Specialty Finance Industry Insights...05/21/13 Mortgage Capital Markets Cooperative, LLC/ CMCF Inc -...

Specialty FinanceIndustry InsightsA review of M&A activity and public market valuation in the consumer and commercial specialty inance sectors

November 2013

William Blair’s investment banking group combines signi icant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and inancing solutions to our global base of corporate clients. We serve both publicly traded

and privately held companies, executing mergers and acquisitions, growth inancing, special situations and 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. In 2012, the investment banking group completed 76 merger-and-acquisition transactions worth more than $13.8 billion in value, involving parties in 21 countries and ive continents, and was an underwriter on over 20% of all U.S. initial public offerings.

About William Blair Investment Banking

William Blair

Specialty Finance Industry Insights Table of Contents

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

William Blair

Specialty Finance Industry Insights Introduction 1

Introduction

Specialty finance can be broadly characterized 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.

Market Overview

The outlook for the global economy remains mixed, with significant uncertainty surrounding the United States, Europe, and China. We believe this lack of confidence will dampen growth in overall M&A activity in 2014, as sellers and buyers proceed cautiously. However, 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. We expect this trend to persist in 2014, which should keep M&A activity strong for high-quality companies in the specialty finance sector.

Private equity firms remain highly active in the specialty finance sector. On the supply side, aging portfolio companies of private equity firms may create liquidity opportunities in the near to midterm and will continue to fuel middle-market M&A activity. According to PitchBook, Inc., approximately 60% of private-equity-owned portfolio companies (not only specialty-finance-related) are more than four years old. There has already been strong activity thus far in 2013, as private equity owners have initiated discussions to begin exiting specialty finance businesses purchased before or during the downturn. On the demand side, the significant overhang of undeployed private equity capital (approximately $350 billion in total), the ready availability of credit, and historically low interest rates will contribute to sustained financial buyer interest.

Summary of 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 50% of the aggregate deals in the consumer specialty finance sector have been completed at above 10.0 times LTM net income, and over 16% have been completed at more than 3.00 times LTM book value. On the commercial specialty finance side, approximately 60% of the aggregate deals since 2002 have been completed between 5.0 and 10.0 times LTM net income, and 33% 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 2013, M&A activity in the sector has remained strong, driven primarily by strategic acquirers looking for new product/segments, differentiated platforms, and strong growth. Examples include WSFS Financial Corporation’s acquisition of Array Financial Group, Cash America International’s acquisition of TDP Superstores Corp., Umpua Holdings Corporation’s acquisition of Financial Pacific Holding, and Element Financial Corporation’s acquisition of GE Capital’s fleet portfolio. While global economic uncertainty may cause the broad universe of buyers and sellers to proceed more cautiously in 2014, we expect activity in the specialty finance sector to be on par with or slightly above activity in 2013. In addition, we remain optimistic that capital markets activity will remain strong for solid performing businesses.

Robert Metzger + 312 364 8517 [email protected]

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

Kegan Greene +1 312 364 8113 [email protected]

mailto:[email protected]



Consumer Specialty Finance Sector

William Blair

Specialty Finance Industry Insights 2 Consumer Specialty Finance

Consumer Specialty Finance

M&A Trends

Year-to-date aggregate M&A transaction volume is running slightly behind the comparable period in 2012, although disclosed dollar volume is meaningfully lower over the same period.

Over 50% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and over 16% have been completed at more than 3.00 times LTM book value.

Historical Transaction Volume

Historical Transaction Dollar Volume ($ in millions)

LTM Net Income Multiple Breakdown LTM Book Value Multiple Breakdown

LTM Net Income Multiple by Transaction Size LTM Book Value Multiple by Transaction Size

Sources: SNL and William Blair’s market analysis Note: Year-to-date as of November 1, 2013

47 41

79

53 75

54 32 33

46 50 42 33 31

020406080

100

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012YTD

2013YTD

Average: 50 (3.1%)

$17,055 $26,075

$8,866

$51,379

$16,926

$2,090 $3,299 $2,754

$12,024

$43,055

$10,519 $6,033 $1,700

-

$20,000

$40,000

$60,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012YTD

2013YTD

($ in millions) Average: $17,640 (71.4%)

52.1%31.3%

16.7%

Greater than 10.0x5.0x to 10.0xLess than 5.0x

16.4%

26.2%57.4%

Greater than 3.00x1.50x to 3.00xLess than 1.50x

5.0x

7.1x5.7x

0.0x

5.0x

10.0x

<$50mm $50mm - $100mm >$100mm

1.00x

1.18x

1.09x

0.90x

1.00x

1.10x

1.20x

1.30x

<$50mm $50mm - $100mm >$100mm

William Blair

Specialty Finance Industry Insights Consumer Specialty Finance 3

Select M&A Transactions Transaction Value /

Announced Date Sub-Sector Buyer Name / Target Name

Transaction Value

LTM Net Income

LTM Book Value

11/07/13 Mortgage Stonegate Mortgage Corporation/ Wholesale Lending Channel - - -

10/25/13 Mortgage Banc of California, Inc./ CS Financial, Inc. $8.5 - -

10/25/13 AFS Blackstone Group L.P./ Imperial Holdings structured settlements business $12.0 - -

10/25/13 Mortgage Highlands Bancorp, Inc./ Secured Lending Solutions, Inc. - - -

10/11/13 AFS Undisclosed buyer/ BB&T Corp. consumer lending subsidiary - - -

10/07/13 Mortgage Coastal Carolina Bancshares, Inc./ Investors Mortgage Company Inc. - - -

10/01/13 Collection Shellpoint Partners, LLC/ Resurgent Mortgage Servicing - - -

10/01/13 Mortgage Wintrust Financial Corporation/ Certain assets and liabilities of mortgage banking business - - -

09/30/13 AFS First Cash Financial Services, Inc./ Baja Unlimited, LLC $12.5 - -

09/26/13 AFS Connexus Credit Union/ Financial Institution Lending Options, LLC - - -

08/28/13 AFS Cash America International, Inc./ 34 pawn lending locations $62.0 - -

08/21/13 Mortgage loanDepot.com LLC/ imortgage.com, Inc. - - -

08/05/13 Mortgage Realty Finance Corporation/ ClearVue Management, Inc. $26.0 - -

07/31/13 Mortgage Triumph Bancshares, Inc./ M&P Bank Home Loans and Community Bankers Mortgage Group - - -

07/29/13 Mortgage Investor group/ Urban Financial Group, Inc. $80.0 - -

07/29/13 Mortgage WSFS Financial Corporation/ Array Financial Group Inc. - - -

07/08/13 Mortgage CIB Marine Bancshares, Inc./ Certain assets and liabilities of Avenue Mortgage Corp. - - -

07/01/13 Mortgage Impac Mortgage Holdings, Inc./ Amerihome Mortgage Corporation $1.5 - -

06/30/13 Collection Artisans' Bank/ Gilpin Financial Services Inc. - - -

06/25/13 AFS First Cash Financial Services, Inc./ O'Pak Credit LP / Pro Pawn LP / Milar Credit LP $70.2 - -

06/20/13 AFS Cash America International, Inc./ TDP Superstores Corp. $102.5 - -

05/31/13 AFS Warburg Pincus/ Mariner Finance, LLC - - -

05/28/13 AFS CFAM Financial Services, LLC/ Consumer finance business - - -

05/21/13 Mortgage Capital Markets Cooperative, LLC/ CMCF Inc - - -

05/14/13 Mortgage Ares Commercial Real Estate Corporation/ Alliant Capital, LLC $62.8 11.2x 1.83x

05/06/13 AFS Nationstar Mortgage Holdings Inc./ GreenLight Financial Services, Inc. $75.0 1.2x 0.91x

04/30/13 Collection Two Harbors Investment Corp./ Matrix Financial Services Corporation - - -

04/26/13 Mortgage Louise Bancshares, Inc./ Hancock Mortgage Partners, LLC - - -

04/11/13 AFS Undisclosed buyer/ SLM Student Loan Trust 2006-2 securitization - - -

03/19/13 Mortgage Enterprise Financial Services Corp/ Gorman & Gorman Residential Mortgage Services - - -

03/06/13 AFS Encore Capital Group, Inc./ Asset Acceptance Capital Corp. $203.2 18.6x 1.33x

02/26/13 Collection Wingspan Portfolio Advisors, LLC/ Mortgage servicing operation - - -

02/14/13 Mortgage Ocwen Financial Corporation/ ClearPoint Funding, Inc. - - -

02/13/13 AFS Undisclosed buyer/ SLM Student Loan Trust 2007-4 securitization - - -

01/31/13 Mortgage Altisource Portfolio Solutions S.A./ Fee-based businesses associated with the Homeward $87.0 3.8x -

01/31/13 Collection Altisource Portfolio Solutions S.A./ ResCap fee-based businesses $128.8 5.7x -

01/31/13 AFS Prospect Capital Corporation/ Nationwide Acceptance Corporation - - -

01/30/13 Mortgage Annaly Capital Management, Inc./ CreXus Investment Corp. $875.8 10.4x 1.09x

01/07/13 Collection Walter Investment Management Corp./ Residential mortgage servicing platform $1.0 - -

12/31/12 AFS Walter Investment Management Corp./ Security One Lending, Inc. $31.0 - -

12/28/12 Mortgage Carlile Bancshares, Inc./ Goldome Financial LLC - - -

12/28/12 AFS Investor group/ Credit Central $47.9 - -

12/22/12 Mortgage HomeBancorp, Inc./ Mortgage Investors Corporation - - -

12/21/12 Collection Portfolio Recovery Associates, Inc./ Consumer bankruptcy claims $115.3 - -

12/20/12 AFS EZCORP, Inc./ Twelve Pawn & Jewelry stores $23.0 - -

12/17/12 Mortgage Bexil Corporation/ Undisclosed mortgage bank - - -

12/03/12 Mortgage MVB Financial Corp./ Potomac Mortgage Group, LLC $19.0 - 2.27x

11/30/12 Mortgage Solera National Bancorp, Inc./ Residential Mortgage of Colorado, LLC $0.5 - -

11/21/12 AFS General Motors Financial Company, Inc./ International operations of Ally Financial Inc. $4,200.0 - 1.02x

11/20/12 AFS EZCORP, Inc./ Hayfield Investment Partners, LLC $50.0 - -

11/15/12 AFS Parthenon Capital Partners/ White River Capital, Inc. $79.4 8.8x 1.02x

10/31/12 Mortgage CIVC Partners, LP/ Shelter Mortgage Company, LLC - - -

10/26/12 Mortgage Ocwen Financial Corporation/ Genworth Financial Home Equity Access, Inc. $22.0 - -

10/23/12 AFS Royal Bank of Canada/ Canadian auto finance and deposit business of Ally Financial Inc. $3,823.7 - 1.11x

William Blair


Public Valuation Update

Auto Finance

Indexed Price / LTM Earnings Ratios as of 11/1/2013

Public Company Valuations

Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity

Stock Price / Asset CAGR ROAA ROAE

Net Income

EPS TBVPS 3-Yr CAGR Margin

Company LTM FY2013 LTM 07'-12' LTM LTM LTM LTM

America's Car-Mart CRMT $46.16 $416.2 0.5x 13.9x 13.8x 1.98x 12.4% 9.6% 16.0% 4.4% 6.6%

Carfinco Financial Group CFN $10.73 $284.0 2.5x 13.2x 12.1x 4.39x 15.1% 9.9% 36.8% 8.8% 46.6%

Consumer Portfolio Services CPSS $7.01 $156.1 NMF NMF 10.9x 1.90x (14.6%) 7.0% NMF NA NMF

Credit Acceptance CACC $118.93 $2,824.4 2.1x 11.7x 11.4x 4.08x 17.8% 11.0% 38.4% 14.8% 42.8%

Nicholas Financial NICK $15.24 $185.9 1.0x 9.6x NA 1.38x 8.2% 7.2% 13.9% 12.2% 30.3%

Mean $773.3 1.5x 12.1x 12.0x 2.75x 7.8% 8.9% 26.3% 10.0% 31.6%

Median $284.0 1.5x 12.4x 11.7x 1.98x 12.4% 9.6% 26.4% 10.5% 36.5%

Collection



Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity


Net Income



Asta Funding ASFI $8.52 $110.5 0.3x NMF NA 0.66x (16.7%) 1.7% 1.4% NA 5.2%

Encore Capital Group ECPG $47.38 $1,196.4 3.2x 16.6x 13.0x NMF 19.4% 6.4% 14.5% 18.8% 10.6%

Performant Financial PFMT $10.24 $491.1 2.1x 14.6x 13.8x NMF NA 19.9% NMF NA 13.7%

Portfolio Recovery Associates PRAA $59.02 $2,936.1 0.5x 18.3x 16.9x 4.22x 22.0% 13.1% 22.0% 36.3% 23.5%

Mean $1,183.5 1.5x 16.5x 14.6x 2.44x 8.2% 10.3% 12.7% 27.6% 13.2%

Median $843.8 1.3x 16.6x 13.8x 2.44x 19.4% 9.8% 14.5% 27.6% 12.2%

6.0x

8.0x

10.0x

12.0x

14.0x

Nov 2008 Nov 2009 Nov 2010 Nov 2011 Nov 2012 Nov 2013

Current: 10.0x

2.0x

6.0x

10.0x

14.0x

18.0x

22.0x


Current: 17.5x

William Blair

Specialty Finance Industry Insights Consumer Specialty Finance 5

Alternative Financial Services



Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity


Net Income



Cash America International CSH $39.42 $1,107.8 0.6x 8.7x 9.5x 3.24x 15.0% 7.3% 13.7% 6.9% 7.7%

DFC Global DLLR $11.74 $463.0 2.4x NMF 6.5x NMF 16.0% 7.1% (2.2%) NA (0.9%)

EZCORP EZPW $15.52 $841.7 0.3x 14.6x 8.0x 1.99x 37.1% 6.8% 6.6% (29.5%) 3.4%

First Cash Financial Services FCFS $60.20 $1,740.0 0.4x 20.6x 21.1x NMF 11.7% 14.7% 24.6% 17.7% 13.2%

QC Holdings QCCO $2.37 $41.2 0.3x 11.2x NA 0.72x (2.5%) 6.7% 4.4% NA (0.9%)

Regional Management RM $32.41 $407.9 2.3x 14.9x 13.6x 2.70x NA 7.9% 20.1% NA 18.1%

World Acceptance WRLD $101.29 $1,106.7 1.4x 12.3x 12.7x 3.23x 12.3% 13.7% 27.5% 7.4% 17.0%

Mean $838.7 0.8x 14.5x 11.1x 1.98x 15.5% 8.6% 9.3% (16.2%) 4.8%

Median $841.7 0.4x 14.2x 8.4x 1.98x 15.0% 7.1% 6.6% (11.3%) 3.4%

Credit Card



Company Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity


Net Income


LTM FY2013 LTM 07' - 12' LTM LTM LTM LTM

Alliance Data Systems ADS $236.78 $11,541.4 NMF 34.3x 24.0x NMF 23.6% 6.0% NMF 35.0% 11.1%

American Express AXP $82.16 $88,015.6 2.9x 19.4x 16.7x 4.59x 0.4% 3.1% 24.2% 8.1% 15.4%

Discover Financial Services DFS $52.00 $24,908.0 2.0x 11.7x 10.5x 2.99x 15.0% 3.2% 26.0% 22.5% 34.5%

MasterCard MA $737.48 $88,776.1 NMF 29.2x 28.0x 15.04x 14.8% 21.7% 42.4% 21.6% 38.2%

Visa V $199.16 $127,073.4 NMF 26.2x 26.3x 33.11x 55.6% 11.9% 18.3% 18.9% 42.3%

Mean $68,062.9 2.5x 24.2x 21.1x 13.93x 21.9% 9.2% 27.7% 21.2% 28.3%

Median $88,015.6 2.5x 26.2x 24.0x 9.82x 15.0% 6.0% 25.1% 21.6% 34.5%

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x


Current: 10.7x

6.0x

12.0x

18.0x

24.0x


Current: 17.6x

William Blair


Mortgage



Company Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity


Net Income


LTM FY2013 LTM 07'-12' LTM LTM LTM LTM

Ellington Financial EFC $22.72 $577.5 2.2x 5.8x 7.2x 0.92x NMF 3.6% 15.8% 30.0% NMF

Federal Agricultural Mortgage AGM $34.85 $370.9 NMF 5.7x 7.2x 1.24x 20.5% 0.6% 12.0% 35.4% NMF

Heritage Financial Group HBOS $17.05 $133.6 1.1x 12.5x 14.2x 1.08x 18.6% 0.9% 8.5% NMF 16.0%

Nationstar Mortgage Holdings NSM $50.52 $4,575.4 NMF 13.7x 11.0x 4.64x NMF 2.9% NMF NMF 21.4%

Ocwen Financial OCN $53.36 $7,247.5 1.6x 30.6x 17.4x NA 18.8% 8.9% 15.3% 89.3% 14.8%

PHH PHH $24.31 $1,389.2 3.6x 11.1x 38.6x 0.89x 0.5% 2.1% 12.3% NMF 5.1%

Stonegate Mortgage SGM $17.79 $439.5 2.1x 6.3x 10.8x 1.70x NMF NMF NMF NMF 23.9%

Tree.Com TREE $28.62 $318.3 NMF NA 32.5x 4.41x (20.2%) 2.5% 0.6% NMF 5.1%

Mean $1,881.5 2.1x 12.2x 17.4x 2.13x 7.6% 3.1% 10.7% 51.6% 14.4%

Median $508.5 2.1x 11.1x 12.6x 1.24x 18.6% 2.5% 12.1% 35.4% 15.4%

0.0x

10.0x

20.0x

30.0x

40.0x


Current: 15.4x

Commercial Specialty Finance Sector

William Blair

Specialty Finance Industry Insights 7 Commercial Specialty Finance

Commercial Specialty Finance

M&A Trends

Year-to-date aggregate M&A transaction volume is running behind that of the comparable period in 2012, although disclosed dollar volume is meaningfully higher over the same period.

As shown below, approximately 63% of the aggregate deals since 2002 have been completed between 5.0 and 10.0 times LTM net income, and 33% have been completed between 1.50 and 3.00 times LTM book value.

Transactions less than $50 million were completed at an average of 7.0 times LTM net income, slightly lower than LTM net income multiples on deals above $100 million.

Historical Transaction Volume

Historical Transaction Dollar Volume

LTM Net Income Multiple Breakdown LTM Book Value Multiple Breakdown

LTM Net Income Multiple by Transaction Size LTM Book Value Multiple by Transaction Size

Sources: SNL and William Blair’s market analysis Note: Year-to-date as of November 1, 2013

39

26

45 40 43 42

29 22

28

16

29 24

17

01020304050

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012YTD

2013YTD

Average: 33 (29.2%)

$1,551

$7,885 $9,126 $6,484 $5,702

$11,162

$15,423

$2,453 $1,780 $240

$7,802

$3,134 $6,118

$0$3,000$6,000$9,000

$12,000$15,000$18,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012YTD

2013YTD

($ in millions) Average: $6,328 95.3%

12.5%

62.5%

25.0% Greater than 10.0x

5.0x to 10.0x

Less than 5.0x

33.3%

66.7%

1.50x to 3.00x

Less than 1.50x

7.0x10.4x

8.4x

0.0x

5.0x

10.0x

15.0x

<$50mm $50mm - $100mm >$100mm

1.00x

1.69x

0.91x

0.00x

1.00x

2.00x

<$50mm $50mm - $100mm >$100mm

William Blair

Specialty Finance Industry Insights Commercial Specialty Finance 8

Select M&A Transactions

Transaction Value /

Announced Date Sub-Sector Buyer Name / Target Name

Transaction Value

LTM Net Income

LTM Book Value

09/30/13 Commercial Finance

Solar Capital/ Gemino Healthcare Finance, Incorporated - - -

09/06/13 Leasing General Finance Corporation/ Canadian Storage Containers Inc. $1.7 - -

08/16/13 Commercial Real Estate

Capital One Financial Corporation/ Beech Street Capital, LLC - - -

08/01/13 Leasing General Finance Corporation/ Harper Hot Shot Service, Inc. $3.0 - -


CIM Urban REIT, LLC/ PMC Commercial Trust - - -


Bank of America Corporation/ MuniMae TE Bond Subsidiary, LLC $78.5 - -

06/25/13 Leasing Element Financial Corporation/ Bush Truck Leasing Inc. / Bush Specialty Vehicles, Inc. - - -


Hunt Companies, Inc./ Centerline Holding Company $56.1 - 0.35x

06/03/13 Leasing Umpqua Holdings Corporation/ Financial Pacific Holding Corp. $158.0 8.2x 2.64x


Element Financial Corporation/ GE Capital's fleet portfolio $570.0 - -


KeyCorp/ CMBS special servicing business - - -


Fifth Street Finance Corp./ Healthcare Finance Group, LLC $110.0 - -


UnionBanCal Corporation/ CRE lending division $3,700.0 - -

03/28/13 Leasing BancVue, Ltd/ BancLeasing, LLC - - -


Walter Investment Management Corp./ Business lending mortgage operation of Ally Bank $0.1 - -


Starwood Property Trust Inc./ LNR Property LLC $1,052.9 2.7x 0.99x

01/18/13 Leasing Ontario Teachers' Pension Plan Board/ SeaCube Container Leasing Ltd. $466.6 10.0x 1.89x


Midland Financial Co./ Presidential Financial Corporation - - -

12/28/12 Leasing MB Financial, Inc./ Celtic Leasing Corporation $58.7 - 2.26x


CertusHoldings, Inc./ Resource Financial Services, Inc. - - -


Varde Partners, Inc./ FirstCity Financial Corporation $106.9 3.5x 0.82x


Solar Capital Ltd./ Crystal Capital Financial Holdings, LLC $275.0 - -

12/09/12 Leasing New China Trust Co./ International Lease Finance Corporation $4,227.5 15.0x 0.67x

11/08/12 Leasing Colford Capital Holdings, LLC/ Equilease Financial Services, Inc. - - -

11/08/12 Leasing Element Financial Corporation/ CoActiv Capital Partners - - -


CertusHoldings, Inc./ Quadrant Financial, Inc. - - -

William Blair


Public Valuation Update

Business Development Companies (BDCs)



Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity


Net Income

EPS TBVPS 3-Yr CAGR Margin Dividend Yield Company LTM FY2013 LTM 07'-12' LTM LTM LTM LTM

Apollo Investment AINV $8.51 $1,912.5 0.6x 13.0x 10.2x 1.03x (4.7%) 5.3% 7.7% 37.2% 38.6% 9.4%

Ares Capital ARCC $17.31 $4,834.9 0.7x 8.4x 11.1x 1.06x 28.5% 5.3% 12.8% (4.3%) 61.6% 8.8%

BlackRock Kelso Capital BKCC $9.39 $697.1 0.6x 11.2x 10.7x 1.00x (0.6%) 3.9% 9.1% (9.5%) 46.4% 11.1%

Fidus Investment FDUS $20.37 $279.4 0.7x 9.6x 14.1x 1.28x NA 4.5% 13.8% NA 68.9% 7.5%

Fifth Street Finance FSC $10.19 $1,393.6 0.6x 10.2x 9.6x 1.03x NA 5.4% 10.2% 60.8% 49.6% 11.3%

Full Circle Capital FULL $7.79 $59.0 0.8x 14.4x 10.0x 0.97x NA 4.3% 6.7% NA 31.6% 11.9%

Garrison Capital GARS $14.53 $243.5 0.7x 15.8x 11.8x 0.96x NA NA NA NA 45.4% 9.6%

Golub Capital BDC GBDC $17.57 $751.9 0.7x 12.6x 13.4x 1.16x NA 3.8% 8.8% 15.9% 55.7% 7.3%

Harvest Capital Credit HCAP $15.20 $92.5 - 5.5x 14.4x 1.02x NA NA NA NA NMF 8.9%

Hercules Technology Growth Capital, HTGC $15.42 $951.2 0.9x 9.1x 13.2x 1.48x 15.7% 5.9% 17.9% 286.6% 74.2% 7.3%

Horizon Technology Finance HRZN $13.50 $129.4 0.9x NMF 9.7x 0.90x NA 5.1% 2.4% (35.6%) 11.0% 10.2%

KCAP Financial KCAP $8.33 $277.5 0.7x 8.8x 9.0x 1.04x (9.7%) 6.2% 12.8% NA 64.8% 12.0%

Main Street Capital MAIN $30.06 $1,173.5 0.5x 10.4x 14.7x 1.50x 42.7% 5.3% 14.9% 48.6% NMF 6.4%

Medallion Financial TAXI $15.05 $330.6 1.5x 12.9x 15.7x 1.48x (5.5%) 2.4% 11.7% 211.1% NMF 5.8%

Medley Capital MCC $13.72 $538.2 0.7x 11.5x 9.2x 1.08x NA 5.8% 9.9% NA 41.8% 10.8%

Monroe Capital MRCC $12.80 $125.2 0.7x NA 11.1x NA NA NA NA NA NA 10.6%

OFS Capital OFS $11.92 $114.8 0.7x 11.2x 15.3x 0.81x NA 2.9% 10.1% 147.0% 58.4% 11.4%

PennantPark Floating Rate Capital PFLT $13.14 $193.3 0.6x 9.7x 12.1x 0.94x NA 3.2% 8.7% NA 64.5% 8.0%

PennantPark Investment PNNT $11.17 $742.8 0.5x 8.1x 10.8x 1.06x NA 4.9% 13.4% 77.1% 71.0% 10.0%

Prospect Capital PSEC $11.34 $3,156.7 0.6x 10.3x 7.6x 1.06x 43.0% 7.0% 10.6% 70.0% 41.3% 11.7%

Saratoga Investment SAR $19.20 $90.8 0.8x 8.5x NA 0.81x NA 4.7% 9.5% 2.3% 49.9% 13.8%

Solar Capital SLRC $22.04 $975.8 0.2x 13.7x 11.7x 0.99x NA 5.6% 7.5% (20.7%) 41.1% 7.3%

Solar Senior Capital SUNS $18.02 $207.7 0.2x 25.5x 15.4x 1.01x NA 3.6% 4.0% NA 38.3% 7.8%

TCP Capital TCPC $16.89 $514.4 0.2x 9.8x 10.4x NA NA NA NA NA NA 9.0%

THL Credit TCRD $16.18 $548.6 0.3x 11.0x 11.1x 1.21x NA 6.0% 10.4% NA 57.6% 8.9%

TICC Capital TICC $9.99 $525.8 0.9x 8.6x 9.5x 1.01x 13.8% 4.4% 12.8% 4.9% 65.5% 11.6%

Triangle Capital TCAP $29.25 $807.3 0.8x 10.2x 13.0x 1.83x 42.3% 6.9% 18.4% 44.0% 76.0% 7.4%

Mean $802.5 0.6x 11.2x 11.7x 1.11x 16.6% 4.9% 10.6% 58.5% 52.4% 9.5%

Median $525.8 0.7x 10.3x 11.1x 1.03x 14.7% 5.1% 10.2% 40.6% 52.8% 9.4%

6.0x

8.0x

10.0x

12.0x

14.0x

Nov 2010 Nov 2011 Nov 2012 Nov 2013

Current: 11.6x

William Blair

Specialty Finance Industry Insights Commercial Specialty Finance 10

Commercial Finance



Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity


Net Income

Company

EPS TBVPS 3-Yr CAGR Margin Dividend Yield LTM FY2013 LTM 07'-12' LTM LTM LTM LTM

CapitalSource CSE $13.40 $2,580.0 4.4x 17.8x 21.1x 1.86x (13.9%) 1.8% 9.2% NA 37.3% 0.3%

CIT Group CIT $48.20 $9,654.6 3.9x 12.9x 13.2x 1.14x (13.4%) NA NA NMF 30.5% 0.8%

MB Financial MBFI $29.58 $1,625.8 5.9x 16.4x 16.3x 1.88x 4.1% 1.1% 7.7% NMF 23.0% 1.6%

NewStar Financial NEWS $16.36 $795.2 3.0x 36.4x 33.6x 1.31x (3.8%) 1.1% 4.1% NA 29.3% NA

SVB Financial Group SIVB $95.16 $4,340.1 7.0x 20.9x 21.5x 2.23x 27.7% 2.0% 16.5% 28.3% 17.6% NA

Mean $3,799.1 4.8x 20.9x 21.1x 1.68x 0.1% 1.5% 9.4% 28.3% 27.6% 0.9%

Median $2,580.0 4.4x 17.8x 21.1x 1.86x (3.8%) 1.4% 8.4% 28.3% 29.3% 0.8%

Commercial Real Estate Lending



Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity


Net Income

Company


Manhattan Bridge Capital LOAN $2.23 $9.5 0.7x 17.2x NMF 1.07x NMF 3.8% 6.4% 15.8% 31.4% 1.8%

Resource America REXI $8.61 $172.2 0.1x NMF 136.7x 1.17x (27.3%) (1.5%) (0.6%) NMF (2.3%) 1.9%

Walker & Dunlop WD $12.79 $446.9 1.4x 10.5x NA 1.32x NA 2.8% 11.5% (6.4%) 12.6% NA

Mean $209.5 0.8x 13.8x 136.7x 1.19x (27.3%) 1.7% 5.8% 4.7% 13.9% 1.8%

Median $172.2 0.7x 13.8x 136.7x 1.17x (27.3%) 2.8% 6.4% 4.7% 12.6% 1.8%

10.0x

15.0x

20.0x

25.0x

30.0x

Nov 2010 Nov 2011 Nov 2012 Nov 2013

Current: 23.3x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

Nov 2011 Nov 2012 Nov 2013

Current: 6.0x

William Blair


Leasing



Company Ticker

Stock Price 11/1/13

Equity Market Cap.

Debt / Equity


Net Income


AerCap Holdings AER $20.26 $2,301.8 2.6x 9.8x 8.4x 0.98x 14.3% 3.7% 10.4% 10.1% 23.7% NA

AeroCentury ACY $20.31 $31.3 1.3x 5.0x 6.2x 0.62x 3.8% 0.9% 13.5% 11.9% 27.6% NA

Air Lease AL $29.96 $3,048.5 2.2x 18.4x 16.7x 1.24x NA 3.5% 7.2% NA 21.5% 0.3%

Aircastle AYR $18.87 $1,524.3 2.2x NMF 18.0x 0.95x 5.6% 3.8% 0.7% NMF 1.6% 4.2%

CAI International CAP $22.08 $491.0 2.9x 7.4x 7.7x 1.24x 31.0% 4.8% 19.5% 46.4% 31.7% NA

GATX GMT $51.92 $2,398.7 2.9x 16.9x 15.8x 1.97x 5.1% 2.4% 11.5% 20.7% 11.2% 2.4%

Marlin Business Services MRLN $26.44 $328.0 NA 20.8x 20.0x 2.06x (8.9%) 2.6% 9.9% 52.0% 24.5% 1.7%

MicroFinancial MFI $8.56 $123.6 0.8x 13.0x 13.0x 1.42x 19.0% 5.8% 11.6% 24.0% 28.2% 3.3%

Mobile Mini MINI $36.11 $1,642.9 0.7x NMF 30.6x NMF 10.9% 4.1% 2.8% 7.6% 5.8% NA

Ryder System R $66.28 $3,485.9 2.4x 14.9x 13.8x 2.91x 3.9% 3.6% 14.8% 36.5% 3.6% 2.1%

TAL International Group TAL $48.70 $1,623.3 4.2x 11.2x 11.6x 2.72x 16.8% 5.5% 23.0% 56.4% 23.0% 5.7%

Textainer Group Holdings Limited TGH $37.97 $2,138.4 2.3x 10.9x 11.3x 2.05x 25.2% 5.2% 19.3% 23.4% 38.1% 5.0%

Willis Lease Finance WLFC $17.46 $148.9 3.6x 17.5x NA 0.72x 4.4% 2.6% 5.0% 7.6% NA NA

Mean $1,483.6 2.2x 13.3x 14.4x 1.85x 10.9% 3.7% 11.5% 24.7% 20.0% 3.1%

Median $1,623.3 2.3x 13.0x 13.4x 1.42x 8.3% 3.7% 11.5% 22.1% 23.3% 2.8%

3.0x

8.0x

13.0x

18.0x


Current: 14.6x

Capital Markets Transactions

William Blair

Specialty Finance Industry Insights 12 Capital Markets Transactions

Capital Markets Transactions

Recent Equity Offerings

Initial Public Offerings

Pricing Date Company Price Shares Amount

Market Cap. at Pricing /

LTM EPS LTM Book Value

11/08/13 JGWPT Holdings $14.00 13.9 $195.0 - -

11/06/13 StoneCastle Financial $25.00 6.3 $157.1 - -

10/15/13 Springleaf Holdings $17.00 21.0 $357.8 - -

10/09/13 Stonegate Mortgage $16.00 7.1 $113.6 14.1x 2.48x

10/03/13 Cherry Hill Mortgage Investment $20.00 6.5 $130.0 - -

09/24/13 Capitala Finance $20.00 4.0 $80.0 - -

07/11/13 Fifth Street Senior Floating Rate $15.00 6.7 $100.0 - -

05/08/13 PennyMac Financial Services $18.00 11.1 $200.0 - -

05/02/13 Harvest Capital Credit $15.00 3.4 $51.0 - -

05/01/13 Ellington Residential Mortgage REIT $20.00 6.5 $129.0 - 5.75x

03/26/13 Garrison Capital $15.00 5.3 $80.0 - -

03/21/13 Five Oaks Investment $15.00 4.0 $60.5 22.2x 3.32x

02/14/13 Orchid Island Capital $15.00 2.4 $35.4 - -

02/07/13 ZAIS Financial $21.25 5.7 $120.1 - -

12/04/12 WhiteHorse Finance $15.00 6.7 $100.0 - -

11/07/12 OFS Capital $15.00 6.7 $100.0 - 2.35x

11/07/12 Stellus Capital Investment $15.00 8.0 $120.0 - -

10/24/12 Monroe Capital Corporation $15.00 5.0 $75.0 - -

Notes: Dollar amount and shares amount are in millions and exclude overallotment Sources: SNL and William Blair’s market analysis

William Blair

Specialty Finance Industry Insights Capital Markets Transactions 13

Recent Equity Offerings (cont’d)

Follow-On Offerings

Pricing Date Company Price Shares Amount

Market Cap. at Pricing /

LTM EPS LTM Book Value

10/29/13 Colony Financial $20.21 14.3 $288.8 - -

10/11/13 New Mountain Finance $14.34 6.0 $86.0 13.6x 1.15x

09/26/13 TCP Capital $15.76 3.8 $59.9 12.2x 0.92x

09/26/13 Ares Capital $16.98 11.0 $186.8 9.2x 1.11x

09/24/13 Arbor Realty Trust $7.08 6.0 $42.5 22.4x 0.75x

09/19/13 Regional Management $27.50 3.5 $95.7 13.1x 2.45x

09/19/13 Fifth Street Finance $10.31 15.5 $159.8 13.6x 1.17x

09/12/13 Golub Capital BDC $16.95 3.0 $50.9 17.1x 1.22x

09/10/13 Starwood Property Trust $24.04 25.0 $601.0 16.9x 1.11x

09/04/13 Medley Capital $13.00 6.0 $78.0 16.4x 1.24x

08/13/13 Main Street Capital $29.75 4.0 $119.0 11.1x 1.76x

08/13/13 PennyMac Mortgage Investment Trust $22.11 11.3 $249.8 6.6x 1.05x

08/06/13 NorthStar Realty Finance $9.60 35.0 $336.0 - 1.05x

07/17/13 Monroe Capital $14.05 4.0 $56.2 - -

07/16/13 PennantPark Floating Rate Capital $14.20 4.4 $62.5 22.1x 1.48x

06/21/13 Ares Commercial Real Estate $13.50 18.0 $243.0 - 0.74x

06/20/13 Home Loan Servicing Solutions $23.00 13.0 $299.0 - 1.78x

06/19/13 THL Credit $14.62 6.6 $96.5 16.1x 1.41x

06/18/13 New Mountain Finance $14.55 6.0 $87.3 13.6x 1.19x

06/11/13 Newcastle Investment $4.92 35.0 $172.2 - 0.69x

05/30/13 Air Lease $26.75 8.0 $214.0 19.6x 1.19x

05/22/13 Blackstone Mortgage Trust $25.50 22.5 $573.8 - 4.20x

05/21/13 TCP Capital $15.63 4.5 $70.3 11.1x 0.90x

05/15/13 Apollo Investment $8.60 19.0 $163.4 12.4x 1.17x

05/08/13 JAVELIN Mortgage Investment $19.30 6.0 $115.8 - -

05/08/13 Ellington Financial $25.12 5.0 $125.6 - 0.99x

05/08/13 Stonegate Mortgage $18.00 5.6 $100.0 - -

05/07/13 Golub Capital BDC $17.47 6.0 $104.8 19.5x 1.40x

05/01/13 Ellington Residential Mortgage REIT $20.00 1.1 $21.0 - 5.75x

04/29/13 New York Mortgage Trust $6.96 13.6 $94.7 12.7x 1.11x

Notes: Dollar amount and shares amount are in millions and exclude overallotment Sources: SNL and William Blair’s market analysis

William Blair

Specialty Finance Industry Insights 14 Capital Markets Transactions

Recent Debt Offerings Date Company Offering Description Amount Maturity Date

10/21/13 Toyota Motor Credit 2.000% Series B unsecured medium-term notes, due Oct 24, 2018 $1,500.0 10/24/18

10/15/13 Resource Capital 6.000% Convertible senior unsecured notes, due Dec 1, 2018 $100.0 12/01/18

09/26/13 Ford Motor Credit Company 2.875% Senior unsecured notes, due Oct 1, 2018 $1,000.0 10/01/18

09/17/13 American Capital 6.500% Senior unsecured notes, due Sept 15, 2018 $350.0 09/15/18

09/17/13 SLM 5.500% Series A unsecured medium-term notes, due Jan 15, 2019 $1,250.0 01/15/19

09/12/13 GSV Capital 5.250% Senior convertible unsecured notes, due Sept 15, 2018 $60.0 09/15/18

09/04/13 Brookfield Asset Management 5.040% Medium-term notes, due Mar 8, 2024 $300.0 03/08/24

08/27/13 Caterpillar Financial Services Floating rate series G medium-term notes, due Aug 28, 2015 $250.0 08/28/15

08/13/13 PACCAR Financial 1.150% Series N medium-term notes, due Aug 16, 2016 $500.0 08/16/16

08/07/13 Portfolio Recovery Associates 3.000% Senior unsecured convertible notes, due Aug 1, 2020 $250.0 08/01/20

08/06/13 PHH 6.375% Senior unsecured notes, due Aug 15, 2021 $350.0 08/15/21

07/25/13 CIT Group 5.000% Senior unsecured notes, due Aug 1, 2023 $750.0 08/01/23

07/24/13 American Express Credit Floating rate series E senior unsecured medium-term notes, due July 29, 2016 $1,200.0 07/29/16

07/16/13 Ares Capital 4.375% Senior unsecured convertible notes, due Jan 15, 2019 $250.0 01/15/19

07/16/13 WhiteHorse Finance 6.500% Senior unsecured notes, due July 31, 2020 $30.0 07/31/20

07/15/13 Ally Financial 3.500% Senior unsecured guaranteed notes, due July 18, 2016 $1,000.0 07/18/16

07/09/13 General Electric Capital Floating rate series A senior unsecured medium-term notes, due July 12, 2016 $1,350.0 07/12/16

06/25/13 Full Circle Capital 8.250% Senior unsecured notes, due June 30, 2020 $18.8 06/30/20

06/14/13 NorthStar Realty Finance 5.375% Senior unsecured exchangeable notes, due June 15, 2033 $300.0 06/15/33

06/10/13 Apollo Investment 6.875% Senior unsecured notes, due July 15, 2043 $135.0 07/15/43

05/30/13 National Rural Utilities Cooperative Finance

2.350% Collateral trust bonds, due June 15, 2020 $400.0 06/15/20

05/21/13 Springleaf Finance 6.000% Senior unsecured notes, due June 1, 2020 $300.0 06/01/20

05/08/13 Cash America International 5.750% Senior unsecured notes, due May 15, 2018 $300.0 05/15/18

05/07/13 General Motors Financial 2.750% Senior unsecured notes, due May 15, 2016 $1,000.0 05/15/16

05/07/13 iStar Financial 4.875% Senior unsecured notes, due July 1, 2018 $300.0 07/01/18

05/02/13 Saratoga Investment 7.500% Senior unsecured notes, due May 31, 2020 $42.0 05/31/20

04/24/13 Arlington Asset Investment 6.625% Senior unsecured notes, due May 1, 2023 $25.0 05/01/23

04/24/13 PennyMac 5.375% Senior exchangeable unsecured notes, due May 1, 2020 $200.0 05/01/20

04/11/13 Fannie Mae 0.875% Benchmark notes, due May 21, 2018 $5,500.0 05/21/18

04/05/13 Colony Financial 5.000% Convertible senior unsecured notes, due Apr 15, 2023 $175.0 04/15/23

03/27/13 Fifth Street Finance 6.125% Senior unsecured notes, due Apr 30, 2028 $75.0 04/30/28

03/26/13 Main Street Capital 6.125% Senior unsecured notes, due Apr 1, 2023 $80.0 04/01/23

03/13/13 Medley Capital 6.125% Senior unsecured notes, due Mar 30, 2023 $60.0 03/30/23

03/08/13 Prospect Capital 5.875% Senior unsecured notes, due Mar 15, 2023 $250.0 03/15/23

03/06/13 Freddie Mac 0.500% Reference notes, due May 13, 2016 $3,500.0 05/13/16

03/06/13 IAS Operating Partnership LP 5.000% Senior exchangeable unsecured notes, due Mar 15, 2018 $350.0 03/15/18

03/06/13 International Lease Finance 3.875% Senior unsecured notes, due Apr 15, 2018 $750.0 04/15/18

03/06/13 John Deere Capital Floating rate series E senior medium-term notes, due Jan 12, 2015 $600.0 01/12/15

02/28/13 Redwood Trust 4.625% Senior convertible unsecured notes, due Apr 15, 2018 $250.0 04/15/18

02/19/13 MVC Capital 7.250% Senior unsecured notes, due Jan 15, 2023 $70.0 01/15/23

02/19/13 Ryder System 2.350% Unsecured medium-term notes, due Feb 26, 2019 $250.0 02/26/19

02/13/13 Blackrock Kelso Capital 5.500% Senior convertible unsecured notes, due Feb 15, 2018 $100.0 02/15/18

02/11/13 Starwood Property Trust 4.550% Convertible unsecured senior notes, due Mar 1, 2018 $525.0 03/01/18

02/04/13 Nationstar Mortgage LLC 6.500% Senior unsecured notes, due July 1, 2021 $400.0 07/01/21

01/29/13 Air Lease 4.750% Senior unsecured notes, due Mar 1, 2020 $400.0 03/01/20

Notes: Dollar amount in millions and excludes overallotment Sources: SNL and William Blair’s market analysis

William Blair

Specialty Finance Industry Insights Capital Markets Transactions 15

Recent Preferred Equity Offerings

Date Company Amount Call Date Dividend Date

07/16/13 Farm Credit Bank of Texas $300.0 09/15/23 6.8%

06/13/13 Oxford Lane Capital $20.0 06/30/16 7.5%

05/29/13 General Electric Capital $1,000.0 06/15/23 5.3%

05/28/13 New York Mortgage Trust $75.0 06/04/18 7.8%

05/08/13 Capstead Mortgage $150.0 05/13/18 7.5%

05/06/13 Arbor Realty Trust $30.0 05/09/18 7.8%

04/23/13 CYS Investments $200.0 04/30/18 7.5%

04/15/13 CoBank, ACB $200.0 07/01/18 6.1%

04/11/13 Dynex Capital $50.0 04/30/18 7.6%

04/08/13 MFA Financial $175.0 04/15/18 7.5%

04/03/13 NorthStar Realty Finance $175.0 04/10/18 8.5%

03/12/13 iStar Financial $175.0 03/15/18 4.5%

02/07/13 ARMOUR Residential REIT $135.0 02/12/18 7.9%

01/29/13 Arbor Realty Trust $35.0 02/01/18 8.3%

01/29/13 MuniMae TE Bond Subsidiary $74.0 04/30/28 5.0%

01/14/13 Federal Agricultural Mortgage $60.0 01/17/18 5.9%

01/10/13 KKR Financial Holdings $325.0 01/15/18 7.4%

11/19/12 Oxford Lane Capital $15.0 12/31/14 8.5%

10/09/12 Discover Financial Services $500.0 12/01/17 6.5%


09/25/12 Resource Capital $25.0 10/02/17 8.3%

09/20/12 AG Mortgage Investment Trust $100.0 09/27/17 8.0%

09/13/12 Apollo Residential Mortgage $150.0 09/20/17 8.0%

09/06/12 Annaly Capital Management $400.0 09/13/17 7.5%

08/16/12 Hatteras Financial $250.0 08/27/17 7.6%

07/27/12 CYS Investments $75.0 08/03/17 7.8%

07/27/12 AG Mortgage Investment Trust $45.0 08/03/17 8.3%

07/25/12 Dynex Capital $50.0 07/31/17 8.5%

07/25/12 Apollo Commercial Real Estate Finance $75.0 08/01/17 8.6%

07/24/12 General Electric Capital $1,750.0 12/15/22 6.3%

07/19/12 Invesco Mortgage Capital $135.0 07/26/17 7.8%

07/10/12 Colony Financial $102.7 03/20/17 8.5%


06/13/12 Avangard Capital Group $0.9 01/00/00 4.5%

Notes: Dollar amount in millions and excludes overallotment Sources: SNL and William Blair’s market analysis

William Blair

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

Financial Services & Technology Analysts and Coverage

Insurance Brokers and Property and Casualty Insurance

Adam Klauber, CFA

Financial Technology and Specialty Finance

Robert Napoli

Asset Management and Financial Technology

Chris Shutler, CFA

Allstate Corporation (The) (ALL)

American International Group (AIG)

AmTrust Financial Services (AFSI)

Aon (AON)

Argo Group International Holdings (AGII)

Arthur J. Gallagher & Co. (AJG)

Brown & Brown (BRO)

Chubb Corporation (The) (CB)

Crawford & Company (CRD.B)

eHealth (EHTH)

Erie Indemnity Company (ERIE)

Fortegra Financial Corporation (FRF)

HCC Insurance Holdings (HCC)

Kemper Corporation (KMPR)

Markel Corporation (MKL)

Marsh & McLennan Companies (MMC)

National Financial Partners (NFP)

National Interstate Corporation (-TL)

Progressive Corporation (The) (PGR)

RLI Corp. (RLI)

Tower Group (TWGP)

Travelers Companies (The) (TRV)

Willis Group Holdings (WSH)

Alliance Data Systems (ADS)

American Express Company (AXP)

Asset Acceptance Capital (AACC)

CAI International (CAP)

Capital One Financial (COF)

Cardtronics (CATM)

DFC Global (DLLR)

Discover Financial Services (DFS)

Encore Capital Group (ECPG)

Financial Engines (FNGN)

Garrison Capital (GARS)

Green Dot Corporation (GDOT)

Marlin Business Services (MRLN)

MasterCard (MA)

MoneyGram International (MGI)

Monroe Capital Corporation (MRCC)

Performant Financial Corporation (PFMT)

Portfolio Recovery Associates (PRAA)

Visa (V)

WageWorks (WAGE)

Western Union Company (The) (WU)

WEX (WXS)

Affiliated Managers Group (AMG)

Artisan Partners Asset Management (APAM)

Cardtronics (CATM)

Envestnet (ENV)

Euronet Worldwide (EEFT)

Fiserv (FISV)

Global Payments (GPN)

Heartland Payment Systems (HPY)

Higher One Holdings (ONE)

Invesco (IVZ)

LPL Financial (LPLA)

MSCI (MSCI)

NetSpend Holdings (NTSP)

Schwab (The Charles Schwab Corporation) (SCHW)

T. Rowe Price Group (TROW)

TD Ameritrade Holding Corporation (AMTD)

Vantiv (TROW)

William Blair

Specialty Finance Industry Insights Investment Banking Team Biographies 17

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, 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 E. Greene, associate, joined William Blair in 2010. Before joining William Blair, Kegan worked at Babcock & Brown, Goldman Sachs, and Deloitte’s transaction services department. Kegan 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

William Blair

Specialty Finance Industry Insights 18 Select William Blair Transactions

Select William Blair Transactions

$30,000,000

Project POLARIS(In Process)

M&A Sell-sideSub Debt FacilitySubprime Auto

$90,000,000

Project NORMANDY(In Process)

M&A Sell-sideSub Debt Facility

VSC Financing

$100,000,000

Project DRIVE(Under Exclusivity)

M&A Sell-sideSenior & Junior Debt

FacilitiesBHPH Dealer

Not Disclosed

Project SMOKEY(In Process)

M&A BuysideSubprime Auto

$50,000,000

Follow-on Offering

Not Disclosed

Has acquired

$100,000,000

Senior Credit Facility

$34,000,000

Initial Public Offering

$287,500,000

Convertible Senior, Unsecured Notes

$75,000,000

Follow-on Offering

$18,750,000

Junior Unsecured Notes

$115,000,000

Preferred EquityOffering

$438,600,000

has been acquired by

$51,000,000


£525,000,000


$42,000,000

Baby Bond Offering

$78,000,000

Follow-on Offering

$92,000,010


$97,980,000

Follow-on Offering

$35,000,000

Senior Subordinated Notes Preferred Equity

$75,000,000


$125,000,000

Senior Secured CreditFacility

$230,000,000

Convertible Offering

$74,000,000

Senior Credit Facility & Subordinated Notes

Not Disclosed


Manheim

$30,000,000

Second Lien Loan

$102,212,920


$75,469,000

Follow-on Offering

188,893,000

Follow-on Offering

$228,433,000

Follow-on Offering

$15,000,000

Second Lien Term Loan

COLLINS FINANCIAL SERVICES, INC.

INNOVATION COMPLIANCE INTEGRITY

C F S I

£28,000,000

has sold a minority stake to

Investcorp

$34,875,000

Follow-on Offering

$143,750,000


$271,860,000

Follow-on Offering

$15,000,000

Junior Debt

$87,000,000


$25,000,000

Junior Debt

$146,625,000


Not Disclosed


Sallie Mae

$67,447,500

Follow-on Offering

William Blair

Specialty Finance Industry Insights Notes 19

Notes

William Blair

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 Services Authority ("FSA") 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, and is directed only at, professional clients and eligible counterparties (as defined in COBS 3.5 and 3.6 of the FSA Handbook). This advertisement is not intended to be investment advice. William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com November 22, 2013 Specialty Finance Industry Insights 20 Disclosures

Disclosures

International

FrankfurtWilliam Blair International, Limited An der Hauptwache 760313 Frankfurt am MainGermany+49 69 509527 600

LondonWilliam Blair International, LimitedThe Broadgate Tower20 Primrose Street17th FloorLondon EC2A 2EWUnited KingdomEquity Sales: +44 20 7868 4400Corporate Finance: +44 20 7868 4444

William Blair International, Limited40 Bruton StreetLondon W1J 6QZUnited KingdomInvestment Management: +44 20 7297 4700

São PauloWilliam Blair do Brasil Assessoria Financeira Ltda.Av. Brigadeiro Faria Lima 3729, room 511São Paulo, SPBrazil04538-905+55 11 3443 6472

ShanghaiWilliam Blair & Company, L.L.C. Shanghai Representative Of�iceUnit 16-18, 11th FloorBuilding One, Corporate Avenue222 Hubin RoadShanghai 200021P.R. China+86 21 2327 2222

ZurichWilliam Blair & Company, L.L.C. Stockerstrasse 46CH-8002 ZurichSwitzerlandInstitutional Sales: +41 44 287 9020Investment Management: +41 44 287 90 30

HeadquartersChicago222 West Adams StreetChicago, IL 60606+1 312 236 1600+1 800 621 [email protected]

United States

Boston125 High StreetOliver Street TowerSuite 1901Boston, MA 02110+1 617 235 7500

HartfordPutnam Place100 Great Meadow RoadSuite 606Wethers�ield, CT 06109+1 800 596 2028

New York666 Fifth Avenue14th FloorNew York, NY 10103+1 212 237 2700

San Francisco343 Sansome Street12th FloorSan Francisco, CA 94104+1 415 986 5596

Wilmington500 Delaware AvenueSuite 720Wilmington, DE 19801+1 302 573 5000

Specialty FinanceIndustry InsightsA review of M&A activity and public market valuation in the consumer and commercial specialty finance sectors

June 2013

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, special situations and 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. In 2012, the investment banking group completed 76 merger-and-acquisition transactions worth more than $13.8 billion in value, involving parties in 21 countries and five continents, and was an underwriter on over 20% of all U.S. initial public offerings.

About William Blair Investment Banking

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