MUSA Auto Finance recently entered into a $125 million warehouse facility with Goldman Sachs and, additionally, secured a capital investment of up to $50 million from Crestline Investors.

Company management highlighted the capital investment, along with the warehouse facility, will provide MUSA Auto Finance with the funding needed to launch its vehicle leasing program nationwide this year. MUSA’s business plan is to begin originating new and pre-owned model leases strategically in key U.S. major markets with continued geographic expansion and market penetration in 2017 and 2018.

MUSA Auto Finance was founded by Jeff Morgan, who also owns Mortgages USA and Internet Auto Group. Richard Frunzi, who is the company president and a former co-founder and chief executive officer of Exeter Finance, joined Morgan last year to create MUSA Auto Finance.

The company has recently consummated the asset purchase of an originations, servicing and collections platform based in Jacksonville, Fla. 

“It has always been a career goal of mine to create an auto finance company that would modernize vehicle leasing and make it accessible to more consumers,” Morgan said.

“To be entering into this venture with Goldman Sachs and Crestline Investors sets MUSA on the path to become one of the premier consumer vehicle leasing companies in the U.S.,” he continued.

As mentioned, MUSA Auto Finance maintains its corporate offices in Dallas with a servicing and collections center in Jacksonville, Fla. MUSA originates its leases from franchised and select independent dealers and will be expanding its sales force nationwide. The company expects to be in 25 major markets during the next 12 months and all 48 contiguous states within the next two years. 

Along with Morgan and Frunzi, other members of MUSA Auto Finance’s executive team include:

—Cinde Perales, chief compliance officer

—Eric Estes, chief operations officer

—Scott Schondau, chief financial officer

“Our new funding capacity gives MUSA the ability to build out our infrastructure, and launch our innovative lease program nationally,” Frunzi said. “Our effortless lease program greatly simplifies the leasing process, opening doors to dealer personnel that have never offered a lease product before.

“In addition, our unique product gives customers an option to lease both new and pre-owned vehicles,” he went on to say.

For more information, visit www.musaautofinance.com.  

Investor buys 17% of Nicholas Financial’s shares

Nicholas Financial — determined to be among the top 20 market holders of what Experian Automotive analysts classify as finance companies; operations that do not hold consumer deposits and often specialize in originating subprime paper — filed the mandatory document with the Securities and Exchange Commission because an investment firm purchased more than 5 percent of its outstanding shares.

As first noted by the Tampa Bay Business Journal, a Schedule 13D was posted involving Nicholas Financial; what the SEC said is commonly referred to as a “beneficial ownership report.” That filing indicated The Magnolia Group, an investment firm out of Omaha, Neb., acquired more than 1.3 million shares of the finance company’s common stock; an amount representing about 17 percent of what Nicholas Financial had outstanding. The aggregated price of the share purchase came in at more than $14.65 million, according to the filing.

The filing stated that The Magnolia Group made this move “based on the belief that such securities, when purchased, were undervalued and represented an attractive investment opportunity.” The filing continued that although The Magnolia Group “has no specific plan or proposal to acquire additional common stock or dispose of the common stock, consistent with its investment purpose,” that the investment entity “at any time and from time to time may acquire additional common stock or dispose of any or all of its common stock depending upon an ongoing evaluation of the investment in the common stock, prevailing market conditions, other investment opportunities, liquidity requirements of (The Magnolia Group) and/or other investment considerations.”

The filing added, “The purpose of the acquisition of the common stock is for investment, and the acquisitions of the common stock were made in the ordinary course of business and were not made for the purpose of acquiring control of the issuer.”

According to the company’s financial statement following the close of the third quarter of its fiscal year on Dec. 31, Nicholas Financial’s diluted earnings per share decreased 40 percent to $0.21 as compared to $0.35 in the year-ago span. The company reported its net earnings softened from $2.7 million to $1.6 million.

The company explained that its Q3 net earnings were adversely affected primarily by an increase in the provision for credit losses due to higher charge-offs and past-due accounts, along with a reduction in the gross portfolio yield. To a lesser extent, the company pointed out its results were favorably impacted by a decrease in operating expenses, which was partially offset by a change in the interest rate swaps.

Nicholas Financial indicated that it purchased 3,846 vehicle installment contracts during the Q3, leaving its number of active contracts as of Dec. 31 at 37,834. The average amount financed per contact in Q3 came in at $11,945 with an APR of 21.99 percent and an average discount of 6.87 percent.

Within its outstanding portfolio, Nicholas Financial said the average term amount remaining on the contract stood at 57 months. The company added 14.45 percent of its outstanding contracts were in delinquency, ranging from 60 days or less (7.04 percent) to more than 90 days (3.95 percent).

“During our third quarter, competition for new loan originations remained high with yields that continued to trend lower. We do not expect to see any material changes during our fourth quarter ending March 31,” said Ralph Finkenbrink, the company’s president and chief executive officer.