Tidewater Finance Co. has no plans to continue to tighten credit this year, signaling that the company has stabilized and is prepared for a downturn in the cycle, Nathan Benson, chief executive of the subprime lender told Auto Finance News.
“We started tightening up [credit] back in October 2015,” he said. “So we’ve been very fortunate, it’s helped us.”
Last month, Kroll Bond Ratings Agency upgraded Tidewater’s 2016-A issuance, which includes $118 million in loans as of Jan. 31. Cumulative net losses to date sit at 2.45% of the pool compared to the original expected loss rate of 6.41%.
“Tidewater has been proactive in a strategic shift in originations and reducing origination volumes ahead of industry or economic downturn,” the Kroll 2016-A presale report stated. “Tidewater is following a controlled growth strategy with a focus on long-term performance and not sacrificing credit quality for volume.”
The company’s history in the secondary market assures Benson that the company is ready to take on another cycle. “We use [securitizations] as a mechanism for capital, because we’re privately owned,” Benson said.
“If you have unlimited capital then you don’t have to [securitize]. If you use it for the right purposes it’s a great vehicle, but if you use it just to generate volume and off-load it then it’s not a good vehicle.”
