A former senior vice president of Nicholas Financial is looking to duplicate the same success he enjoyed previously now that he is overseeing a North Carolina-based operation fueled by a merchant banking firm.

Douglas Marohn now is chief executive officer at Metrolina Credit Co., which recently acquired locations in Charlotte and Concord, N.C., to go along with the previous purchase of a location in High Point, N.C., by ML Credit Group, an organization affiliated with merchant banking firm Comstock Capital & Advisory Group.

As an indirect, subprime lender, Metrolina provides vehicle financing solutions for both franchised and independent dealers in North Carolina, but Marohn has his eyes on spreading well beyond the Carolinas.

“Metrolina has operated in the North Carolina market for over 20 years and has an excellent reputation for being an honest, straightforward lender, ready to provide financing solutions for its dealer partners. I am excited to perpetuate the brand that Metrolina has established as we expand within North Carolina and additional markets,” Marohn said.

“We have an opportunity to do exactly what I did at Nicholas and grow slowly but methodically,” continued Marohn, referencing Ohio, Florida, Georgia and Tennessee as possible destinations as well as “any state that has favorable laws and rates for our type of business.”

First Orders of Business

Since coming on board earlier this year, Marohn explained to SubPrime Auto Finance News some of the first chores he needed to accomplish.

First, the company had to streamline processes that had been irregular since nearly eight families composed the previous ownership and operated each branch differently.

“Job one was to create identifiable brand identity and brand equity,” Marohn said. “The previous owners, for all the good things they did, there was a splintered, fractional ownership. Our High Point brach operated one way. The Charlotte branch operated another way. The Concord branch operated another. There were a lot of similarities in the way they did business, but there were also some very significant differences whether it was the type of deals they financed or the structure they brought to the table or which products they sold.

“My job right now is to have a universal approach,” he continued. “Metrolina in High Point should be operating the exact same way as Metrolina in Concord or Charlotte to our borrowing customer as well as our dealership customer. Our programs should be the same. Our underwriting should be the same. The level of service and commitment to excellence should be exactly the same.”

Next, Marohn is out to expand Metrolina’s market share and amount of receivables. He explained the company previously was primarily a recourse lender. Metrolina currently has about $12 million in receivables through 2,500 customers.

Marohn said, “20 years ago only a handful of dealerships did subprime. Now they all do. And because Metrolina had plenty of business through their core dealerships, they hadn’t needed to or had the appetite to expand their business in the marketplace.

“We’ve got money to lend,” he continued, referencing the financial backing the company has through First Tennessee Bank. “Nothing is easy, but there is a lot of opportunity out there before we even expand our footprint of branches to expand our business in the markets we’re currently in.”

Underwriting Strategy

Marohn is upbeat about the potential pool of customers Metrolina can tap to build its portfolio. He noted the company’s underwriting strategy isn’t much different than what might be utilized at Nicholas Financial or another subprime finance company.

“Like other successful companies in the true deep subprime space, we bring a common-sense approach,” he said. “There is no cookie-cutter scorecard. There is no credit scoring. We have those internal guidelines, of course, things that we look for when we underwrite a deal. But no one deal is ever the same.

“You can’t buy this paper on a slide rule. You can maybe do that in the high 500, low 600 beacon score ranges when you have little more predictability with the FICO scores and you’re buying a little more in volume,” Marohn went on to say, adding that Metrolina is open to making deals with customers who have credit scores in the 400s.

Why would the company delve that deep into the credit spectrum?

“We are looking at the strength and stability of the customer and their ability to repay the loan based off their income and capacity,” Marohn said. “Then we look at their credit to try to find the best deal structure. We believe that almost any applicant can be approved and a deal can be structured in a positive way. It may not be exactly what the customer is looking to buy. It may not be exactly what the dealer is looking to put together. But we can find a way to approve almost any customer and we do so because we investigate the deal up front.

“We interview the customer prior to decisioning the deal,” he continued. “We know that customer better than usually the dealer will know that customer. We can put together a deal that matches that particular customer’s situation. I always say we don’t sell price, but we do sell pricing. We’re not going to be the highest advance or the lowest rate or the smallest discount, but we will have the structure that best meets that customer’s situation and provides them with the best opportunity to succeed and complete the loan, which is best for everyone. The customer doesn’t have any negative impact. We don’t have any losses, and the dealership sells a car and most likely has a repeat customer.”

Long-Term Objectives

Marohn spent 13 years at Nicholas Financial, leaving in 2011. During that span, he helped to grow Nicholas from a company that had 15 braches working solely with independent dealers to an operation that had more than 70 locations in 15 states where 60 percent of the dealer network was composed for franchised stores.

“The independent dealer has been the core of subprime business and the core of Metrolina, so we’re probably going to be focusing on that independent dealership but not exclusively,” Marohn said. “There’s a lot of great business to be had from the franchise dealerships and we want to be more and more a part of that as we grow.”

Before the end of the year, Metrolina hopes to roll out branch locations in Raleigh, N.C., and Spartanburg, S.C.

“From there, we’ll expand to whatever market makes the most sense. We have no desire to stay in just North and South Carolina. We plan to expand to most every state that is conducive to our business,” Marohn said.

And with Marohn at the controls, Comstock Capital is confident Metrolina can achieve its objectives and more.

“We are extremely excited to partner with Mr. Marohn as we continue to expand the Metrolina platform in North Carolina,” Comstock managing director John Nagy said. “Mr. Marohn’s extensive experience in the indirect auto finance industry, particularly building best in class branch based operating models we believe well positions Metrolina for continued success as we expand the footprint.”