specialty finance industry insights...december 2014 specialty finance industry insights a review of...

December 2014

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

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 - 2013, the investment banking group completed 250 merger-and-acquisition transactions worth more than $52 billion in value, involving parties in 27 countries and four continents, was an underwriter on over 20% of all U.S. initial public offerings and arranged more than $11.5 billion of debt financing.

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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 Disclosures ..................................................................................................................................................................................................................................................... 19

William Blair

Specialty Finance Industry Insights Introduction 1

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 have been performing strongly this year. Total global year-to-date M&A volume is over $2.5 trillion, up over 43% from the same time period last year and during the same time, the number of new equity issuances (both initial public offerings and follow-on offerings) is up over 20%. 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 2014 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 56% of the aggregate deals in the consumer specialty finance sector have been completed at above 10.0 times LTM net income, and approximately 19% have been completed at more than 3.00 times LTM book value. On the commercial specialty finance side, approximately 44% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 20% 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 2014 thus far, M&A activity in the sector has been strong, driven primarily by strategic acquirers looking for new products/segments, differentiated platforms, and strong growth. Examples include Banco Santander’s acquisition of Carfinco Financial Group and GoldenTree Asset Management’s acquisition of Origen Financial. While global economic uncertainty may cause the broad universe of buyers and sellers to proceed more cautiously into 2015, we remain optimistic that both M&A and capital markets activity will remain strong for solidly 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]

ConsumerSpecialty 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 2013, though disclosed dollar volume is meaningfully higher over the same period. • Approximately 56% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 19% 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

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

Source: SNL Financial and William Blair’s market analysis. Note: Year-to-date as of October 31, 2014.

47 41 79 53 75 54 32 33 46 50 42 47 36 30 020406080100

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013YTD 2014YTD

Average: 50 (16.7%)

$17,055 $26,075 $8,866 $51,379

$16,926 $2,090 $3,299 $2,754 $12,024 $43,055 $10,519 $1,817 $1,807 $5,552 -$20,000$40,000$60,0002002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013YTD 2014YTD

($ in millions) Average: $16,322 207.2%

55.9%28.8%15.3% Greater than 10.0x5.0x to 10.0xLess than 5.0x

18.7%28.0%53.3% Greater than 3.00x1.50x to 3.00xLess than 1.50x

5.9x 8.1x 13.4x0.0x5.0x10.0x15.0x

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

1.36x 1.24x 1.34x0.90x1.00x1.10x1.20x1.30x1.40x1.50x

<$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 10/21/14 Auto Fortress Investment Group LLC/ Omnisure Group, LLC - - - 10/08/14 Mortgage Morrison Grove Capital Advisors/ MMA Financial TC LLC $15.9 - - 09/24/14 Collection Arrow Global Group PLC/ Capquest Group Limited $258.2 - - 09/23/14 Auto Mint Leasing, Inc./ Investment Capital Fund Group, LLC - - - 09/16/14 Auto Banco Santander SA/ Carfinco Financial Group Inc. $297.8 13.8x 4.08x 09/11/14 Mortgage Home Point Capital/ Maverick Funding Corp. - - - 09/09/14 AFS GoldenTree Asset Management LP/ Origen Financial, Inc. $483.3 - 2.91x 08/25/14 AFS First Cash Financial Services, Inc./ CAMex Holding, LLC - - - 08/06/14 Mortgage ZAIS Financial Corp./ GMFS, LLC $63.0 5.7x - 08/01/14 Collection Encore Capital Group, Inc./ Atlantic Credit & Finance, Inc. $196.1 - - 07/07/14 Auto Milestone Partners/ PayLink Payment Plans, LLC - - - 07/02/14 Mortgage MutualFirst Financial, Inc./ Summit Mortgage, Inc. - - - 06/05/14 Mortgage Strategic Growth Bank Inc./ Guardian Mortgage Company, Inc. $25.7 - - 05/05/14 Mortgage Freedom Mortgage Corporation/ BluFi Lending Corporation - - - 04/17/14 AFS LendingClub Corporation/ Springstone Financial LLC $140.0 14.5x - 04/16/14 AFS Nelnet, Inc./ Education Lending Services, Inc. $127.1 - - 04/15/14 AFS Aaron's/ Progressive Finance Holdings $700.0 - - 04/02/14 AFS Lone Star Funds/ DFC Global $1,417.0 - 0.79x 03/27/14 Auto Sunset Brands, Inc./ MotorMax - - - 03/26/14 Mortgage Investor group/ Southern Trust Mortgage LLC - - - 03/03/14 Mortgage InterLinc Mortgage Services, LLC/ Hometown Mortgage Services, Inc. - - - 03/01/14 Mortgage First Bells Bankshares, Inc./ Cendera Funding, Inc. - - - 02/19/14 Collection Portfolio Recovery Associates, Inc./ Aktiv Kapital AS $1,315.0 - - 02/12/14 Mortgage American Advisors Group/ Reverse mortgage division - - - 02/07/14 Collection Encore Capital Group, Inc./ Marlin Financial Group Limited $512.9 - - 01/29/14 Mortgage CapStar Bank/ Farmington Financial Group, LLC - - - 01/14/14 Mortgage Fidelity Homestead Savings Bank/ NOLA Lending Group, LLC. - - - 01/13/14 Mortgage Stonegate Mortgage Corporation/ Medallion Mortgage Company, LLC - - - 01/06/14 Mortgage Sterling Capital Partners/ Diamond Mortgage Group, LLC - - - 01/01/14 AFS Lone Star, ACA/ Texas Land Bank, ACA - - - 12/31/13 AFS Asta Funding, Inc./ CBC Settlement Funding, LLC $5.0 - - 12/31/13 Mortgage Guaranteed Rate, Inc./ Arbor Mortgage Corporation - - - 12/31/13 Mortgage Guaranteed Rate, Inc./ Sun State Home Loans - - - 12/31/13 Mortgage Guaranteed Rate, Inc./ Nationwide Direct Mortgage - - - 12/06/13 AFS Private investors/ GFC Lending, LLC - - - 12/03/13 Mortgage Aris Mortgage Holding Company, LLC/ AmeriHome Mortgage Corporation - - - 11/30/13 AFS DFC Global Corp./ Monte Caja Oro - - - 11/29/13 AFS Pine Tree Equity Management, LP/ North State Acceptance, LLC - - - 11/14/13 Mortgage Tiptree Financial Inc./ Luxury Mortgage Corp. $5.0 - - 11/14/13 Mortgage Stonegate Mortgage Corporation/ Crossline Capital Inc. - - - 11/07/13 Mortgage Stonegate Mortgage Corporation/ Wholesale Lending Channel - - -

William Blair


Public Valuation Update

Auto Finance

Indexed Price / LTM Earnings Ratios as of 10/31/2014

Public Company Valuations Ticker

Stock Price 10/31/14

Equity Market Cap.

Debt / Equity

Stock Price /

Asset CAGR ROAA ROAE

Net Income

EPS TBVPS 3-Yr CAGR Margin

Company LTM FY2014 LTM 08'-13' LTM LTM LTM LTMAlly Financial Inc. ALLY $22.70 $10,891.9 4.8x NMF 12.9x 0.78x (4.4%) 0.6% 5.0% NMF 16.5%America's Car-Mart Inc. CRMT $45.98 $392.6 0.4x 18.7x 18.1x 1.83x 12.3% 6.0% 9.7% (9.2%) 4.5%Consumer Portfolio Services, Inc. CPSS $7.06 $179.1 NMF 8.0x 7.9x 1.47x (3.2%) 1.8% 27.6% NA 21.4%Credit Acceptance Corp. CACC $147.56 $3,039.4 2.2x 13.1x 11.9x 4.32x 16.4% 10.1% 36.0% 11.9% 40.7%Santander Consumer USA Holdings Inc. SC $18.50 $6,455.4 NMF 10.3x 8.0x 2.03x NA 2.3% 21.6% NA 25.4% Mean $4,191.7 2.5x 12.6x 11.8x 2.09x 5.3% 3.7% 22.5% 1.4% 21.7%

Median $3,039.4 2.2x 11.7x 11.9x 1.83x 4.6% 2.0% 24.6% 1.4% 21.4% Collection




Equity Market Cap.

Debt / Equity

Stock Price /


Net Income


Company LTM FY2014 LTM 08'-13' LTM LTM LTM LTMAsta Funding Inc. ASFI $8.43 $109.5 0.2x 9.9x NMF 0.61x (15.5%) (2.1%) 6.9% 47.5% 28.5%Encore Capital Group, Inc. ECPG $45.51 $1,166.5 4.4x 12.4x 10.4x NMF 37.4% 6.3% 15.8% 19.9% 9.7%Performant Financial Corporation PFMT $8.63 $420.5 1.2x 21.6x 22.4x NMF NA 10.6% NMF NA 9.1%PRA Group, Inc. PRAA $63.25 $3,167.2 1.5x 18.2x 15.9x 3.81x 19.5% 9.6% 19.6% 22.7% 21.5%Mean $1,215.9 1.8x 15.5x 16.2x 2.21x 13.8% 6.1% 14.1% 30.0% 17.2%

Median $793.5 1.4x 15.3x 15.9x 2.21x 19.5% 7.9% 15.8% 22.7% 15.6%

6.0x8.0x10.0x12.0x14.0x16.0x

Oct 2009 Oct 2010 Oct 2011 Oct 2012 Oct 2013 Oct 2014

Current: 12.7x

2.0x6.0x10.0x14.0x18.0x22.0x


Current: 11.7x

William Blair

Specialty Finance Industry Insights Consumer Specialty Finance 5

Alternative Financial Services




Equity Market Cap.

Debt / Equity

Stock Price / Asset CAGR ROAA ROAE

Net Income


Company LTM FY2014 LTM 08'-13' LTM LTM LTM LTMCash America International, Inc. CSH $49.15 $1,419.8 0.6x 13.9x 11.0x 3.73x 11.9% 7.7% 9.5% (7.9%) 5.5%Enova International, Inc. ENVA $28.47 $939.5 3.6x 8.7x 8.4x NMF NA 9.9% 57.2% 46.0% 13.7%EZCORP, Inc. EZPW $11.28 $604.4 0.4x 12.8x 9.7x 1.28x 34.4% 4.8% 5.5% NA 4.7%First Cash Financial Services Inc. FCFS $59.08 $1,672.4 0.5x 20.5x 20.1x 10.16x 20.0% 12.0% 20.6% 6.5% 11.9%QC Holdings, Inc. QCCO $1.63 $28.5 0.2x NMF NA 0.41x (5.4%) 7.3% (13.2%) NA (7.5%)Regional Management Corp. RM $11.66 $148.3 2.0x 7.7x 9.3x 0.86x NA 6.2% 12.1% 2.0% 10.4%Springleaf Holdings, LLC LEAF $37.42 $4,297.0 3.1x 7.4x 18.9x 2.04x (10.3%) 5.0% 33.5% NMF 33.5%World Acceptance Corp. WRLD $71.66 $686.2 1.9x 7.3x 7.9x 2.27x 10.7% 13.7% 32.7% 3.4% 16.9%Mean $1,224.5 1.5x 11.2x 12.7x 2.97x 10.2% 8.3% 19.7% 10.0% 10.0%

Median $812.9 1.3x 8.7x 9.7x 2.04x 11.3% 7.5% 16.3% 3.4% 11.2%

Credit Card


Public Company Valuations

Company Ticker


Equity Market Cap.

Debt / Equity

Stock Price /


Net Income


LTM FY2014 LTM 08' - 13' LTM LTM LTM LTMAlliance Data Systems Corporation ADS $283.35 $15,733.9 NMF 32.4x 22.8x NMF 25.0% 5.2% NMF 23.4% 11.2% American Express Company AXP $89.95 $93,069.2 2.9x 16.7x 16.3x 4.63x 4.0% 3.8% 29.1% 6.1% 18.2%Discover Financial Services DFS $63.78 $28,923.0 1.9x 12.1x 12.1x 2.83x 14.7% 3.2% 23.0% NA 34.9%MasterCard Incorporated MA $83.75 $96,551.6 0.2x 28.9x 27.2x NMF 17.1% 22.5% NMF 14.3% 37.4%Synchrony Financial SYF $27.02 $22,528.3 2.8x 12.3x 9.9x 2.64x NA 3.1% 30.4% NA 32.8%Visa Inc. V $241.43 $149,195.2 NMF 28.0x 27.0x NMF 0.6% 13.7% 20.0% 14.2% 42.8%Mean $67,666.9 1.9x 21.7x 19.2x 3.36x 12.3% 8.6% 25.6% 14.5% 29.6%

Median $60,996.1 2.3x 22.4x 19.5x 2.83x 14.7% 4.5% 26.1% 14.3% 33.8%

6.0x9.0x12.0x15.0x18.0x


Current: 10.2x

6.0x12.0x18.0x24.0x30.0x


Current: 18.3x

William Blair


Mortgage



Company Ticker


Equity Market Cap.

Debt / Equity

Stock Price /


Net Income


LTM FY2014 LTM 08'-13' LTM LTM LTM LTMEllington Financial LLC EFC $22.49 $752.1 1.8x 8.3x 8.4x 0.93x 33.6% 2.0% 10.0% 48.4% (4.5%)Heritage Financial Group, Inc. HBOS $21.19 $186.6 1.5x 19.0x 17.6x 1.11x 22.4% 0.6% 6.0% 35.7% 10.3% Nationstar Mortgage Holdings Inc. NSM $35.12 $3,195.3 NMF NMF 9.8x 2.83x NMF 1.1% 13.5% NMF 11.0% Ocwen Financial Corp. OCN $23.56 $2,964.2 3.8x 17.7x 10.6x NMF 28.8% 6.1% 11.0% 33.6% 8.6% PennyMac Mortgage Investment Trust PMT $21.59 $1,600.7 1.8x 7.7x 7.9x 1.01x NA 5.0% 14.3% 61.8% 50.7% PHH Corporation PHH $23.69 $1,360.7 1.0x NA NMF 0.76x 1.4% (0.9%) (3.8%) 57.1% 6.4% Stonegate Mortgage Corporation SGM $14.46 $372.6 4.1x NA 10.5x 1.28x NA (0.6%) (3.0%) NA (3.3%) Walter Investment Management Corp. WAC $22.72 $856.6 NMF 7.7x 4.4x 1.97x NMF (0.3%) (5.0%) NA (4.5%) Mean $1,490.3 2.3x 13.2x 10.8x 1.32x 21.5% 1.9% 6.9% 47.3% 11.3%

Median $1,360.7 1.8x 13.0x 10.1x 1.06x 25.6% 1.1% 10.0% 48.4% 8.6%

0.0x10.0x20.0x30.0x


Current: 12.6x

CommercialSpecialty 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 meaningfully above the comparable period in 2013, although disclosed dollar volume is significantly lower over the same period. • Approximately 44% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 20% 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

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

Source: SNL Financial and William Blair’s market analysis. Note: Year-to-date as of October 31, 2014.

39 26 45 40 43 42 29 22 28 16 29 26 18 31 01020304050

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013YTD 2014YTD

Average: 32 72.2%

$1,551 $7,885 $9,126 $6,484 $5,702 $11,162 $15,423 $2,453 $1,780 $240 $7,802 $7,314 $6,197 $3,878 $0$4,000$8,000$12,000$16,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013YTD 2014YTD

($ in millions) Average: $6,328 (37.4%)

44.0%32.0%24.0% Greater than 10.0x5.0x to 10.0xLess than 5.0x6.7%

20.0%73.3% Greater than 3.00x1.50x to 3.00xLess than 1.50x

5.6x 8.1x 9.2x0.0x5.0x10.0x

<$50mm $50mm - $100mm >$100mm1.00x 1.40x 0.99x

0.00x0.50x1.00x1.50x<$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 10/31/14 Leasing General Electric Capital Corporation/ VB Leasing CZ - - - 10/14/14 Commercial Finance Meta Financial Group, Inc./ AFS/IBEX Financial Services, Inc. - - - 10/13/14 Leasing General Electric Capital Corporation/ Milestone Aviation Group Limited $1,775.0 - - 10/10/14 Leasing FIMBank Plc/ First Factors S.A. $5.7 - - 10/09/14 Commercial Finance Heritage Commerce Corp/ BVF/CSNK Acquisition Corp. $22.5 1.7x 0.14x 09/29/14 Commercial Real Estate Walker & Dunlop, Inc./ Johnson Capital Group, Inc. - - - 09/26/14 Leasing First Midwest Bancorp, Inc./ National Machine Tool Financial Corporation - - - 09/04/14 Commercial Finance National Commerce Corporation/ CBI Holding Company, LLC - - - 09/03/14 Leasing Crestmark Bancorp Inc./ TIP Capital's equipment leasing and asset management business - - - 08/26/14 Commercial Finance Funding Circle Limited/ LeapPay, Inc. - - - 08/11/14 Leasing Signature Bancshares, Inc./ Lease Finance Group, Inc. - - - 08/05/14 Commercial Finance Cargills Bank Ltd./ Capital Alliance Finance PLC $441.0 - - 08/04/14 Leasing Carolina Alliance Bank/ Dave McBride Leasing, LLC - - - 07/11/14 Commercial Finance Pine Tree Equity Management, L.P./ Celtic Capital Corporation - - - 06/28/14 Commercial Real Estate Sutherland Asset Management Corporation/ CIT Small Business Lending Corporation - - - 06/24/14 Leasing CIT Group Inc./ Direct Capital Corporation - - - 06/10/14 Commercial Finance Minnwest Corporation/ HiLine Credit Corporation - - - 06/05/14 Commercial Finance Ares Management, L.P./ Keltic Financial Services, LLC - - - 06/02/14 Leasing Element Financial Corporation/ PHH Vehicle Management Services Group LLC $1,402.5 24.2x 3.80x 06/02/14 Commercial Finance Omega Commercial Finance Corp./ AmericaVest CRE Mortgage Funding Trust, Inc. $2.0 - - 05/21/14 Commercial Finance Independent Holdings, Inc./ Goodman Factors, Inc. - - - 05/15/14 Commercial Finance National Bancshares, Inc./ Doral Healthcare Finance - - - 05/05/14 Commercial Finance United Community Banks, Inc./ Business Carolina Inc. - - - 04/22/14 Commercial Real Estate Wood Creek Capital Management, LLC/ Genesis Funding Limited - - - 04/08/14 Commercial Real Estate Northwest Federal Credit Union/ Park Place Equity, LLC - - - 03/31/14 Commercial Finance FJ Management Inc./ Anchor Funding Services, LLC - - - 03/28/14 Commercial Finance FBR & Co./ Securities Lending Business - - - 03/14/14 Commercial Finance Tiger Global Management/ OnDeck $77.0 - - 02/28/14 Commercial Finance Undisclosed Buyer/ KEF France SAS - - - 02/21/14 Leasing Wells Fargo & Company/ Long Haul Holding Corp. $152.0 - - 01/23/14 Leasing HgCapital/ Accelerate Acquisitions Limited - - -

William Blair


Public Valuation Update

Business Development Companies (BDCs)




Equity Market Cap.

Debt / Equity


Net Income

EPS TBVPS 3-Yr CAGR Margin Dividend Yield Company LTM FY2014 LTM 08'-13' LTM LTM LTM LTMApollo Investment Corporation AINV $8.25 $1,953.1 0.8x 6.9x 9.2x 0.95x (4.6%) 5.2% 14.4% NA 68.4% 9.7% Ares Capital Corporation ARCC $15.99 $5,022.6 0.7x 8.3x 10.9x 0.96x 31.2% 4.8% 11.9% 16.8% 60.0% 9.8% BlackRock Kelso Capital Corporation BKCC $8.82 $657.6 0.5x 6.2x 10.5x 0.88x 5.8% 4.1% 15.8% 16.4% 88.1% 9.5% Capitala Finance Corp. CPTA $18.40 $238.7 1.2x 16.4x 10.5x 0.92x NA 3.8% 5.6% NA 30.2% 10.2% CM Finance Inc. CMFN $12.60 $172.2 0.6x 9.4x 19.7x 0.86x NA 5.2% 12.5% NA 72.5% 10.7% Fidus Investment Corporation FDUS $16.98 $270.5 0.6x 14.0x 10.8x 1.12x NA 4.9% 7.2% (1.7%) 38.2% 9.0% Fifth Street Finance Corp. FSC $8.90 $1,356.7 0.8x 11.3x 8.8x 0.92x 47.3% 5.1% 7.9% 55.0% 38.3% 12.4% Full Circle Capital Corporation FULL $5.96 $71.2 1.0x NMF 8.3x 0.96x NA 4.6% NA NA NMF 13.5% Garrison Capital Inc. GARS $14.75 $247.2 0.9x 7.9x 11.5x 0.95x NA 3.6% 12.2% NA 65.0% 9.5% Golub Capital BDC, Inc. GBDC $17.33 $815.6 1.0x 12.0x 13.9x 1.11x 50.6% 3.8% 9.4% 45.2% 59.7% 7.4% Harvest Capital Credit Corporation HCAP $12.86 $79.7 NA 11.1x 9.5x 0.89x NA 7.2% 8.0% NA 57.2% 10.5% Hercules Technology Growth Capital, Inc. HTGC $15.76 $996.9 0.8x 13.3x 13.1x 1.54x 15.0% 5.6% 11.6% 22.5% 53.9% 7.9% Horizon Technology Finance Corporation HRZN $14.09 $135.6 0.6x 17.3x 12.5x 0.98x NA 5.0% 5.5% (19.1%) 23.9% 9.8% KCAP Financial, Inc. KCAP $7.63 $280.2 0.7x 10.2x 7.8x 0.98x (0.4%) 5.9% 9.7% NMF 47.9% 13.1% Main Street Capital Corporation MAIN $31.78 $1,425.7 0.6x 13.4x 14.6x 1.51x 51.5% 5.0% 11.5% 24.1% 73.8% 8.1% Medallion Financial Corp. TAXI $11.55 $290.6 1.2x 10.4x 11.2x 1.05x (1.7%) 2.6% 10.8% 14.4% 67.7% 8.3% Medley Capital Corporation MCC $11.62 $682.2 0.6x 8.4x 7.4x 0.92x NA 6.0% 10.8% NA 45.4% 12.7% Monroe Capital Corporation MRCC $13.84 $131.7 0.8x 11.0x 9.7x 0.99x NA 4.8% NA NA 44.2% 9.8% OFS Capital Corporation OFS $11.70 $112.7 1.1x NMF 12.7x 0.84x NA 3.0% 5.5% 29.6% 37.5% 11.6% PennantPark Floating Rate Capital Ltd. PFLT $14.04 $209.2 0.7x 10.2x 12.9x 0.98x NA 3.8% 9.7% NA 67.6% 7.7% PennantPark Investment Corporation PNNT $10.88 $817.0 0.6x 6.6x 9.9x 0.99x 22.4% 4.9% 14.6% 40.9% 75.0% 10.3% Prospect Capital Corporation PSEC $9.58 $3,284.6 0.8x 9.5x 7.5x 0.92x 52.4% 5.5% 9.9% 34.6% 42.9% 14.6% Saratoga Investment Corp. SAR $15.20 $81.8 1.0x 8.1x 7.6x 0.68x (2.0%) 4.1% 8.5% (5.2%) 41.0% 5.8% Solar Capital Ltd. SLRC $18.59 $789.4 0.2x 11.1x 11.9x 0.83x 14.4% 3.5% 7.5% 11.9% 58.3% 8.6% Solar Senior Capital Ltd. SUNS $15.12 $174.4 0.4x 13.1x 13.0x 0.86x NA 3.1% 6.5% NA 60.9% 9.3% TCP Capital Corp. TCPC $16.89 $716.3 0.4x 10.9x 11.1x 1.09x 16.9% 5.3% 10.8% 33.3% 74.9% 8.5% THL Credit, Inc. TCRD $12.86 $436.0 0.6x 10.2x 9.5x 0.97x NA 5.2% 9.5% 26.5% 49.6% 10.6% TICC Capital Corp. TICC $8.77 $528.5 0.8x 13.1x 7.7x 0.93x 37.2% 5.3% 7.0% 6.9% 32.7% 13.2% TPG Specialty Lending, Inc. TSLX $16.77 $898.3 0.5x 8.4x 9.1x 1.07x NA 6.0% 13.2% NA 63.6% 9.3% Triangle Capital Corporation TCAP $25.36 $817.6 0.7x 15.8x 12.0x 1.52x 30.7% 5.6% 9.2% (4.0%) 47.6% 8.5%

Mean $789.8 0.7x 10.9x 10.8x 1.01x 22.9% 4.7% 9.9% 23.5% 54.7% 10.0%

Median $482.3 0.7x 10.6x 10.7x 0.96x 19.6% 5.0% 9.7% 16.8% 57.2% 9.7%

5.0x10.0x15.0x20.0x25.0x


Current: 13.3x

William Blair

Specialty Finance Industry Insights Commercial Specialty Finance 10

Commercial Finance




Equity Market Cap.

Debt / Equity


Net Income

Company

EPS TBVPS 3-Yr CAGR Margin Dividend Yield LTM FY2014 LTM 08'-13' LTM LTM LTM LTMCIT Group Inc. CIT $48.80 $8,974.9 3.9x 9.7x 14.8x 1.06x (10.1%) 2.1% 11.0% NMF 41.9% 1.2% NewStar Financial, Inc. NEWS $13.68 $655.5 3.0x NMF NMF 1.07x 0.3% 0.6% 2.6% (2.8%) 21.2% NA PacWest Bancorp PACW $42.66 $4,347.6 3.5x 30.4x 16.7x 2.50x 7.8% 0.9% 4.8% 51.4% 18.1% 2.3% SVB Financial Group SIVB $111.99 $5,691.4 8.0x 20.6x 21.3x 2.09x 21.4% 1.8% 15.8% 19.7% 18.8% NA

Mean $4,917.4 4.6x 20.2x 17.6x 1.68x 4.8% 1.4% 8.5% 22.7% 25.0% 1.8%

Median $5,019.5 3.7x 20.6x 16.7x 1.58x 4.0% 1.4% 7.9% 19.7% 20.0% 1.8% Commercial Real Estate Lending




Equity Market Cap.

Debt / Equity


Net Income

Company

EPS TBVPS 3-Yr CAGR Margin DividendYield LTM FY2014 LTM 08'-13' LTM LTM LTM LTMLadder Capital Corp LADR $18.99 $960.8 2.1x NMF 12.8x 1.42x NA 3.3% 8.9% NA 21.2% NA Resource America, Inc. REXI $9.54 $188.9 1.5x NMF NMF 1.36x 25.0% 1.4% 5.7% NA 3.5% 2.5% Walker & Dunlop, Inc. WD $16.11 $525.1 2.6x 11.4x 11.9x 1.48x 43.8% 3.4% 11.6% 63.0% 14.4% NA

Mean $558.3 2.1x 11.4x 12.4x 1.42x 34.4% 2.7% 8.7% 63.0% 13.1% 2.5%

Median $525.1 2.1x 11.4x 12.4x 1.42x 34.4% 3.3% 8.9% 63.0% 14.4% 2.5%

10.0x15.0x20.0x25.0x30.0x


Current: 17.0x

5.0x10.0x15.0x20.0x25.0x30.0x


Current: 11.8x

William Blair


Leasing



Company Ticker


Equity Market Cap.

Debt / Equity


Net Income

EPS TBVPS 3-Yr CAGR Margin Dividend Yield LTM FY2014 LTM 08'-13' LTM LTM LTM LTMAerCap Holdings N.V. AER $43.34 $9,201.9 4.0x 11.1x 10.0x 3.19x 11.8% 3.3% 12.0% 52.7% 23.1% NA AeroCentury Corp. ACY $11.15 $17.9 3.2x NA NMF 0.50x 4.5% NMF NMF NA (22.2%) NA Air Lease Corporation AL $36.59 $3,746.2 2.5x 16.0x 15.5x 1.39x NA 3.8% 9.5% NA 24.3% 0.3% Aircastle LTD AYR $19.08 $1,545.6 2.3x 20.2x 12.4x 0.93x 8.0% 4.2% 4.7% NMF 10.0% 4.2% CAI International Inc. CAP $21.05 $437.5 2.9x 7.7x 8.0x 1.03x 32.3% 3.8% 14.6% 7.7% 26.7% NA Element Financial Corporation EFN $11.61 $3,066.2 2.7x NMF 24.1x 1.99x NA 0.1% NMF NA 2.9% NA GATX Corp. GMT $63.40 $2,840.3 3.1x 14.7x 14.3x 2.25x 4.8% 2.9% 15.1% 26.5% 14.2% 2.1% Marlin Business Services Corp. MRLN $21.14 $273.0 NA 15.3x 13.6x 1.55x (2.4%) 2.5% 10.9% 47.7% 24.2% 2.4% MicroFinancial Inc. MFI $8.39 $121.1 0.9x 12.3x 11.7x 1.30x 10.5% 5.6% 11.0% 6.8% 23.7% 3.8% Mobile Mini, Inc. MINI $43.83 $2,020.9 0.6x NMF NMF 6.06x (1.4%) 3.8% 5.3% 24.2% 10.1% 1.6% Ryder System, Inc. R $88.47 $4,692.4 2.3x 17.1x 15.8x 3.09x 6.4% 3.9% 15.1% 19.6% 4.1% 1.7% TAL International Group, Inc. TAL $43.13 $1,435.9 4.3x 11.7x 11.4x 2.32x 15.6% 4.7% 18.2% 4.6% 19.5% 6.7% Textainer Group Holdings Limited TGH $34.44 $1,953.2 2.3x 10.2x 11.7x 1.70x 24.6% 4.3% 16.9% 3.3% 34.6% 5.5% Willis Lease Finance Corp. WLFC $22.81 $191.2 3.5x 13.2x 17.3x 0.87x 4.1% 3.4% 6.6% (1.8%) 8.0% NA

Mean $2,253.1 2.5x 13.6x 13.8x 2.01x 9.9% 3.6% 11.7% 26.5% 9.4% 3.1%

Median $1,749.4 2.6x 13.2x 13.0x 1.63x 7.2% 3.8% 11.5% 13.7% 16.9% 2.4%

6.0x11.0x16.0x21.0x26.0x


Current: 13.5x

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 10/08/14 Eagle Point Credit Company Inc. $20.00 5.2 $103.1 - - 07/30/14 Synchrony Financial $23.00 125.0 $2,875.0 - - 05/08/14 Alcentra Capital Corporation $15.00 6.6 $100.0 10.3x 0.90x 04/09/14 Ally Financial Inc. $25.00 95.0 $2,375.0 - 0.80x 03/20/14 TPG Specialty Lending, Inc. $16.00 7.0 $112.0 12.4x 1.03x 03/05/14 TriplePoint Venture Growth BDC Corp. $15.00 8.3 $125.0 - - 02/05/14 CM Finance Inc. $15.00 6.7 $100.0 9.1x 1.47x 02/05/14 Ladder Capital Corp $17.00 13.3 $225.3 - 6.44x 01/22/14 Santander Consumer USA Holdings Inc. $24.00 75.0 $1,799.8 17.2x 3.10x 01/15/14 American Capital Senior Floating, Ltd. $15.00 10.0 $150.0 - - 11/08/13 JGWPT Holdings Inc. $14.00 13.9 $195.0 - - 11/06/13 StoneCastle Financial Corp. $25.00 6.3 $157.1 - - 10/15/13 Springleaf Holdings, Inc. $17.00 21.0 $357.8 - 1.12x 10/09/13 Stonegate Mortgage Corporation $16.00 7.1 $113.6 14.1x 2.48x 10/03/13 Cherry Hill Mortgage Investment Corporation $20.00 6.5 $130.0 - - 09/24/13 Capitala Finance Corp. $20.00 4.0 $80.0 - - 07/11/13 Fifth Street Senior Floating Rate Corp. $15.00 6.7 $100.0 - - 05/08/13 PennyMac Financial Services, Inc. $18.00 11.1 $200.0 - - 05/02/13 Harvest Capital Credit Corporation $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 Inc. $15.00 5.3 $80.0 - - 03/21/13 Five Oaks Investment Corp. $15.00 4.0 $60.5 22.2x 3.32x 02/14/13 Orchid Island Capital, Inc. $15.00 2.4 $35.4 - - 02/07/13 ZAIS Financial Corp. $21.25 5.7 $120.1 - - 12/04/12 WhiteHorse Finance, Inc. $15.00 6.7 $100.0 - - 11/07/12 OFS Capital Corporation $15.00 6.7 $100.0 - 2.35x 11/07/12 Stellus Capital Investment Corporation $15.00 8.0 $120.0 - - 10/24/12 Monroe Capital Corporation $15.00 5.0 $75.0 - - Note: Dollar amount and shares amount are in millions and exclude overallotment.Source: SNL Financial 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 10/27/14 Hannon Armstrong Sustainable Infrastructure Capital, Inc. $13.60 4.0 $54.4 - 1.37x 10/23/14 New Mountain Finance Corporation $14.53 5.0 $72.7 10.0x 1.08x 10/07/14 KCAP Financial, Inc. $8.02 3.0 $24.1 11.3x 1.12x 09/30/14 Fidus Investment Corporation $17.00 2.0 $34.0 16.8x 1.29x 09/18/14 Blackstone Mortgage Trust, Inc. $27.49 8.0 $219.9 21.7x 1.05x 09/05/14 AerCap Holdings N.V. $47.10 10.2 $479.5 29.4x 1.38x 09/05/14 PennantPark Investment Corporation $11.63 8.5 $98.9 6.4x 1.14x 09/04/14 Arlington Asset Investment Corp. $27.61 2.8 $75.9 7.9x 0.87x 09/04/14 NorthStar Realty Finance Corp. $18.40 45.0 $828.0 - 1.25x 09/03/14 Ellington Financial LLC $23.92 8.0 $191.4 11.2x 1.24x 09/02/14 Santander Consumer USA Holdings Inc. $18.68 10.0 $187.7 12.0x 2.14x 08/20/14 Medley Capital Corporation $13.02 5.0 $65.1 12.9x 1.14x 08/14/14 Fifth Street Senior Floating Rate Corp. $12.91 22.8 $294.3 - 3.61x 08/12/14 Newcastle Investment Corp. $4.32 39.5 $170.6 15.8x 1.95x 08/12/14 Triangle Capital Corporation $26.85 4.3 $115.5 11.2x 1.95x 08/05/14 TPG Specialty Lending, Inc. $18.63 5.0 $93.2 10.5x 1.13x 07/29/14 TCP Capital Corp. $17.33 5.4 $93.6 10.2x 1.04x 07/17/14 Garrison Capital Inc. $14.50 2.0 $29.0 7.9x 0.94x 07/16/14 Ares Capital Corporation $16.63 13.5 $224.5 9.9x 1.07x 07/16/14 Colony Financial, Inc. $22.14 15.0 $332.1 17.7x 0.85x 07/11/14 Fifth Street Finance Corp. $9.95 13.3 $131.8 12.8x 1.09x 06/19/14 Five Oaks Investment Corp. $11.00 3.5 $38.5 - 0.76x 05/13/14 NorthStar Realty Finance Corp. $15.45 30.0 $463.5 - 2.24x 04/30/14 Apollo Commercial Real Estate Finance, Inc. $16.35 9.0 $147.2 10.4x 0.88x 04/29/14 ePlus Inc. $50.00 1.6 $78.7 11.4x 1.51x 04/25/14 New Residential Investment Corp. $6.10 25.0 $152.5 5.2x 1.00x 04/23/14 Hannon Armstrong Sustainable Infrastructure Capital, Inc. $13.00 5.0 $65.0 - 1.48x 04/23/14 Medley Capital Corporation $13.25 6.0 $79.5 15.3x 1.17x 04/09/14 New Mountain Finance Corporation $14.30 3.5 $50.0 10.5x 1.05x 04/08/14 Main Street Capital Corporation $31.50 4.0 $126.0 14.0x 1.75x 04/08/14 Starwood Property Trust, Inc. $22.32 22.0 $491.0 12.2x 1.38x 04/03/14 Western Asset Mortgage Capital Corporation $14.67 13.0 $190.7 - 1.02x 04/02/14 New York Mortgage Trust, Inc. $7.59 13.0 $98.7 8.8x 1.19x 04/01/14 Blackstone Mortgage Trust, Inc. $27.72 8.0 $221.8 - 1.11x 03/26/14 PennyMac Financial Services, Inc. $16.50 5.6 $91.7 5.3x 0.55x 03/25/14 Arlington Asset Investment Corp. $27.40 2.8 $75.4 - 3.53x 03/19/14 Orchid Island Capital, Inc. $12.55 3.2 $40.2 - 2.43x 03/18/14 Golub Capital BDC, Inc. $18.05 3.5 $63.2 - 3.49x 03/14/14 TICC Capital Corp. $10.14 6.0 $60.8 - - 03/11/14 Oxford Lane Capital Corp. $17.00 2.8 $47.6 18.1x 2.37x 02/27/14 Colony Financial, Inc. $21.90 13.0 $284.7 23.1x 1.26x 02/25/14 Apollo Investment Corporation $8.69 12.0 $104.3 - - 02/20/14 Kayne Anderson MLP Investment Company $37.05 8.0 $296.4 31.6x - 02/19/14 Five Oaks Investment Corp. $11.30 3.0 $33.9 31.2x 1.25x 01/31/14 Medley Capital Corporation $14.00 6.0 $84.0 - - 01/29/14 New Mountain Finance Corporation $14.70 2.3 $34.2 17.5x 2.15x 01/16/14 Orchid Island Capital, Inc. $12.50 1.8 $22.5 - - 01/14/14 Full Circle Capital Corporation $7.13 1.7 $11.8 - 0.85x Note: Dollar amount and shares amount are in millions and exclude overallotment.Source: SNL Financial 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 10/31/14 Main Street Capital Corporation 4.500% Senior unsecured notes, due Dec 1, 2019 $175.0 12/01/19 10/28/14 Ford Motor Credit Company LLC 2.597% Senior unsecured notes, due Nov 4, 2019 $1,250.0 11/04/19 10/28/14 GATX Corporation 2.600% Senior unsecured notes, due Mar 30, 2020 $250.0 03/30/20 10/23/14 Toyota Motor Credit Corporation Floating rate series B medium term notes, due Oct 29, 2015 $1,250.0 10/29/15 10/02/14 Starwood Property Trust, Inc. 3.750% Convertible senior unsecured notes, due Oct 15, 2017 $375.0 10/15/17 10/01/14 Freddie Mac 1.000% Reference Notes, due July 28, 2017 $500.0 07/28/17 09/25/14 National Rural Utilities Cooperative Finance Corporation Floating rate series C senior unsecured medium-term notes, due May 12, 2017 $25.0 05/12/17 09/24/14 AerCap Ireland Capial Limited 5.000% Senior unsecured notes, due Oct 1, 2021 $800.0 10/01/21 09/24/14 Ally Financial Inc. 5.125% Senior unsecured notes, due Sept 30, 2024 $700.0 09/30/24 09/22/14 General Motors Financial Company, Inc. 4.375% Senior unsecured notes, due Sept 25, 2021 $1,250.0 09/25/21 09/16/14 PennantPark Investment Corporation 4.500% Senior unsecured notes, due Oct 1, 2019 $250.0 10/01/19 09/10/14 John Deere Capital Corporation 2.300% Series F senior medium term notes, due Sept 16, 2019 $500.0 09/16/19 09/09/14 Air Lease Corporation 4.250% Senior unsecured notes, due Sept 15, 2024 $500.0 09/15/24 09/08/14 PACCAR Financial Corp. 2.200% Series N medium-term notes, due Sept 15, 2019 $300.0 09/15/19 09/04/14 American Honda Finance Corporation 2.250% Series A unsecured medium-term notes, due Aug 15, 2019 $1,000.0 08/15/19 09/04/14 Fannie Mae 2.625% Benchmark notes, due Sept 6, 2024 $4,500.0 09/06/24 08/13/14 Caterpillar Financial Services Corporation 1.250% Series H medium-term notes, due Aug 18, 2017 $750.0 08/18/17 08/12/14 American Express Credit Corporation 2.250% Series E senior unsecured medium term notes, due Aug 15, 2019 $1,500.0 08/15/19 08/12/14 Apollo Commercial Real Estate Finance, Inc. 5.500% Convertible senior unsecured notes, due Mar 15, 2019 $100.0 03/15/19 08/11/14 RAIT Financial Trust 7.125% Senior unsecured notes, due Aug 30, 2019 $70.0 08/30/19 08/06/14 Synchrony Financial 4.250% Senior unsecured notes, due Aug 15, 2024 $1,250.0 08/15/24 08/04/14 Arbor Realty Trust, Inc. 7.375% Senior unsecured notes, due May 15, 2021 $35.0 05/15/21 07/24/14 Alliance Data Systems Corporation 5.375% Senior unsecured notes, due Aug 1, 2022 $600.0 08/01/22 07/14/14 Full Circle Capital Corporation 8.250% Senior unsecured notes, due June 30, 2020 $12.5 06/30/20 07/08/14 American Honda Finance Corporation 1.200% Series A medium-term unsecured notes, due July 14, 2017 $650.0 07/14/17 07/07/14 General Motors Financial Company, Inc. 3.500% Senior unsecured notes, due July 10, 2019 $800.0 07/10/19 06/25/14 CNH Industrial Capital LLC 3.375% Series A senior unsecured notes, due July 15, 2019 $500.0 07/15/19 06/18/14 EZCORP, Inc. 2.125% Senior unsecured cash convertible notes, due June 15, 2019 $200.0 06/15/19 06/12/14 Colony Financial, Inc. 3.875% Convertible senior notes, due Jan 15, 2021 $150.0 01/15/21 06/12/14 TCP Capital Corp. 5.250% Senior unsecured convertible notes, due Dec 15, 2019 $100.0 12/15/19 06/11/14 Capitala Finance Corp. 7.125% Senior unsecured notes, due June 16, 2021 $100.0 06/16/21 06/11/14 General Finance Corporation 8.125% Senior unsecured notes, due July 31, 2021 $63.0 07/31/21 06/10/14 iStar Financial Inc. 5.000% Senior unsecured notes, due July 1, 2019 $770.0 07/01/19 06/09/14 John Deere Capital Corporation Floating rate series F senior medium-term notes, due Apr 12, 2016 $750.0 04/12/16 06/06/14 DFC Global Corp. 10.500% Senior secured notes, due June 15, 2020 $800.0 06/15/20 06/04/14 TPG Specialty Lending, Inc. 4.500% Senior convertible unsecured notes, due Dec 15, 2019 $100.0 12/15/19 06/03/14 PACCAR Financial Corp. 1.100% Series N medium-term notes, due June 6, 2017 $300.0 06/06/17 06/02/14 American Express Credit Corporation 1.125% Series E senior unsecured medium term notes, due June 5, 2017 $1,650.0 06/05/17 05/28/14 New Mountain Finance Corporation 5.000% Senior unsecured convertible notes, due June 15, 2019 $100.0 06/15/19 05/23/14 Enova International, Inc. 9.750% Senior unsecured notes, due June 1, 2021 $500.0 06/01/21 05/22/14 Caterpillar Financial Services Corporation Floating rate series H medium-term notes, due May 20, 2016 $250.0 05/20/16 05/16/14 National Rural Utilities Cooperative Finance Corporation 4.023% Secured collateral trust bonds, due Nov 1, 2032 $218.3 11/01/32 05/13/14 Toyota Motor Credit Corporation 1.125% Series B unsecured medium-term notes, due May 16, 2017 $900.0 05/16/17 Note: Dollar amount in millions and excludes overallotment. Source: SNL Financial 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 Rate (%)09/04/14 Invesco Mortgage Capital Inc. $150.0 12/27/24 7.8% 06/17/14 Federal Agricultural Mortgage Corporation $75.0 07/18/24 6.0% 06/12/14 Colony Financial, Inc. $75.0 06/19/19 7.5% 06/03/14 Resource Capital Corp. $110.0 07/30/24 8.6% 05/29/14 Oxford Lane Capital Corp. $28.0 06/30/17 8.1% 05/21/14 Five Oaks Investment Corp. $15.0 12/23/18 8.8% 05/13/14 Gladstone Capital Corporation $55.0 06/30/17 6.8% 05/12/14 NorthStar Realty Finance Corp. $225.0 05/15/19 8.8% 05/05/14 American Capital Agency Corp. $175.0 05/08/19 7.8% 03/20/14 Federal Agricultural Mortgage Corporation $75.0 04/17/19 6.9% 02/26/14 Element Financial Corporation $125.0 06/30/19 6.5% 12/18/13 Five Oaks Investment Corp. $20.0 12/23/18 8.8% 12/10/13 Element Financial Corporation $100.0 12/31/18 6.6% 11/13/13 Oxford Lane Capital Corp. $36.6 06/30/16 7.5% 07/16/13 Farm Credit Bank of Texas $300.0 09/15/23 6.8% 06/13/13 Oxford Lane Capital Corp. $20.0 06/30/16 7.5% 05/29/13 General Electric Capital Corporation $1,000.0 06/15/23 5.3% 05/28/13 New York Mortgage Trust, Inc. $75.0 06/04/18 7.8% 05/08/13 Capstead Mortgage Corporation $150.0 05/13/18 7.5% 05/06/13 Arbor Realty Trust, Inc. $30.0 05/09/18 7.8% 04/23/13 CYS Investments, Inc. $200.0 04/30/18 7.5% 04/15/13 CoBank, ACB $200.0 07/01/18 6.1% 04/11/13 Dynex Capital, Inc. $50.0 04/30/18 7.6% 04/08/13 MFA Financial, Inc. $175.0 04/15/18 7.5% 04/03/13 NorthStar Realty Finance Corp. $175.0 04/10/18 8.5% 03/12/13 iStar Financial Inc. $175.0 03/15/18 4.5% 02/07/13 ARMOUR Residential REIT, Inc. $135.0 02/12/18 7.9% 01/29/13 Arbor Realty Trust, Inc. $35.0 02/01/18 8.3% 01/29/13 MuniMae TE Bond Subsidiary, LLC $74.0 04/30/28 5.0% 01/14/13 Federal Agricultural Mortgage Corporation $60.0 01/17/18 5.9% 01/10/13 KKR Financial Holdings LLC $325.0 01/15/18 7.4% 11/19/12 Oxford Lane Capital Corp. $15.0 12/31/14 8.5% 10/09/12 Discover Financial Services $500.0 12/01/17 6.5% 10/03/12 NorthStar Realty Finance Corp. $125.0 10/11/17 8.9% 09/25/12 Resource Capital Corp. $25.0 10/02/17 8.3% 09/20/12 AG Mortgage Investment Trust, Inc. $100.0 09/27/17 8.0% 09/13/12 Apollo Residential Mortgage, Inc. $150.0 09/20/17 8.0% 09/06/12 Annaly Capital Management, Inc. $400.0 09/13/17 7.5% 08/16/12 Hatteras Financial Corp. $250.0 08/27/17 7.6% 07/27/12 CYS Investments, Inc. $75.0 08/03/17 7.8% 07/27/12 AG Mortgage Investment Trust, Inc. $45.0 08/03/17 8.3% 07/25/12 Dynex Capital, Inc. $50.0 07/31/17 8.5% 07/25/12 Apollo Commercial Real Estate Finance, Inc. $75.0 08/01/17 8.6% 07/24/12 General Electric Capital Corporation $1,750.0 12/15/22 6.3% 07/19/12 Invesco Mortgage Capital Inc. $135.0 07/26/17 7.8% 07/10/12 Colony Financial, Inc. $102.7 03/20/17 8.5% 07/09/12 NorthStar Realty Finance Corp. $63.3 02/07/12 8.3% Note: Dollar amount in millions and excludes overallotment. Source: SNL Financial 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, 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) • 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) • Progressive Corporation (The) (PGR) • RLI Corp. (RLI) • Travelers Companies, Inc. (The) (TRV) • WebMD Health Corp. (WBMD) • Willis Group Holdings Public Limited Company (WSH)

• 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)

• Affiliated Managers Group, Inc. (AMG) • Artisan Partners Asset Management Inc. (APAM) • Eaton Vance Corp. (EV) • Envestnet, Inc. (ENV) • Euronet Worldwide, Inc. (EEFT) • Fiserv, Inc. (FISV) • Global Payments, Inc. (GPN) • Heartland Payment Systems, Inc. (HPY) • Higher One Holdings, Inc. (ONE) • Invesco Ltd. (IVZ) • LPL Financial Holdings Inc. (LPLA) • MSCI Inc. (MSCI) • Schwab (The Charles Schwab Corporation) (SCHW) • 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

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 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

William Blair

Specialty Finance Industry Insights 18 Select William Blair Transactions

Select William Blair Transactions

$70,000,000Senior Notes

$100,000,000Senior Unsecured Notes

$29,000,000Follow-on Offering

$76,475,000Follow-on Offering

$1,285,000,000has been acquired byPortfolio Recovery

Associates

Not Disclosedhas been acquired byMilestone Partners

$60,000,000Debt Placement

$161,000,000

Convertible Bond Offering

$66,815,000

Follow-on Offering

Not Disclosedhas been recapitalized by

Pine Tree Equity Management

NORTH STATE ACCEPTANCE

$100,000,000

Senior Credit FacilityDebt PlacementNot Disclosed

has acquiredPersian Acceptance

Corporation

$50,000,000

Follow-on Offering

$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

$438,600,000has been acquired by

£525,000,000has been acquired by

$42,000,000

Baby Bond Offering

$78,000,000



$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

$30,000,000

Second Lien Loan

$102,212,920


$75,469,000

Follow-on Offering

188,893,000


Follow-on Offering

$15,000,000

Second Lien Term LoanCOLLINS FINANCIAL SERVICES, INC.INNOVATION COMPLIANCE INTEGRITY

CFSI

£28,000,000has sold a minority stake to

Investcorp

$34,875,000

Follow-on OfferingAugust 2008

$143,750,000


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 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 December 2, 2014 Specialty Finance Industry Insights Disclosures 19

Disclosures

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, inancial 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 - 2013, the investment banking group completed 250 merger-and-acquisition transactions worth more than $52 billion in value, involving parties in 27 countries and four continents, was an underwriter on over 20% of all U.S. initial public offerings and arranged more than $11.5 billion of debt inancing.

About William Blair Investment Banking

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