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March 24, 2017  

Founders Part Ways With Sierra, Skopos

Sierra Auto Finance founder Sam Ellis and Skopos Financial co-founder Mark Gallas have separately left the subprime auto lenders.

Ellis held the titles of president and chief executive at Sierra. Sources said the Dallas company broke the news of his departure to employees on March 20, citing no reason other than a desire on his part to spend more time with his family.

Gallas, a managing director at Skopos, exited the Irving, Texas, operation this month. “I am proud of what we built at Skopos and look forward to watching the company continue to succeed. For me, it was simply the right time to pursue other interests,” he said.

Sierra and Skopos both cater to deep subprime borrowers — typically, those with credit scores of 550 or less. The performance of such accounts has been on a gradual downtrend for some time, with S&P and Fitch recently reporting that losses and delinquencies among securitized pools of subprime auto loans in general were at or near their highest levels since the financial crisis.

The chief cause: loose standards that prevailed from 2014 to early 2016, especially among newer lenders seeking to build up their origination volumes. Most lenders, including heavyweights Ally Bank, General Motors Financial and Santander Consumer USA, since have tightened their underwriting processes while reducing their origination volumes. Sierra and Skopos also have taken steps to keep losses in check.

At Sierra, chief financial officer W. Brett Beebe is taking command until the company names a permanent replacement for Ellis.

Ellis started Sierra in 2012 following his departure two years earlier from subprime lender Exeter Finance, where he was a co-founder. Sierra completed its debut securitization in August, engaging bookrunner Well Fargo to distribute $135 million of bonds with grades from S&P and Kroll.

Since then, concerns over loan performance led Ellis to replace staffers including servicing head Pete Siciliano and individuals from the company’s finance and structured-finance reporting groups. Sierra and its majority owner, Emerald Development Managers, didn’t return calls.

Gallas and Daniel Porter launched Skopos in 2012. A spokesman described his parting as amicable, adding that “he remains one of our key partners.”

Outsiders say Gallas’ exit came as little surprise. That’s because he already had given way as Skopos leading executive with the November hiring of industry veteran Dave Prescher in the newly created role of president.

Skopos initially entered the asset-backed bond market with an unrated deal. It then completed a $154 million offering with grades from DBRS and Kroll in November 2015, with Citigroup running the books. The company hasn’t offered another securitization since then, however, with a spokesman previously stating that it wouldn’t attempt to do so until 2018 at the earliest. Skopos is owned by private equity firm Lee Equity.