What’s next for Westlake?
Westlake Financial Services, traditionally a subprime auto lender, has branched out into near-prime and prime-risk lending, plus commercial lending to dealerships.
Last month, the privately held Los Angeles company said it was opening a sales office in Dallas to better serve the Midwest and Texas. (In 2012, Westlake’s operations first reached all 50 states.) In January, Westlake bought Western Funding Inc. in Las Vegas, a subprime lender for independent used-car dealers.
Last month, Westlake hired Casey Harmon, the former national manager of dealer services and sales for Toyota Financial Services, as senior vice president of corporate development.
Ian Anderson, Westlake group president, talked about the lender’s growth plans last week with Special Correspondent Jim Henry.
Q. How’s Westlake in general, and where is its growth coming from?
A. Overall, things are going pretty well. We just bought a large portfolio -- about $180 million, and that helps our growth in total. At the beginning of the year we bought Western Funding.
Westlake recently announced it had $2.1 billion in outstanding loans. What was it a year ago?
It’s actually up to $2.3 billion. A year ago, it was $1.7 billion. We have really pushed into the 600-plus FICO business. It’s now more than 35 percent of our business. It used to be, a few years ago, only 10 to 15 percent, so it’s much higher than it used to be.
You recently said Westlake is targeting 20 percent growth in 2015. Is that total outstanding loans, or is that origination volume? Does that include buying existing portfolios?
It’s origination volume. Right now, it’s actually pacing about 30 percent growth over December last year. A lot of that has to do with strategic partnerships. That does not include portfolio acquisitions.
What is meant by strategic partnerships?
We have relationships with retailers like AutoNation and Penske Automotive. We also have relationships with Enterprise Car Sales. We also have a brand-new relationship with a large Japanese motorcycle company I can’t name yet. We’re starting to do motorcycles this year, and power-sports vehicles. We also support a large ride-share company -- we’re just piloting that.
Westlake said that growing strategic partnerships would be part of Casey Harmon’s responsibilities, along with gaining more efficiency. What does that entail?
No. 1 is really increasing our relationships with more partners out there. He’s charged with that, as well as trying to help us improve our efficiency. We have a goal to save $1 million per month.
We have been able to reduce our operating costs. Operating costs were the equivalent of 6.4 percent of total outstandings, and now it’s 5.7 percent. Our goal is 5 percent.
Does Westlake provide other financial products for dealerships?
We have also expanded into working capital and credit facilities for dealers. We just helped two dealers buy facilities. We are providing that type of financing for well over 20 dealers now.
We have changed from being just subprime to not only full-service, but we’re a diversified financial services company. Our strategy is trying to serve the underserved.
Does Westlake also have relationships with other lenders in which it gets the other lenders’ turndowns?
Yes, we have that with one pretty large lender. It’s a pass-through relationship, as you describe. We also have those for three smaller regional banks we do that with.
How many people is Westlake adding with its new production center? Is that for servicing, too?
They will not be servicing the accounts there. It is for sales and production.
We plan to have it up and running by Feb. 1 and completely staffed. As of Dec. 15, we expect to have 26 new sales reps sitting at Westlake, and four new ones at Western Funding.
What does that make the company total?
It’s 326 right now, going to 400.
I understand everybody tries to have new staff in place and broken in for tax return season because that’s the busy season for subprime.
That’s right. With the new sale reps, we expect to have 240 to 250 sales reps in place when tax season hits.
