CHADDS FORD, Pa. -

About 14 months ago, the merger of Flagship Credit Acceptance and CarFinance Capital became finalized, leaving Michael Ritter as the chief executive officer of the finance company that specializes in filling its portfolio with subprime paper.

During that span, Flagship Credit Acceptance navigated through all the changes to write what Ritter called “a remarkable story.” Flagship Credit Acceptance now operates with a streamlined branding strategy to cater to its dealership and consumer customers. The company also is tapping the ABS market to position it for even more growth.

“Whenever two entities of a similar size come together, you’re going to have challenges. Challenges emerge. Our merger was not unique in that respect,” Ritter told SubPrime Auto Finance News during a recent phone conversation.

“However, in hindsight, we accomplished so much in such a short period of time that it’s really impossible to recount them all. But the most noteworthy is the combination of our sales team and the introduction of individual product and originations platform across all Flagship territories,” he continued.

“Our sales leadership did a magnificent job integrating the two sales teams without any deterioration in volume. We actually exceeded our sales goals for the first half of the year and the year as a whole. It’s really a remarkable story what we were able to do,” Ritter went on to say.

The merging process intensified in the fall of 2014 when Perella Weinberg Partners combined companies into a single unit with total assets in excess of $2 billion. Last Jan. 1, Flagship Credit Acceptance carried on as the resulting finance company; one that operates in all by three states. Leadership has since retired the CarFinance Capital brand

“The company has really emphasized a broad dealership base through systematic geographic expansion. That’s been my philosophy for decades,” Ritter said. “We work hard to hire highly qualified area sales managers to manage the sales effort by territory. We continue to believe that in order to service our dealer customer that we need to have a consistent and direct interaction. We’ve embraced the concept of vertical integration and a transactional sales approach in every dealership and have put these strategies to use with really great success.

“In my opinion, indirect auto lending remains a service business,” he continued. “Our strategy is to always build a strong dealer base throughout the U.S. Once that base is established, we solidify that base and deepen it by providing what we refer to around here as expectation exceeding customer service — from our dealer service triangle of sales, credit and funding partners within the organization. To that extent, you can say I’m old school, but I think that’s what it takes to succeed.”

Ritter also touched on what feedback Flagship Credit Acceptance is receiving from its dealer network that currently stands at more than 8,700 stores.

“In terms of what the dealers ask for the most from Flagship, I would say would be a broader product mix. We have expanded some of our offerings, but we’re very careful and very cautious to stay with what we do best. We just think that’s the best long-term solution for not only Flagship, but also for our dealers,” Ritter said.

“I think what we do is good customer service with a good product. It has to be a competitive product because it’s a very competitive environment,” he added.

Besides originating contracts through its dealer network, Flagship Credit Acceptance also is active in the ABS market.

On Feb. 25, the company successfully completed its 14th term asset-backed securitization of $447 million of notes with Flagship Credit Auto Trust 2016-1. The development brought Flagship Credit Acceptance’s total issuance to more than $4 billion in notes.

Flagship Credit Acceptance mentioned the notes were assigned ratings by Standard & Poor’s Rating Services and Kroll Bond Rating Agency with Barclays, Citigroup and Deutsche Bank Securities acting as joint book-runners for the transaction.

“The current market seems to be more cautious. Spreads have clearly widened,” Ritter said during the interview with SubPrime Auto Finance News just before this ABS transaction finalized.

“I’m not an economist but that could be due to multiple factors whether it be China, the price of oil and its production and supply, and the Federal Reserve’s lack of clear direction,” he continued. “I think all of those factors have caused the markets to be wary and tightened significantly over the last six to nine months.

“In terms of importance to Flagship, it’s very important,” Ritter added about the ABS market. “What we have done is made sure is strategically positioned our company to have access to a significant amount of borrowing capacity and equity; enough to weather an economic crisis. Those are lessons learned from prior recessions and prior crises.”

Meanwhile, Ritter also mentioned Flagship Credit Acceptance also is keeping a close watch on another component of what finance companies must do nowadays. Ritter insisted that it’s important that finance companies place a “high value” on compliance; a practice he stressed Flagship Credit Acceptance does.

“We’re a consumer finance company and therefore subject to consumer finance laws of the country as well as the states which we do business. These are laws. They’re not suggestions. We treat them as such. It’s not an option to us,” Ritter said.

“Flagship wants to adhere not only to the law but the spirit of the law,” he continued. “We devote a significant amount of time and resources to training and developing our underwriters, collectors and funders to be great stewards of our compliance initiatives. At the end of the day, it’s really the front-end people that have the direct interaction.

“In addition, we developed sophisticated risk-based pricing and credit scorecard to ensure a consistent and fair lending environment here at Flagship. We literally strive for perfection every day,” Ritter went on to say.

Striving for perfect along with Ritter is a workforce that consists of approximately 800 professionals who specialize in funding, collections and other tasks.

“I believe that Flagship’s future looks very bright,” Ritter said. “Having said that, however, we choose to conduct business in a very competitive industry that requires the diligent management of our people, processes and plan. We need to be continuously improving at all times. Our pricing needs to be competitive, augmented by superior service.

“We’ve got a strong, growing portfolio. And growing a strong portfolio servicing group is of paramount importance so we have to make sure customer service, our servicing and our collections are superior. We need to collect those dollars we lend,” he continued.

“At Flagship, we’re going full speed ahead into 2016 and beyond. We feel pretty good,” Ritter concluded.