Arrow Financial Services Announces new Partner

Arrow Financial Services LLC, a leading purchaser and collector of consumer debt, announced today that Parthenon Capital has made a meaningful equity investment in Arrow. Parthenon Capital is a leading middle-market private equity firm located in Boston and San Francisco, which provides growth capital, strategic guidance and operating expertise. Parthenon has committed $45 million for future growth and to finance strategic acquisitions for Arrow.

¡§This investment represents a new chapter for Arrow,¡¨ said Jack Lavin, CEO of Arrow. Mr. Lavin continued, ¡§As part of our ongoing effort to institutionalize our planning and processes, we made the decision to partner with a value-added, outside investor. Parthenon Capital, in addition to being a source of capital, will contribute to our strategic decisions regarding growth into new geographies and markets, both internally and through acquisitions. Our challenge is not finding opportunities for growth, but making the optimal decisions regarding which ones to pursue.¡¨

Brian Golson, Principal of Parthenon Capital stated, ¡§The purchase component of the collections industry has emerged as the primary driver of growth in the market. The evolution of the industry demands that winning companies have a mastery of finance coupled with operational excellence.¡§ Golson also stated, ¡§Arrow¡¦s executive team has developed strong credit grantor relationships, sophisticated database-driven modeling techniques, access to the securitization market as a source of financing, strong collection systems, and a robust infrastructure including over 1,100 employees in five locations.¡¨

This is the first transaction closed by Parthenon Capital¡¦s newly opened San Francisco Office. The firm has established a bi-coastal presence in order serve its national investment scope and be highly responsive to new opportunities and to the management teams in its portfolio. Parthenon Capital maintains a strong relationship with its sister company, The Parthenon Group (¡§TPG¡¨), a leading management consulting firm. ¡§We leverage the deep strategic and operating knowledge of our team and TPG to help companies achieve their Full Potential?·, said Will Kessinger, West Coast Office Head. ¡§Here, we were also able to leverage our experience and relationships in the specialty finance and business services sectors to offer a valuable partnership with the Arrow Team,¡¨ he continued.

Michael Valentino, Arrow¡¦s CFO, described his enthusiasm for the transaction: ¡§We have a tremendous opportunity to broaden our scope into related financial services sectors that leverage Arrow¡¦s core competencies. In conjunction with our new partnership with Parthenon Capital, we have extended our long-term relationship with Prudential Financial. Prudential has become a minority shareholder in Arrow in addition to reaffirming its dedication to Arrow¡¦s securitization efforts. Arrow¡¦s base of capital, strategic partners, and operating capabilities will provide the company with the winning ingredients for success.¡¨

Arrow Financial Services is a leading participant in the accounts receivable management industry focusing on consumer debt. The company purchases for its own account, collects on a contingency basis and provides first-party collection services. Arrow plans to expand its purchasing capability internationally and develop Canada and India-based collections capacity. For more information, visit www.arrow-financial.com.

Parthenon Capital, with offices in Boston and San Francisco, is a $1.1 billion private equity firm focused on providing capital and strategic resources to enable middle-market companies to achieve their Full Potential?·. For more information, visit www.parthenoncapital.com.

Prudential Financial companies, with approximately $580 billion in total assets under management and administration as of March 31, 2002, serve individual and institutional customers worldwide and include The Prudential Insurance Company of America, one of the largest life insurance companies in the U.S. These companies offer a variety of products and services, including life insurance, property and casualty insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, banking and trust services, real estate brokerage franchises and relocation services. For more information, visit www.prudential.com.