Company breaks away from traditional business model, succeeds

CHRIS CLOUGH, THE OLYMPIAN

Originally published July 1, 2001

TUMWATER - Westar Financial Services has found success against the behemoths of car leasing, such as Ford and GMAC, by going outside traditional financing channels.

"We're unique. There's no other company doing business quite the same way we are," Westar CEO Bob Christensen said.

Westar deems itself "the leading publicly traded automobile-oriented e- commerce financial portal."

There's no dispute that it's unique - and complex. Which begs the question, what is it exactly that Westar does? And as a corporation with its eye on the bottom line, where's the revenue coming from?

Here's a walk-through of a basic transaction:

A customer applies for an automobile lease in one of 16 Western states where Westar has direct dealer relationships, or across the nation where one of three financial partners - Mellon, AmSouth and USAA - operate.

The customer's application is entered into Westar's LASIRpro computer system, which simultaneously accesses credit reports from the three major credit bureaus.

In an instant, LASIRpro kicks out a recommendation based on nine criteria - including income and payment history - and balancing risk and reward gives one of three responses.

-Decline.

-Borderline, which allows for more information to be considered and/or a human judgment call on the lease.

-Green light. An approval comes back as fast as 12.5 seconds.

Westar's quick response time is one of the major factors that differentiates it in terms of customer service, Christensen said.

It helped bring in more than $300 million in revenue in fiscal year 2001.

Industry leader

Once the lease is finalized, Westar embarks on another unique path.

Westar bundles a group of leases under what it calls a Carlson Trust - basically a legal structure of what is termed securitization.

The bundle of leases then is auctioned to larger financial institutions, a practice widely used with mortgages and credit card accounts.

In 1996, Westar was the third company - behind Ford and World Omni - to auction a lease bundle.

The bundles are sold for less than what Westar would likely make over the full life of the leases, but by auctioning them off at a discount, Westar gets an earlier infusion of money to finance more leases.

All of Westar's leases are auctioned off - once enough have been gathered to bundle. The number of leases in each bundle ranges from 1,000 to 3,000.

Westar continues to provide service to the lease customer even after the lease is auctioned off.

To date, Westar has completed at least 35 such auctions, according to Cindy Kay, Westar's controller.

Using a more complex version of this basic model, Westar completed about 12,000 customer lease transactions last year and has seen its revenue climb from $2.2 million in 1998 to what is on track to be $500 million-plus this fiscal year.

The Olympian Copyright 2001

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