Specialty Finance Industry Insights

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Specialty Finance

Industry Insights

A review of M&A activity and

public market valuation in the

consumer and commercial

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William Blair

Specialty Finance Industry Insights

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

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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 performed strongly in the first quarter. Total global year-to-date M&A volume is over $400 billion,

up more than 5% from the corresponding period last year, and over the same period the total disclosed dollar volume of new equity

issuances (both initial public offerings and follow-on offerings) is up more than 17%. While some industry veterans believe

valuations are ahead of themselves, deal activity suggests otherwise.

This theme persists within the specialty finance sector and we believe 2015 M&A activity will remain strong for high quality

companies in this sector. Large strategic acquirers with healthy war chests will likely continue to pursue companies with

differentiated solutions, go-to-market strategies, and proven strong growth and profitability. In addition, private-equity firms remain

highly active in the specialty finance sector. Aging portfolio companies of private-equity firms – in particular, specialty finance

businesses purchased before or during the downturn – may create liquidity opportunities in the near to midterm and will continue to

fuel middle-market M&A activity.

Specialty finance companies generate high margins and recurring cash flows. In addition, these companies have meaningful

operating leverage. As a result, M&A transactions in the sector are generally completed at attractive multiples. Since 2002,

approximately 53% of the aggregate deals in the consumer specialty finance sector have been completed at above 10.0 times LTM

net income, and approximately 18% have been completed at more than 3.00 times LTM book value. In the commercial specialty

finance sector, approximately 46% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and

approximately 22% have been completed between 1.50 and 3.00 times LTM book value. Acquirers in the sector are most often

strategic parties that are able to pay more because of the significant revenue synergies generated by pushing new or stronger finance

products through an established distribution platform. In addition, many private-equity funds have developed a differentiated level

of industry knowledge and expertise, and as a result have established strong reputations in the sector.

In 2015 thus far, M&A activity in the sector has been strong, driven primarily by strategic acquirers looking for new products and

segments, differentiated platforms, and additional avenues for growth. Examples include New Residential Investment Corporations'

acquisition of Home Loan Servicing Solutions and Huntington Bancshares’ acquisition of Macquarie Equipment Finance. While global

economic uncertainty may cause the broad universe of buyers and sellers to proceed more cautiously in 2015, we remain optimistic

that both M&A and capital markets activity will remain strong for solidly performing businesses.

Robert Metzger

+1 312 364 8517

J.P. Young

+1 312 364 8160

Kegan Greene

+1 312 364 8113

Consumer

Specialty

Finance

Sector

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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 ahead of the comparable period in 2014, though disclosed

dollar volume is meaningfully lower over the same period.

• Approximately 53% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and

approximately 18% have been completed at more than 3.00 times LTM book value.

• Transactions less than $50 million were completed at an average of 5.9 times LTM net income, meaningfully lower than LTM net

income multiples on deals above $50 million.

Historical Transaction Volume

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 February 28, 2015.

47 ₄₁ 79 53 75 54 32 33 46 50 ₄₂ 47 39 8 10 0 20 40 60 80 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 YTD 2015YTD Average: 49 25.0% $17,055 $26,075 _$8,866 $51,379 $16,926 $2,090 $3,299 $2,754 $12,024 $43,055 $10,519 $1,817 $6,009 $1,828 $1,327 -$20,000 $40,000 $60,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 YTD 2015YTD ($ in millions) Average: $16,322 (27.4%) 53.2% 32.3% 14.5% Greater than 10.0x 5.0x to 10.0x Less than 5.0x 18.2% 27.3% 54.5% Greater than 3.00x 1.50x to 3.00x Less than 1.50x 5.9x 7.5x 13.4x 0.0x 5.0x 10.0x 15.0x <$50mm $50mm - $100mm >$100mm 1.36x 1.12x 1.34x 0.90x 1.00x 1.10x 1.20x 1.30x 1.40x 1.50x <$50mm $50mm - $100mm >$100mm

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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 03/10/15 Mortgage The J.G. Wentworth Company/ Weststar Mortgage, Inc. $54.0 - - 03/03/15 AFS Springleaf Holdings, LLC/ OneMain Financial Holdings, Inc. $4,250.0 7.5x 1.30x

02/23/15 Mortgage Investor group/ FBC Mortgage, LLC - - -

02/22/15 Collection New Residential Investment Corp./ Home Loan Servicing Solutions, Ltd. $1,296.1 7.6x 1.02x 02/18/15 Collection Cerberus Capital Management, L.P./ Gescobro Collection Services - - - 02/10/15 Mortgage Cherry Hill Mortgage Investment Corporation/ Aurora Financial Group, Inc. $7.0 - - 02/09/15 Mortgage Legal & General Group/ New Life Mortgages Ltd. $5.0 - - 02/09/15 Mortgage Wilshire Bancorp, Inc./ Bank of Manhattan's mortgage lending division - - -

01/28/15 Mortgage Skipton Building Society/ Topaz Finance Limited - - -

01/28/15 Mortgage Paragon Financial Resources/ Houston Capital Mortgage, Inc. - - -

01/27/15 AFS EZCORP, Inc./ Twelve pawn store operations $19.3 - -

01/12/15 Mortgage Citizens Financial Corp./ Reliance Mortgage Company - - -

01/08/15 Mortgage Impac Mortgage Holdings, Inc./ Mortgage operations of CashCall, Inc. - - -

12/18/14 AFS BNP Paribas/ JD Group's consumer finance business $398.0 - -

12/15/14 Mortgage Aquiline Holdings LLC/ LenderLive Network, Inc. - - -

12/10/14 Mortgage Academy Mortgage Corporation/ Republic Mortgage Home Loans, LLC - - - 12/10/14 Mortgage Open Mortgage, LLC/ 360 Mortgage Group's reverse mortgage origination business - - - 12/01/14 Mortgage MidAmerica Mortgage, Inc./ Affinity Lending Soultions. LLC - - -

11/24/14 AFS Tiptree Financial Inc./ Reliance First Capital, LLC $34.7 - -

11/13/14 Mortgage loanDepot.com LLC/ Mortgage Master, Inc. - - -

11/10/14 AFS Nishi-Nippon City Bank, Ltd./ Nishi-Nippon Credit Guarantee Co., Ltd. $24.3 5.2x 0.70x 11/07/14 Mortgage Bankers Bancorp of Oklahoma, Inc./ Advance Mortgage Corporation - - -

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. - - -

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

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Specialty Finance Industry Insights

4 Consumer Specialty Finance

Public Valuation Update

Auto Finance

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

Ticker Stock Price 2/28/15 Equity Market

Cap. Debt / Equity

Stock Price /

Asset

CAGR ROAA ROAE

Net Income

EPS BVPS 3-Yr CAGR Margin

Company LTM FY2015 LTM ’09-’14 LTM LTM LTM LTM

Ally Financial Inc. ALLY $20.78 $10,005.6 4.8x 15.3x 10.6x 0.71x (2.5%) 0.6% 6.2% NMF 17.6% America's Car-Mart Inc. CRMT $53.21 $456.0 0.5x 16.9x 16.2x 2.02x 10.6% 7.6% 13.1% (3.4%) 5.5% Consumer Portfolio Services, Inc. CPSS $6.96 $178.2 NMF 7.6x 6.6x 1.40x 11.4% 1.8% 26.6% NA 20.9% Credit Acceptance Corp. CACC $183.30 $3,829.7 2.5x 15.4x 13.6x 5.45x 18.8% 10.2% 36.7% 12.3% 40.7% Nicholas Financial Inc. NICK $14.89 $183.4 0.8x 11.6x NA 1.18x 7.5% 5.5% 10.8% (8.9%) 26.4% Santander Consumer USA Holdings Inc. SC $22.53 $7,862.6 NMF 10.5x 9.3x 2.29x NA 2.6% 24.5% 6.6% 26.3%

Mean $3,752.6 2.2x 12.9x 11.3x 2.17x 9.2% 4.7% 19.6% 1.6% 22.9% Median $2,142.8 1.7x 13.5x 10.6x 1.71x 10.6% 4.1% 18.8% 1.6% 23.6%

Collection

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

Stock Price /

Asset

Net Income

Asta Funding Inc. ASFI $8.47 $110.0 0.2x 10.0x NMF 0.62x NA (2.1%) 6.9% 47.5% 28.5% Encore Capital Group, Inc. ECPG $39.97 $1,031.4 4.2x 10.4x 7.9x 1.78x 44.5% 7.8% 15.9% 19.4% 9.7% Performant Financial Corporation PFMT $5.25 $259.1 1.2x 27.6x 22.4x 3.04x NA 6.6% 11.4% (8.8%) 4.8% PRA Group, Inc. PRAA $50.09 $2,508.5 1.6x 14.3x 10.6x 3.81x 28.5% 10.3% 19.9% 20.5% 20.0%

Mean $977.2 1.8x 15.6x 13.6x 2.31x 36.5% 5.6% 13.5% 19.7% 15.7% Median $645.2 1.4x 12.4x 10.6x 2.41x 36.5% 7.2% 13.6% 20.0% 14.9%

6.0 8.0 10.0 12.0 14.0 16.0

Feb 2010 Feb 2011 Feb 2012 Feb 2013 Feb 2014 Feb 2015

Current: 13.5x 2.0x 6.0x 10.0x 14.0x 18.0x 22.0x 26.0x

Current: 12.4x

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William Blair

Specialty Finance Industry Insights

Consumer Specialty Finance 5

Alternative Financial Services

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

Stock Price /

Asset

Net Income

Cash America International, Inc. CSH $21.58 $652.5 0.2x NMF 22.1x 1.16x 3.7% 1.4% (0.9%) (10.1%) 9.0% Enova International, Inc. ENVA $23.09 $762.0 3.2x 6.8x 6.5x 4.89x 15.1% 9.9% 57.2% 44.5% 14.5% EZCORP, Inc. EZPW $10.44 $560.1 0.4x 15.8x 8.9x 1.16x 23.3% 4.4% 4.0% NA (5.4%) First Cash Financial Services Inc. FCFS $48.14 $1,363.2 0.5x 16.4x 16.8x 7.99x 22.8% 11.8% 19.8% 6.5% 11.9% QC Holdings, Inc. QCCO $1.72 $30.1 0.2x NMF NA 0.43x (5.4%) 7.1% 7.5% NA 3.5% Regional Management Corp. RM $15.60 $198.8 1.9x 13.7x 8.6x 1.13x NA 5.2% 8.7% 2.0 7.6% Springleaf Holdings, Inc. LEAF $38.45 $4,415.3 4.6x 8.8x 16.3x 2.18x (10.3%) 4.6% 32.6% (22.9%) 29.9% World Acceptance Corp. WRLD $82.11 $776.8 1.9x 8.3x 8.0x 2.46x 10.1% 12.3% 31.6% 1.3% 16.4%

Mean $1,094.9 1.6x 11.6x 12.4x 2.67x 8.5% 7.1% 20.1% 3.5% 10.9% Median $707.2 1.2x 11.2x 8.9x 1.67x 10.1% 6.2% 14.3% 1.7% 10.5%

Credit Card

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

Company Ticker Stock Price 2/28/15 Equity Market

Stock Price /

Asset

Net Income

LTM FY2015 LTM ’09-’14 LTM LTM LTM LTM Alliance Data Systems

Corporation ADS $278.51 $17,491.8 5.4x 35.4x 18.7x NMF 31.1% 4.5% 29.6% 17.1% 9.5% American Express Company AXP $81.59 $83,154.5 3.0x 14.7x 14.9x 4.95x 4.9% 3.8% 29.3% 6.0% 18.2% Discover Financial Services DFS $60.98 $27,272.7 2.0x 12.4x 11.4x 2.75x 12.6% 2.9% 21.2% NA 33.0% MasterCard Incorporated MA $90.13 $103,510.0 0.2x 29.1x 25.9x NMF 15.5% 21.6% NMF 23.8% 38.2% Synchrony Financial SYF $31.95 $26,638.8 2.6x 11.5x 12.4x 2.96x NA 3.1% 30.4% 3.7% 33.4% Visa Inc. V $271.31 $166,557.4 NMF 30.3x 26.2x 5.86x 3.6% 13.8% 20.4% 13.8% 43.3%

Mean $70,770.9 2.7x 22.2x 18.3x 4.13x 13.5% 8.3% 26.2% 12.9% 29.3% Median $55,213.6 2.6x 21.9x 16.8x 3.96x 12.6% 4.1% 29.3% 13.8% 33.2%

6.0x 9.0x 12.0x 15.0x 18.0x

Current: 11.2x 6.0x 12.0x 18.0x 24.0x 30.0x 36.0x

Current: 21.9x

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Specialty Finance Industry Insights

6 Consumer Specialty Finance

Mortgage

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

Company Ticker Stock Price 2/28/15 Equity Market

Stock Price /

Asset

Net Income

LTM FY2015 LTM ’09-’14 LTM LTM LTM LTM Ellington Financial LLC EFC $20.48 $685.1 2.2x 9.8x 8.3x 0.88x 20.8% 1.7% 8.5% 78.9% (9.3%) Heritage Financial Group,

Inc. HBOS $25.89 $228.0 1.3x 27.3x 23.4x 1.61x 24.4% 0.5% 5.3% 25.5% 8.6% Nationstar Mortgage

Holdings Inc. NSM $26.65 $2,424.7 NMF 10.9x 7.3x 2.07x 54.1% 1.8% 20.0% NMF 15.2% Ocwen Financial Corp. OCN $8.14 $1,024.1 3.8x 6.1x 4.4x 0.71x 28.8% 6.1% 11.0% 33.6% 8.6% PennyMac Mortgage Investment Trust PMT $21.44 $1,597.5 2.0x 8.7x 8.4x 1.01x NA 4.2% 12.8% 44.5% 47.7% PHH Corporation PHH $24.28 $1,243.1 1.1x NA NMF 0.80x 1.4% (2.8%) (11.3%) 57.1% 8.4% Stonegate Mortgage Corporation SGM $10.02 $258.3 4.1x 12.5x 6.7x 0.95x NA (2.4%) (10.4%) NA (12.9%) Walter Investment

Management Corp. WAC $16.67 $628.8 NMF 8.7x 8.4x 2.12x 58.7% (0.6%) (9.8%) NA (9.3%)

Mean $1,065.8 2.4x 12.5x 9.8x 1.15x 25.9% 1.3% 5.1% 47.9% 9.5% Median $1,024.1 2.1x 10.3x 7.8x 0.95x 24.4% 1.7% 8.5% 44.5% 8.6%

0.0x 5.0x 10.0x 15.0x 20.0x 25.0x

Current: 10.3x

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Commercial

Specialty

Finance

Sector

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Specialty Finance Industry Insights

7 Commercial Specialty Finance

Commercial Specialty Finance

M&A Trends

• Year-to-date aggregate M&A transaction volume and disclosed dollar volume are running significantly above those of the

comparable period in 2014.

• Approximately 46% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and

approximately 22% have been completed between 1.50 and 3.00 times LTM book value.

• Transactions less than $50 million were completed at an average of 5.6 times LTM net income, slightly lower than LTM net

income multiples on deals above $50 million.

Historical Transaction Volume

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 February 28, 2015.

39 26 45 ₄₀ ₄₃ ₄₂ 29 22 28 16 29 ₂₆ 35 4 9 0 10 20 30 40 50 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 YTD 2015YTD Average: 32 125.0% $1,551 $7,885 $9,126 $6,484 $5,702 $11,162 $15,423 $2,453 $1,780 $240 $7,802 $7,314 $4,159 $229 $1,123 $0 $4,000 $8,000 $12,000 $16,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 YTD 2015YTD ($ in millions) Average: $6,237 NMF 46.2% 30.8% 23.1% Greater than 10.0x 5.0x to 10.0x Less than 5.0x 6.5% 21.7% 71.7% Greater than 3.00x 1.50x to 3.00x Less than 1.50x 5.6x 8.1x 10.0x 0.0x 5.0x 10.0x 15.0x <$50mm $50mm - $100mm >$100mm 1.00x 1.40x 1.01x 0.00x 0.50x 1.00x 1.50x <$50mm $50mm - $100mm >$100mm

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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 03/09/15 Commercial Finance BankUnited/ CertusHolding's small business finance unit

- - -

03/03/15 Leasing Wood Creek Capital Management/ Milestone Equipment Holdings - - - 03/03/15 Commercial Finance Triumph Capital Advisors/ Doral Money Inc. $133.3 - - 02/24/15 Leasing

Huntington Bancshares Incorporated/ Macquarie Equipment Finance, Inc. $425.0 - - 02/20/15 Commercial Finance Wesleyan Assurance Society/ Syscap Holdings Limited - - - 02/11/15 Commercial Finance Fortress Investment Group/ UniCredit Credit Management Bank $624.0 - - 02/10/15 Commercial Finance Aquiline Holdings LLC/ Engs Commercial Finance Co. - - -

02/06/15 Leasing Beacon Credit Union/ Midwest Ag Finance, Inc. - - -

01/23/15 Commercial Finance Prosper Marketplace, Inc./ American HealthCare Lending, LLC $21.0 - -

01/20/15 Commercial Finance UniCredit Bank Austria/ Transfinance - - -

01/15/15 Commercial Finance Temasek Holdings Limited/ SVB India Finance Private Limited $45.4 - - 01/09/15 Leasing General Finance Corporation/ Bristlecone Ventures, LLC $7.3 - - 12/30/14 Commercial Finance AgTexas Farm Credit Services/ Great Plains Ag Credit - - - 12/15/14 Leasing Fortress Investment Group LLC/ MicroFinancial Incorporated $151.4 15.2x 1.58x 11/26/14 Leasing General Finance Corporation/ YS Container Services Limited - - - 10/31/14 Commercial Finance Blackrock Kelso Capital Corporation/ GB Credit Partners LLC $129.6 - -

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/ First Factors $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 - - -

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, LP/ Celtic Capital Corporation - - - 06/28/14 Commercial Real Estate Sutherland Asset Management Corp./ CIT Small Business Lending 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 - - 05/15/14 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 - - -

03/28/14 Commercial Finance FBR & Co./ Securities Lending Business - - -

03/14/14 Commercial Finance Tiger Global Management/ OnDeck $77.0 - -

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Specialty Finance Industry Insights

9 Commercial Specialty Finance

Public Valuation Update

Business Development Companies (BDCs)

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

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

Stock Price /

Asset

CAGR ROAA ROAE

Net Income

EPS BVPS 3-Yr CAGR Margin

Dividend Yield

Company LTM FY2015 LTM ’09-’14 LTM LTM LTM LTM

Apollo Investment Corporation AINV $7.79 $1,844.2 0.8x 11.8x 8.1x 0.89x 7.4% 5.3% 8.0% NA 36.7% 10.3%

Ares Capital Corporation ARCC $17.30 $5,434.1 0.7x 8.9x 10.8x 1.04x 32.6% 4.8% 11.6% 22.8% 59.8% 9.1%

BlackRock Kelso Capital Corporation BKCC $8.78 $654.5 0.5x 5.2x 10.0x 0.88x 8.2% 4.1% 15.8% 21.3% NMF 9.6%

Capitala Finance Corp. CPTA $18.81 $244.0 0.8x NA 9.8x 0.95x NA 4.1% 5.6% NA (6.9%) 10.0%

CM Finance Inc. CMFN $13.73 $187.6 0.7x 8.1x NA 0.94x NA 4.8% 13.5% NA 79.7% 10.1%

Fidus Investment Corporation FDUS $16.60 $266.0 0.6x 12.2x 10.0x 1.09x NA 4.9% 7.2% (1.7%) 38.2% 9.2%

Fifth Street Finance Corp. FSC $7.08 $1,085.6 1.0x 21.4x 8.0x 0.73x 45.0% 4.6% 3.5% 28.0% 16.1% 12.4%

Full Circle Capital Corporation FULL $3.88 $46.4 1.0x NMF 5.9x 0.62x NA 5.5% 4.6% NA NMF 10.8%

Garrison Capital Inc. GARS $15.03 $251.9 0.9x 8.3x 9.9x 0.96x NA 3.6% 12.2% (8.1%) 60.4% 9.3%

Golub Capital BDC, Inc. GBDC $17.76 $837.8 1.0x 12.5x 13.6x 1.14x 28.7% 3.7% 9.4% 45.0% 58.9% 7.2%

Harvest Capital Credit Corporation HCAP $12.55 $77.9 0.2x 8.3x 8.1x 0.87x NA 7.2% 8.0% NA 57.2% 10.8%

Hercules Technology Growth Capital, Inc. HTGC $15.55 $998.2 1.0x 14.1x 11.7x 1.52x 20.6% 5.3% 10.9% 14.9% 49.6% 8.0%

Horizon Technology Finance Corporation HRZN $14.13 $136.0 0.6x 8.8x 10.2x 0.98x NA 5.0% 5.5% (19.1%) 23.9% 9.8%

KCAP Financial, Inc. KCAP $7.50 $275.4 0.7x 10.0x 7.8x 0.96x (0.4%) 5.9% 9.7% NMF 47.9% 13.3%

Main Street Capital Corporation MAIN $30.95 $1,397.7 0.8x 13.4x 13.6x 1.47x 53.9% 4.9% 11.6% 17.0% 71.6% 6.8%

Medallion Financial Corp. TAXI $10.45 $258.6 1.3x 9.2x 9.8x 0.95x 2.6% 2.4% 10.5% 14.4% 69.9% 9.2%

Medley Capital Corporation MCC $9.46 $555.6 0.9x 25.2x 7.0x 0.75x NA 5.7% 3.3% 11.7% 13.2% 12.7%

Monroe Capital Corporation MRCC $14.91 $141.9 0.8x 10.3x 9.4x 1.07x NA 4.9% 10.1% NA 44.2% 9.1%

OFS Capital Corporation OFS $12.13 $116.9 1.1x 11.8x 10.6x 0.87x NA 3.0% 5.5% 29.6% 37.5% 11.2%

PennantPark Floating Rate Capital Ltd. PFLT $13.97 $208.1 0.6x 14.0x 11.1x 0.97x NA 3.9% 7.0% NA 48.1% 7.7%

PennantPark Investment Corporation PNNT $9.51 $714.1 0.8x 13.8x 8.6x 0.86x 22.5% 4.8% 6.3% NA 31.2% 11.8%

Prospect Capital Corporation PSEC $8.63 $3,093.0 0.8x 9.0x 8.1x 0.82x 57.6% 5.5% 9.3% 25.2% 41.8% 11.6%

Saratoga Investment Corp. SAR $15.76 $84.8 1.1x 7.0x 8.9x 0.71x 10.9% 4.1% 10.3% (5.9%) 47.2% 5.6%

Solar Capital Ltd. SLRC $20.12 $854.4 0.2x 17.8x 12.5x 0.90x 13.8% 3.0% 5.0% (7.5%) 39.7% 8.0%

Solar Senior Capital Ltd. SUNS $16.17 $186.5 0.7x 16.0x 11.7x 0.92x NA 3.2% 5.7% NA 52.9% 8.7%

TCP Capital Corp. TCPC $16.60 $808.6 0.4x NMF 10.3x 1.07x 16.9% 5.3% 10.8% 33.3% 74.9% 9.3%

THL Credit, Inc. TCRD $12.09 $409.9 0.6x 11.1x 8.8x 0.91x NA 5.2% 9.5% 26.5% 49.6% 11.2%

TICC Capital Corp. TICC $7.29 $440.0 1.0x NA 6.9x 0.78x 35.8% 5.4% (0.6%) 6.9% (2.9%) 14.8%

TPG Specialty Lending, Inc. TSLX $18.54 $1,000.4 0.5x 11.0x 11.1x 1.18x NA 6.4% 12.1% NA 52.1% 8.4%

Triangle Capital Corporation TCAP $23.67 $778.9 0.8x 24.8x 10.7x 1.42x 30.4% 5.8% 5.8% (20.7%) 27.1% 9.3%

Mean $779.6 0.8x 12.5x 9.8x 0.97x 24.2% 4.7% 8.3% 12.3% 43.6% 9.8% Median $425.0 0.8x 11.4x 9.9x 0.94x 21.5% 4.9% 8.7% 14.9% 47.5% 9.5%

5.0x 10.0x 15.0x 20.0x 25.0x

Current: 11.4x

(14)

William Blair

Specialty Finance Industry Insights

Commercial Specialty Finance 10

Commercial Finance

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

Stock Price /

Asset

CAGR ROAA ROAE

Net Income Company

Dividend Yield LTM FY2015 LTM ’09-’14 LTM LTM LTM LTM

CIT Group Inc. CIT $46.28 $8,139.8 4.0x 8.1x 13.7x 0.99x (4.4%) 2.3% 12.0% NMF 44.5% 1.3% NewStar Financial, Inc. NEWS $9.98 $465.1 3.3x NMF NMF 0.73x 5.0% 0.4% 1.7% (9.2%) 16.6% NA PacWest Bancorp PACW $45.84 $4,722.0 3.6x 23.6x 16.0x 2.64x 25.0% 1.5% 7.9% 49.3% 24.6% 4.4% SVB Financial Group SIVB $122.90 $6,263.4 8.6x 23.1x 21.2x 2.22x 25.1% 1.4% 13.4% 15.4% 19.3% NA

Mean $4,897.6 4.9x 18.3x 17.0x 1.64x 12.7% 1.4% 8.8% 18.5% 26.2% 2.8% Median $5,492.7 3.8x 23.1x 16.0x 1.60x 15.0% 1.4% 10.0% 15.4% 21.9% 2.8%

Commercial Real Estate Lending

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

Stock Price /

Asset

Net Income Company

Ladder Capital Corp LADR $18.40 $946.3 2.1x 21.3x 8.7x 1.38x NA 3.5% 8.9% 27.8% 21.2% NA Resource America, Inc. REXI $9.30 $212.6 1.5x NMF 18.4x 1.33x 50.5% 1.4% 5.7% NA 3.5% 2.6% Walker & Dunlop, Inc. WD $16.03 $510.1 3.2x 10.1x 8.8x 1.47x 52.6% 3.3% 12.3% 13.8% 14.4% NA

Mean $556.3 2.3x 15.7x 12.0x 1.39x 51.5% 2.7% 9.0% 20.8% 13.1% 2.6% Median $510.1 2.1x 15.7x 8.8x 1.38x 51.5% 3.3% 8.9% 20.8% 14.4% 2.6%

10.0x 15.0x 20.0x 25.0x 30.0x 35.0x

Current: 23.1x 5.0x 10.0x 15.0x 20.0x

Current: 15.7x

(15)

Specialty Finance Industry Insights

11 Commercial Specialty Finance

Leasing

Indexed Price / LTM Earnings Ratios as of 2/28/2015

Public Company Valuations

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

Stock Price /

Asset

CAGR ROAA ROAE

Net Income

AerCap Holdings N.V. AER $44.50 $9,448.2 3.8x 9.8x 8.7x 2.75x 45.3% 4.4% 15.6% 67.6% 22.3% NA AeroCentury Corp. ACY $10.07 $16.2 3.2x NA 10.3x 0.45x 4.5% NMF 5.9% NA 8.4% NA Air Lease Corporation AL $38.24 $3,915.5 2.4x 16.1x 12.9x 1.41x NA 3.8% 9.7% 68.8% 24.4% 0.4% Aircastle LTD AYR $23.07 $1,867.5 2.2x 18.5x 11.5x 1.09x 6.9% 4.6% 6.0% 26.9% 12.5% 3.8% CAI International Inc. CAP $24.28 $504.7 2.9x 8.5x 8.3x 1.14x 36.9% 3.7% 14.1% 6.3% 26.5% NA Element Financial Corporation EFN $12.80 $3,380.9 2.8x NMF 15.6x 2.11x NA 0.7% 2.5% NA 16.0% NA GATX Corp. GMT $62.25 $2,757.7 3.3x 13.9x 11.8x 2.24x 5.9% 2.9% 15.1% 22.8% 14.1% 2.4% Marlin Business Services Corp. MRLN $18.71 $239.9 NA 12.6x 11.8x 1.34x 6.0% 2.6% 11.5% 46.3% 25.9% 2.7% Mobile Mini, Inc. MINI $41.49 $1,915.1 1.1x NMF 11.6x 2.09x 3.7% 3.6% 5.2% 13.2% 10.0% 1.8% Ryder System, Inc. R $93.99 $4,980.3 2.5x 22.7x 14.8x 3.67x 9.1% 3.9% 11.9% 8.8% 3.3% 1.6% TAL International Group, Inc. TAL $41.73 $1,372.1 4.6x 11.3x 11.4x 2.31x 18.9% 4.6% 18.3% 4.2% 19.1% 6.9% Textainer Group Holdings Limited TGH $32.26 $1,834.4 2.4x 9.7x 10.8x 1.57x 26.2% 4.1% 16.3% 7.8% 33.6% 5.8% Willis Lease Finance Corp. WLFC $21.34 $179.6 3.5x 24.0x 17.3x 0.81x 4.1% 3.4% 6.6% (1.8%) 8.0% NA

Mean $2,493.2 2.9x 14.7x 12.1x 1.77x 15.2% 3.5% 10.7% 24.6% 17.2% 3.2% Median $1,867.5 2.9x 13.2x 11.6x 1.57x 6.9% 3.8% 11.5% 13.2% 16.0% 2.6%

6.0x 11.0x 16.0x 21.0x

Current: 13.2x

(16)

Capital Markets

Transactions

(17)

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

02/13/15 Great Ajax Corp. $14.25 5.0 $71.3 - 1.00x

12/16/14 On Deck Capital, Inc. $20.00 10.0 $200.0 - -

12/11/14 Avolon Holdings Limited $20.00 13.6 $272.7 12.1x 1.05x

12/10/14 LendingClub Corporation $15.00 58.0 $870.0 - -

11/20/14 Neff Corporation $15.00 10.5 $157.1 9.8x 1.11x

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.

(18)

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 03/05/15 Apollo Commercial Real Estate Finance, Inc. $17.00 10.0 $170.0 10.3x 0.92x

12/19/14 Ally Financial Inc. $23.25 54.9 $1,277.0 10.4x 0.74x

12/01/14 AerCap Holdings N.V. $41.23 11.2 $463.1 15.1x 1.18x

11/21/14 New York Mortgage Trust, Inc. $7.94 13.0 $103.2 6.1x 1.01x

11/21/14 TCP Capital Corp. $17.05 5.9 $100.6 11.4x 1.03x

11/20/14 Walker & Dunlop, Inc. $15.30 2.0 $30.6 11.0x 1.25x

11/12/14 Newtek Business Services Corp. $12.50 2.2 $27.5 16.5x 1.55x

11/04/14 StoneCastle Financial Corp. $23.00 1.6 $36.8 - 1.00x

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

04/08/14 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

03/19/14 Orchid Island Capital, Inc. $12.55 3.2 $40.2 - 2.43x

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

02/20/14 Kayne Anderson MLP Investment Company $37.05 8.0 $296.4 31.6x -

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.

(19)

Specialty Finance Industry Insights

14 Capital Markets Transactions

Recent Debt Offerings

Date Company Offering Description Amount Maturity Date

03/05/15 John Deere Capital Corporation 2.050% Series F medium-term unsecured notes, due Mar 10, 2020 $500.0 03/10/20 03/03/15 PACCAR Financial Corp. 1.450% Series N medium-term notes, due Mar 9, 2018 $500.0 03/09/18 03/02/15 Discover Financial Services 3.750% Senior unsecured notes, due Mar 4, 2025 $500.0 03/04/25 02/24/15 Apollo Investment Corporation 5.250% Senior unsecured notes, due Mar 3, 2025 $350.0 03/03/25 02/17/15 Ryder System, Inc. 2.650% Unsecured medium-term notes, due Mar 2, 2020 $400.0 03/02/20 02/03/15 GATX Corporation 3.250% Senior unsecured notes, due Mar 30, 2025 $300.0 03/30/25 02/03/15 Triangle Capital Corporation 6.375% Senior unsecured notes, due Mar 15, 2022 $75.0 03/15/22 01/26/15 Synchrony Financial 2.700% Senior unsecured notes, due Feb 3, 2020 $750.0 02/03/20 01/22/15 Harvest Capital Credit Corporation 7.000% Senior unsecured notes, due Jan 16, 2020 $25.0 01/16/20 01/20/15 National Rural Utilities Cooperative _{Finance Corporation} 2.850% Collateral trust bonds, due Jan 27, 2025 $500.0 01/27/25 01/15/15 Freddie Mac 0.500% Reference Notes, due Jan 27, 2017 $4,000.0 01/27/17 01/13/15 John Deere Capital Corporation 1.350% Series F medium-term notes, due Jan 16, 2018 $500.0 01/16/18 01/12/15 Aircastle Limited 5.500% Senior unsecured notes, due Feb 15, 2022 $500.0 02/15/22 01/07/15 Air Lease Corporation 3.750% Senior unsecured notes, due Feb 1, 2022 $600.0 02/01/22 01/07/15 General Motors Financial Company, Inc. 3.150% Senior unsecured notes, due Jan 15, 2020 $1,000.0 01/15/20 01/07/15 Resource Capital Corp. 8.000% Convertible senior unsecured notes, due Jan 15, 2020 $100.0 01/15/20 01/06/15 Ford Motor Credit Company LLC 2.145% Senior unsecured notes, due Jan 9, 2018 $750.0 01/09/18 12/08/14 American Honda Finance Corporation 1.550% Series A unsecured medium-term notes, due Dec 11, 2017 $1,000.0 12/11/17 12/08/14 General Electric Capital Corporation Floating rate series A senior unsecured global medium-term notes, due Dec _{15, 2054} $78.5 12/15/54 12/02/14 American Express Company 3.625% Subordinated unsecured notes, due Dec 5, 2024 $600.0 12/05/24 11/25/14 FS Investment Corporation 4.250% Senior unsecured notes, due Jan 15, 2020 $325.0 01/15/20 11/25/14 Springleaf Finance Corporation 5.250% Senior unsecured notes, due Dec 15, 2019 $700.0 12/15/19 11/19/14 Caterpillar Financial Services Corporation 3.400% Series 84 senior notes, due Nov 25, 2017 $1,000.0 11/25/17 11/18/14 Ares Capital Corporation 3.875% Senior unsecured notes, due Jan 15, 2020 $400.0 01/15/20 11/18/14 RWT Holdings, Inc. 5.625% Senior convertible unsecured notes, due Nov 15, 2019 $200.0 11/15/19 11/12/14 PACCAR Financial Corp. 1.400% Series N medium-term notes, due Nov 17, 2017 $300.0 11/17/17 11/03/14 Navient Corporation 5.875% Senior unsecured notes, due Oct 25, 2024 $500.0 10/25/24 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 10/23/14 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 09/04/14 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

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

(20)

William Blair

Specialty Finance Industry Insights

Capital Markets Transactions 15

Recent Preferred Equity Offerings

Date Company Amount Call Date Dividend Rate (%)

02/25/15 American Express Company $850.0 03/15/20 4.9%

12/04/14 Wells Fargo Real Estate Investment Corp. $240.0 12/11/19 6.4%

11/20/14 Oxford Lane Capital Corp. $25.0 06/30/17 8.1%

11/05/14 American Express Company $750.0 11/15/19 5.2%

11/05/14 Gladstone Investment Corporation $36.0 12/31/17 6.8%

10/13/14 Kayne Anderson MLP Investment Company $25.0 02/09/17 3.9%

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%

05/21/14 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%

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%

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

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%

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%

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

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

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%

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

(21)

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)

• Connecture, Inc. (CNXR)

• Crawford & Company (CRD.A)

• Crawford & Company (CRD.B)

• eHealth, Inc. (EHTH)

• Erie Indemnity Company (ERIE)

• Federated National Holding Company (FNHC)

• HCC Insurance Holdings, Inc. (HCC)

• Kemper Corporation (KMPR)

• Markel Corporation (MKL)

• Marsh & McLennan Companies, Inc. (MMC)

• National General Holdings Corp. (NGHC)

• National Interstate Corporation (NATL)

• Navigators Group, Inc. (The) (NAVG)

• Patriot National, Inc. (PN)

• Progressive Corporation (The) (PGR)

• RLI Corp. (RLI)

• Travelers Companies, Inc. (The) (TRV)

• WebMD Health Corp. (WBMD)

• Willis Group Holdings Public Limited Company (WSH)

• 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)

• Charles Schwab Corporation (The) (SCHW)

• Eaton Vance Corp. (EV)

• Envestnet, Inc. (ENV)

• Euronet Worldwide, Inc. (EEFT)

• Fiserv, Inc. (FISV)

• Global Payments, Inc. (GPN)

• Heartland Payment Systems, Inc. (HPY)

• Invesco Ltd. (IVZ)

• LPL Financial Holdings Inc. (LPLA)

• MSCI Inc. (MSCI)

• SEI Investments Company (SEIC)

• SS&C Technologies Holdings, Inc. (SSNC)

• T. Rowe Price Group, Inc. (TROW)

• TD Ameritrade Holding Corporation (AMTD)

• Vantiv, Inc. (VNTV)

• Waddell & Reed Financial, Inc. (WDR)

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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,ManagingDirector, 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.

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.

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Specialty Finance Industry Insights

18 Select William Blair Transactions

Select William Blair Transactions

$27,500,000

Direct Unsecured Notes

£158,000,000

has been acquired by

Arrow Global

$70,000,000

Senior Notes

$100,000,000

Senior Unsecured Notes

$29,000,000

Follow-on Offering

$76,475,000

Follow-on Offering

$1,285,000,000

has been acquired by Portfolio Recovery

Associates

Not Disclosed

has been acquired by Milestone Partners $60,000,000 Debt Placement $151,800,000 Follow-on Offering $161,000,000

Convertible Bond Offering

$66,815,000

Follow-on Offering

Not Disclosed

has been recapitalized by Pine Tree Equity

Management

NORTH STATE ACCEPTANCE

$100,000,000

Senior Credit Facility Debt Placement Not Disclosed has acquired Persian Acceptance Corporation $50,000,000 Follow-on Offering Not Disclosed has acquired $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 $438,600,000

$51,000,000

Initial Public Offering

£525,000,000

$42,000,000

Baby Bond Offering

$78,000,000

Follow-on Offering

$92,000,010

Initial Public Offering

$97,980,000

Follow-on Offering

$35,000,000

Senior Subordinated Notes Preferred Equity

$75,000,000

Initial Public Offering $125,000,000

Senior Secured Credit Facility

$230,000,000

Convertible Offering

$74,000,000

Senior Credit Facility & Subordinated Notes

Not Disclosed

has been acquired by Manheim

$30,000,000

Second Lien Loan

$102,212,920

Initial Public Offering $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

CFSI

£28,000,000 has sold a minority stake to Investcorp $271,860,000 Follow-on Offering

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William Blair

Specialty Finance Industry Insights

Notes 19

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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

March 18, 2014

Specialty Finance Industry Insights

20 Disclosures

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Specialty Finance Industry Insights

Specialty Finance

Industry Insights

A review of M&A activity and

public market valuation in the

consumer and commercial

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

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 performed strongly in the first quarter. Total global year-to-date M&A volume is over $400 billion,

up more than 5% from the corresponding period last year, and over the same period the total disclosed dollar volume of new equity

issuances (both initial public offerings and follow-on offerings) is up more than 17%. While some industry veterans believe

valuations are ahead of themselves, deal activity suggests otherwise.

This theme persists within the specialty finance sector and we believe 2015 M&A activity will remain strong for high quality

companies in this sector. Large strategic acquirers with healthy war chests will likely continue to pursue companies with

differentiated solutions, go-to-market strategies, and proven strong growth and profitability. In addition, private-equity firms remain

highly active in the specialty finance sector. Aging portfolio companies of private-equity firms – in particular, specialty finance

businesses purchased before or during the downturn – may create liquidity opportunities in the near to midterm and will continue to

fuel middle-market M&A activity.

Specialty finance companies generate high margins and recurring cash flows. In addition, these companies have meaningful

operating leverage. As a result, M&A transactions in the sector are generally completed at attractive multiples. Since 2002,

approximately 53% of the aggregate deals in the consumer specialty finance sector have been completed at above 10.0 times LTM

net income, and approximately 18% have been completed at more than 3.00 times LTM book value. In the commercial specialty

finance sector, approximately 46% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and

approximately 22% have been completed between 1.50 and 3.00 times LTM book value. Acquirers in the sector are most often

strategic parties that are able to pay more because of the significant revenue synergies generated by pushing new or stronger finance

products through an established distribution platform. In addition, many private-equity funds have developed a differentiated level

of industry knowledge and expertise, and as a result have established strong reputations in the sector.

In 2015 thus far, M&A activity in the sector has been strong, driven primarily by strategic acquirers looking for new products and

segments, differentiated platforms, and additional avenues for growth. Examples include New Residential Investment Corporations'

acquisition of Home Loan Servicing Solutions and Huntington Bancshares’ acquisition of Macquarie Equipment Finance. While global

economic uncertainty may cause the broad universe of buyers and sellers to proceed more cautiously in 2015, we remain optimistic

that both M&A and capital markets activity will remain strong for solidly performing businesses.

Robert Metzger

+1 312 364 8517

[email protected]

J.P. Young

+1 312 364 8160

[email protected]

Kegan Greene

+1 312 364 8113

[email protected]

Consumer

Specialty

Finance

Sector

Specialty Finance Industry Insights

2 Consumer Specialty Finance

Consumer Specialty Finance

M&A Trends

•