Assuming the acquisition uses excess capital, approximately 2% cash EPS accretion in year two.Assuming the acquisition replaces planned share repurchases (capital neutral), approximately 1% cash EPS dilution in year two.Strong return on invested capital: Mid-teens IRR.Service Finance currently maintains relationships with funding partners that purchase its loans however, under Truist's ownership, the vast majority of loans will be held on Truist's balance sheet.Allows Truist to deploy its strong capital and substantial liquidity position (approximately 50 bps reduction in Truist's Common Equity Tier 1 ratio anticipated).Strong profitability profile generating greater than 3% cash return on assets (ROA) (run-rate), with low credit risk (average FICO greater than 760).In addition to being highly strategic, the acquisition is also financially attractive: Truist has a strong historical relationship with Service Finance and significant experience in the home improvement industry, including having purchased more than $2 billion of loans from Service Finance since 2018. Originations are expected to exceed $2.5 billion in 2021 and have grown at approximately 30% annually over the past three years, making Service Finance a top-three home improvement POS finance company. More than 80% of Service Finance's loan applications are completed on its mobile application, offering homeowners a simple, fast and paperless experience. "This is a dynamic market with tremendous potential, and joining Truist only improves our outlook for growth." "As a former home improvement contractor, I know how important it is to help contractors and their customers get access to convenient and attractive financing so our end-customers can spend more time enjoying the moments that matter, in the place that matters the most-their homes," said Mark Berch, president and founder of Service Finance. "Just like Sheffield, Service Finance partners with leading brand names in their industry and has earned a reputation for unparalleled client service and delivering innovative solutions." "Service Finance's client-centric model, coupled with Truist's financial strength and commitment to POS lending, perfectly position us to continue to provide distinctive, secure and successful client experiences," said Jeff McKay, head of Truist's POS lending unit. "This acquisition significantly strengthens Truist's leadership position in the rapidly growing POS industry, and we're excited to partner with Mark Berch and the entire Service Finance team." "The acquisition of Service Finance expands the scale and capabilities of our wholesale payments businesses, enabling Truist to deliver innovative financing solutions to Service Finance's nationwide network of dealers and serve homeowners across the country," said Mike Maguire, head of National Consumer Finance and Payments at Truist. Service Finance and Sheffield will serve more than 250 manufacturers, associations and other sponsors spanning approximately 29,000 contractors and dealers-making Truist a leading national provider of POS lending solutions.īased in Boca Raton, Florida, Service Finance uses proprietary technology to deliver innovative payment solutions to more than 14,000 home improvement dealers and contractors, helping them provide prime and super-prime borrowers with financing for a wide range of home improvement products and projects. The acquisition of Service Finance expands Truist's POS lending business, which currently includes Sheffield Financial, a leading POS lender in the power equipment, power sports, trailer and other consumer products segments. 10, 2021 /PRNewswire/ - Truist Financial Corporation (NYSE: TFC) today announced that its wholly owned bank subsidiary, Truist Bank, has signed a definitive agreement to acquire Service Finance Company, LLC (Service Finance), a leading national provider of point-of-sale (POS) financing solutions for the home improvement industry, for $2 billion.
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