HOUSTON — After being cautious amidst the turmoil of the economy, First Investors Financial Services' chairman and chief executive officer told SubPrime Auto Finance News on Monday that his company is growing again, including expanding both originations and dealer base.

While he couldn't give specifics about the planned growth, he said it will be done in a methodical fashion.

One of the primary reasons behind the company expanding is that the management team believes the unemployment rate, which is a key driver of loan performance, topped out in the fourth quarter of last year. Tommy Moore, CEO and chairman, said this figure might rise slightly this year, but that the worst appears to be behind.

He went on to say that a lot of the market uncertainty was also due to questions about what would happen to General Motors and Chrysler, in addition to their dealers as the companies worked their way toward bankruptcy last year.

"Going into the fourth quarter of 2009, that uncertainty had a lot of clarity brought to it as well. The dealer risk and collateral risk had all leveled off," the CEO explained to SubPrime Auto Finance News.

"We started making policy changes to increase originations. Also during 2009, we've almost doubled our dealer base and are still actively adding dealers," he continued.

The company has an indirect lending presence in 28 states and a direct-to-consumer lending presence in 42 states.

For dealers looking to establish a relationship with the subprime lender, Moore said the company works primarily with franchise dealers. The team looks for dealers who fit into the company's geographic footprint, in addition to reviewing Better Business Bureau ratings and customer satisfaction levels.

"They must have a dedicated subprime finance department and subprime must be a core business of theirs. This can be something the dealer just set up, but structuring a subprime deal and working with the lender and customer for this is a different ball game than what the F&I department is used to dealing with," Moore indicated.

Looking ahead to the coming year, Moore said he sees good things for the market, particularly in the securitization arena.

"Investors that have historically bought securitized auto pools will look back and say that this asset class is a very, very safe asset class. Look at all the subprime ABS securitizations done during the height of the credit bubble. Only three downgrades and all of those were through Chrysler. The securitizations have worked and worked very well under the most adverse conditions you could imagine — two out of three domestics going bankrupt, high unemployment, consumers coming off of a spending binge and they've held up incredibly well," Moore explained.

Basically, he said subprime auto ABS has less volatility than non-prime and prime.

"The auto securitization market will return. Will it go back to where it was? I don't think so. … But more and more investors are coming back to the marketplace," he said.

"We are more optimistic than pessimistic about the securitization market," Moore added.

Founded in 1988 and being incorporated and offering its first loan in 1989, he pointed out that First Investors celebrated its 20th anniversary last year. This means the company has been through a lot of downturns. In fact, one of the reasons Moore started the company back in the late 1980s was the extremely tight lending environment.

"Back then, Texas just came out of a deep recession. A lot of banks went down and were sold and taken over. No one was lending any money. I saw an opportunity to lend. There wasn't even the term ‘subprime' for loans back then. I understood that bad things happen to good people and saw the economy fall away. A lot of good people were unable to get any access to credit. Here we are 20 years later," Moore said.

So how has the company survived over the years while many other subprime lenders went out of business?

"We've just been very methodical in our growth. We don't grow for growth sake. We're very disciplined in our underwriting. We've never had a credit problem in 20 years and risk management is at the core of our business. Our delinquency and charge-offs are second to none. We lend during both good and bad times. We're very disciplined, and if things become irrational, we take a step back, which is what we did in the fourth quarter of 2006," Moore highlighted.

Retaining all of the company's customer data, the management team was able to review this information and determine that a housing problem was in the pipeline.

"We saw there was going to be a meltdown," he said. "We sidestepped the entire mortgage meltdown by being very proactive and disciplined. We saw our originations drop. We decided that we would rather have the pain of discipline than the pain of regret. And we're continuing to look very closely at what is going on with consumers," Moore pointed out.

Another factor that has helped the company is its various models. In addition to direct and indirect auto loans, the company also makes portfolio acquisitions and third-party loan servicing deals, the latter two of which it runs out of its Atlanta offices. So when originations may be pulled back, the portfolio acquisition and loan servicing side of the business is relatively strong, Moore noted, which can help to offset the reduction.

To be more specific, First Investors actually grew its staff by 30 to 40 percent last year to deal with portfolio acquisitions and servicing.

"We think it's a good time to be lending now," he told SubPrime Auto Finance News. "Our market has rationalized, taking a more rational approach to pricing of risk, and it is a really good time to be originating loans and lending in a down market. At least now we know we can put our hand out and find the bottom."

For dealers interested in establishing a relationship with First Investors, Moore invites them to visit www.fifsg.com.

Dealers can also call the toll-free line at (866) 889-6495.