CHARLOTTE, North Carolina, August 10, 2021 / PRNewswire / – Truist Financial Corporation (NYSE: TFC) announced today that its wholly-owned banking subsidiary, Truist Bank, has signed a definitive agreement to acquire Service Finance Company, LLC (Service Finance), l ” a leading national provider of sales financing solutions (POS) for the home improvement industry, for $ 2 billion. The acquisition of Service Finance expands the point-of-sale lending business of Truist, which currently includes Sheffield Financial, a leading point-of-sale lender in the electrical equipment, powersports, trailers and automotive segments. ‘other consumer products. Service Finance and Sheffield will serve more than 250 manufacturers, associations and other sponsors covering approximately 29,000 contractors and dealers, making Truist one of the nation’s leading providers of point-of-sale lending solutions.
Situated at Boca Raton, Florida, Service Finance uses proprietary technology to provide innovative payment solutions to more than 14,000 dealers and home improvement contractors, helping them provide prime and super low cost borrowers with financing for a wide range of mortgage products and projects. home renovation.
“The acquisition of Service Finance expands the scale and capabilities of our wholesale payment business, enabling Truist to deliver innovative financing solutions to Service Finance’s national dealer network and serve owners across the country.” , said Mike maguire, Head of Finance and National Consumer Payments at Truist. “This acquisition significantly strengthens Truist’s leadership position in the rapidly growing point-of-sale industry, and we are delighted to partner with Marc Berch and the entire Service Finance team. “
“Service Finance’s customer-centric model, coupled with Truist’s financial strength and commitment to point-of-sale lending, positions us perfectly to continue to deliver distinctive, secure and successful customer experiences,” said Jeff McKay, Head of Truist’s POS Loan Unit. “Like Sheffield, Service Finance partners with leading brands in their industry and has built a reputation for unparalleled customer service and delivering innovative solutions.
“As a former home improvement entrepreneur, I know how important it is to help entrepreneurs and their clients access convenient and attractive financing so that our end customers can spend more time enjoying the moments that count, in the place that matters most— their homes, ”said Marc Berch, president and founder of Service Finance. “This is a dynamic market with enormous potential, and joining Truist only enhances our prospects for growth.”
Over 80% of Service Finance’s loan applications are completed on its mobile app, giving homeowners a fast, easy, and paperless experience. The origins should exceed $ 2.5 billion in 2021 and have grown by around 30% per year over the past three years, making Service Finance one of the top three home improvement point-of-sale finance companies. Truist has a strong historical relationship with Service Finance and significant experience in the home improvement industry, including having purchased over $ 2 billion of Service Finance loans since 2018.
In addition to being highly strategic, the acquisition is also financially attractive:
- Solid profitability profile generating a return on cash on assets (ROA) above 3% (run-rate), with low credit risk (average FICO above 760)
- Allows Truist to deploy its strong capital and substantial liquidity position (approximately 50 basis point reduction in Truist’s Common Equity Tier 1 ratio expected)
- Service Finance currently maintains relationships with financial partners who purchase its loans; however, under Truist ownership, the vast majority of loans will be held on Truist’s balance sheet.
- Strong return on invested capital: TRI Mid-teens
- Accretion of earnings per share (EPS):
- Assuming the acquisition replaces the planned share buybacks (capital neutral), approximately 1% dilution of EPS in cash in year two
- Assuming the acquisition uses excess capital, an increase in cash EPS of approximately 2% in year two
- In the long term, accretive to Truist’s already strong profitability indicators: ROA, tangible return on equity, efficiency ratio and EPS growth
Berch and the Service Finance team will join the POS loan unit of Truist’s National Consumer Finance and Payments group and will continue to be based in Boca Raton, Florida. Service Finance is a wholly owned subsidiary of Canadian company ECN Capital Corp. Truist aims for the acquisition to close at the end of 2021, subject to standard authorizations and regulatory approvals, and the satisfaction of customary closing conditions.
Davis polk & Wardwell LLP acted as legal counsel and Truist Securities acted as financial advisor to Truist. Cravath, Swain & Moore LLP served as legal counsel to ECN Capital Corp.
Truist Financial Corporation is a purpose-built financial services company committed to inspiring and building better lives and communities. Formed by the historic merger of BB&T and SunTrust equals, Truist has a leading market share in many high growth markets across the country. The company offers a wide range of services, including retail, small business and corporate banking; asset Management; capital markets; commercial real estate; corporate and institutional banking; Assurance; mortgage; Payments; specialized loans; and wealth management. Based at Charlotte, North Carolina, Truist is one of the top 10 U.S. commercial banks with total assets of $ 522 billion from June 30, 2021. Truist Bank, FDIC member. Learn more at Truist.com.
Winston-Salem, North Carolina– based in Sheffield Financial is a division of Truist Bank, member FDIC, which is a subsidiary of Truist Corporation (NYSE: TFC). Sheffield, which has funded more than $ 30 billion on loan since its founding in 1992, currently serves approximately 15,000 outdoor power equipment, powersports and trailer dealers nationwide. The company offers retail financing options in all 50 states for outdoor power equipment, trailers, and powersports equipment, such as snowmobiles, all-terrain vehicles, side-by-side vehicles, motorcycles and personal watercraft. For more information on Sheffield Financial, visit SheffieldFinancial.com.
About the service finance company
Service Finance Company, LLC (“SFC”) is a subsidiary of ECN Capital Corp. (TSX: ECN), a publicly traded finance and distribution company. SFC provides financing solutions that include promotional and standard payment terms for home improvement contractors enrolled in the SFC financing program. SFC is an FHA Title I lender and is licensed to operate as a sales finance company and third party service provider in all fifty states and the District of Colombia.
About ECN Capital Corp.
With assets managed and advised by $ 33 billion, ECN Capital Corp. (TSX: ECN) is a leading provider of business services to North America-based banks, credit unions, life insurance companies, pension funds and investment funds (collectively our “Partners”). ECN Capital creates, manages and advises credit assets on behalf of its partners, in particular unsecured loan portfolios, secured loan portfolios and credit card portfolios. Our partners look for high quality assets that match their deposits or other liabilities. These services are offered through three operating companies: Service Finance, Triad Financial Services and The Kessler Group.
To learn more about ECN Capital Corp. and Service Finance, see the presentation of Investor Day 2021 dated February 4, 2021.
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SOURCE Truist Financial Corporation