortgage, Inc.

Strategic Growth Bank Inc./ Guardian Mortgage Company, Inc. Freedom Mortgage Corporation/ BluFi Lending Corporation

-

$196.1

-

$25.7

-

-

-

-

LendingClub Corporation/ Springstone Financial LLC

$140.0

14.5x

Aaron's/ Progressive Finance Holdings

$700.0

-

Nelnet, Inc./ Education Lending Services, Inc. Lone Star Funds/ DFC Global

Sunset Brands, Inc./ MotorMax

Investor group/ Southern Trust Mortgage LLC

InterLinc Mortgage Services, LLC/ Hometown Mortgage Services, Inc. First Bells Bankshares, Inc./ Cendera Funding, Inc.

Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.

$127.1 $1,417.0

-

-

-

-

0.79x

-

-

-

-

Specialty Finance Industry Insights Consumer Specialty Finance 3

William Blair

Public Valuation Update Auto Finance Indexed Price / LTM Earnings Ratios as of 2/28/2015 16.0

Current: 13.5x

14.0 12.0 10.0 8.0

6.0 Feb 2010

Feb 2011

Feb 2012

Public Company Valuations

Feb 2013

Feb 2014

Stock Price /

Company

Stock Price Ticker 2/28/15

Ally Financial Inc.

ALLY

Consumer Portfolio Services, Inc.

CPSS

America's Car-Mart Inc.

CACC

Nicholas Financial Inc.

NICK

Debt / Equity

$20.78 $10,005.6

CRMT

Credit Acceptance Corp.

Equity Market Cap.

3-Yr CAGR Margin

LTM

’09-’14

LTM

LTM

LTM

(2.5%)

0.6%

$178.2

NMF

7.6x

6.6x

1.40x

11.4%

1.8%

$183.4

0.8x

$22.53

Median

ROAE

0.71x

$3,829.7

Mean

ROAA

10.6x

$183.30

Santander Consumer USA Holdings Inc. SC

FY2015

BVPS

15.3x

$456.0

$14.89

LTM

Net Income

Asset CAGR

4.8x

$53.21 $6.96

EPS

0.5x

16.9x

16.2x

2.02x

17.6%

NA

20.9%

10.8%

(8.9%)

26.4%

18.8%

10.2%

36.7%

$7,862.6

$3,752.6

NMF

2.2x

10.5x

12.9x

9.3x

11.3x

2.29x

2.17x

NA

9.2%

2.6%

4.7%

$2,142.8

1.7x

13.5x

10.6x

1.71x

10.6%

4.1%

7.5%

5.5%

LTM

NMF

13.1%

13.6x

1.18x

6.2%

7.6%

15.4x

NA

5.45x

10.6%

2.5x

11.6x

Feb 2015

26.6% 24.5%

(3.4%)

12.3%

5.5%

40.7%

19.6%

6.6%

1.6%

22.9%

26.3%

18.8%

1.6%

23.6%

Collection Indexed Price / LTM Earnings Ratios as of 2/28/2015 26.0x

Current: 12.4x

22.0x 18.0x 14.0x 10.0x 6.0x

2.0x Feb 2010

Feb 2011

Feb 2012

Public Company Valuations

Feb 2013

Feb 2014

Stock Price /

Company

Stock Price Ticker 2/28/15

Asta Funding Inc.

ASFI

Performant Financial Corporation

PFMT

Encore Capital Group, Inc. PRA Group, Inc. Mean

$8.47

Equity Market Cap.

Debt / Equity

EPS LTM

FY2015

LTM

LTM

$259.1

1.2x

27.6x

22.4x

3.04x

$2,508.5

$977.2

1.6x

1.8x

14.3x

15.6x

10.6x

$645.2

1.4x

12.4x

Specialty Finance Industry Insights 4 Consumer Specialty Finance

3-Yr CAGR Margin

LTM

0.62x

$50.09

Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.

ROAE

’09-’14

NMF

PRAA

Median

ROAA

LTM

10.0x

$1,031.4

$5.25

BVPS

0.2x

$39.97

4.2x

10.4x

7.9x

Net Income

Asset CAGR

$110.0

ECPG

Feb 2015

NA

(2.1%)

NA

6.6%

1.78x

44.5%

13.6x

3.81x

10.6x

6.9%

47.5%

11.4%

(8.8%)

7.8%

15.9%

2.31x

28.5%

36.5%

10.3% 5.6%

19.9%

2.41x

36.5%

7.2%

19.4%

LTM 28.5%

9.7% 4.8%

13.5%

20.5%

20.0%

19.7%

15.7%

13.6%

20.0%

14.9%

William Blair

Alternative Financial Services Indexed Price / LTM Earnings Ratios as of 2/28/2015 18.0x

Current: 11.2x

15.0x 12.0x 9.0x

6.0x Feb 2010

Feb 2011

Feb 2012

Public Company Valuations

Feb 2013 Stock Price /

Company

Stock Equity Price Market Ticker 2/28/15 Cap.

Cash America International, Inc.

CSH

$21.58

$652.5

0.2x

NMF

22.1x

1.16x

EZCORP, Inc.

EZPW

$10.44

$560.1

0.4x

15.8x

8.9x

1.16x

0.2x

NMF

Enova International, Inc.

ENVA

First Cash Financial Services Inc.

FCFS

QC Holdings, Inc.

Springleaf Holdings, Inc.

$1,363.2

RM

$15.60

$198.8

WRLD

$82.11

LEAF

World Acceptance Corp. Mean

$762.0

$48.14

QCCO

Regional Management Corp.

$23.09

Debt / Equity

$1.72

$38.45

$30.1

$4,415.3

3.2x

EPS LTM

FY2015 LTM

6.8x

0.5x

BVPS

6.5x

16.4x

16.8x

1.9x

13.7x

8.6x

4.6x

7.99x

NA

8.8x

16.3x

$776.8

$1,094.9

1.9x

1.6x

8.3x

11.6x

8.0x

12.4x

$707.2

1.2x

11.2x

8.9x

Median

4.89x

Feb 2014

Net Income

Asset CAGR

ROAA

ROAE

3-Yr CAGR

Margin

’09-’14

LTM

LTM

LTM

LTM

3.7%

1.4%

(0.9%)

(10.1%)

23.3%

4.4%

4.0%

NA

(5.4%)

NA

3.5%

15.1%

57.2% 19.8%

6.5%

NA

5.2%

8.7%

2.0

2.18x

(10.3%)

7.1%

7.5%

4.6%

32.6% 31.6%

9.0%

44.5%

11.8%

(5.4%)

2.46x

9.9%

22.8%

0.43x 1.13x

Feb 2015

14.5% 11.9%

7.6%

(22.9%) 1.3%

29.9%

2.67x

10.1% 8.5%

12.3%

16.4%

7.1%

20.1%

3.5%

10.9%

1.67x

10.1%

6.2%

14.3%

1.7%

10.5%

Credit Card Indexed Price / LTM Earnings Ratios as of 2/28/2015 36.0x

Current: 21.9x

30.0x 24.0x 18.0x 12.0x

6.0x Feb 2010

Feb 2011

Feb 2012

Public Company Valuations

Feb 2013 Stock Price /

Company

Stock Price Ticker 2/28/15

Equity Market Cap.

Debt / Equity

EPS LTM

FY2015

Alliance Data Systems Corporation

ADS

$278.51

$17,491.8

5.4x

35.4x

18.7x

Discover Financial Services

DFS

$60.98

$27,272.7

2.0x

12.4x

11.4x

Synchrony Financial

SYF

American Express Company AXP MasterCard Incorporated Visa Inc. Mean

MA V

Median Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.

$81.59

$83,154.5

$90.13 $103,510.0 $31.95

$26,638.8

3.0x 0.2x 2.6x

14.7x 29.1x 11.5x

Feb 2014

Feb 2015 Net Income

BVPS

Asset CAGR

ROAA

ROAE

3-Yr CAGR

Margin

LTM

’09-’14

LTM

LTM

LTM

LTM

NMF

31.1%

2.75x

12.6%

12.4x

2.96x

NA

14.9x

4.95x

25.9x

NMF

4.9%

4.5%

29.6%

2.9%

21.2%

3.8%

15.5%

21.6%

29.3%

17.1%

9.5%

6.0%

18.2%

NMF

23.8%

38.2%

3.1%

30.4%

NA

3.7%

33.0% 33.4%

$271.31 $166,557.4 $70,770.9

NMF

2.7x

30.3x

22.2x

26.2x

18.3x

5.86x

4.13x

3.6%

13.5%

13.8% 8.3%

20.4%

26.2%

13.8%

12.9%

29.3%

43.3%

$55,213.6

2.6x

21.9x

16.8x

3.96x

12.6%

4.1%

29.3%

13.8%

33.2%

Specialty Finance Industry Insights Consumer Specialty Finance 5

William Blair

Mortgage Indexed Price / LTM Earnings Ratios as of 2/28/2015 25.0x

Current: 10.3x

20.0x 15.0x 10.0x 5.0x

0.0x Feb 2010

Feb 2011

Feb 2012

Public Company Valuations

Feb 2013 Stock Price /

Company

Stock Price Ticker 2/28/15

Ellington Financial LLC

EFC

$20.48

$685.1

2.2x

Nationstar Mortgage Holdings Inc.

NSM

$26.65

$2,424.7

NMF

PMT

$21.44

$1,597.5

2.0x

SGM

$10.02

Heritage Financial Group, Inc. Ocwen Financial Corp. PennyMac Mortgage Investment Trust PHH Corporation

Stonegate Mortgage Corporation Walter Investment Management Corp. Mean

HBOS

OCN

PHH

WAC

Equity Market Cap.

$25.89

$8.14

$24.28 $16.67

Median Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.

Specialty Finance Industry Insights 6 Consumer Specialty Finance

$228.0

$1,024.1 $1,243.1 $258.3

Debt / Equity

EPS LTM 9.8x

FY2015

ROAE

3-Yr CAGR

Margin

’09-’14

LTM

LTM

LTM

LTM

8.5%

78.9%

(9.3%)

7.3x

2.07x

54.1%

1.8%

20.0%

NMF

15.2%

4.2%

12.8%

44.5%

47.7%

NA

(12.9%)

5.1%

47.9%

9.5%

8.5%

44.5%

6.1x

4.4x 8.4x

NA

NMF

8.7x

8.4x

12.5x

ROAA

LTM

1.7%

3.8x

4.1x

BVPS

20.8%

23.4x

1.1x

Net Income

Asset CAGR

0.88x

27.3x

8.7x

6.7x

1.61x

0.71x 1.01x

24.4%

28.8%

NA

0.5%

6.1%

5.3%

33.6% 57.1%

1.4%

(2.8%)

(11.3%)

2.12x

58.7%

(0.6%)

(9.8%)

0.95x

NA

NMF

2.4x

12.5x

9.8x

1.15x

25.9%

$1,024.1

2.1x

10.3x

7.8x

0.95x

24.4%

(2.4%)

1.3% 1.7%

25.5%

11.0%

0.80x

$628.8

$1,065.8

Feb 2015

8.3x

1.3x

10.9x

Feb 2014

(10.4%)

NA

8.6%

8.6% 8.4%

(9.3%)

8.6%

Commercial Specialty Finance Sector

William Blair

Commercial Specialty Finance M&A Trends •

Year-to-date aggregate M&A transaction volume and disclosed dollar volume are running significantly above those of the comparable period in 2014.



Approximately 46% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 22% have been completed between 1.50 and 3.00 times LTM book value.



Transactions less than $50 million were completed at an average of 5.6 times LTM net income, slightly lower than LTM net income multiples on deals above $50 million.

Historical Transaction Volume 50 40 30 20 10 0

39

45

26

2002

2003

43

40

2004

2005

Average: 32

42

2006

2007

29

2008

28

22 2009

16

2010

2011

29

26

2012

2013

125.0% 35

2014

9

4

2014 YTD

2015 YTD

Historical Transaction Dollar Volume ($ in millions)

$16,000 $12,000 $8,000 $4,000 $0

$1,551

$7,885

$9,126

2003

2004

2002

$6,484

$5,702

2005

2006

$11,162

2007

LTM Net Income Multiple Breakdown

23.1%

30.8%

10.0x 5.0x 0.0x

5.6x $100mm

71.7%

21.7%

6.5%

Greater than 3.00x 1.50x to 3.00x Less than 1.50x

LTM Book Value Multiple by Transaction Size 1.50x 1.00x 0.50x 0.00x

1.00x

$100mm

William Blair

Select M&A Transactions Transaction Value / Announced Date

Sub-Sector

Buyer Name / Target Name

03/09/15

Commercial Finance

BankUnited/ CertusHolding's small business finance unit

03/03/15

Commercial Finance

Triumph Capital Advisors/ Doral Money Inc.

03/03/15 02/24/15 02/20/15 02/11/15 02/10/15 02/06/15 01/23/15 01/20/15 01/15/15 01/09/15 12/30/14 12/15/14 11/26/14 10/31/14 10/31/14 10/14/14 10/13/14 10/10/14 10/09/14 09/29/14 09/26/14 09/04/14 08/26/14 08/11/14 08/05/14 08/04/14 07/11/14 06/28/14 06/10/14 06/05/14 06/02/14 06/02/14 05/15/14 05/05/14 04/22/14 04/08/14 03/28/14 03/14/14

Leasing Leasing

Commercial Finance

Commercial Finance Commercial Finance Leasing

Commercial Finance

Commercial Finance Commercial Finance Leasing

Commercial Finance Leasing Leasing

Commercial Finance Leasing

Commercial Finance Leasing Leasing

Commercial Finance

Transaction Value

Wood Creek Capital Management/ Milestone Equipment Holdings

Fortress Investment Group/ UniCredit Credit Management Bank

-

$21.0

Temasek Holdings Limited/ SVB India Finance Private Limited

$45.4

UniCredit Bank Austria/ Transfinance

-

General Finance Corporation/ Bristlecone Ventures, LLC

$7.3

AgTexas Farm Credit Services/ Great Plains Ag Credit

-

-

-

Meta Financial Group, Inc./ AFS/IBEX Financial Services, Inc.

-

-

General Electric Capital Corporation/ Milestone Aviation Group Limited

$1,775.0

FIMBank/ First Factors

$5.7

Heritage Commerce Corp/ BVF/CSNK Acquisition Corp.

Omega Commercial Finance Corp./ AmericaVest CRE Mortgage Funding Trust, Inc. National Bancshares, Inc./ Doral Healthcare Finance

United Community Banks, Inc./ Business Carolina Inc.

FBR & Co./ Securities Lending Business Tiger Global Management/ OnDeck

-

-

Ares Management, L.P./ Keltic Financial Services, LLC

-

-

-

-

Pine Tree Equity Management, LP/ Celtic Capital Corporation

-

-

-

$441.0

Carolina Alliance Bank/ Dave McBride Leasing, LLC

-

0.14x

-

Cargills Bank Ltd./ Capital Alliance Finance PLC

-

-

1.7x

-

Signature Bancshares, Inc./ Lease Finance Group, Inc.

-

$22.5

-

National Commerce Corporation/ CBI Holding Company, LLC

Commercial Real Estate Northwest Federal Credit Union/ Park Place Equity, LLC

Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.

-

-

-

Commercial Real Estate Wood Creek Capital Management, LLC/ Genesis Funding Limited

Commercial Finance

-

-

$129.6

General Electric Capital Corporation/ VB Leasing CZ

Element Financial Corporation/ PHH Vehicle Management Services Group LLC

Commercial Finance

-

-

Blackrock Kelso Capital Corporation/ GB Credit Partners LLC

Leasing

Commercial Finance

-

-

1.58x

Minnwest Corporation/ HiLine Credit Corporation

Commercial Finance

-

15.2x

-

Commercial Finance

Commercial Finance

-

-

$151.4

General Finance Corporation/ YS Container Services Limited

Commercial Real Estate Sutherland Asset Management Corp./ CIT Small Business Lending Corporation Commercial Finance

-

Fortress Investment Group LLC/ MicroFinancial Incorporated

Funding Circle Limited/ LeapPay, Inc.

Commercial Finance

-

Prosper Marketplace, Inc./ American HealthCare Lending, LLC

Commercial Finance

Leasing

-

-

Beacon Credit Union/ Midwest Ag Finance, Inc.

First Midwest Bancorp, Inc./ National Machine Tool Financial Corporation

Commercial Finance

$133.3 $624.0

Aquiline Holdings LLC/ Engs Commercial Finance Co.

Leasing Leasing

-

-

Commercial Real Estate Walker & Dunlop, Inc./ Johnson Capital Group, Inc. Commercial Finance

-

$425.0

Wesleyan Assurance Society/ Syscap Holdings Limited

LTM Book Value

-

Huntington Bancshares Incorporated/ Macquarie Equipment Finance, Inc.

LTM Net Income

-

-

-

$1,402.5

24.2x

3.80x

-

-

-

$2.0

-

$77.0

-

-

Specialty Finance Industry Insights Commercial Specialty Finance 8

William Blair

Public Valuation Update Business Development Companies (BDCs) Indexed Price / LTM Earnings Ratios as of 2/28/2015 25.0x 20.0x

Current: 11.4x

15.0x 10.0x

5.0x Feb 2010

Feb 2011

Feb 2013

Feb 2012

Public Company Valuations

Stock Price /

Company

Stock Price Ticker 2/28/15

Apollo Investment Corporation

AINV

BlackRock Kelso Capital Corporation

BKCC

Ares Capital Corporation Capitala Finance Corp. CM Finance Inc.

Fidus Investment Corporation Fifth Street Finance Corp.

Full Circle Capital Corporation Garrison Capital Inc.

Golub Capital BDC, Inc.

Harvest Capital Credit Corporation

Hercules Technology Growth Capital, Inc.

Horizon Technology Finance Corporation KCAP Financial, Inc.

Main Street Capital Corporation Medallion Financial Corp.

Medley Capital Corporation

Monroe Capital Corporation OFS Capital Corporation

PennantPark Floating Rate Capital Ltd. PennantPark Investment Corporation Prospect Capital Corporation Saratoga Investment Corp. Solar Capital Ltd.

Solar Senior Capital Ltd. TCP Capital Corp. THL Credit, Inc.

TICC Capital Corp.

TPG Specialty Lending, Inc.

Triangle Capital Corporation Mean

$1,844.2

0.8x

11.8x

$8.78

$654.5

0.5x

5.2x

$17.30

CPTA

$18.81

FDUS

$16.60

FSC

$13.73

$5,434.1 $244.0 $187.6 $266.0

$7.08

$1,085.6

GARS

$15.03

$251.9

HCAP

$12.55

$77.9

FULL

GBDC HTGC

HRZN KCAP

$3.88

$17.76

$46.4

$837.8

$15.55

$998.2

$7.50

$275.4

$14.13

$136.0

MAIN

$30.95

$1,397.7

MCC

$9.46

$555.6

TAXI

$10.45

MRCC

$14.91

PFLT

$13.97

OFS

PNNT PSEC

$12.13 $9.51

TSLX

TCAP

Median

Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.

Specialty Finance Industry Insights 9 Commercial Specialty Finance

$208.1 $714.1 $854.4

$16.60

$808.6

$16.17

TICC

$116.9

$20.12

SUNS TCRD

$141.9

$3,093.0

$15.76

TCPC

$258.6

$8.63

SAR

SLRC

EPS LTM

$7.79

ARCC CMFN

Equity Market Debt / Cap. Equity

$12.09 $7.29

$18.54 $23.67

$84.8

$186.5 $409.9

0.7x 0.8x 0.7x

BVPS

FY2015 LTM 8.1x

0.89x

10.0x

0.88x

8.9x

10.8x

NA

9.8x

8.1x

NA

0.6x

12.2x

10.0x

1.0x

NMF

5.9x

1.0x 0.9x

21.4x 8.3x

8.0x 9.9x

1.0x

12.5x

13.6x

1.0x

14.1x

11.7x

0.7x

10.0x

7.8x

1.3x

9.2x

0.2x 0.6x 0.8x

8.3x 8.8x

8.1x

10.2x

13.4x

13.6x

0.9x

25.2x

7.0x

1.1x

11.8x

10.6x

13.8x

8.6x

0.8x 0.6x 0.8x 0.8x 1.1x

10.3x 14.0x 9.0x 7.0x

9.8x 9.4x

11.1x 8.1x 8.9x

0.2x

17.8x

12.5x

0.4x

NMF

10.3x

0.7x

16.0x

11.7x

0.6x

11.1x

$778.9

0.5x

11.1x

$779.6

0.8x

11.0x

0.8x

$425.0

0.8x

$440.0

$1,000.4

1.0x

NA

24.8x

8.8x 6.9x

Feb 2014 Net Income

Asset CAGR

ROAA

ROAE

3-Yr CAGR

Margin

’09-’14

LTM

LTM

LTM

LTM

7.4%

5.3%

8.2%

4.1%

1.04x

32.6%

0.95x

NA

0.94x 1.09x

NA NA

0.73x

45.0%

0.96x

NA

0.62x

NA

1.14x

28.7%

1.52x

20.6%

0.96x

(0.4%)

0.95x

2.6%

0.87x 0.98x 1.47x 0.75x 1.07x 0.87x 0.97x

NA NA

53.9% NA NA NA NA

0.86x

22.5%

0.71x

10.9%

0.82x 0.90x 0.92x

57.6% 13.8% NA

1.07x

16.9%

0.78x

35.8%

0.91x 1.18x

Feb 2015

NA NA

8.0%

NA

36.7%

21.3%

NMF

4.8%

11.6%

22.8%

4.1%

5.6%

NA

(6.9%)

(1.7%)

38.2%

15.8%

4.8%

13.5%

4.6%

3.5%

4.9% 5.5%

7.2% 4.6%

NA

28.0% NA

59.8% 79.7%

60.4%

7.2%

8.0%

NA

57.2%

5.3%

10.9%

5.9%

9.7%

5.0%

14.9%

5.5%

(19.1%)

4.9%

11.6%

17.0%

5.7%

3.3%

11.7%

2.4%

10.5%

4.9%

10.1%

3.9%

7.0%

3.0% 4.8% 5.5%

NMF

14.4% NA

5.5%

29.6%

6.3%

NA

9.3%

NA

25.2%

4.1%

10.3%

(5.9%)

3.2%

5.7%

NA

3.0%

5.0%

(7.5%)

58.9% 49.6% 23.9% 47.9% 71.6% 69.9%

9.8%

13.3% 6.8% 9.2%

11.8%

47.2%

5.6%

41.8% 39.7% 52.9%

6.9%

(2.9%)

5.8%

5.8%

27.1%

NA

8.0%

31.2%

48.1%

(0.6%)

12.1%

7.2%

10.8%

11.2%

5.4% 6.4%

10.8%

37.5%

44.2%

33.3% 26.5%

9.2%

12.7%

10.8% 9.5%

10.1%

13.2%

5.3% 5.2%

9.6%

10.0%

9.3%

NMF

(8.1%)

45.0%

9.1%

12.4%

12.2% 9.4%

10.3%

16.1%

3.6% 3.7%

Dividend Yield

74.9%

9.1% 7.7%

11.6% 8.0% 8.7% 9.3%

49.6%

11.2%

52.1%

8.4%

14.8%

12.5x

10.7x

9.8x

1.42x

0.97x

30.4%

24.2%

4.7%

8.3%

(20.7%) 12.3%

43.6%

9.8%

9.3%

11.4x

9.9x

0.94x

21.5%

4.9%

8.7%

14.9%

47.5%

9.5%

William Blair

Commercial Finance Indexed Price / LTM Earnings Ratios as of 2/28/2015 35.0x 30.0x

Current: 23.1x

25.0x 20.0x 15.0x

10.0x Feb 2010

Feb 2011

Feb 2012

Public Company Valuations

Feb 2013 Stock Price /

Company

Stock Price Ticker 2/28/15

CIT Group Inc.

CIT

$46.28

$8,139.8

4.0x

PacWest Bancorp

PACW

$45.84

$4,722.0

3.6x

NewStar Financial, Inc.

NEWS

SVB Financial Group

SIVB

Mean

$9.98

$122.90

Median

Equity EPS BVPS Market Debt / Cap. Equity LTM FY2015 LTM

Feb 2014 Net Income

Asset CAGR

ROAA

ROAE

3-Yr CAGR

Margin

’09-’14

LTM

LTM

LTM

LTM

8.1x

13.7x

0.99x

(4.4%)

2.3%

12.0%

$6,263.4

23.6x

7.9%

1.64x

25.1%

1.5%

17.0x

2.22x

25.0%

4.9x 18.3x

21.2x

2.64x

$4,897.6

23.1x

16.0x

12.7%

1.4%

$5,492.7

3.8x 23.1x

16.0x

1.60x

15.0%

$465.1

3.3x 8.6x

NMF

NMF

0.73x

Feb 2015

5.0%

0.4%

Dividend Yield

NMF

44.5%

1.3%

49.3%

24.6%

4.4%

1.7%

(9.2%)

13.4% 8.8%

18.5%

15.4%

26.2%

19.3%

2.8%

1.4% 10.0%

15.4%

21.9%

2.8%

1.4%

16.6%

NA NA

Commercial Real Estate Lending Indexed Price / LTM Earnings Ratios as of 2/28/2015 20.0x

Current: 15.7x

15.0x 10.0x

5.0x Feb 2010

Feb 2011

Feb 2012

Public Company Valuations

Feb 2013 Stock Price /

Company

Stock Price Ticker 2/28/15

Ladder Capital Corp

LADR

$18.40

$946.3

2.1x

21.3x

Walker & Dunlop, Inc.

WD

$16.03

$510.1

3.2x

NMF

$556.3 2.3x

10.1x

18.4x

15.7x

$510.1 2.1x

15.7x

Resource America, Inc. Mean

Median

REXI

$9.30

Equity EPS Market Debt / Cap. Equity LTM $212.6

1.5x

BVPS FY2015 LTM

Feb 2014

Feb 2015 Net Income

Asset CAGR

ROAA

ROAE

3-Yr CAGR Margin

’09-’14

LTM

LTM

LTM

8.7x

1.38x

8.8x

1.33x

12.0x

1.47x

50.5%

1.39x

8.8x

1.38x

LTM

Dividend Yield

NA

3.5%

8.9%

27.8%

21.2%

52.6%

2.7%

12.3%

13.8%

9.0% 20.8%

14.4%

2.6%

51.5%

3.3%

3.5%

13.1%

2.6%

51.5%

3.3%

8.9% 20.8%

14.4%

2.6%

1.4%

5.7%

NA

NA NA

Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.

Specialty Finance Industry Insights Commercial Specialty Finance 10

William Blair Leasing Indexed Price / LTM Earnings Ratios as of 2/28/2015 Current: 13.2x

21.0x 16.0x 11.0x

6.0x Feb 2010

Feb 2011

Feb 2012

Public Company Valuations

Feb 2013 Stock Price /

Company

Stock Price Ticker 2/28/15

AerCap Holdings N.V.

AER

$44.50

$9,448.2

3.8x

9.8x

Air Lease Corporation

AL

$38.24

$3,915.5

2.4x

16.1x

$24.28

$504.7

2.9x

8.5x

AeroCentury Corp. Aircastle LTD

CAI International Inc.

Element Financial Corporation GATX Corp.

Marlin Business Services Corp. Mobile Mini, Inc.

Ryder System, Inc.

TAL International Group, Inc.

Textainer Group Holdings Limited Willis Lease Finance Corp. Mean

ACY

AYR CAP

EFN

GMT

MRLN MINI R

TAL

TGH

WLFC

$10.07 $23.07 $12.80 $62.25 $18.71

Equity Market Cap. $16.2

$1,867.5 $3,380.9 $2,757.7 $239.9

Debt / Equity LTM 3.2x 2.2x 2.8x

$41.73

$1,372.1

4.6x

$32.26 $21.34

Median Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.

Specialty Finance Industry Insights 11 Commercial Specialty Finance

$4,980.3 $1,834.4 $179.6

2.5x 2.4x

3-Yr CAGR

Margin

LTM

LTM

LTM

Dividend Yield

15.6%

67.6%

22.3%

NA

12.9x

1.41x

NA

3.8%

9.7%

68.8%

24.4%

0.4%

1.14x

36.9%

3.7%

14.1%

6.3%

26.5%

NA

2.24x

5.9%

2.9%

15.1%

22.8%

2.09x

3.7%

3.6%

5.2%

13.2%

8.3x

15.6x

12.6x

11.8x

9.7x

ROAE

4.4%

NMF

11.3x

ROAA

’09-’14 LTM 45.3%

11.5x

22.7x

Net Income

2.75x

18.5x

NMF

NA

1.1x

Asset CAGR

Feb 2015

8.7x

10.3x

13.9x

$1,915.1

BVPS

FY2015 LTM

NA

3.3x

$41.49 $93.99

EPS

Feb 2014

11.8x 11.6x 14.8x 11.4x 10.8x

0.45x 1.09x 2.11x 1.34x 3.67x

4.5% 6.9%

NA

6.0% 9.1%

2.31x

18.9%

1.57x

26.2%

NMF

4.6% 0.7% 2.6%

5.9% 6.0% 2.5%

11.5%

3.9%

11.9%

4.1%

16.3%

4.6% 3.4%

18.3%

NA

26.9% NA

46.3% 8.8%

8.4%

12.5% 16.0%

3.8%

NA

14.1%

2.4%

10.0%

1.8%

25.9% 3.3%

4.2%

19.1%

7.8%

NA

33.6%

2.7% 1.6% 6.9% 5.8%

3.5x

$2,493.2 2.9x

24.0x

14.7x

17.3x

12.1x

0.81x

1.77x

4.1%

15.2%

6.6%

3.5% 10.7%

(1.8%)

24.6%

8.0%

17.2%

3.2%

NA

$1,867.5 2.9x

13.2x

11.6x

1.57x

6.9%

3.8% 11.5%

13.2%

16.0%

2.6%

Capital Markets Transactions

William Blair

Capital Markets Transactions Recent Equity Offerings Initial Public Offerings Market Cap. at Pricing / Pricing Date

Company

02/13/15

Great Ajax Corp.

$14.25

12/10/14

LendingClub Corporation

$15.00

12/16/14 12/11/14 11/20/14 10/08/14 07/30/14 05/08/14 04/09/14 03/20/14 03/05/14 02/05/14 02/05/14 01/22/14 01/15/14 11/08/13 11/06/13 10/15/13 10/09/13 10/03/13 09/24/13 07/11/13 05/08/13 05/02/13 05/01/13 03/26/13 03/21/13 02/14/13 02/07/13 12/04/12 11/07/12 11/07/12 10/24/12

On Deck Capital, Inc.

Avolon Holdings Limited Neff Corporation

Eagle Point Credit Company Inc. Synchrony Financial

Alcentra Capital Corporation Ally Financial Inc.

TPG Specialty Lending, Inc.

TriplePoint Venture Growth BDC Corp. CM Finance Inc.

Ladder Capital Corp

Santander Consumer USA Holdings Inc. American Capital Senior Floating, Ltd. JGWPT Holdings Inc.

StoneCastle Financial Corp. Springleaf Holdings, Inc.

Stonegate Mortgage Corporation

Cherry Hill Mortgage Investment Corporation Capitala Finance Corp.

Fifth Street Senior Floating Rate Corp. PennyMac Financial Services, Inc.

Harvest Capital Credit Corporation

Ellington Residential Mortgage REIT Garrison Capital Inc.

Five Oaks Investment Corp. Orchid Island Capital, Inc. ZAIS Financial Corp.

WhiteHorse Finance, Inc. OFS Capital Corporation

Stellus Capital Investment Corporation Monroe Capital Corporation

Price

5.0

Amount $71.3

$20.00

10.0

$200.0

$15.00

10.5

$157.1

$20.00 $20.00

13.6 58.0 5.2

-

$16.00

7.0

$112.0

$25.00 $15.00 $15.00

95.0 8.3 6.7

$17.00

13.3

$14.00

13.9

$24.00 $15.00 $25.00 $17.00 $16.00 $20.00 $20.00 $15.00

$21.25 $15.00 $15.00 $15.00 $15.00

10.3x

$125.0

-

$2,375.0 $100.0 $225.3

-

12.4x 9.1x

-

6.3

$157.1

-

10.0 21.0 7.1 6.5 4.0 6.7

5.3

$15.00

$100.0

17.2x

$15.00 $15.00

-

$1,799.8

11.1

$20.00

-

9.8x

75.0

$18.00 $15.00

-

$103.1

$870.0 $2,875.0

6.6

-

12.1x

125.0

$15.00

LTM EPS

$272.7

$23.00

Note: Dollar amount and shares amount are in millions and exclude overallotment. Source: SNL Financial and William Blair’s market analysis.

Specialty Finance Industry Insights 12 Capital Markets Transactions

Shares

3.4 6.5 4.0 2.4

$150.0 $195.0 $357.8

$51.0

$129.0 $80.0

-

$75.0

0.80x 1.03x

-

1.47x 6.44x 3.10x

-

2.48x

-

5.75x

-

-

-

-

$120.0

-

0.90x

-

$100.0

8.0 5.0

-

22.2x

$100.0

-

-

-

$60.5 $35.4

-

1.11x

-

$200.0

-

1.05x

1.12x

$100.0

$80.0

1.00x

-

14.1x

$130.0

$120.1

6.7

-

$113.6

5.7 6.7

-

LTM Book Value

-

-

3.32x

-

2.35x

-

William Blair

Recent Equity Offerings (cont’d) Follow-On Offerings Market Cap. at Pricing / Pricing Date 03/05/15

Company Apollo Commercial Real Estate Finance, Inc.

11/21/14

New York Mortgage Trust, Inc.

12/19/14 12/01/14 11/21/14 11/20/14 11/12/14 11/04/14 10/27/14 10/23/14 10/07/14 09/30/14 09/18/14 09/05/14 09/05/14 09/04/14 09/04/14 09/03/14 09/02/14 08/20/14 08/14/14 08/12/14 08/12/14 08/05/14 07/29/14 07/17/14 07/16/14 07/16/14 07/11/14 06/19/14 05/13/14 04/30/14 04/29/14 04/25/14 04/23/14 04/23/14 04/09/14 04/08/14 04/08/14 04/03/14 04/02/14 04/01/14 03/26/14 03/19/14 03/11/14 02/27/14 02/20/14 01/29/14 01/16/14 01/14/14

Ally Financial Inc.

AerCap Holdings N.V. TCP Capital Corp.

Walker & Dunlop, Inc.

Newtek Business Services Corp. StoneCastle Financial Corp.

Hannon Armstrong Sustainable Infrastructure Capital, Inc. New Mountain Finance Corporation KCAP Financial, Inc.

Fidus Investment Corporation

Blackstone Mortgage Trust, Inc. AerCap Holdings N.V.

PennantPark Investment Corporation Arlington Asset Investment Corp. NorthStar Realty Finance Corp. Ellington Financial LLC

Santander Consumer USA Holdings Inc. Medley Capital Corporation

Fifth Street Senior Floating Rate Corp. Newcastle Investment Corp.

Triangle Capital Corporation TPG Specialty Lending, Inc. TCP Capital Corp.

Garrison Capital Inc.

Ares Capital Corporation Colony Financial, Inc.

Fifth Street Finance Corp.

Five Oaks Investment Corp.

NorthStar Realty Finance Corp.

Apollo Commercial Real Estate Finance, Inc. ePlus Inc.

New Residential Investment Corp.

Hannon Armstrong Sustainable Infrastructure Capital, Inc. Medley Capital Corporation

New Mountain Finance Corporation Main Street Capital Corporation Starwood Property Trust, Inc.

Western Asset Mortgage Capital Corporation New York Mortgage Trust, Inc.

Blackstone Mortgage Trust, Inc.

PennyMac Financial Services, Inc. Orchid Island Capital, Inc.

Oxford Lane Capital Corp. Colony Financial, Inc.

Kayne Anderson MLP Investment Company New Mountain Finance Corporation Orchid Island Capital, Inc.

Full Circle Capital Corporation

Price $17.00

Shares 10.0

Amount $170.0

$7.94

13.0

$103.2

$23.25 $41.23 $17.05 $15.30 $12.50 $23.00 $13.60 $14.53 $8.02

$17.00 $27.49

54.9 11.2 5.9 2.0 2.2 1.6 4.0 5.0

$1,277.0 $463.1 $100.6 $30.6 $27.5 $36.8 $54.4

$65.1

$18.63 $17.33 $14.50

8.5 8.0

10.0 22.8 39.5 4.3 5.0 5.4 2.0

$479.5 $98.9

$170.6 $115.5 $93.2 $93.6 $29.0

3.5

$38.5

$15.45 $16.35 $50.00

30.0 9.0 1.6

$6.10

25.0

$14.30

3.5

$13.00 $13.25 $31.50

5.0 6.0

$16.50 $12.55 $17.00

5.6 3.2 2.8

Note: Dollar amount and shares amount are in millions and exclude overallotment. Source: SNL Financial and William Blair’s market analysis.

7.9x 9.9x

12.8x

-

11.4x 5.2x

15.3x

$491.0

12.2x

$50.0

$190.7 $221.8 $91.7 $40.2

10.5x 14.0x

-

8.8x

-

5.3x

-

$47.6

18.1x

$34.2

17.5x

$22.5

1.7

10.2x

$79.5

1.8

$7.13

10.5x

-

$152.5

$12.50

2.3

11.2x

$65.0

$78.7

$284.7

$14.70

15.8x

10.4x

13.0 8.0

12.9x

$147.2

$21.90 $37.05

12.0x

-

$98.7

8.0

$7.59

13.0

-

$463.5

$131.8

13.0

$27.72

$14.67

7.9x

17.7x

$126.0

22.0

6.4x

$332.1

4.0

$22.32

29.4x

-

$11.00

13.3

16.8x

$294.3

$187.7

$224.5

15.0

11.3x

11.2x

13.5

$9.95

-

$191.4

$16.63 $22.14

-

$75.9

5.0

$26.85

16.5x

2.8

$13.02 $4.32

11.0x

21.7x

$34.0

$828.0

$12.91

11.4x

$219.9

2.0

$24.1

45.0

$18.68

6.1x

8.0

3.0

$18.40 $23.92

15.1x

10.0x

10.2

$27.61

10.4x

$72.7

$47.10 $11.63

LTM EPS 10.3x

$296.4 $11.8

23.1x 31.6x

-

LTM Book Value 0.92x 0.74x 1.18x 1.01x 1.03x 1.25x 1.55x 1.00x 1.37x 1.08x 1.12x 1.29x 1.05x 1.38x 1.14x 0.87x 1.25x 1.24x 2.14x 1.14x 3.61x 1.95x 1.95x 1.13x 1.04x 0.94x 1.07x 0.85x 1.09x 0.76x 2.24x 0.88x 1.51x 1.00x 1.48x 1.17x 1.05x 1.75x 1.38x 1.02x 1.19x 1.11x 0.55x 2.43x 2.37x 1.26x

-

2.15x

-

0.85x

Specialty Finance Industry Insights Capital Markets Transactions 13

William Blair

Recent Debt Offerings Date

Company

Offering Description

03/05/15

John Deere Capital Corporation

2.050% Series F medium-term unsecured notes, due Mar 10, 2020

$500.0

03/10/20

03/02/15

Discover Financial Services

3.750% Senior unsecured notes, due Mar 4, 2025

$500.0

03/04/25

03/03/15 02/24/15 02/17/15 02/03/15 02/03/15 01/26/15 01/22/15 01/20/15 01/15/15 01/13/15 01/12/15 01/07/15 01/07/15 01/07/15 01/06/15 12/08/14 12/08/14 12/02/14 11/25/14 11/25/14 11/19/14 11/18/14 11/18/14 11/12/14 11/03/14 10/31/14 10/28/14 10/23/14 10/02/14 10/01/14 09/25/14 09/24/14 09/24/14 09/22/14 09/16/14 09/10/14 09/09/14 09/04/14 09/04/14

PACCAR Financial Corp.

Apollo Investment Corporation Ryder System, Inc. GATX Corporation

Triangle Capital Corporation Synchrony Financial

Harvest Capital Credit Corporation

National Rural Utilities Cooperative Finance Corporation Freddie Mac

John Deere Capital Corporation Aircastle Limited

Air Lease Corporation

General Motors Financial Company, Inc. Resource Capital Corp.

Ford Motor Credit Company LLC

American Honda Finance Corporation General Electric Capital Corporation American Express Company FS Investment Corporation

Springleaf Finance Corporation

1.450% Series N medium-term notes, due Mar 9, 2018 5.250% Senior unsecured notes, due Mar 3, 2025

2.650% Unsecured medium-term notes, due Mar 2, 2020 3.250% Senior unsecured notes, due Mar 30, 2025 6.375% Senior unsecured notes, due Mar 15, 2022

0.500% Reference Notes, due Jan 27, 2017

1.350% Series F medium-term notes, due Jan 16, 2018 5.500% Senior unsecured notes, due Feb 15, 2022 3.750% Senior unsecured notes, due Feb 1, 2022

3.150% Senior unsecured notes, due Jan 15, 2020

8.000% Convertible senior unsecured notes, due Jan 15, 2020 2.145% Senior unsecured notes, due Jan 9, 2018

1.550% Series A unsecured medium-term notes, due Dec 11, 2017

Floating rate series A senior unsecured global medium-term notes, due Dec 15, 2054

Starwood Property Trust, Inc. Freddie Mac

National Rural Utilities Cooperative Finance Corporation AerCap Ireland Capial Limited Ally Financial Inc.

General Motors Financial Company, Inc. PennantPark Investment Corporation John Deere Capital Corporation Air Lease Corporation

American Honda Finance Corporation Fannie Mae

$25.0

$4,000.0 $500.0 $500.0 $600.0

$1,000.0 $100.0 $750.0

$1,000.0 $78.5

$600.0

5.250% Senior unsecured notes, due Dec 15, 2019

$700.0

4.250% Senior unsecured notes, due Jan 15, 2020

5.625% Senior convertible unsecured notes, due Nov 15, 2019 5.875% Senior unsecured notes, due Oct 25, 2024 4.500% Senior unsecured notes, due Dec 1, 2019

2.597% Senior unsecured notes, due Nov 4, 2019

Floating rate series B medium term notes, due Oct 29, 2015

3.750% Convertible senior unsecured notes, due Oct 15, 2017 1.000% Reference Notes, due July 28, 2017

Floating rate series C senior unsecured medium-term notes, due May 12, 2017 5.000% Senior unsecured notes, due Oct 1, 2021

5.125% Senior unsecured notes, due Sept 30, 2024 4.375% Senior unsecured notes, due Sept 25, 2021 4.500% Senior unsecured notes, due Oct 1, 2019

2.300% Series F senior medium term notes, due Sept 16, 2019 4.250% Senior unsecured notes, due Sept 15, 2024

2.250% Series A unsecured medium-term notes, due Aug 15, 2019 2.625% Benchmark notes, due Sept 6, 2024

Note: Dollar amount in millions and excludes overallotment. Source: SNL Financial and William Blair’s market analysis.

Specialty Finance Industry Insights 14 Capital Markets Transactions

$75.0

3.625% Subordinated unsecured notes, due Dec 5, 2024

1.400% Series N medium-term notes, due Nov 17, 2017

Toyota Motor Credit Corporation

$300.0

$500.0

PACCAR Financial Corp. Ford Motor Credit Company LLC

$400.0

2.850% Collateral trust bonds, due Jan 27, 2025

7.000% Senior unsecured notes, due Jan 16, 2020

3.875% Senior unsecured notes, due Jan 15, 2020

Main Street Capital Corporation

$350.0

$750.0

Ares Capital Corporation Navient Corporation

$500.0

2.700% Senior unsecured notes, due Feb 3, 2020

Caterpillar Financial Services Corporation 3.400% Series 84 senior notes, due Nov 25, 2017 RWT Holdings, Inc.

Amount

$325.0 $1,000.0 $400.0 $200.0 $300.0 $500.0 $175.0

$1,250.0 $1,250.0 $375.0 $500.0 $25.0

$800.0 $700.0

$1,250.0 $250.0 $500.0 $500.0

$1,000.0 $4,500.0

Maturity Date 03/09/18 03/03/25 03/02/20 03/30/25 03/15/22 02/03/20 01/16/20 01/27/25 01/27/17 01/16/18 02/15/22 02/01/22 01/15/20 01/15/20 01/09/18 12/11/17 12/15/54 12/05/24 01/15/20 12/15/19 11/25/17 01/15/20 11/15/19 11/17/17 10/25/24 12/01/19 11/04/19 10/29/15 10/15/17 07/28/17 05/12/17 10/01/21 09/30/24 09/25/21 10/01/19 09/16/19 09/15/24 08/15/19 09/06/24

William Blair

Recent Preferred Equity Offerings Date 02/25/15

Company American Express Company

Amount $850.0

Call Date 03/15/20

11/05/14

American Express Company

$750.0

11/15/19

12/04/14 11/20/14 11/05/14 10/13/14 09/04/14 06/17/14 06/12/14 06/03/14 05/29/14 05/21/14 05/13/14 05/12/14 05/05/14 03/20/14 02/26/14 12/18/13 12/10/13 11/13/13 07/16/13 06/13/13 05/29/13 05/28/13 05/08/13 05/06/13 04/23/13 04/15/13 04/11/13 04/08/13 04/03/13 03/12/13 02/07/13 01/29/13 01/29/13 01/14/13 01/10/13 11/19/12 10/09/12 10/03/12 09/25/12 09/20/12 09/13/12 09/06/12 08/16/12 07/27/12 07/27/12 07/25/12 07/25/12 07/24/12 07/19/12 07/10/12

Wells Fargo Real Estate Investment Corp. Oxford Lane Capital Corp.

Gladstone Investment Corporation

Kayne Anderson MLP Investment Company

$240.0 $25.0 $36.0 $25.0

Invesco Mortgage Capital Inc.

$150.0

Resource Capital Corp.

$110.0

Federal Agricultural Mortgage Corporation Colony Financial, Inc.

Oxford Lane Capital Corp.

Five Oaks Investment Corp.

Gladstone Capital Corporation

$75.0 $75.0 $28.0 $15.0 $55.0

NorthStar Realty Finance Corp.

$225.0

Element Financial Corporation

$125.0

American Capital Agency Corp.

Federal Agricultural Mortgage Corporation Five Oaks Investment Corp.

Element Financial Corporation Oxford Lane Capital Corp.

Farm Credit Bank of Texas Oxford Lane Capital Corp.

General Electric Capital Corporation New York Mortgage Trust, Inc.

Capstead Mortgage Corporation Arbor Realty Trust, Inc. CYS Investments, Inc. CoBank, ACB

Dynex Capital, Inc.

MFA Financial, Inc.

NorthStar Realty Finance Corp. iStar Financial Inc.

ARMOUR Residential REIT, Inc. Arbor Realty Trust, Inc.

MuniMae TE Bond Subsidiary, LLC

Federal Agricultural Mortgage Corporation

$175.0 $75.0 $20.0

$100.0 $36.6

$300.0 $20.0

$1,000.0 $75.0

$150.0 $30.0

$200.0 $200.0 $50.0

$175.0 $175.0 $175.0 $135.0 $35.0 $74.0 $60.0

KKR Financial Holdings LLC

$325.0

NorthStar Realty Finance Corp.

$125.0

Oxford Lane Capital Corp.

Discover Financial Services Resource Capital Corp.

AG Mortgage Investment Trust, Inc. Apollo Residential Mortgage, Inc. Annaly Capital Management, Inc. Hatteras Financial Corp. CYS Investments, Inc.

AG Mortgage Investment Trust, Inc. Dynex Capital, Inc.

Apollo Commercial Real Estate Finance, Inc. General Electric Capital Corporation Invesco Mortgage Capital Inc. Colony Financial, Inc.

07/09/12 NorthStar Realty Finance Corp. Note: Dollar amount in millions and excludes overallotment. Source: SNL Financial and William Blair’s market analysis.

$15.0

$500.0 $25.0

$100.0 $150.0 $400.0 $250.0 $75.0 $45.0 $50.0 $75.0

$1,750.0 $135.0 $102.7 $63.3

12/11/19 06/30/17 12/31/17 02/09/17 12/27/24 07/18/24 06/19/19 07/30/24 06/30/17 12/23/18 06/30/17 05/15/19 05/08/19 04/17/19 06/30/19 12/23/18 12/31/18 06/30/16 09/15/23 06/30/16 06/15/23 06/04/18 05/13/18 05/09/18 04/30/18 07/01/18 04/30/18 04/15/18 04/10/18 03/15/18 02/12/18 02/01/18 04/30/28 01/17/18 01/15/18 12/31/14 12/01/17 10/11/17 10/02/17 09/27/17 09/20/17 09/13/17 08/27/17 08/03/17 08/03/17 07/31/17 08/01/17 12/15/22 07/26/17 03/20/17 02/07/12

Dividend Rate (%) 4.9% 6.4% 8.1% 5.2% 6.8% 3.9% 7.8% 6.0% 7.5% 8.6% 8.1% 8.8% 6.8% 8.8% 7.8% 6.9% 6.5% 8.8% 6.6% 7.5% 6.8% 7.5% 5.3% 7.8% 7.5% 7.8% 7.5% 6.1% 7.6% 7.5% 8.5% 4.5% 7.9% 8.3% 5.0% 5.9% 7.4% 8.5% 6.5% 8.9% 8.3% 8.0% 8.0% 7.5% 7.6% 7.8% 8.3% 8.5% 8.6% 6.3% 7.8% 8.5% 8.3%

Specialty Finance Industry Insights Capital Markets Transactions 15

William Blair

Financial Services & Technology Analysts and Coverage Insurance Brokers and Property and Casualty Insurance Adam Klauber, CFA • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

Allstate Corporation (The) (ALL) American International Group, Inc. (AIG) AmTrust Financial Services, Inc. (AFSI) Aon plc (AON) Argo Group International Holdings. Ltd. (AGII) Arthur J. Gallagher & Co. (AJG) Benefitfocus, Inc. (BNFT) Brown & Brown, Inc. (BRO) Chubb Corporation (The) (CB) CNA Financial Corporation (CNA) Connecture, Inc. (CNXR) Crawford & Company (CRD.A) Crawford & Company (CRD.B) eHealth, Inc. (EHTH) Erie Indemnity Company (ERIE) Federated National Holding Company (FNHC) HCC Insurance Holdings, Inc. (HCC) Kemper Corporation (KMPR) Markel Corporation (MKL) Marsh & McLennan Companies, Inc. (MMC) National General Holdings Corp. (NGHC) National Interstate Corporation (NATL) Navigators Group, Inc. (The) (NAVG) Patriot National, Inc. (PN) Progressive Corporation (The) (PGR) RLI Corp. (RLI) Travelers Companies, Inc. (The) (TRV) WebMD Health Corp. (WBMD) Willis Group Holdings Public Limited Company (WSH)

Financial Technology and Specialty Finance Robert Napoli • • • • • • • • • • • • • • • • • • • • • • • • •

Alliance Data Systems Corporation (ADS) American Express Company (AXP) Bottomline Technologies, Inc. (EPAY) CAI International, Inc. (CAP) Capital One Financial Corporation (COF) Cardtronics, Inc. (CATM) Discover Financial Services (DFS) Encore Capital Group, Inc. (ECPG) EVERTEC, Inc. (EVTC) Financial Engines, Inc. (FNGN) Garrison Capital Inc. (GARS) Green Dot Corporation (GDOT) Harvest Capital Credit Corporation (HCAP) Independence Realty Trust, Inc. (IRT) Marlin Business Services Corp. (MRLN) MasterCard Incorporated (MA) MoneyGram International, Inc. (MGI) Monroe Capital Corporation (MRCC) Performant Financial Corporation (PFMT) PRA Group (PRAA) QIWI plc (QIWI) Visa Inc. (V) WageWorks, Inc. (WAGE) Western Union Company (The) (WU) WEX Inc. (WEX)

Specialty Finance Industry Insights 16 Financial Services & Technology Analysts and Coverage

Asset Management and Financial Technology Chris Shutler, CFA • • • • • • • • • • • • • • • • • • •

Affiliated Managers Group, Inc. (AMG) Artisan Partners Asset Management Inc. (APAM) Charles Schwab Corporation (The) (SCHW) Eaton Vance Corp. (EV) Envestnet, Inc. (ENV) Euronet Worldwide, Inc. (EEFT) Fiserv, Inc. (FISV) Global Payments, Inc. (GPN) Heartland Payment Systems, Inc. (HPY) Invesco Ltd. (IVZ) LPL Financial Holdings Inc. (LPLA) MSCI Inc. (MSCI) SEI Investments Company (SEIC) SS&C Technologies Holdings, Inc. (SSNC) T. Rowe Price Group, Inc. (TROW) TD Ameritrade Holding Corporation (AMTD) Vantiv, Inc. (VNTV) Waddell & Reed Financial, Inc. (WDR) WisdomTree Investments, Inc. (WETF)

William Blair

Investment Banking Team Biographies William Blair & Company Financial Services Investment Banking Robert Metzger, Managing Director and Head of Financial Services Investment Banking, joined William Blair in 1999. While at William Blair and in his prior position at ABN AMRO, he focused on the corporate finance needs of insurance, financial technology, and specialty finance companies. Mr. Metzger graduated in 1989 with highest honors from the University of Illinois, receiving a B.S. in accountancy. In 1995, he graduated with distinction from Northwestern University’s J.L. Kellogg Graduate School of Management, receiving an M.B.A. in finance and strategy. He is a Certified Public Accountant. [email protected] +1 312 364 8517

J.P. Young, Managing Director, is a member of the financial services industry group, where he focuses on the corporate finance needs of banks, broker-dealers, and specialty finance companies. Mr. Young joined William Blair’s investment banking group in 2009 from Macquarie Capital and began his investment banking career in 2000 at Piper Jaffray. He has extensive experience providing M&A advisory services and raising public and private-equity capital for clients. Mr. Young received a B.S. from Lehigh University and an M.S. from the University of Chicago. [email protected] +1 312 364 8160

Kegan Greene, Vice President, joined William Blair in 2010. Before joining William Blair, Mr. Greene worked at Babcock & Brown, Goldman Sachs, and Deloitte’s transaction services department. He holds an M.B.A. in finance and entrepreneurship from the University of Chicago, a J.D. from DePaul University, and a B.A. in English from DePauw University. [email protected] +1 312 364 8113

Specialty Finance Industry Insights Investment Banking Team Biographies 17

William Blair

Select William Blair Transactions $27,500,000

£158,000,000

$70,000,000

$100,000,000

$29,000,000

$76,475,000

has been acquired by Direct Unsecured Notes

Arrow Global

Senior Notes

Senior Unsecured Notes

Follow-on Offering

Follow-on Offering

$1,285,000,000

Not Disclosed

$60,000,000

$151,800,000

$161,000,000

$66,815,000

Milestone Partners

Debt Placement

Follow-on Offering

Convertible Bond Offering

Follow-on Offering

$100,000,000

Not Disclosed

$50,000,000

Not Disclosed

$34,000,000

has been acquired by Portfolio Recovery Associates

Not Disclosed

has been acquired by

NORTH STATE ACCEPTANCE

has been recapitalized by

has acquired

Pine Tree Equity Management

Senior Credit Facility Debt Placement

Persian Acceptance Corporation

$287,500,000

$75,000,000

$18,750,000

has acquired

Follow-on Offering

$438,600,000

Initial Public Offering

$51,000,000

£525,000,000 has been acquired by

has been acquired by

Convertible Senior, Unsecured Notes

Follow-on Offering

Junior Unsecured Notes

$42,000,000

$78,000,000

$92,000,010

$97,980,000

$35,000,000

$75,000,000

Baby Bond Offering

Follow-on Offering

Initial Public Offering

Follow-on Offering

Senior Subordinated Notes Preferred Equity

Initial Public Offering

$125,000,000

$230,000,000

$74,000,000

Not Disclosed

$30,000,000

$102,212,920

Senior Secured Credit Facility

Convertible Offering

Senior Credit Facility & Subordinated Notes

Manheim

Second Lien Loan

Initial Public Offering

$75,469,000

188,893,000

$228,433,000

$15,000,000

£28,000,000

$271,860,000

Initial Public Offering

has been acquired by

CFSI

COLLINS FINANCIAL SERVICES, INC.

INNOVATION

Follow-on Offering

Follow-on Offering

Specialty Finance Industry Insights 18 Select William Blair Transactions

Follow-on Offering

COMPLIANCE

INTEGRITY

Second Lien Term Loan

has sold a minority stake to Investcorp

Follow-on Offering

William Blair

Notes

Specialty Finance Industry Insights Notes 19

William Blair

Disclosures

William Blair is a trade name for William Blair & Company, L.L.C. and William Blair International, Limited. William Blair & Company, L.L.C., is a Delaware company and is regulated by the Securities and Exchange Commission, The Financial Industry Regulatory Authority, and other principal exchanges. William Blair International Limited is authorised and regulated by the Financial Conduct Authority ("FCA") in the United Kingdom. William Blair & Company® only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated within the United States and are not offered to persons or institutions outside of the United States. This material has been approved for distribution in the United Kingdom by William Blair International Limited, Regulated by the Financial Conduct Authority (FCA), and is directed only at, and is only made available to, persons falling within COB 3.5 and 3.6 of the FCA Handbook (being “Eligible Counterparties” and Professional Clients). This Document is not to be distributed or passed on to any “Retail Clients.” No persons other than persons to whom this document is directed should rely on it or its contents or use it as the basis to make an investment decision. William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com

Specialty Finance Industry Insights 20 Disclosures

March 18, 2014

About William Blair Investment Banking

William Blair’s investment banking group combines significant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and financing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions, growth financing, financial restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. From 2010-2014, the investment banking group completed more than 330 merger-andacquisition transactions worth $73 billion in value, involving parties in 36 countries and five continents, was an underwriter on more than 20% of all U.S. initial public offerings, and raised nearly $100 billion in public and private financing.

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Specialty Finance Industry Insights - William Blair

March 2015 Specialty Finance Industry Insights A review of M&A activity and public market valuation in the consumer and commercial specialty finance ...

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