2009 Special Finance Hall of Fame Inductee

The Special Finance Hall of Fame was established by Special Finance Insider in 2008 to annually honor individuals and/or companies for their noteworthy achievements and successes in the special finance industry. Last year’s inaugural class included individuals and companies that excelled in their field and whose names are synonymous with the special finance industry. In the second year of the Hall of Fame, Special Finance Insider recognizes an individual with virtually a lifetime of experience in special finance. That experience, along with a consistent business model and an emphasis on cultivating long-term relationships, has contributed to both his and his company’s longevity in the special finance industry. He is truly worthy of the elite company he joins. Our 8th inductee to the Special Finance Hall of Fame is E. Dwight Cope, president of Western Funding Inc.

Cope has spent the majority of his life being involved with special finance in some capacity. In order to learn a little about our inductee, it is necessary to also take a look at the company with which his entire life has been inextricably entwined. While he’s been officially on the company payroll for over 30 years, Cope’s history with Western Funding goes back much, much further.

Western Funding Inc. is the creation of Cope’s father, the late Fred E. Cope. After the finance company Fred had been working for since 1954 was bought out, he decided to go out on his own. With help from a handful of private investors, he raised $50,000 and founded Western Funding Inc. in 1962. The company started out doing some small personal loans and seller-assisted loans for a few franchise dealers, while developing a reserve financing program to buy those hard-to-place customers, a segment where the senior Cope recognized a need for financing options.

Dwight was practically raised in the business. As a boy, he worked in Western Funding’s office, filing away folders for his father. In high school, he repossessed vehicles—not exactly the typical after-school job for a teenager. “Times were different,” he said. “We could do things … back in the ‘60s that you couldn’t do today. [It was] a lot safer back then too.”

He spent a short time in college before being drafted into the United States Army, where he served from 1969 until 1971. After getting out of the service, Cope said he “bummed around” for a few years, which actually meant he found work building houses and boats. Cope said he hadn’t initially planned on carving out his career in the family business. “I was around the office all the time, though, doing things,” he said.

Eventually, however, he realized building houses or boats wouldn’t be as lucrative as a career in financing. “I finally wised up that this was where the money was,” he said. And, he added, “I got tired of pushing nails. A pencil’s a lot easier to push.” In 1978, Cope began working full-time at Western Funding as a collector. At that time, the business was still very small, having just a single office in Southern California with roughly 15 employees. “A lot of history, a lot of stability, but we were pretty small,” he said. “We grew, slow but sure.”

They opened a second office in San Jose, eventually followed by additional offices in cities like Denver, Houston, Phoenix and so on. Cope eventually took on more responsibilities, opening several of Western’s branch offices and training the staff; he also began handling audits and month-end reports and working conventions.

With his father’s passing in 2001, Cope – by that time the company’s vice-president – took the helm and continued on the course his father had set for the business. “The basic philosophy hasn’t changed that much,” he said. “Pay for what the paper’s worth. Keep expenses down. Put everything back into the company we can.” That last directive has been especially important to the company’s growth. “We’re kind of old-school,” Cope said. “We put everything back into the company.”

Another so-called “old school” idea that has been important in Western Funding’s success is cultivating long-term relationships. “I’ve had 20-year-plus relationships with a number of dealers,” Cope said, adding that Western’s relationships with its dealers are not dependent upon the volume of business those dealers produce. Many of their dealers are independents who are not high-volume. Cope said he will work with a dealer, franchise or independent, regardless of whether that dealer sends Western Funding one contract a month or 25.

Over the years, Western Funding has been involved in everything from financing furniture and vacuums to tuition funding. While the company has always done some automotive paper, the big move into automotive financing didn’t actually happen until the ‘80s. After financing the hard-to-place customer for furniture and other installment sales contracts over the years, Cope said it was only natural that the company would concentrate on that same tier in automotive financing.

“What the primary and secondary lenders don’t want to buy, that’s where we buy,” said Cope. Western Funding is special finance, he emphasized, not subprime finance. The distinction? “[Subprime finance companies] have more rules than I have,” he explained. “They look at FICO scores and they’ve got models that they use, and we don’t do that. We’re very hands-on. We try to put the deal together without using a scorecard.”

Western Funding’s growth for many years was slow and steady, Cope said, but in the ‘90s the company began expanding more quickly. The biggest periods of growth have occurred in challenging economic times. When lending conditions are the tightest for everyone else (for example, when the economy slowed in 1997 and again in the 2001-2002 recession), Western Funding is buying paper and lots of it. “In recessions we grow and when times are good, we collect,” Cope stated.

Knowing when to buy and when to scale back has been important to the company’s growth and longevity. “We adapted to the industry,” said Cope, “and when the industry would go a different direction, we would pull back a little bit and watch it come back in line and then [we would] grow again.”

In the current economy, he said, “We’re growing again … Right now we’ve got a 15 percent growth going for the year.” So far this year, Cope said he’s averaged about 900 contracts a month. “It’s time to grow again, add another office,” he said, referring to the fact that Western just opened another branch office, its 16th location, in Georgia.

Cope and Western Funding have moved with the market and stayed in the game while many other finance companies have come and gone. “There’s a fine line in our business,” he explained. “If you don’t have enough reserve to protect yourself against losses, you’re only in the business for a short time.” But how is Cope able to position his company to weather changes in the market so successfully?

“Experience,” he stated. “There’s no way of learning it out of a book. It’s just on-the-job training. You’ve got to be almost raised in the business to understand it … We’ve been doing this such a long time and we’ve been through so many cycles, it’s just normal for us. We ride the cycles.”

One would imagine having such a broad perspective on the business would allow someone to predict the direction of the market. “We try a little bit,” said Cope, adding that he can successfully forecast where the business is headed only “from time to time. Other times I blow it.” His best prediction? “We’re just going to continue to serve our dealers and collect accounts—that’s the only forecast I have.”

Cope did not express worry about taking on too many dealers; he and his company stand ready to take on any new special finance business that comes their way. Undoubtedly, Cope wants Western to keep growing: “I don’t know where we’ll stop.”