PAYMENTS INDUSTRY Q BOSTON CHICAGO LONDON LOS ANGELES PHILADELPHIA SAN DIEGO SILICON VALLEY TAMPA CONTACTS

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1 PAYMENTS INDUSTRY CONTACTS Ted Polk (312) Lisa Tolliver Director (312) Daniel Schultz Director of Business Development (617) DATA SECURITY, MOBILE INNOVATIONS, AND PREPAID CARDS Macro trends in improving data security, developing innovative mobile payment solutions, and tapping into the growing prepaid & reloadable card market have dominated the payments industry sector over the past year. The payments industry, estimated to generate more than $900 billion a year in revenue, consists of organizations which store, process and transmit cardholder data for debit, credit and prepaid cards. Recent cyber security attacks on major U.S. corporations have spawned a movement towards safer and more secure payment methods. Massive security breaches at companies such as Target in 2013 and Home Depot in 2014 resulted in the theft of payment card information for millions of people, resulting in stolen personal information, clone cards, fraudulent transactions and other forms of payment card fraud. In response, payment card issuers are shifting towards EMV, or chip-enabled payment card technology, in an effort to limit the amount of consumer payment information that must be stored on corporate databases. Compared to the static authentication process used for magnetic stripes, the dynamic EMV technology is much harder to copy because each time the card is used the chip creates a new transaction code that will never be used again. Furthermore, as corporate security breaches and payment card fraud continue to plague news headlines, some consumers have sought to use safer alternatives such as prepaid and reloadable cards. The prepaid and gift card market has shown promising growth in recent years and is poised to expand considerably over the next several years, largely driven by consumer frustration over rising bank fees, increasing importance of greater societal financial inclusion, and wider use in corporate America. According to Packaged Facts, U.S. prepaid and gift card transaction value reached nearly $250 billion in 2014, an 11% increase over Notable recent trends include employer s increased use of reloadable payroll cards in lieu of ordinary checks or direct deposit, and employers issuing gift cards for bonuses. According to Incentive Research Foundation, two-thirds of all companies give their employees gift cards and it is the largest and fastest growing category of employee rewards. Giving prepaid & gift cards to employees is proving to be a very cost effective way for employers to reward their employees, with a number of companies placing maximum dollar limits on cards. BOSTON CHICAGO LONDON LOS ANGELES PHILADELPHIA SAN DIEGO SILICON VALLEY TAMPA Perhaps most important, high banking fees, lack of steady income, and the scarce availability of alternative financial services such as check cashing and walk-in bill pay facilities all promote financial exclusion; for the 106 million under-banked people in the U.S., this is a costly and inefficient reality. The increasing availability of General Purpose Reloadable (GPR) cards is becoming a major proponent of growth in the prepaid market. These cards are especially attractive to underserved individuals who otherwise would not have the ability to shop and pay bills online, remit funds, and earn savings and rewards. However, prepaid cards also meet many needs for the general population as well. Everyday more and more consumers look to cash alternatives like prepaid and gift cards to reduce their carbon footprint, increase focus on budgeting and security for travel and online payments, and replace mass market categories like meal vouchers.

2 DATA SECURITY, MOBILE INNOVATIONS, AND PREPAID CARDS (CONTINUED) With new products emerging like Apple Pay, Square, and Google Wallet, mobile payment services and applications are becoming an exciting and nascent market in the payments industry. Specifically, mobile payments include mobile acceptance, mobile wallets, and mobile commerce services, all of which go beyond payments to emphasize rewards, offers and enhanced checkout experiences. Mobile acceptance in particular is expected to be the biggest driver of growth in the mobile payments sector, with mobile payment volume projected to increase at a CAGR of 30% between the three year period spanning 2014 to One growth driver includes the 20+ million casual merchants that currently do not accept card-based payments in the U.S., who are now taking advantage of new card-reading phone dongles offered by companies like Square. In essence, these tablet or phone insertable card-readers may have the potential to do to the physical world what PayPal did to the online space, by enabling casual merchants who otherwise couldn t afford to maintain a merchant account to accept these card payment methods. Further, merchants as well as consumers are drawn towards the convenience of mobile acceptance applications. Mobile checkout or line-busting technology utilized by companies like Uber promotes convenience for merchants and consumers alike as they now have the capability to charge and pay for services on the go without any physical transaction needing to occur. MERGER AND ACQUISITION ACTIVITY Merger and acquisition activity in the payments industry in 2014 was robust and in line with the frothy M&A activity witnessed across all sectors. The payments segment experienced a 44% rise in M&A volume in 2014 alongside the economy wide 53.4% increase in M&A volume. Companies with mounting stockpiles of cash on their balance sheet are helping to drive the strong M&A activity in the payments industry, as spending cash on acquisitions is an attractive alternative to low interest rates. Further, lofty stock prices are creating additional incentives for publicly traded firms to pursue acquisitions of privately held companies. Private equity acquirers have been active as well, capitalizing on cheap debt, with total debt to EBITDA multiples available in the 3.5x 4.0x range for middle market businesses at the start of Characterized by its continual evolution and innovative technology, the payments sector has acquirers searching for more efficient and secure payment methods as well as improved product lines that meet growing consumer demand and provide better ways to access their money and manage financial obligations. Strategic buyers are realizing value creation by purchasing complementary businesses to grow their market share, access new revenue channels, and expand their product offerings. With acquisitions in the payments industry already totaling over $2.3 billion, M&A has been strong thus far in Notable transactions this year include: Visa s acquisition of TrialPay, a provider of incentives and customer specific promotions based off of personal transaction history; PayPal s $280 million acquisition of Paydiant, a mobile payment solutions company; DH Corp s $1.25 billion acquisition of Fundtech, a leading provider of global payment solutions; and Mastercard s $600 million acquisition of Applied Predictive Technologies, a cloud-based analytics and big data company. Capstone Partners LLC 2

3 SELECT PAYMENT M&A TRANSACTIONS Enterprise EV / LTM Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA Aug-15 American Express Company ValueAct Capital Provides charge and credit payment card products and travelrelated services to consumers and businesses worldwide. Jul-15 American Credit Card Processing Corporation Priority Payment Provides credit card processing and merchant accounts for merchant businesses in the United States. Jul-15 Transaction Wireless First Data Jul-15 isend ezetop Operates a cloud-based multi-channel digital gifting and marketing platform. Provides electronic payment services for people who support family members in various countries. Jun-15 Premier Payments Newtek Business Services Corp. Provides debit and credit card payment processing services to merchants and businesses. $ May-15 SparkBase Factor4 Offers proprietary gift card and loyalty program software platform designed for small business end users. Apr-15 Apr-15 CapitalMark & Trust Superior Financial Service Pinnacle Provides banking solutions for businesses and individuals. Sparrow Offers credit and debit card payment processing services. Mar-15 Bridge Capital Western Alliance Bancorporation Provides various commercial and retail banking products and services. Feb-15 Colonial American OceanFirst Provides consumer and commercial banking products and services in the United States. Feb-15 LoopPay Samsung Electronics America Provides a mobile wallet platform that allows consumers to pay virtually everywhere and store their cards on their smartphone. Feb-15 Green Dot GreenLight Capital Operates as a pro-consumer technology bank holding company that provides personal banking for the masses. Feb-15 AccountNow Green Dot Provides alternative online banking solutions in the United States. Feb-15 Achieve Financial Services Green Dot Feb-15 TouchPay Valid Secure Packaging Global Telecom Link Valid USA Gift2Gift Ackroo IntelCrawler InfoArmor Offers general-purpose reloadable (GPR) prepaid debit cards and related financial services. Provides booking, deposit, and release solutions that facilitate the transfer of funds for correctional applications in federal, state, and local facilities. Provides card personalization and packaging services for prepaid gift and general purpose reload card markets. Develops an application to order, design, add text, and save gift cards online. Cyber threat intelligence company that acts as a multi-tier intelligence aggregator. $ $ National Bancshares Direct Connect Holdings Farmers National Banc The Beekman Group rapid! Financial Services UniRush Offers personal and commercial banking services. Provides customized electronic payment processing, equipment, merchant services, and support to businesses in the US and Canada. Provides domestic employer prepaid payroll cards and paycard services for companies in the United States. Advanceit Financial Corporation TorQuest Partners Merchant cash advance provider offering financing for small and medium sized businesses in Canada. Purina Credit Union Anheuser-Busch Employees' Credit Union Operates as a credit union offering financial products and services to its members. Dec-14 Money Access International CIAO Group Engaged in developing and operating prepaid card programs. $ Dec-14 Akimbo Financial FiCentive Social payment company offering a Visa prepaid card and a convenient way to share money with friends and family. $ x - LTM = last twelve months; EV = enterprise value Sources: Capstone Partners LLC research; Capital IQ; public filings and press releases Capstone Partners LLC 3

4 SELECT PAYMENT M&A TRANSACTIONS (CONTINUED) Enterprise EV / LTM Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA Dec-14 Heritage Financial Group Renasant Dec-14 Wallaby Financial rate Nov-14 Susquehanna Bancshares BB&T Provides commercial banking, retail banking, mortgage banking, and wealth management services. Provides payments information and optimization to optimize users credit card usage for rewards, credit limit, statement due date, bonuses, etc Provides a range of retail and commercial banking, and financial products and services in the mid-atlantic region. Nov-14 SecureNet Payment WorldPay Provides payment processing solutions to merchants. Nov-14 Valley Community Bay Commercial Provides general commercial banking services to residents, small and medium sized businesses, and professional firms in California. Independence Pacific Premier Commercial bank providing financial solutions to individuals and businesses. American of St. Paul Greater Sacramento Bancorp The First National of Deerwood AmericanWest Provides a range of financial products and services, including personal and business banking, mortgages and home equity loans, etc. Provides commercial banking services primarily to small-tomedium size businesses, individuals, and professionals in California. TransFirst Vista Equity Partners Provides payment transaction processing services and payment enabling technologies in the United States. Florida Group Iberia Sep-14 Brink Software ParTech Provides commercial and retail banking services to businesses and individuals in the United States. Provides a cloud-based point of sale and restaurant management software solution to the hospitality industry. $ Sep-14 Yakima Telco Federal Credit Union Gesa Credit Union Operates as a credit union. Sep-14 Ebates Rakuten Provides online cash back shopping services. $1, x - Sep-14 Nexxo Financial Corporation Concepts in Benefits Moneygram International Total Administrative Services Corporation EFT Source CPI Card Group Engaged in kiosk-based retail money transfer business. Provides a debit card solution to health reimbursement, health savings, flexible spending, parking and mass transit, and dependent care accounts. Provides personalization and fulfillment services for debit, automated teller machine, credit, and prepaid cards to financial industry. Maxie Mobile Global Payout Mobile financial center providing mobile financial services. $ Comdata Network FleetCor Technologies Business-to-business provider of electronic payment solutions. $5, x 42.7x Gift Ya Now Eventure Interactive Develops an online electronic gift card platform. 1Bitcoin network Get Real USA Jul-14 Phoenix Payment TouchNet Information American Bancard Heartland Payment Jul-14 Gyft First Data Corporation Jul-14 Retail Decisions ACI Worldwide Develops a social network, savings, loyalty, and rebate shopping platform for the crypto-currency (bitcoin). Operates as credit card, debit card, and electronic check payment processor that provides front-end and back-end payment solutions. Provides campus commerce solutions for higher education institutions in the United States and internationally. Offers a platform for managing digital gift cards from mobile phones. Provides fraud prevention, payment processing, risk management, and value-added payment services in the United Kingdom. $ $ x 11.5x $ $ Jul-14 Towne Richmond Towne Provides various financial services to consumers and businesses in the United States. LTM = last twelve months; EV = enterprise value Sources: Capstone Partners LLC research; Capital IQ; public filings and press releases Capstone Partners LLC 4

5 THE PAYMENTS TEAM Ted Polk, (312) Ted is and Head of the Central Region at Capstone, based out of Chicago. Prior to Capstone, Ted ran the corporate finance practice in the Central region for Morgan Stanley Smith Barney s Capital Strategies Group and its predecessor, Citi Capital Strategies. He has over 20 years of experience, having completed strategic sale and recapitalization transactions across a variety of industries. Ted is a frequent public speaker on the topic of business exits and recapitalizations of privately owned businesses. In 2008, Ted was recognized by The M&A Advisor for the Cross-Border Middle-Market Deal of the Year. In 2009, another of his transactions was recognized as the Middle-Market M&A Financing Deal of the Year and in 2011 he was recognized for lead-managing the Middle-Market Deal of the Year. Previously, Mr. Polk worked at Valuemetrics, Inc. and in the Corporate ing Group at The of New York. Ted received his BSBA degree from Georgetown University and MBA from the University of Chicago. He is a Chartered Financial Analyst (CFA), a Series 7 and 63 Registered Securities Representative, and a Series 24 Registered Securities Principal. Lisa Tolliver, Director ltolliver@capstonellc.com (312) Lisa has over 15 years of experience in the investment banking industry, primarily focused on advising private business owners in liquidity related transactions. Presently, Lisa is a Director in Capstone s Chicago office, supporting the management of the Central Region. Prior to Capstone, Ms. Tolliver worked in the Capital Strategies Group at Morgan Stanley Smith Barney, where she was involved in the evaluation, marketing and closing of numerous transactions across a wide range of industries. Specifically, Lisa has developed expertise within various industries including business services, consumer products, software & technology, manufacturing, and government services. Lisa received her BA on academic scholarship from Illinois State University and is a Series 7 and 63 Registered Securities Representative. Daniel Schultz, Director of Business Development dschultz@capstonellc.com (617) Dan oversees Capstone s national business development and industry coverage activities, working closely with current and prospective clients of the firm on matters related to corporate sales, recapitalizations, mergers & acquisitions and growth financings. In his role, Dan is able to deliver specific market intelligence to clients regarding M&A, financing, strategic, industry and competitive trends. Prior to spearheading the firm s business development and market initiatives, he was a Vice President in Capstone s M&A group, managing numerous successful transactions across a variety of industries. Dan also gained hands-on transaction experience as an investment banker at Headwaters MB. He started his career with Ernst & Young s National Professional AABS practice in New York and later worked in Assurance and Advisory Business Services in the Denver office. Dan received a BE in Biomedical Engineering with a Business Minor from Vanderbilt University. He earned an MBA and a Master of Accountancy from the Daniels College of Business at the University of Denver. Capstone Partners LLC 5

6 CAPSTONE S LEADERSHIP TEAM NATIONAL John Ferrara Founder, President (617) jferrara@capstonellc.com BOSTON Jacob Voorhees (617) jvoorhees@capstonellc.com CHICAGO Ted Polk (312) tpolk@capstonellc.com LOS ANGELES David Bench (949) dbench@capstonellc.com LONDON John Snead jsnead@capstonellc.com PHILADELPHIA Eric Williams (215) ewilliams@capstonellc.com SAN DIEGO & SILICON VALLEY David Michaels (858) dmichaels@capstonellc.com TAMPA Tom Elliott (813) telliott@capstonellc.com CORPORATE RESTRUCTURING Brian Davies (617) bdavies@capstonellc.com ABOUT CAPSTONE PARTNERS Capstone Partners LLC is a premier investment banking firm dedicated to serving the corporate finance needs of middle market business owners, investors and creditors. The firm provides M&A, corporate restructuring, private placement and financial advisory services. Headquartered in Boston, Capstone has offices in Chicago, London, Los Angeles, Philadelphia, San Diego, Silicon Valley and Tampa with an international presence that spans 450+ professionals in close to 40 countries. For more information about our expertise, please visit World Class Wall Street Expertise. Built for the Middle Market Capstone Partners LLC. All rights reserved.