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COPPERFIELD RESEARCH

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CONN Job? Substantial Downside Likely


Conn's is a subprime finance company with deteriorating credit that
is masquerading as a retailer. The thesis that Conn's will successfully
unload its credit risk to an unsuspecting buyer, while retaining
underwriting authority and servicing, appears deeply flawed. We
believe no buyer is dumb enough to buy Conn's portfolio, and cede
underwriting and servicing back to Conn's. Without autonomy over
credit creation, Conn's retail model is likely broken.

Fair Value ~ $15.00 per share; 60% downside

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IMPORTANT Disclaimer Please read this Disclaimer in its entirety before


continuing to read our research opinion. You should do your own research
and due diligence before making any investment decision with respect to
securities covered herein. We strive to present information accurately and
cite the sources and analysis that help form our opinion. As of the date this
opinion is posted, the author of this report has a short position in the
company covered herein and stands to realize gains in the event that the
price of the stock declines. The author does not provide any advanced
warning of future reports to others. Following publication of this report, the
author may transact in the securities of the company, and may be long, short,
or neutral at any time hereafter regardless of our initial opinion. To the best
of our ability and belief, all information contained herein is accurate and
reliable, and has been obtained from public sources we believe to be
accurate and reliable. However, such information is presented as is,
without warranty of any kind whether express or implied. The author of
this report makes no representations, express or implied, as to the timeliness
or completeness of any such information or with regard to the results to be
obtained from its use. All expressions of opinion are subject to change
without notice and the author does not undertake to update or supplement
this report or any of the information contained herein. This is not an offer to
buy any security, nor shall any security be offered or sold to any person, in
any jurisdiction in which such offer would be unlawful under the securities
laws of such jurisdiction.

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------------------------------------------------------------------------------------------------------------At first blush, the bull/bear debate on Conn's (CONN) would appear well understood by all involved.
Conn's is a battleground stock, with thoughtful investors holding extremely disparate views on the
companys future. After spending an inordinate amount of time analyzing the credit side of Conn's, we
believe substantial downside exists for reasons outside of the typical bull/bear debate.
Today, the most important variable in the Conn's story is whether the company can successfully monetize
the credit portfolio and negotiate a flow agreement. The word and is paramount in this discussion
because a sale of the credit portfolio, without a flow agreement that allows Conn's to continue underwriting
loose credit, destroys Conn's retail economics. Conn's stock has been aggressively bought by retail sector
investors who foolishly believe the retail business would have greater stand-alone value independent from
the credit side of the house. This new investor base, as well as the majority of retail sell-side analysts, does
not appear to understand Conn's credit portfolio metrics, or the retail segment's reliance on in-house credit.
The two businesses operate symbiotically and are heavily dependent on one another.
The recent 35% run in Conn's stock began when management stated there were multiple parties interested
in its credit portfolio. Amazingly, investors have equated the existence of interested parties with a favorable
outcome. The fact multitude lenders want to diligence Conn's credit portfolio should not be surprising. The
incentive to access Conn's data room for information is no different than public investors who look at an
array of deals despite having minimal intent to buy. In today's easy money environment, where the thirst for
yield often supersedes risk considerations, we concede that a dumb buyer may emerge. However, we
believe any sale would come with highly restrictive terms on future underwriting. Should a sale be
accompanied with restrictions on Conn's underwriting and servicing autonomy, any stock pop will be short
lived. Without carte blanche discretion on aggressive financing, which we believe has resulted in a material
overstatement of Conn's retail economics (an imbedded cost of financing allows Conn's to generate a
40.5% retail gross margin), Conn's retail model will break.
Based on our analysis, we believe Conn's has disingenuously window dressed its credit portfolio, while
subtly removing important disclosures from investor presentations. Despite wide ranging sell-side analysis
of Conn's, the most important picture cumulative loss curves has somehow managed to escape scrutiny.
Our analysis herein unequivocally illustrates why the consensus view of improving credit is false. We also
detail nuances within Conn's credit portfolio and underwriting practices that have been neglected by
investors, but will unlikely be overlooked by potential buyers. The markets assumption that a portfolio sale
and flow agreement is a fait accompli has created significant downside risk for CONN investors should
neither materialize. As such, we believe Conn's stock will retest the early 2015 lows around $15 per
share, representing 60% near-term downside. In this report, we analyze the following issues:

Significant uncertainty persists on where credit losses and ultimate cumulative losses on recent
vintages will normalize. The slope of the cumulative loss curves on the 2014 vintage is still steepening
meaning losses continue to accelerate. Based on a series of inaccurate forecasts and atrocious
communication, it appears Conn's management has no idea where losses ultimately shake out. When
Conn's reports its 1Q'16 report on 6/2/15, we expect the 2014 loss curves will already approach
management's revised loss rate, which will make it clear that another increase in cumulative loss
guidance is coming.

In 2013, Conn's claimed to make significant underwriting changes. The 2014 vintage should have
partially benefitted from the underwriting changes, while the 2015 vintage should be reaping the full
benefit of the changes. However, 2015 losses to-date are currently running higher than the disastrous
2014 vintage. Our presentation of cumulative loss curves is in direct conflict with the widely held view
by retail sector investors and sell-side analysts that management's underwriting changes are driving
credit improvements. When viewed through a credit portfolio lens, it is clear that the exact opposite is
happening losses are accelerating.

The optical improvement in Conn's delinquency rate is a function of normal seasonality, as well as
financial sleight of hand. Historical delinquency rates at other subprime lenders trough around tax

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------------------------------------------------------------------------------------------------------------refund season and these same seasonal patterns have helped Conn's. In addition to seasonality, Conn's
delinquency rate has been artificially suppressed by: a) the October 2014 decision to begin retaining
no-interest, high FICO loans on balance sheet, b) management aggressively increasing the percentage
of re-aged account balances, and c) significant charge-off growth. In the most recent quarter, re-aged
accounts grew by 52% year-over-year, compared to 28% overall portfolio growth. 1 The quality of the
re-aged accounts has also deteriorated significantly, with 93% growth in balances that have been reaged at least six months and 98% growth in balances that have been re-aged between 3 - 6 months.
Serving as a significant red flag to investors and potential buyers, Conn's changed its re-aging policy
last year to increase the frequency that accounts can be re-aged by 33%.

A class action lawsuit makes salacious accusations against Conn's current management, including
allegations that they knowingly misled investors. Former employees provide numerous examples
illustrating Conn's renegade approach to its credit operations. Employees claimed Conn's would:
extend up to $10,000 of credit to consumers with no credit scores; approve credit during the initial four
to five months a new store was opened - even for customers with no income and FICO scores as low as
400; direct customers who had not been approved for credit at established Conn's location to newly
opened stores since they would automatically be approved for credit; and call [customers with
declined credit] when a new store opened in their area and were told to apply for credit there. If true,
the litany of inflammatory accusations would constitute violations of multiple U.S. laws, including: the
CARD Act, Truth-in-Lending Act, Fair Credit Reporting Act, and the Credit Card Accountability,
Responsibility & Disclosure ACT of 2009. A New York Times expos corroborated many of the
claims in the class action lawsuit. If Conn's management was this irresponsible with underwriting
while receivables were on-balance sheet, we can only imagine how aggressive they might be in a
flow agreement where a 3rd party assumed the ultimate credit risk.

A litany of regulatory issues (both present and future) would seem to present a material deterrent to
prospective portfolio buyers. Just last week, the CFPB moved to regulate installment lenders, which
will likely subject Conn's to much earlier than expected CFPB regulation. This follows on the heels of
its March 2015 introduction of draconian regulation targeting the lending & collection practices of the
payday loan industry. The CFPB has also asked for public comments on 12 areas of concern in the
credit card market. Two significant financial drivers for Conn's, deferred interest and add-on products,
appear to be under the CFPBs microscope. Deferred interest products comprise 33% of Conn's loan
portfolio, while add-on products represent $50 million of high margin revenue in the credit card
segment. Any credit portfolio buyer would presumably not only need to get comfortable with
these looming regulatory risks, but also quantify the material economic risk on Conn's. Finally,
the SEC's ongoing inquiry into Conn's has the potential to create even more uncertainty for a potential
buyer. The class action lawsuit alleges that Conn's top two executives possessed the motive to commit
fraud [when they] reaped more than $4.5 million in insider trading proceeds. If true, the SEC will
have obvious grounds to pursue enforcement actions.

We believe Conn's management and large investors have encouraged sell-side analysts to use Bluestem
Brands as a proxy for a deal structure. This comparison appears misplaced. Bluestem originates and
services loans retained by Santander Consumer USA (SC). However, according to its amended 10K,
only 30% of Bluestem's sales were financed through SC last year.2 This compares with approximately
89% of Conn's sales that rely on financing. Further, SC is not required to take all of Bluestems loans,
but instead has the option to purchase certain loans.3 Conn' already has this type of third party
relationship with Synchrony Financial (SYF), who chose to finance just 10.8% of Conn's loans last
year. Bluestem also appears to be far more attractive as a financing partner given a) less reliance on
issues currently under the microscope of regulators, and b) strict ongoing regulation by the FDIC (their
cards are issued through an FDIC insured bank). If an ultimate portfolio/flow agreement looks like
Bluestem, we believe Conn's partner would only accept a minority of loans, while refusing to cede
universal underwriting authority.

A Brief Timeline on the Sale Process

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------------------------------------------------------------------------------------------------------------Any analysis of Conn's must start with the understanding that subprime financing underpins the retail
economic model. In the trailing twelve months, approximately 78% of Conn's sales were financed through
in-house credit, while another 15% of sales were financed by Synchrony Financial or AcceptanceNow's
Rent-to-Own. Cash transactions represented just 6.5% of sales.4 Without the fuel of easy credit, Conn's
economic model should be similar to other big box retailers that struggle to make money. Conn's
management not only understands this, but seems proud of the differentiation from easy credit. At the
Canaccord Genuity conference on 8/14/2013, Conn's COO openly stated that a core competitive
advantage is our credit offering. [For additional background on management's alleged willingness to
sacrifice credit standards to drive retail sales growth, we suggest reading the updated class action lawsuit
dated 4/10/2015. Docket 14-cv-00548].
Considering how integral in-house financing is to Conn's, it should be unsurprising the stock collapse was
concomitant with the credit deterioration that commenced in late 2013. After a year of credit quality
erosion and questions about the sustainability of its business model, Conn's announced in October 2014 that
it was exploring strategic alternatives, which included the sale of the company.5 Roughly six months
later, on March 31, 2015, Conn's announced disappointing 4Q'15 results. 6 In its earnings release,
management disclosed they were no longer exploring the sale of the company, but instead pursuing the
sale of all or a portion of the loan portfolio, or other refinancing of our loan portfolio.7 While the stock
was poised to again collapse, during the Q&A segment of the conference call, management insinuated that
a sale of the portfolio at book value (net of the credit reserve) was possible.8 Management further stated
that with any potential transaction, they planned to retain the ability to originate and service accounts
in any circumstances.9 Confidently resetting expectations for a portfolio sale and flow agreement has
resulted in a 55% parabolic stock move off the intraday low of $26.50 on 3/31/15.
While a sale and flow agreement is now the consensus expectation, any potential buyer will undoubtedly
need to get comfortable with many uncertainties, least of all the tight correlation between unfettered
subprime loan growth and massive investor losses. While Conn's management may not like the
comparison, any buyer of Conn's credit and regulatory risk, who also cedes ongoing underwriting AND
servicing, will likely go the way of Metris, Providian, and Compucredit. In the following discussion, we
identify many credit and regulatory issues. In isolation, each individual issue would dissuade potential
buyers from bidding on the Conn's portfolio at book value. But when considering all of the issues
collectively, we believe it is highly unlikely that Conn's finds a portfolio buyer and flow partner.
The ONLY Chart that Matters
Public analysis of Conn's credit portfolio has been limited to delinquencies and charge-offs. From a credit
perspective, these metrics undoubtedly matter. However, the most insightful approach to analyzing Conn's
credit portfolio and underwriting standards is the assessment of its cumulative loss curves. Static pool
cumulative loss analysis compares the performance of different loan vintages at similar points in time. By
comparing losses across vintages, or loans that have progressed from delinquency to net charge-off status,
analysts can ascertain far more information than simply looking at management's hand selected metrics.
Ultimate loss estimates generally represent the largest variable in determining a range of portfolio returns.
While investors and sell-side analysts do not appear to understand static pool cumulative loss analysis, we
believe sophisticated buyers of Conn's portfolio will find significant red flags when they perform this
analysis.
Below, we have reproduced Conn's static pool cumulative loss curves by vintage. THE TABLE BELOW
REPRESENTS THE MOST POWERFUL REFUTATION OF THE CONSENSUS VIEW THAT CONN'S
CREDIT PORTFOLIO IS IMPROVING. Unsurprisingly, Conn's management appears to have quietly
removed this chart several years ago from investor presentations.

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Chart 1. Static Pool Cumulative Loss by Vintage


9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
0

2
'06

4
'07

6
'08

'09

10
'10

11
'11

12

13
'12

14

15
'13

16

17
'14

18

19

20

21

'15

Source: SEC filings, compary presentations, and our estimates.

The static pool cumulative loss chart clearly portrays Conn's persistent credit deterioration over the past
four years. The 2011 vintage ended with a 6% terminal cumulative loss rate (or $37 million of net credit
losses on $613 million of originations).10 Since 2011, each successive annual vintage has experienced
significant deterioration, with the 2013/2014 vintages demonstrating distressing loss curves. Any potential
buyer of the Conn's portfolio will need to blindly accept that the 2013 vintage, which is on average now
two years old, has only recently started to flatten. More disturbing than the disastrous 2013 vintage is the
slope of the 2014 vintage. As seen by the purple line with triangles above, the slope of the 2014 vintage
is still steepening, which means losses are accelerating at a never-before seen rate (faster even than
the horrendous 2013 vintage).
It is our opinion that Conn's management was either incompetent or intentionally misleading when
discussing portfolio losses with the investment community. In December 2013, management claimed that
earlier recognition of losses could steepen the slope of the cumulative loss curves early in their life.11 This
increased loss velocity was evident in the 2012 vintage, as seen above. Rebutting management's
explanation for the steeper loss curves is the fact the 2013 and 2014 vintages have experienced accelerating
losses well beyond management's public guidance. The 8.2% cumulative loss on the 2014 vintage will soon
eclipse the 2013 vintage (8.3% at January 31, 2015), while already exceeding the cumulative losses of
every other vintage dating back to 2006.12
Management's original guidance for the 2013 vintage was a 6% cumulative loss rate. This guidance was
communicated with confidence when management proclaimed, many years of experience underwriting
and collecting this type of credit allow us to deliver this consistent performance.13 Yet three months later,
management's claims of experience and consistent performance looked promotional, inaccurate, delusional
and misleading. In December 2013, management confessed there would be modest upward pressure on
the 2013 vintage. However, they also assured investors not [to] expect the final static pool loss rates under
reasonably foreseeable scenarios to exceed 7%.14 As detailed in Table 2 below, Conn's management
appears to have again severely erred in its credit assessment or been highly disingenuous. Just nine months
after stating the 2013 static pool loss rate would not exceed 7% "under reasonably foreseeable scenarios,"

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------------------------------------------------------------------------------------------------------------management increased the cumulative loss guidance for 2013 and 2014 to 8% and 9.5%,15 respectively
(9/2/14). Just six months later, on 3/31/15, the loss rates on these vintages were raised again to 8.6% (2013)
and 10.5% (2014).16

Table 1. Historical Increases in Cum Loss Projections


9/5/13 12/5/13
2013 6%
<7%
2014
<7%
Source: company filings.

3/27/14 6/2/14 9/2/14 3/31/15 June '15


7%
7%
8%
8.6%
7%
7%
9.5% 10.5%
?

Table 2. Cum Loss Guidance and Commentary

Call Date
9/5/13

Static pool loss rates have been fairly stable over time at around 6% The company's many years of experience
underwriting and collecting this type of credit allow us to deliver this consistent performance We expect the final
static pool loss rates for the recent fiscal years to be in line with historical experience though there may be modest
upward pressure as a result of the recent execution issues; and for the current fiscal year due to the increased volume of
new credit customers entering the portfolio.

12/5/13

We expect the final static pool loss rates for the recent fiscal years to be in line with historical experience though there may
be modest upward pressure as a result of the recent execution issues, and, for the current fiscal year, due to the increased
volume of new credit customers. However, due to the rapid pay down of the receivables we now experience, we would not
expect the final static pool loss rates under reasonably foreseeable scenarios to exceed 7%.

3/27/14

We expect the final static pool loss rates for the recent fiscal years to be in line with historical experience though there may
be modest upward pressure as a result of the recent execution issues, and for the current fiscal year, due to the increased
volume of new credit customers. However, due to the rapid pay down of the receivables we now experience, we expect the
final static pool loss rates under reasonably foreseeable scenarios to end up around 7%.
Later, when asked "what gives you the confidence that he loss rates are going to mirror the historical average," CONN's
CEO claimed the changes to their re-aging and charge-off policy is "we're just going to get there quicker."

6/2/14

We expect the final static pool loss rates for the recent fiscal years to be in line with historical experience though there
may be modest upward pressure to around 7% as a result of the execution issues experienced in fiscal 2014, and due to
the increased volume of new credit customers originated during those periods.

9/2/14

Static losses for fiscal 2013 originations are now expected to be higher than originally forecast, moving from 7% to
around 8%. As we've indicated previously, the fiscal 2014 originations static losses will be elevated, and we now
expect these to be around 9.5%. Fiscal 2015 originations static losses are expected to trend down from fiscal 2014.
We stated the goal of maintaining static losses at 7% or below to assist investors in understanding how the company is
underwriting accounts.

3/31/15

The fiscal 2014 origination static losses will be elevated and we now expect these to be around 10.5% based on current
collections trends. Our prior expectation for fiscal 2014 static loss was 9.5%. Our expectation for loss increased primarily
because of our assessment of the impact of tighter re-aging standards and reduced account combinations.

Source: call transcripts.

An objective analyst would presumably take issue with many of the statements Conn's management has
made. But incredibly, many investors and supportive sell-side analysts believe changes made in 2013 to
Conn's underwriting practices have resulted in improved credit performance. As highlighted from Conn's
investor presentation slide deck, the company made underwriting changes in October 2013. If this were
truly the case, then the benefit of these changes should have been partially reflected in the 2014 vintage.

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While the implementation time required for the changes to impact credit quality is debatable, the 2014 loss
curves suggest zero improvement was realized. The 2015 vintage, which should have received the full
benefit of the 2013 underwriting changes, suggests Conn's more conservative approach was either an abject
failure or completely insincere. As seen in Chart 1 above, the initial charge-offs on the 2015 vintage
(represented by the green box) are already running 30 basis points ahead of the catastrophic 2014 vintage.
As each successive vintage seems to have credit quality worse than the year prior, management has
continued to provide wide ranging excuses for credit deterioration. Over the past eighteen months, the sellside has blindly accepted excuses for credit deterioration, which include changes to the re-aging policy,17
installment issues with a collections platform,18 and even reduced sales of charged-off debt.19 It is our
opinion that management's endless excuses are simply gross misrepresentations, which is a view shared by
a number of former employees as discussed later.
Contrary to investors' misplaced belief that Conn's credit performance is on the mend (when looking at the
wrong metrics), the string of negative credit surprises will likely continue. On its fourth quarter 2015
earnings call,20 management provided 1Q'16 charge-off guidance between 12.5% and 13.5%. Based on our
assumption for the 1Q'16 average outstanding loan balance, management's guidance implies 1Q'16 net
charge-offs of $40 to $45 million, which would be a 100% year-over-year increase. According to Conn's
March 2015 investor presentation,21 at least 96% of the remaining portfolio at 1/31/2015 was comprised of
the 2014 and 2015 vintage. As such, 1Q'16 charge-offs will be heavily concentrated in these vintages.
In Chart 2 below, we plot the estimated cumulative loss curves at 4/30/15, generously assuming charge-offs
at the low- to midpoint of management's guidance. Using management's guidance for total net-charge offs,
we believe the 2014 vintage cumulative loss will increase to over 10% in 1Q'16. This would mean the static
losses for the 2014 vintage are already approaching management's updated ultimate loss guidance of 10.5%
(provided on 3/31/2015). We believe management will once again need to increase their cum loss guidance
for the 2014 vintage. And the development in the 2015 vintage appears even worse. Using management's
guidance, the implied ramp in 2015 charge-offs appears to be tracking well ahead of the 2014 vintage.
Despite the widely held view that management's underwriting changes are driving improvements in
credit losses (based on delinquency numbers, while ignoring charge-offs and re-aged accounts) the
exact opposite is occurring credit losses are accelerating.

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------------------------------------------------------------------------------------------------------------Chart 2. Static Pool Cum Loss by Vintage - Estimated

10%

8%

6%

4%

2%

0%
0

2
'06

4
'07

5
'08

'09

9
'10

10

11
'11

12

13
'12

14

15
'13

16
'14

17

18

19

20

'15

Source: SEC filings, compary presentations, and our estimates.

Improvement? NO - Just Seasonality & Sleight of Hand!


As stated multiple times, the incremental retail-sector buyer in Conn's appears to have missed the nuances
of credit analysis. And seasonality is a material nuance in the analysis of subprime delinquency data. Every
year, between late-January and mid-March, the IRS pays out billions of dollars in refunds to lower income
tax payers. These refunds are often used to pay down personal debt that has accrued over the course of the
previous year. As a result, most subprime portfolios experience optically improved trends during, and
shortly after, refund season. This phenomenon is clear when examining Conn's historical delinquency data.
Table 3 below highlights how Conn's delinquency rates have bottomed in the March-to-May timeframe the
previous two years.22 Based on the historical impact of refunds, we believe Conn's 60+ day delinquency
rate will once again bottom in May and begin to increase throughout the rest of 2015.
Table 3. Monthly 60+ Day Delinquency

60+ day delinquency


% re-aged
60+ day delinquency
% re-aged
60+ day delinquency
% re-aged
source: company filings.

Feb/13 Mar/13 Apr/13 May/13 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14
7.0%
6.5%
6.7%
7.0%
7.6%
8.2%
8.7%
8.5%
8.5%
8.5%
8.5%
8.8%
11.2%
10.8%
10.9%
11.3%
Feb/14 Mar/14 Apr/14 May/14 Jun/14 Jul/14 Aug/14 Sep/14 Oct/14 Nov/14 Dec/14 Jan/15
8.7%
8.2%
8.0%
7.8%
8.2%
8.7%
9.2%
9.7%
9.7% 10.0% 9.7%
9.7%
11.6%
12.1%
13.1%
13.4%
Feb/15 Mar/15 Apr/15
9.2%
8.7%
8.4%
n/a

The 30+ day delinquency rate for Capital One's Domestic Card business (a much higher credit quality
portfolio with 32% of loans below 660 FICO) and the total delinquency rate for AmeriCredit/GM's
subprime auto securitization trust, AMCAR, supports our assertion that Conn's improvement is seasonal.
As seen in the charts below, the delinquency rates in the COF and ACF/GM subprime securitization trusts
have historically bottomed in March or April, only to steadily increase after tax refund season.

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------------------------------------------------------------------------------------------------------------Chart 3. Capital One Domestic Card 30+ Day Delinquency By Month

4%
4%
4%
3%
3%
3%
3%
3%
Jan-15

Feb-15

Mar-15

Apr-15

May-15
'12

Jun-15

Jul-15

Aug-15

'13

'14

'15

Sep-15

Oct-15

Nov-15

Dec-15

source: company filings.

Chart 4. AmeriCredit's AMCAR Total Delinquency By Month

13%

11%

9%

7%

5%

3%
Jan-15
'05

Feb-15

Mar-15

Apr-15

'06

'07

'08

May-15
'09

Jun-15
'10

Jul-15

Aug-15
'11

Sep-15
'12

Oct-15
'13

Nov-15
'14

Dec-15
'15

source: securitization trust reports.

In addition to the flattering effect of seasonality, we believe Conn's delinquency data has been distorted by
management's aggressive tactics. If we did not know better, we would guess management was trying to
artificially dress up the portfolio. Beginning in October 2014, Conn's started to retain 18- and 24-month
equal-payment, no-interest loans to higher FICO borrowers. 23 These loans are unlikely to go into early
payment default, so despite producing minimal incremental interest income, including them in the portfolio
denominator helps the optics of delinquencies.
Management has also been much more aggressive re-aging and restructuring accounts. Re-aging a
delinquent account is when a consumer makes a payment, no matter how small, or even makes a verbal
commitment to pay on a debt, that often allows Conn's to deem the credit current.24 Conn's grants
extensions to customers who have experienced financial difficulty but indicate a willingness and ability
to resume making monthly payments. 25 According to public filings, Conn's charges-off an account when it
is more than 209 days past due. Hence, re-aging an account from a delinquent status to a current status26
allows loss recognition to be delayed and the clock to even restart. Aggressive re-aging does not improve or

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------------------------------------------------------------------------------------------------------------alter credit quality, it simply delays loss recognition. This questionable practice was one of the primary
issues that drove Conn's stock to the low single digits in 2010 and 2011. We believe Conn's decision to
again commence aggressively re-aging accounts is a significant red flag.
Buried in Conn's 1Q'15 10Q, the company disclosed that beginning in May 2014, subsequent re-aging of an
account could occur every four months, versus every six month previously. 27 The impact of this
questionable policy change can be seen in the percentage of re-aged accounts. At 1/31/15, re-aged accounts
comprised 13.4% of the portfolio balance, which was a material increase from just 11.3% the prior year.
Looked at another way, the balance of re-aged accounts grew by 52% year-over-year, compared to 28%
overall portfolio growth.28
The quality of the re-aged accounts has also deteriorated significantly. As of 1/31/15, balances that have
been re-aged at least six months grew 93%, while balances that have been re-aged between 3 - 6 months
grew 98%. Lower quality re-aged balances will likely result in higher permanent losses.
Finally, the elevation of charge-offs has also had a flattering impact, making delinquencies appear
artificially low. While higher charge-offs lead to lower delinquencies, the ultimate impact is the recognition
of a permanent loss.
Table 4. Re-Aged Accounts
$ MMs

Balances re-aged > 6 months


Balances re-aged 3-6 months
Re-aged accounts classified as "current"
Total Re-aged accounts
% yoy change - > 6 months
% yoy change - 3-6 months
% yoy change - current
% yoy change - Total re-aged
% yoy change - total gross receivables
% gross receivables - > 6 months
% gross receivables - 3-6 months
% gross receivables - current
% gross receivables
source: company filings.

4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15


1/31/13 4/30/13 7/31/13 10/31/13 1/31/14 4/30/14 7/31/14 10/31/14 1/31/15
19.6
20.5
20.3
22.8
24.2
26.8
33.8
38.8
46.7
19.1
19.2
19.9
20.7
21.2
23.6
28.2
34.6
41.9
47.8
47.0
50.5
59.3
75.4
77.9
80.8
90.8
94.3
86.4
86.7
90.7
102.8 120.8 128.3 142.9
164.2 183.0
23%
31%
67%
70%
93%
11%
23%
42%
67%
98%
58%
66%
60%
53%
25%
40%
48%
58%
60%
52%
15%

22%

27%

2.6% 2.7% 2.4%


2.6% 2.5% 2.4%
6.4% 6.1% 6.0%
11.7% 11.2% 10.8%

38%
2.4%
2.2%
6.3%
10.9%

44%

43%

40%

2.3% 2.4% 2.9%


2.0% 2.1% 2.4%
7.1% 7.1% 6.9%
11.3% 11.6% 12.1%

33%

28%

3.1%
2.8%
7.2%
13.1%

3.4%
3.1%
6.9%
13.4%

Despite the ability to track credit trends in real-time, we believe Conn's has misrepresented its considerable
underwriting and collection issues. Further, the perceived improvements in the credit portfolio are illusory,
due in part to sleight of hand and seasonality. We believe it is improbable that potential buyers of Conn's
credit portfolio will be as easily fooled when appropriately discounting the deteriorating credit portfolio
and aggressive re-aging practices.
Lawsuit & Former Employees Corroborate a Broken Credit Model
Beginning in late 2012/early 2013, the Company implemented a new growth strategy
pursuant to which Conn's undertook to open new and larger stores (with increased square
footage) in order to be able to expand beyond its core market of consumer electronics. In the
larger format stores, Conn's was able to sell an increased volume of larger ticket items such
as furniture and mattresses. In connection with Conn's growth strategy, Defendants also
lowered Conn's underwriting standards in all of its stores in order to push the larger ticket
items onto customers who had little or no ability to pay. In so doing, Conn's substantially
increased sales revenues during the Class Period based, in significant part, on sales that were
only achieved through high-risk consumer credit.29

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11

COPPERFIELD RESEARCH

------------------------------------------------------------------------------------------------------------The quote above is one of many disturbing accusations, many of which come directly from former
employees, in a lawsuit filed against Conn's. While the lawsuit did make the rounds last year, we would
strongly encourage any interested party to carefully read the amended complaint, which has remained
below the radar (dated 4/10/2015 - docket 14-cv-00548). If the statements made by former employees are
accurate, we do not believe a potential partner would ever trust Conn's to underwrite and service a credit
portfolio.

The following segments are allegations taken directly from the lawsuit that we believe fundamentally taints
Conn's management, underwriting, servicing capabilities, integrity, and likelihood a buyers is willing to pay
book value for the portfolio:

________________________________________________________________________
12

COPPERFIELD RESEARCH

------------------------------------------------------------------------------------------------------------Many former Conn's employees provided similar accounts describing the dysfunction of Conn's credit and
underwriting operations. Assuming there is a modicum of truth to the employee accusations (of which the
SEC is surely aware), we again would argue the market's expectation for a portfolio sale and flow
agreement is severely misplaced. Below are some relevant accusations from former employees in the public
lawsuits. While the outcomes of the shareholder lawsuit, CFPB investigations, and SEC inquiries are still
pending, we believe if the inflammatory accusations are true, Conn's could be in violation of multiple
United States laws and regulations, including: the CARD Act, Truth-in-Lending Act, Fair Credit Reporting
Act, and the Credit Card Accountability, Responsibility & Disclosure ACT of 2009.
Employee #1: high ranking executive, who was the Senior Manager of Collections Strategy reporting
directly to Conn's current COO Michael Poppe:
Conn's management was well aware of the risks posed by excessively lenient lending practices.
This employee was required to participate in earnings conference calls, on which management misled
investors. Specifically, management's excuse that a new collections software platform was to blame
for Conn's higher-than-expected delinquency rate, and not the more lenient lending standards, was a
lie. Contrary to management's public statements, he believed the new software actually helped the
collections group deal with the influx of problem loans. The employee believed management's decision
to extend credit to increasingly uncreditworthy consumers in order to boost sales was to blame for
skyrocketing problem loans.
Management further mislead investors by reporting the average credit score of the credit portfolio as a
whole, rather than the average credit score of delinquent customers, which had dropped by 40 points.
Employee #2: Credit Manager:
Lending practices were relaxed to such a degree that customers with no reported credit scores were
receiving credit lines of $7,000 to $10,000.
This employee also highlighted how Conn's average weighted delinquency scores were inflated.
Employee #3: Credit Underwriter:
Conn's relied on an Automated Approval System, as opposed to human underwriters, to review and
approve all but a small percentage of credit applications.
The company reviewed applications with FICO scores as low as 400, which directly conflicted with
the corporate policy management had communicated to investors.
Credit requirements at new stores were non-existent.
Information provided on credit applications was not questioned and all customers were approved for
credit at new stores.
Employee #4: District Manager:
Every customer was approved for credit during the initial four to five months a new store was opened,
including customers with no income and FICO scores as low as 400.
Customers who had not been approved for credit at a more established Conn's location were directed
by those stores to shop at newly opened stores since they would automatically be approved for credit.
Customers with declined credit applications were called when a new store opened in their area and
were told to apply for credit there.
High-risk customers [who] obtained automatic approval of credit lines were subject to aggressive
sales tactics to pressure the customer to 'max out' the credit line.
Sales reps were required to pass off customers to managers if customers in new stores did not spend
their entire credit limit.
Employee #5: Vice President of Credit
Conn's current COO Michael Poppe supervised the lowering of credit and underwriting standards that
commenced in 2013 with credit increasingly being extended to uncreditworthy customers.
Management was not only aware, but highly involved in day-to-day issues like collections. They were
provided with updated delinquency information, which was discussed daily with top ranking Conn's
management.

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13

COPPERFIELD RESEARCH

------------------------------------------------------------------------------------------------------------Employee #6: Collections Specialist


The collections desk was dealing with customers with FICO scores in the 200s, 300s, 400s, and
500s.
His job was impossible as people he was contacting lacked the ability to pay the credit lines they had
been given. The company's response was for him to pressure customers into entering an extension
program.
Many of the allegations found in the shareholder lawsuit seemed to be verified by an independent New
York Times article on Conn's from September 2014 titled, If a Company Won't Talk, Its Former
Employees Will.30 Their research found further evidence, while citing specific examples, of
management's total disregard for underwriting. For example, the article documents a man from Arizona
with destroyed credit whose house had just been foreclosed on. This man visited a friend who worked at
Conn's, only to surprisingly obtain a $14,000 Conn's credit line (at a 25% interest rate plus add-on credit
insurance that further increased the effective yield). 31 Unsurprisingly, he fell behind on payments soon
after making his purchases. All of his other creditors worked with him to reduce his monthly outlays except
Conn's. The man told the New York Times: they called me eight times every day and tell me I qualify for
refinancing, but that I need to send them $280 before they will send me the paperwork for the refi I tell
them I want to see the paperwork before I send the money. And they won't until I send them $280.32 This
anecdote leads us, and undoubtedly potential buyers, to wonder whether sending $280 would have
classified this account as re-aged (moving it from delinquent status to current).
Regulatory Issues Likely to Weigh On Potential Buyers
We believe investors in Conn's are unaware of the looming regulatory risk. Ironically, Conn's management,
who we think has been highly disingenuous with investors, actually admits they expect to be subject to the
CFPB's regulation at some point and regulation may have an impact on our business.33 This regulatory
impact may be much closer than investors expect. Last Friday (5/22/15), the CFPB moved to regulate
installment lenders, which could encapsulate Conn's.34 Conn's offers closed-end credit with fixed
repayment schedule and repayment amounts, which appears to fit the definition of installment loans. This is
important because retail-centric investors and sell-side analysts appear unaware of the CFPB's increased
focus on stemming the more destructive lending and collections practices.35
In March 2015, the CFPB released proposed regulations for the payday loan industry that could cut
industry revenues by 60% to 75%.36 The CFPB stated businesses with abusive credit/collection policies
will continue to be a priority. We believe Conn's could also be severely affected by the recently launched
CFPB public inquiry into the credit card market, with a specific focus on credit card terms, the use of
consumer disclosures, credit card debt collection practices, and rewards programs.37 The CFPB listed 12
areas of concern being studied, several of which could have a materially negative impact on Conn's credit
practices.38
Deferred interest products were highlighted as an area of concern by the CFPB. Their policy focus on
whether consumers who use deferred interest promotions understand the risk of being charged retroactive
interest seems to suggest regulation is forthcoming. 39 Deferred interest promotions add interest to the loan
balance if a customer misses a single payment or does not payoff the loan balance within 12 months. This
predatory tactic effectively turns an interest free loan into a high cost subprime financing. 40 In a report to
Congress, the CFPB found that 43% of borrowers with subprime credit scores who took out promotional
financing with deferred interest were ultimately charged retroactive interest in a lump sum. 41 In its report
to Congress, the CFPB concluded that deferred interest products end up costing a significant segment of
vulnerable consumers a sizable amount of money. Their recent public focus on this predatory loan product
could present a material problem for Conn's, considering nearly one-third of its portfolio is exposed to
deferred interest.42

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14

COPPERFIELD RESEARCH

------------------------------------------------------------------------------------------------------------At 1/31/2015, promotional no-interest receivables represented 32.8% of Conn's receivables portfolio (or
$448 million of $1.37 billion).43 This controversial loan product has been a significant driver of Conn's
portfolio growth. The promotional deferred interest receivable of $448 million has grown from just $84
million over the last four years. During this same period, deferred interest receivables have ballooned from
just 12.4% of Conn's portfolio in 4Q'11 to 32.8% in 4Q'15. 44 There is little doubt that Conn's will have
significant risk if/when the CFPB target these products, as its own disclosures clearly highlight that
promotional credits include deferred interest.45
Table 5. No-interest Receivables
$ MMs
4Q'11 4Q'12 4Q'13 4Q'14 4Q'15
1/31/11 1/31/12 1/31/13 1/31/14 1/31/15

No-interest receibables balance 83.8 95.2 202.4 380.3 448.0


% of gross loans
12.4% 14.8% 27.3% 35.6% 32.8%
source: company filings.
Credit card add-on products and what actions issuers have taken to prevent unfair, abusive, or deceptive
marketing practices and what harmful practices persist is the second areas of concern being studied by the
CFPB that directly affects Conn's.46 As a precursor to what may happen with Conn's, CFPB rules went into
effect in 2014 that prohibit financing credit insurance premiums (an add-on product) with a mortgage.47
Demonstrating the aggressive stance the CFPB took against lenders, Bank of America was ordered to pay
$727 million in relief to consumer harmed by practices related to credit card add-on products.48 Further,
a number of state attorney generals and private plaintiffs have filed lawsuits against retailers relating to
improper practices in connection with the sale of credit insurance. 49 The crackdown on credit card
companies' usage of useless and over-priced add-on products to extract additional fees from customers,
while avoiding state usury violations should not be ignored.50 We believe Conn's own add-on products
are exposed to substantial regulatory risk.
Conn's offers credit insurance on finance sales, while requiring that customers either purchase property
insurance from Conn's, or provide evidence of insurance from a third-party provider.51 In fiscal 2015,
Conn's recognized $50.6 million of insurance commission revenue. When compared to the $211.1
million of interest income and fee revenue, it is clear that these add-on products represent a material
economic driver of the credit business.52 Further, we believe insurance commissions flow through at nearly
100% margin. The New York Times reported that several former Conn's employees [were given] odd
instructions when it came to selling credit insurance, which included being encouraged to sell it to
maximize their bonus, but [they were] not supposed to discuss it with customers.53 If true, Conn's
methods would by definition constitute the exact unfair, abusive, or deceptive marketing practices that
the CFPB is currently studying. If future regulation reduced and/or eliminated insurance add-on products,
Conn's (or an unsuspecting buyer) could lose 19% of its revenue, with extremely high margins.
Finally, on November 25, 2014 the Fort Worth Regional Office of the SEC sent an information request to
Conn's as part of a non-public inquiry relating to underwriting policies and bad debt provisions.54 The
previously discussed class action lawsuit alleges that Conn's top two executives, CEO Theodore Wright and
COO Michael Poppe, possessed the motive to commit fraud when they reaped more than $4.5 million
[of] insider trading proceeds selling stock while allegedly aware of Conn's extensive credit issues. If true,
we believe these executives could be subject to SEC enforcement, which would create even greater
uncertainty at Conn's.

Bluestem Does Not Appear To Be a Viable Comp


Multiple sell-side analysts have used Bluestem as a proxy for Conn's imminent credit transaction structure.
We believe the facts do not support this comparison. Bluestem is an online retailer, and wholly-owned

________________________________________________________________________
15

COPPERFIELD RESEARCH

------------------------------------------------------------------------------------------------------------subsidiary of Capmark Financial (CPMK), doing business under the Fingerhut, Gettington.com, and
PayCheck Direct brands. Back in 2013, Bluestem Brands entered into an agreement with Santander
Consumer USA (SC) in which SC would purchase revolving credit receivables originated by Fingerhut and
Gettington.com.55 According to SC's 10K, the agreement includes an option to purchase certain loans
from Bluestem.56 Based on our understanding, the effective Bluestem/SC option is very different than
the required flow agreement that sell-side analysts have floated for Conn's. For example, in an amendment
to its 10K, SC disclosed that they originated approximately $343 million of loans with Bluestem in 2014.57
CPMK disclosed that Bluestem had $1.2 billion of merchandise sales in its fiscal year ended 1/30/2015.58
This implies that only 30% of Bluestem's sales were financed through SC. This ratio is in stark contrast
to Conn's financing profile and needs.
In fiscal 2015, Conn's in-house financed sales were $942.2 million compared to $1.22 billion of total retail
sales. In-house financing accounted for 78% of Conn's retail sales. We think it is nonsensical to assume
these financed sales could be easily transferred to a third party. But what investors do not appear to realize
is Conn's already has a relationship with a third party lender, Synchrony Financial. Similar to SC, who has
the option to acquire higher credit quality loans through Bluestem (while Bluestem services the
portfolio), Synchrony can also extend credit to qualified Conn's customers. We believe it is telling that
Synchrony Financial only financed 10.8% of Conn's sales in fiscal 2015, nowhere near the 30% of
Bluestem sales that were financed by SC. The fact Synchrony has been so selective in Conn's credit
purchases suggests to us that Conn's will struggle to find a lender foolish enough to not only buy the nonSynchrony financed portfolio (Conn's portfolio), but also cede unrestricted underwriting and servicing
responsibilities.
We also believe Bluestem is exposed to far less regulatory risk, making Bluestem a more attractive
financing partner than Conn's. For example, Bluestem appears less reliant on deferred interest (Conn's
portfolio is roughly one-third promotional no-interest credit) and add-on products, which we highlighted
earlier as hot button issues for regulators. Fingerhut, which accounts for most of Bluestem's portfolio loans,
does offer an account protection add-on product.59 However, unlike Conn's, a merchandise buyer is NOT
required to buy insurance from Bluestem, or provide proof of third party coverage. We believe this
requirement of proving third party coverage drives significantly higher attachment rates at Conn's. Further,
Bluestem offers revolving credit for financing smaller ticket items with low initial credit lines, while also
retaining credit losses on higher credit risk customers.60 Bluestem's credit card is issued through a Utahchartered industrial bank, which subjects their credit offering to regular review by the FDIC. In totality, the
Conn's comparisons to Bluestem appear unwarranted. With far less regulatory risk, we believe Bluestem is
a quantifiable risk for a third party financing partner, whereas Conn's risk appears open-ended.
Without a Portfolio Sale and Flow Agreement Conn is Broken
We concur with management's public statements that credit is inextricably linked to its retail model. That
89% of retail sales required financing, while just 6.5% of retail sales were cash sales, speaks to the
depressed state of Conn's customers. As such, it should be no surprise that management has emphatically
stated they need to retain underwriting and servicing autonomy. This requirement for control is one of the
main fundamental dynamics that make a successful transaction unlikely (defined as portfolio sale and
unrestricted flow agreement). Potential portfolio buyers will need to contend with massaged credit optics,
questionable underwriting standards, charge-off and re-aging policies that suggest credit is getting worse,
as well as a host of existing and/or potential regulatory impediments. As it becomes clear that Conn's is
unlikely to find a portfolio buyer and flow partner, we believe Conn's stock will collapse as investors
realize its retail business model is broken.
It is our opinion that Conn's systematically overstates its retail gross margins by financing sales that
consumers could not otherwise afford. The derivative beneficiary of Conn's credit policies has been an
overstatement of retail segment economics. Conn's generates a logic-defying 40.5% retail gross margin,
which we believe is solely a function of its aggressive financing tactics.61 As Table 6 highlights below,
similar big box retailers like hhgregg (HHG) and Best Buy (BBY) generate gross margins in the high-

________________________________________________________________________
16

COPPERFIELD RESEARCH

------------------------------------------------------------------------------------------------------------twenties, significantly lower than Conn's.62,63 The bullish argument that Conn's over-indexes to furniture
and mattresses is simply fallacious. Mattress Firm (MFRM), a specialty mattresses company, reported a
38.2% gross margin in 2014, despite high-end specialty and private label mattresses comprising more than
40% of its sales.64 We believe Conn's retail gross margins are overinflated due to a simple formula: Find
consumers that are reliant on subprime financing, charge a higher initial mark-up (IMU) on retail
merchandise, overstate margins and income at the retail operations. This formula imbeds a cost of financing
in gross margins, but WITHOUT CAPTIVE IN-HOUSE FINANCING, THIS RETAIL FORMULA NO
LONGER WORKS.
Table 6. Ratail Gross Margins
$ MMs
2011
2012

CONN
26.5%
28.7%
HGG
30.3%
28.9%
BBY
25.0%
24.5%
source: company filings.

2013

2014

2015

35.2%
29.0%
23.6%

39.9%
28.4%
23.1%

40.5%
28.5%
22.4%

Conn's retail square footage growth and economics fail without the support of easy credit and lax
underwriting standards. We can not stress enough that a portfolio sale, without an unrestricted flow
agreement, means the engine behind Conn's unfettered retail growth is broken. Under this scenario, we
believe the shares will revisit the $15 level seen earlier in 2015, which would represent more than 60%
downside.

http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
http://www.sec.gov/Archives/edgar/data/1580608/000119312515153785/d916189d10ka.htm
3
http://www.sec.gov/Archives/edgar/data/1580608/000158060815000031/santander201410-k.htm
2

________________________________________________________________________
17

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------------------------------------------------------------------------------------------------------------4

http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
http://www.marketwatch.com/story/conns-exploring-strategic-alternatives-2014-10-06
6
http://finance.yahoo.com/news/conn-inc-reports-fourth-quarter-100000450.html
7
http://finance.yahoo.com/news/conn-inc-reports-fourth-quarter-100000450.html
8
seekingalpha.com/article/3043486-conns-conn-ceo-theo-wright-on-q4-2015-results-earnings-call-transcript
9
seekingalpha.com/article/3043486-conns-conn-ceo-theo-wright-on-q4-2015-results-earnings-call-transcript
10
http://www.sec.gov/Archives/edgar/data/1223389/000119312512159313/d329947d10k.htm
11
http://seekingalpha.com/article/1881071-conns-management-discusses-q3-2014-results-earnings-call-transcript
12
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
13
http://seekingalpha.com/article/1676222-conns-management-discusses-q2-2014-results-earnings-call-transcript
14
http://seekingalpha.com/article/1881071-conns-management-discusses-q3-2014-results-earnings-call-transcript
15
http://seekingalpha.com/article/2466205-conns-conn-ceo-theodore-wright-on-q2-2015-results-earnings-call-transcript
16
http://seekingalpha.com/article/3043486-conns-conn-ceo-theo-wright-on-q4-2015-results-earnings-call-transcript
17
http://seekingalpha.com/article/1881071-conns-management-discusses-q3-2014-results-earnings-call-transcript
18
http://seekingalpha.com/article/1676222-conns-management-discusses-q2-2014-results-earnings-call-transcript
19
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
20
seekingalpha.com/article/3043486-conns-conn-ceo-theo-wright-on-q4-2015-results-earnings-call-transcript
21
http://ir.conns.com/
22
http://ir.conns.com/
23
http://www.sec.gov/Archives/edgar/data/1223389/000122338914000023/conn2014103110-q.htm
24
http://www.creditcards.com/glossary/term-reaging-or-reage.php
25
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
26
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
27
http://www.sec.gov/Archives/edgar/data/1223389/000122338914000010/conn2014043010-q.htm
28
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
29
docket 14-cv-00548
30
http://www.nytimes.com/2014/09/14/your-money/the-haggler-if-a-company-wont-talk-its-former-employees-will.html?_r=0
31
http://www.nytimes.com/2014/09/14/your-money/the-haggler-if-a-company-wont-talk-its-former-employees-will.html?_r=0
32
http://www.nytimes.com/2014/09/14/your-money/the-haggler-if-a-company-wont-talk-its-former-employees-will.html?_r=0
33
seekingalpha.com/article/3043486-conns-conn-ceo-theo-wright-on-q4-2015-results-earnings-call-transcript
34
http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201504&RIN=3170-AA07
35
http://dallasmorningviewsblog.dallasnews.com/2014/07/feds-are-stepping-up-the-charge-against-payday-lenders-and-itswelcome.html/
36
http://files.consumerfinance.gov/f/201503_cfpb_outline-of-the-proposals-from-small-business-review-panel.pdf
37
http://www.consumerfinance.gov/newsroom/cfpb-launches-public-inquiry-to-inform-agency-review-of-the-credit-card-market/
38
http://www.cfpbmonitor.com/2015/03/19/cfpb-launches-another-credit-card-review/
39
http://www.cfpbmonitor.com/2015/03/19/cfpb-launches-another-credit-card-review/
40
http://www.sec.gov/Archives/edgar/data/1223389/000122338914000006/conn0131201410-k.htm
41
www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QFjAA&url=http%3A%2F%2Ffil
es.consumerfinance.gov%2Ff%2F201309_cfpb_card-actreport.pdf&ei=LXRaVc6VMcvfoATrs4P4Bw&usg=AFQjCNEhQ6WDGoGv4wpHPSnOKcaGq5zx5Q&sig2=FToHF6n7UHEiFFTnGo4iw&bvm=bv.93756505,d.cGU
42
www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QFjAA&url=http%3A%2F%2Ffil
es.consumerfinance.gov%2Ff%2F201309_cfpb_card-actreport.pdf&ei=LXRaVc6VMcvfoATrs4P4Bw&usg=AFQjCNEhQ6WDGoGv4wpHPSnOKcaGq5zx5Q&sig2=FToHF6n7UHEiFFTnGo4iw&bvm=bv.93756505,d.cGU
43
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
44
http://www.sec.gov/Archives/edgar/data/1223389/000114036113015715/form10k.htm
45
http://www.sec.gov/Archives/edgar/data/1223389/000122338914000006/conn0131201410-k.htm
46
http://www.cfpbmonitor.com/2015/03/19/cfpb-launches-another-credit-card-review/
47
http://www.consumerfinance.gov/regulations/loan-originator-compensation-requirements-under-the-truth-in-lending-act-regulationz/
48
http://www.consumerfinance.gov/newsroom/cfpb-orders-bank-of-america-to-pay-727-million-in-consumer-relief-for-illegal-creditcard-practices/
49
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
50
http://www.uspirg.org/blogs/eds-blog/usp/financial-follies-update-discover-card-pays-deceptive-marketing-penalty
51
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
52
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
53
http://www.nytimes.com/2014/09/14/your-money/the-haggler-if-a-company-wont-talk-its-former-employees-will.html?_r=0
54
http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
55
http://www.businesswire.com/news/home/20130919005320/en/Bluestem-Brands-Announces-Agreement-Santander-ConsumerUSA#.VVpRQUZD3jM
56
http://www.sec.gov/Archives/edgar/data/1580608/000158060815000031/santander201410-k.htm
57
http://www.sec.gov/Archives/edgar/data/1580608/000119312515153785/d916189d10ka.htm
58
http://www.capmark.com/investor-relations
59
www.fingerhut.com/custserv/custserv.jsp?pageName=SafelineTC
60
http://www.capmark.com/investor-relations
5

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------------------------------------------------------------------------------------------------------------61

http://www.sec.gov/Archives/edgar/data/1223389/000122338915000013/conn0131201510-k.htm
http://www.sec.gov/Archives/edgar/data/1396279/000139627915000018/hgg-20150331x10k.htm
63
http://www.sec.gov/Archives/edgar/data/764478/000076447815000014/bby-2015x10k.htm
64
http://www.sec.gov/Archives/edgar/data/1419852/000155837015000438/mfrm-20150203x10k.htm
62

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