MSF Q4 Spotlight-Specialty Finance

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MSF Enterprises, LLC Copyright © 2012

ABSTRACT

Although the economy continues to recover from the recession (2007-2009), a number oeconomic factors have been slow to improve and credit has remained largely restricted.While prime interest rates have been pushed to historic lows, small-to-medium sized businesses and consumers with poor credit have been unable to take advantage. Traditiona banks have tightened lending standards and have demonstrated a general unwillingness toextend credit to higher risk consumers. Specialty finance firms, which provide access tocapital outside the traditional banking system, have been responsible for filling a portion ofthe credit gap left behind by major banks. In this setting, specialty finance plays a criticarole in the broader financial system by extending credit and stimulating growth throughconsumers and businesses. Given the characteristics of the market, the specialty financesegment features a number of attractive investment opportunities and can provide high

yield potential in a low interest rate environment.

Inside Story:

Specialty Finance: Filling the Gap

MSF Enterprises, LLC

INSIDE STORY:

Introduction p.1

Role of

Specialty Finance p.2

Public Specialty

Finance Companies p.4

Enterprise


Consumer


Conclusion p.9

December 2012

Denver ● New York

0%

5%

10%

15%

20%

25%

U.S. Government U.S. Corporate(Investment

Grade)

U.S. Corporate(Speculative

Grade)

Middle MarketFirm (Loan from

SpecialtyLender)

Prime Consumer (FICO > 680)

Non-PrimeConsumer (FICO

620-679)

SubprimeConsumer (FICO

< 619)

Expected 5 Yr Loan Rate Based on Credit Quality

*Highlighted categories reflect potential borrowers in the specialty finance space. Rates are approximated for

illustrative purposes.



1

MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012

Q4 2012 Spotlight Specialty Finance: Filling the Gap INTRODUCTION

Coming out of the recession (2007 – 2009), the U.S. economy entered a period of consumer retrenchment and corporate deleveraging in which loose borrowing practicesthat contributed to the formation of a credit bubble were temporarily abandoned. As of Q3 2012, U.S. households were paying less than 16% of after-tax income to cover debt

payments and lease obligations, the lowest level since 19841. Meanwhile, the averagecredit card balance declined over 24% since the second half of 2008 and the totalnumber of cards in circulation dropped over 20%2. Corporations have largely cleanedup their balance sheets as well, with the S&P 500 approaching a record cash level of $1.5 trillion3. Banks have similarly tightened up their books, with total loansoutstanding among the four largest lenders falling nearly 5% in the first quarter of 2012from the same period two years earlier 4.

Exhibit 1: Deleveraging in the U.S.

*Chart and data from Federal Reserve

The past few years have featur ed the beginn ing of a deleveraging process among businesses

and households. Many fi rms and individuals have become more will ing to borr ow recentl y,

yet are unabl e to access capital .

The process of widespread deleveraging presents a tremendous obstacle to economicgrowth and has prompted the Fed to target lower interest rates and encourage borrowingthrough various easing programs. While interest rates have dropped to all-time lows,the outcome for the end-borrower has been mixed. Many qualified consumers and businesses have been able to take advantage of low interest rates by refinancing current

obligations and floating longer-dated notes. Lower quality borrowers, however, are stillstruggling to obtain financing as banks have yet to loosen credit standards despite asignificant increase in demand for auto loans, mortgages and other forms of credit5.Although consumers and businesses remain cautious about ramping up spending due tocontinued economic uncertainty, a number of likely borrowers are still largely excludedfrom the capital markets. Regional banks have expanded their lending practices to pick up some of this unmet demand, increasing total loan volume nearly 10% from Q1 2010to Q1 20126. Still, there is a shortage of credit for consumers and companies



2


Q4 2012 Spotlight Specialty Finance: Filling the Gap perceived as “high risk .” The unwillingness of the traditional banking system to lend tothis demographic effectively limits growth potential, as the subprime and non-creditcategories account for more than 100 million U.S. consumers. A number of firms have been successful providing financing to these “high risk” customers, with specialtyfinance playing an important role in the current low-growth, credit-restrictedenvironment.

Exhibit 2

*Data from Federal Deposit Insurance Corporation (FDIC)

With banks increasingl y unwi ll ing to l end to high r isk customers, specialty f inance and the

shadow banki ng system have accepted the role of providing credit to smal ler, non- investment

grade compani es.

ROLE OF SPECIALTY FINANCE

Specialty finance can be broadly characterized as any financing activity that takes placeoutside of the traditional capital provision services of the banking system. Typically,specialty finance firms are thought of as being non-bank lenders that make loans toconsumers and small to medium-sized businesses (SMB’s) that cannot otherwise obtainfinancing. For our purposes, we consider specialty finance as encapsulating a muchlarger array of activities that basically includes any unconventional means of providing

or transferri ng capital . Without a consensus in the industry regarding the definition andscope of specialty finance, this paper will seek to address the importance of the segmentand potential opportunities it may provide.

In order to determine the range of transactions included in the specialty finance segment,we will first provide an examination of the typical firm operating in the space, includingits target market and potential sources of capital. Specialty finance activities are often acomponent of the shadow banking system, as many of the firms that operate in the spaceare non-bank lenders. Shadow banking is comprised of non-bank financial institutionsthat act as credit intermediaries without exposure to the same regulation as their commercial bank counterparts7. The firms are not burdened by restrictions on leverage,yet cannot access central bank funding or government safety nets like deposit insurance

0%

10%

20%

30%

40%

50%

60%

70%

80%

Bank Share of

Non-Investment Grade Lending



3


Q4 2012 Spotlight Specialty Finance: Filling the Gap (until there is a financial crisis, of course). However, since traditional banks can also package their offerings in unconventional ways, specialty finance cannot be strictlyclassified as a form of shadow banking. Instead, we have loosely characterized specialtyfinance firms as those willing to take greater risk to provide financial services to clientsthat do not fit into a standard “credit box.”

Specialty finance firms generally offer services to unbanked or underbanked consumers, aswell as SMB’s that encounter cash-flow problems or may be experiencing a brief period of declining performance. Unable to obtain financing from a bank, these customers areforced to turn to specialty finance companies and are subject to above-average interestrates. By charging a higher rate and using various forms of collateral as protection againstdefault, specialty finance firms are able to compensate for riskier credit profiles. Offeringhigher-yield potential in a low-rate environment, specialty finance is an attractive businessmodel to a range of financial firms capable of underwriting the added risk. As a result, a

number of special ty lenders have been drawn into the space along wi th other f irms

looking to enhance their retur ns, such as hedge funds and pri vate equi ty groups .

Aside from an increase in the level of risk that specialty finance firms are willing to take

on, they further differ from banks in terms of the way they are capitalized. While banksare primarily funded by customer deposits and Federal Funds, firms operating exclusivelyin the specialty finance space must access the capital markets to obtain funding. Thosewith strong credit ratings are able to take advantage of the commercial paper market, yetthis highly liquid segment tends to dry up during periods of instability, as observed during2007-20098. Finance companies with favorable credit ratings will take on unsecured debtif it is available, yet this type of borrowing often takes the form of secured debt when theeconomic outlook turns negative. If the outlook is positive and investors have an appetitefor risk, specialty finance companies are able to raise funds through securitization.Issuance of such asset-backed securities in 2012 is down considerably from pre-recessionlevels, with $174.2 billion raised through October 2012 compared to $753.9 billion for thefull year 20069. At the same time, the market for these products may be showing signs of

improvement as 2012 issuance is up 65% over the prior year 10

. Regardless of the fundingmethod, specialty finance firms will face a much higher cost of capital than commercial banks and must therefore seek out riskier transactions to achieve favorable net interestmargins.

There are a number of different types of specialty finance activities, which we havearranged into two segments for this paper: enterprise specialty finance and consumer specialty finance. We will examine these categories and provide an evaluation of themarket opportunities in each segment.

Bank ’ s closed folks … Check out Special ty F inance as an

alternative source for your

capital needs



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Q4 2012 Spotlight Specialty Finance: Filling the Gap Exhibit 3: U.S. Publicly Traded Specialty Finance Companies

Firm Ticker Category Description P/E

EZCORP,

Inc.EZPW

Consumer Specialty

Finance

Firm provides non-recourse pawn loans, payday loans, installment loans, auto titleloans, debit cards and other fee-based creditservices. The company also sells merchandiseand operates over 1,100 physical storelocations under the EZPAWN, Value Pawnand EZMONEY brands.

7.0x

Cash America

International,

Inc.

CSH

Consumer

Specialty Finance

Firm provides pawn lending, consumer loans,check cashing, money orders, wire transfers,

pre-paid debit cards and other credit services.The company has over 1,000 physicallocations and also operates through its Internetlending activities.

10.3x

Green Dot

CorporationGDOT

Consumer Specialty Finance

Firm offers general purpose reloadable prepaiddebit cards and cash loading/transfer services.

The company markets its cards and services to banked, underbanked and unbankedconsumers and offers its products throughretail distributors, mass merchandisers,convenience stores and online.

9.9x

America's

Car-Mart Inc.CRMT

Consumer Specialty Finance

Company operates as an automotive retailer with 117 dealerships, primarily selling older model used vehicles and providing financingfor its customers under the Buy-Here-Pay-Here (BHPH) business model.

11.2x

CreditAcceptance

Corp.

CACCConsumer Specialty Finance

Firm provides auto loans and related servicesto consumers by purchasing consumer loansfrom dealer-partners, often BHPH dealers, or

by advancing money to dealer-partners inexchange for the right to service theunderlying consumer loans.

11.5x

American

Capital, Ltd.ACAS

EnterpriseSpecialty

Finance

Firm operates as a Business DevelopmentCompany (BDC)** and offers senior debt,mezzanine debt and equity to fund growth,acquisitions, recapitalizations andsecuritizations, investing $5MM-$800MM per company.

2.5x

Full CircleCapital

FULL

EnterpriseSpecialty Finance

Firm operates as a BDC, lending and investing

primarily in senior secured loans, as well asmezzanine loans and equity securities issues

by lower middle market companies.

23.6x

*Firm descriptions from Yahoo! Finance**Business Development Companies (BDC’s) are a form of publicly traded private equity that make investmentsin small and middle market businesses. BDC’s are taxed as regulated investment companies with a pass-through structure, distributing at least 90% of taxable income as dividends.



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Q4 2012 Spotlight Specialty Finance: Filling the Gap ENTERPRISE SPECIALTY FINANCE

Companies that have exhausted the traditional avenues for raising debt may turn tospecialty finance firms for funding through various loan structures and other exoticinstruments. Di rect lending f rom hedge funds and pri vate equi ty groups has become

increasingly popular for middle market companies that have been declined credit or are

unable to receive favorable loan terms from traditional banks. Faced with a shortage of market-traded debt instruments that carry attractive yields, money managers have takenan opportunistic approach to the credit crunch by providing debt facilities. Debt provided by institutional investors typically carries an interest rate of around 9-12% that canincrease depending on the perceived risk of the borrower 11. With such high yield potential, several hedge funds and private equity firms have initiated new funds to focuson direct lending strategies over the past few years12.

Middle market firms are often able to leverage assets on their balance sheet, such asinventory or accounts receivable, as collateral to obtain short-term financing. Inventory- based lending is a common practice among retailers, in which inventory is pledged ascollateral to secure a loan. The lender will conduct an appraisal of the inventory and lendagainst the net orderly liquidation value in order to protect against downside risk 13.

Accounts receivable can also be used as loan collateral, as invoice discounting enables afirm to borrow against existing sales invoices. Alternatively, receivables can be soldoutright in a process called factoring, which allows the company to sell off the asset at adiscount. Due to the nature of the business and the way payments are structured,

receivables-based lending i s a cri tical aspect of the healthcare industry . With U.S.medical spending projected to reach 20% of GDP by 202114 and Obamacare expected tofurther complicate payments in the industry, healthcare receivables should continue to provide attractive investment opportunities in both the primary and securitizationmarkets. Along with other types of asset-based lending, these loans are important for

many companies because the lender’s risk is derived from the value of a particular asset,and is not influenced by the overall financial strength of the company.

Royalty-backed notes have also emerged as a special structure enabling companies indifficult borrowing positions to fund their operations. Bonds backed by intellectual property rights first reached a mainstream audience in relation to the music industry. Inthe late 1990’s, Bowie Bonds (also called Pullman Bonds, after the banker that negotiatedthe deal) were introduced, backed by underlying cash flows tied to royalties on David

Bowie’s music catalog15. The structure has been revived in recent years within the capex-

intensive pharmaceuticals industry, as firms have looked to sell off future royalty streamsin order to obtain immediate cash flow to fund further research and development16. Withthe global pharmaceuticals market expected to reach $1.1 trillion by 201417 and further product innovation required to meet the needs of an aging population, there shouldcontinue to be royalty-backed investments available in the space. Since I P

secur i tizations have not been fu ll y explored across industr ies , the area could provide

significant opportunities for firms deprived of capital and investors looking to takeadvantage.



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Q4 2012 Spotlight Specialty Finance: Filling the Gap Exhibit 4: Royalty Bond Structure

The royalty bond structure typically benefits fr om mul tiple forms of downside protection,

including counterparty risk mit igation, over-collateral ization and a flexible final maturi ty date.

Firms that wish to raise equity yet do not have the necessary scale to complete a publicoffering through an investment bank are forced to either locate private investors or take analternative approach. Crowd funding has emerged as a way for relatively small

companies to circumvent the traditional equity raising process whil e br inging in the needed capital to grow their business. The potential for start-ups and franchises to raiseequity through crowd funding is a recent development made possible with the passage of the JOBS Act in April 2012, which eased a restriction on public solicitation from privatecompanies seeking to raise equity18. Since crowd funding is a relatively new form of specialty finance, there are a number of potential risks that must be addressed in terms of investor protection. The SEC has not yet determined the exact rules for crowd funding, soit may take some time before the landscape for this type of investment can be fullyunderstood. Yet considering the overwhelming number of small businesses in need of capital and the appeal of being an early-stage investor, there are likely to be substantial

opportunities in the future for crowd funding.

CONSUMER SPECIALTY FINANCE

Consumers that have either a poor FICO score or unestablished credit will have limitedchoices when seeking financing. Specialty finance firms may extend credit to theseindividuals, but usually in smaller amounts in order to mitigate risk. The buy-here-pay-here (BHPH) model, commonly used by independent auto dealerships, can be an effectivemethod of providing financing to individuals with low FICO scores or limited credithistories. When a consumer is unable to obtain financing from a bank, a store or dealership may lend directly to the customer to fund the purchase, profiting from both thesale and the financing process. Under this arrangement, a higher interest rate is charged

and a larger down payment is required to ensure some level of protection if the borrower defaults and the automobile must be repossessed. The lender utilizes a number of additional risk-reduction methods, such as requiring in-person payments and installingGPS systems to expedite the process of collateral recovery19. In a low interest rateenvironment, the high-yielding paper f rom BHPH transactions can provide attractive

investment opportuni ties even wi th an expected defaul t rate of 30% factored in .



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Q4 2012 Spotlight Specialty Finance: Filling the Gap

Loans that effectively force the borrower into making regular, timely payments also provide an alternative form of financing for consumers that most banks would generally prefer to avoid. Payday loans — short-term loans that must be repaid on the borrower’snext pay date — are one of the more common forms of borrowing for low creditconsumers. The lender will typically verify employment, charge an above-average APR

and set up an electronic funds transfer agreement in an attempt to ensure repayment.With such loans averaging 10-20% default rates20, payday lenders must have a number of protections in place to assure profitability. Payroll deduction loans similarly rely on the borrower’s employment status by enabling a worker to obtain a cash advance and thenamortize the loan with each check received. Since a portion of the borrower’s check isautomatically deducted for loan service, the lender is able to mitigate its risk as long asthe customer maintains employment. In a similar structure, on-bill financing ensuresrepayment by combining loan payments with an existing obligation, such as a utility bill.On-bill financing is most applicable with property improvements, in which the cost isreceived as part of the bill from a utility company or other service provider. As adelinquent payment would result in the customer being shut off from utility privileges,the borrower’s incentive is increased and the lender’s risk is mitigated.

Collateralized non-recourse loans, in which the lender cannot pursue anything other thanthe collateral pledged, provide another loan structure that incentivizes the borrower tostay current on payments. Only the collateral can be collected in the event of default, sothe lender wil l typicall y target a low loan-to-value rati o and charge a higher interest

rate to offset risk . Low credit consumers are often eligible for this type of financingthrough a pawn shop, in which personal property is used to secure a loan. If the customer does not pay back the loan plus interest within a specified period of time, the pawn broker takes ownership of the item and sells it at a mark-up to cover the loan amount.

Exhibit 5: Percentage of U.S. Households That Have Used Alternative Financial

Services (AFS)

*Chart and data from Federal Deposit Insurance Corporation (FDIC)



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Aside from obtaining loans, unbanked and low credit consumers often require a range of additional banking-type services that must be addressed through specialty finance. Sincesome of these customers do not maintain checking accounts, they can encounter difficulties when attempting to execute various types of financial transactions. For example, consumers that do not qualify for a traditional credit card might utilize a prepaid

debit card as an alternative. Such prepaid cards enable the user to make purchases and pay bills online, yet typically do not require any type of bank account. Although 88% of consumers had a checking account in 2011, the amount has declined from the 2010 levelof 92%, primarily due to banks charging higher fees21. Consumers paid an average of 21% more to maintain checking accounts in 2011 than in 200622. With the increase in bank fees, an estimated 13% of U.S. adults used a prepaid debit card in 2011, up from11% in 201023. At the same time, the percentage of U.S. consumers carrying a credit

card fel l 9% in 2011 over the previous year, while debit card penetrati on fel l 15%24.

Prepaid cards enable financial institutions to access otherwise unreachable consumers,and they are able to capitalize through a bevy of fees including activation, monthlymaintenance, balance verification and loading fees. Unbanked consumers also requireservices for money transfers and remittances, which may be administered by commercial

banks or non-bank financial institutions. These services are heavily relied upon by thecustomer and providers are able to take advantage, charging an average fee of 7.6% of thetransaction size for global cash remittances in 201125.

Changes in legislation intended to protect consumers from predatory lending could present future issues for firms operating in the specialty finance space. These changesrequire additional disclosure statements and provide strict limits on the maximum interestrates that can be charged to consumers. Since the majority of consumer protectionlegislation has been passed on a state-by-state basis, a high degree of uncertainty remainsover how restrictions may evolve in the future. In the event that regulation does increase,firms with easy access to capital and highly scalable operations should be in the best position to outperform competitors, along with firms that focus on states where regulation

is more relaxed. I ncreased regulation may resul t in tr aditi onal banks becoming more r isk averse, whi ch would actual ly provide a boost to the special ty f inance segment by

expanding the base of customers requir ing unconventi onal l oan services.



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Exhibit 6: Banking Characteristics of U.S. Households

*Chart and data from Federal Deposit Insurance Corporation (FDIC)

CONCLUSION

Low credit consumers and small-to-medium sized businesses continue to be underserved by traditional banks. With approximately 60 mil li on unbanked and underbanked

consumers in the U.S. spending a total of $78 bil l ion on f inancial services each year 26,

there are tremendous opportunities for specialty finance companies that cater to thisdemographic. With employment slow to improve and the overall economic outlook uncertain, it is unlikely that banks will return to pre-recession lending standards in thenear future. As a result, financial firms that are willing to take on additional risk to servenon-traditional customers will continue to find opportunities with higher yield potential.While specialty finance features a number of characteristics that we believe make it aninteresting space in the long term, it should at least continue to provide attractive

opportuni ties for the duration of the cur rent low interest rate envir onment.

Michael Fields

Managing Partner

MSF Enterprises, LLC

717 17th

St., Suite 2160

Denver, CO 80202

[email protected]

303.847.4649

mailto:[email protected]





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Disclaimer

This document is provided for informational purposes only, is subject to change and is not binding. MSF Enterprises, LLC makes no guarantees regarding the information contained herein and any statements represent the opinions of the firm. MSF Enterprises, LLC is not

responsible for any information stated to be obtained from third party sources. Anycompanies, asset types or investment opportunities mentioned in the document are for illustrative purposes only and are not intended as recommendations. MSF Enterprises,

LLC is not responsible for the use made of this document other than the purpose for whichit is intended, except to the extent this would be prohibited by law. Obtain independent

professional advice before investing.



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Q4 2012 Spotlight Specialty Finance: Filling the Gap Endnotes

1. Lee, Don. “U.S. families’ debt loads decline to pre-recession levels.” Los Angeles Times. 15 October 2012. 2. Ibid .3. Cox, Jeff. “Companies Sitting on More Cash Than Ever.” CNBC. 23 October 2012. 4. Marcinek, Laura. “Biggest U.S. Banks Curb Loans as Regional Firms Fill Gap.” Bloomberg. 25 June 2012. 5. Zumbrun, Joshua. “Fed Sees Rising Demand for Auto and Mortgage Loans.” Bloomberg Businessweek. 31 October 2012. 6. Marcinek, Laura. “Biggest U.S. Banks Curb Loans as Regional Firms Fill Gap.” Bloomberg. 25 June 2012.

7.

“The Deloitte Shadow Banking Index: Shedding Light on Banking’s Shadows.” Deloitte. 2012. 8. Kacperczyk, Marcin and Philipp Schnabl. “When Safe Proved Risky: Commercial Paper During the Financial Crisis of 2007-2009.”

Journal of Economic Perspectives. Vol. 24: Issue 1. 2010.9. “Issuance in U.S. Bond Markets.” SIFMA. 2012. 10. Ibid .11. Chassany, Anne-Sylvaine and Jesse Westbrook. “Private Equity Enters Banks’ Turf in Europe.” Bloomberg. 8 February 2012. 12. Ahmed, Azam. “Bank Said No? Hedge Funds Fill a Void in Lending.” NY Times Dealbook. 8 June 2011. 13. Foley, C. Fritz; Raman, Ananth and Nathan C. Craig. “Inventory-Based Lending Industry Note.” Harvard Business School. 2012. 14. Wayne, Alex. “Health-Care Spending to Reach 20% of U.S. Economy by 2021.” Bloomber g Businessweek. 13 June 2012.15. Richardson, Karen. “Bankers Hope for a Reprise of ‘Bowie Bonds.’” The Wall Street Journal. 23 August 2005. 16. Tempkin, Adam. “Bonds backed by drug-royalty cashflows make a return.” Reuters. 5 March 2012. 17. Jung, Jeff and John Tamisiea. “Not Your Parents’ Royalty Fund.” McDermott Will & Emery LLP. 12 October 2010. 18. Landler, Mark. “Obama Signs Bill to Promote Start-Up Investments.” The New York Times. 5 April 2012. 19. Bensinger, Ken. “A vicious cycle in the used-car business.” Los Angeles Times. 30 October 2011. 20. McArdle, Megan. “On Poverty, Interest Rates and Payday Loans.” The Atlantic. 18 November 2009. 21. Ody, Elizabeth. “Prepaid Card Use Up 18% as Consumers Drop Debit: Study.” Bloomberg. 11 April 2012. 22. Ibid .

23. Ibid .24. Ibid .25. “Remittance Prices Worldwide.” The World Bank. November 2011. 26. Morrison, David. “Financial Services to Unbanked Reflect Potentially Huge, Report Suggests.” Credit Union Times. 7 November

2012.

Bibliography

“2011 FDIC National Survey of Unbanked and Underbanked Households.” Federal Deposit Insurance Corporation. September 2012.

Ahmed, Azam. “Bank Said No? Hedge Funds Fill a Void in Lending.” NY Times Dealbook . 8 June 2011.

Bensinger, Ken. “A vicious cycle in the used-car business.” Los Angeles Times. 30 October 2011.

Chassany, Anne-Sylvaine and Jesse Westbrook. “Private Equity Enters Banks’ Turf in Europe.” Bloomberg . 8 February 2012.

“Company Profile.” Yahoo! Finance. 2012.

Cox, Jeff. “Companies Sitting on More Cash Than Ever.” CNBC . 23 October 2012.

Federal Reserve Economic Data. “Total Credit Market Debt Owed (TCMDO).” Federal Reserve Bank of St. Louis. 2012.

Foley, C. Fritz; Raman, Ananth and Nathan C. Craig. “Inventory-Based Lending Industry Note.” Harvard Business School . 2012.

“Issuance in U.S. Bond Markets.” SIFMA. 2012.

Jung, Jeff and John Tamisiea. “Not Your Parents’ Royalty Fund.” McDermott Will & Emery LLP . 12 October 2010.

Kacperczyk, Marcin and Philipp Schnabl. “When Safe Proved Risky: Commercial Paper During the Financial Crisis of 2007-2009.” Journal of

Economic Perspectives. Vol. 24: Issue 1. 2010.

Landler, Mark. “Obama Signs Bill to Promote Start-Up Investments.” The New York Times. 5 April 2012.

Lee, Don. “U.S. families’ debt loads decline to pre-recession levels.” Los Angeles Times. 15 October 2012.

Marcinek, Laura. “Biggest U.S. Banks Curb Loans as Regional Firms Fill Gap.” Bloomberg . 25 June 2012.

McArdle, Megan. “On Poverty, Interest Rates and Payday Loans.” The Atlantic. 18 November 2009.

Morrison, David. “Financial Services to Unbanked Reflect Potentially Huge, Report Suggests.” Credit Union Times. 7 November 2012.

Ody, Elizabeth. “Prepaid Card Use Up 18% as Consumers Drop Debit: Study.” Bloomberg . 11 April 2012.

“Remittance Prices Worldwide.” The World Bank . November 2011.

Richardson, Karen. “Bankers Hope for a Reprise of ‘Bowie Bonds.’” The Wall Street Journal . 23 August 2005.

Tempkin, Adam. “Bonds backed by drug-royalty cashflows make a return.” Reuters. 5 March 2012.

“The Deloitte Shadow Banking Index: Shedding Light on Banking’s Shadows.” Deloitte. 2012.

Wayne, Alex. “Health-Care Spending to Reach 20% of U.S. Economy by 2021.” Bloomberg Businessweek . 13 June 2012.

Zumbrun, Joshua. “Fed Sees Rising Demand for Auto and Mortgage Loans.” Bloomberg Businessweek . 31 October 2012.

MSF Q4 Spotlight-Specialty Finance

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