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Financing Businesses.Strengthening Communities.
2017STAKEHOLDER
INSIGHTS
We are excited to share our new “Pathway Lending Stakeholder Insights” report with you. This document is designed to help you better understand the ways you can partner with us, and how we can help meet your organization’s strategic goals.
As a Community Development Financial Institution (CDFI) certified by the U.S. Department of the Treasury, Pathway Lending brings capital to underserved markets. What began in 1999 as a small SBA Micro Loan Intermediary serving Oak Ridge, Tennessee has grown into the region’s largest CDFI with almost $150MM in lending capital and a service area that includes Tennessee and Alabama, as well as portions of Mississippi, Arkansas, and Kentucky.
One thing that has not changed is our steadfast commitment to creating collaborative partnerships with our stakeholders to better serve our clients and create economic opportunity in communities across our footprint. These relationships with banks and bankers associations; federal, state and local governments; foundations; and corporations benefit everyone involved and generate significant impacts.
In 2017, Pathway Lending provided:
• $40.2MM in new loans originated,
• 69.2% lending activity in qualified CDFI target markets,
• 316 units of affordable housing created or maintained,
• 2,553 jobs impacted and 361 jobs created, and
• 8,253 hours of technical assistance delivered.
Impacts like these are only possible with the support of our stakeholders, including banks whose borrowings meet the criteria for a qualified CRA Investment under the CRA Investment Test; government partners whose grant dollars support programs to bring more opportunity to underserved citizens; and foundation and corporate partners who seek responsible partners to advance their mission in communities across the Southeast.
Thank you for your support of Pathway Lending and your interest in collaborating with us in the future.
Sincerely,
Clint GwinPresident and CEO, Pathway Lending
Hank HeltonExecutive Vice President, Pathway Lending
DEAR FRIENDS & SUPPORTERS,
DAVID BEREZOV, CHAIRMAN Associate Professor of the Practice of Engineering Management, Vanderbilt University School of Engineering
TOM HUNTER, VICE CHAIRMAN Owner, American Heritage Trees
DR. WILLIAM H. (HERB) BYRD, III Vice President for Public Service, University of Tennessee
JON DAVIES Senior Vice President/Compliance Executive – Community Affairs and Contributions, Regions Financial Corporation
IVANETTA DAVIS-SAMUELS Senior Vice President – General Counsel & Corporate Secretary, Meharry Medical College
ANDRE GIST CEO, MIG Steel Fabrication
CINDY HERRON Vice President EnergyRight and Renewable Solutions, Tennessee Valley Authority
KELLY MAGILL Owner/CEO, KGV Studios
HUGH QUEENER Chief Administrative Officer, Pinnacle Bank
PATHWAY LENDING BOARD OF DIRECTORS
2 3
TABLE OF CONTENTS
03 BOARD OF DIRECTORS
04 2017 IMPACTS
06 TENNESSEE LOAN FUNDS OVERVIEW
08 TENNESSEE SMALL BUSINESS JOBS OPPORTUNITY FUND
10 TENNESSEE RURAL OPPORTUNITY FUND
12 KNOXVILLE TECHNOLOGY & JOBS FUND
14 NASHVILLE OPPORTUNITY FUND
16 MEMPHIS SMALL BUSINESS OPPORTUNITY FUND
18 TENNESSEE AFFORDABLE MULTIFAMILY HOUSING LOAN FUND 20 ALABAMA SMALL BUSINESS OPPORTUNITY FUND 21 INCOME STATEMENT 22 BALANCE SHEET BACK COVER SPONSORS AND STAKEHOLDERS
4 5
TARGET MARKETS: Pathway Lending, a certified Community Development Financial Institution, serves businesses throughout Tennessee and Alabama, but focuses its activities on underserved Target Markets that include businesses located in Qualified Investment Areas (as defined by low-income census tracts, poverty rates, and unemployment statistics) and African American owned businesses. In 2018, Pathway Lending is expanding into Kentucky and portions of Arkansas and Mississippi.
The mission of Pathway Lending is to provide lending
solutions and educational services
that support the development, growth,
and preservation of underserved small
businesses, affordable housing, and sustainable
communities.
LENDING ACTIVITY BY
PRODUCT TYPE
NUMBER OF LOANS MADE BY DOLLAR RANGE
DETAIL: ENERGY EFFICIENCY LENDING
AMOUNT OF LOANS MADE BY DOLLAR RANGE
T ACQUISITION: 1.8%
T BUNDLE: 10.8%
T EQUIPMENT: 8.6%
T LINE OF CREDIT: 6.3%
T MICRO: 1.1%
T REAL ESTATE: 16.5%
T WORKING CAPITAL: 12.9%
T MULTIFAMILY: 29.5%
T ENERGY EFFICIENCY: 12.5%
PERCENTAGE BY TOTAL $
L E N D I N G I M PA C T S
T BUILDING RETROFIT 12.2%
T BUNDLE 45.8%
T HVAC 4.5%
T LIGHTING 22.5%
T RENEWABLES 15.0%
C L I E N T I M PA C T S
TOP INDUSTRY SEGMENTS SERVED
totalbusinesses
107
new clients66
CDFI-qualified clients
74
woman- owned
businesses
35
minority- owned
businesses
20
NUMBER OF LOANS MADE IN 2017
142
# OF LOANS IN TARGET MARKET
70%
AMOUNT OF LOANS MADE IN 2017
$40.2MM
$ OF LOANS IN TARGET MARKET
84%
group coaching
classroom training
1-on-1 coaching
4 5
8,1
53
to
tal
ho
urs
246h
3,334h
4,573h
BUSINESS ADVISORY SERVICES
JOBIMPACTS
2017
TOTAL JOBS IMPACTED IN TENNESSEE
& ALABAMA
2,553
JOBS CREATED361
JOBS IN TARGET MARKET
69.6%
6
TENNESSEE LOAN FUND OPTIONS:
A new collaboration with Epicenter Memphis to provide responsible loan capital and technical training to the small businesses who need it most in the Memphis MSA, including select counties in Arkansas and Mississippi.
Memphis Small Business Opportunity Fund
Nashville Opportunity Fund
Through a partnership with Knox County, this fund provides loans to small businesses and technology companies in East Tennessee, including Anderson, Blount, Campbell, Claiborne, Cocke, Grainger, Jefferson, Knox, Loudon, Monroe, Morgan, Roane, Sevier, Scott, and Union counties.
Knox County Technology & Jobs Fund
Formed in partnership with the State of Tennessee and Member Banks of the Tennessee Bankers Association, this perpetual revolving loan fund provides capital specifically to small, disadvantaged, and early stage businesses located in Tennessee’s 92 rural counties (excludes Davidson, Knox, and Shelby Counties).
Tennessee Rural Opportunity Fund
Through a grant from the CDFI Fund and in conjunction with TBA Member Banks, this fund provides permanent financing to developers of Low-Income Housing Tax Credit properties. This fund covers in all 95 counties to help provide safe and affordable housing in Tennessee.
STATEWIDE
Tennessee Affordable Multifamily Housing Loan Fund
7
STATEWIDE
This revolving fund provides loans to businesses anywhere in Tennessee. This public-private collaboration between the State of Tennessee, private financial institutions, and Pathway Lending brings together capital resources to maximize statewide impacts for job creation and business expansion.
Tennessee Small Business Jobs Opportunity Fund
HOW THE PROCESS WORKS FOR BANKS:
Decide where your bank needs CRA investment or loan test credit.
Select the loan fund(s) that best fits your needs.
Determine how much Franchise & Excise Tax Liability you want to offset for this loan or investment (F&E Tax Credit is currently only available within the State of Tennessee).
We’ll provide the due diligence package and standard promissory note for the geographic fund you select. Sign the promissory note, complete the appropriate tax credit forms, and wire the funds to Pathway Lending.
Once we receive the funds, we’ll complete the tax credit form and send it to the Tennessee Department of Revenue. You will receive a confirmation letter from the State.
Use the State of Tennessee F&E Tax filing form to claim your tax credit.
Your bank will receive CRA loan test credit or Investment Test Credit for the amount outstanding at year end (this will occur every year the CRA qualified investment or loan is outstanding).
Enjoy your CRA, community development, or loan test credit during the evaluation cycle when you originated the loan to Pathway Lending.
For the Rural Opportunity Fund (ROF) and the Tennessee Small Business Jobs Opportunity Fund (SBJOF), the note is forgiven at the tenth anniversary of the origination, and your bank can take a federal tax deduction for a contribution expense for the forgiveness, and for contributions to a 501 (C) 3.
For the ROF and SBJOF, upon forgiveness, your bank can also receive a second CRA Investment Test Credit for the full amount for contributing to a Community Development Financial Institution (CDFI).
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In partnership with the Metropolitan Development Housing Agency (MDHA), this fund addresses the financing needs of underfunded small businesses and underserved commercial corridors throughout Davidson County.
That same stubborn commitment to success
is something Allen and Boyd have in common.
Management changes and losing a substantial contract
severely impacted cash flow, and made securing a
traditional bank loan difficult despite the company’s
long history.
“We’re a cyclical business,” said Allen. “When we’re
buying raw materials and going into production,
our cash reserves get low.” A longtime banking
acquaintance referred Crescent to Pathway Lending.
Crescent didn’t just get financial support; Pathway
Lending also provided their team a Business Advisor.
“I wasn’t sure what to expect when I heard we’d be
getting hands-on help along with our loan,” said Allen.
“But Bob Lancaster has been a great mentor. He really
makes you think.”
More than a century after opening, quality jobs
remain the company’s number
one priority. “Making the highest
quality product at the best price is our
focus, but that’s not our legacy,” said Boyd.
“Daddy knew every employee by name. Our
legacy is treating our employees like family.”
“To us, our relationships with clients, vendors, and
employees mean everything,” said Allen. “And now,
Pathway is another one of our ‘family’ relationships.”
Crescent Sock Company is a 116-year-old sock
mill in rural Niota, Tennessee. Opened to create
jobs in this small community, it is currently
managed by the fourth generation of the founder.
Cathy Allen has taken on the role of CEO and is
assisted by her sister, Sandra Boyd. More than a
century after opening, maintaining quality jobs for
their family of employees is still their top priority.
Started by their great grandfather in 1902, Crescent
Sock Company’s strategic location near the train
depot was perfect for receiving raw materials and
distributing finished goods. Their grandfather kept
production going through The Great Depression and
World War II, even petitioning the War Production
Board to maintain their cotton allocation to keep the
mill running.
Allen and Boyd’s father, William “Bill” Burn, was at
the helm in 1966 when an overnight fire burned the
original mill to the ground, taking the dye house,
finishing department, and boiler room with it. With
the help of the community, however, production was
up and running in makeshift quarters in a neighboring
mill, and Crescent never missed a single shipment.
Bill was quoted as saying “We were burned out of
business, but were too stubborn to know it.”
INHERITED TENACITY DRIVES 4TH GENERATION AT OLDEST CONTINUOUSLY OPERATING
SOCK MILL IN AMERICA
client profile:CRESCENT SOCK COMPANY
8 9
TENNESSEE SMALL BUSINESS JOBS OPPORTUNITY FUND
HISTORIC FUND IMPACTS
LOANS ORIGINATED
$88.1MM
BUSINESSESFUNDED
AVERAGELOAN SIZE $426.5M
144
LOW OR MODERATE
CLIENT PROFILE
74%23%14%
INCOME
WOMEN OWNED
MINORITY OWNED
FUND CAPITALIZATION(data as of 12/31/17)BANKS $43,109,184DONATED CAPITAL $10,490,000 TOTAL CAPITAL $53,599,184
OUTSTANDING $41,366,216COMMITMENTS $ 5,544,075TOTAL $46,910,291
LOANS OUTSTANDING & LOAN COMMITMENTS(data as of 12/31/17)
DEPLOYMENT RATIO 77%DEPLOYED & COMMITTED RATIO 91%
DEPLOYMENT STATUS
This revolving fund provides loans to businesses anywhere in Tennessee. This public-private collaboration between the State of Tennessee, private financial institutions, and Pathway Lending brings together capital resources to maximize statewide impacts for job creation and business expansion.
Tennessee Small Business Jobs Opportunity Fund
STATEWIDE
10
TENNESSEE RURAL OPPORTUNITY FUND
client profile
Kiefer is constantly looking for ways to make
every trailer sturdier and to expand the skill set
of their employees. “Every couple weeks we come
up with a new improvement,” says David. “And
everyone who comes on-board, no matter what
department, has to work in the factory so they
learn these trailers inside and out.”
David’s goal for Kiefer is to grow, and to
continue making the best possible product in the
community and industry he loves.
LOANS ORIGINATED
$24.0MM
BUSINESSESFUNDED
AVERAGELOAN SIZE $173.6M
89
HISTORIC LOAN IMPACTS
LOW OR MODERATE
CLIENT PROFILE
53%38%20%
INCOME
WOMEN OWNED
MINORITY OWNED
FUND CAPITALIZATION(data as of 12/31/17)BANKS $ 6,085,650DONATED CAPITAL $ 7,205,000 TOTAL CAPITAL $13,290,650
OUTSTANDING $ 8,282,903COMMITMENTS $ 751,480TOTAL $ 9,034,383
LOANS OUTSTANDING & LOAN COMMITMENTS(data as of 12/31/17)
DEPLOYMENT RATIO 62%DEPLOYED & COMMITTED RATIO 68%
DEPLOYMENT STATUS
KIEFERMANUFACTURING
Last year, David Greene Jr. and his family were
ready to purchase Kiefer Manufacturing,
a horse trailer factory that had been at the
heart of their community for years. By buying
the business, they’d be keeping the doors open
for Hancock County’s largest private employer.
The family’s plans were halted when environmental
testing revealed possible issues on the collateral
property, and their guaranteed loan fell through.
“At that point, we were suffering,” says David.
“We couldn’t get material in here and things
looked pretty bad until Pathway stepped in.”
A contact at the Tennessee Department of
Economic and Community Development (TNECD)
put the Greene family in touch with Pathway
Lending, and within a month they had their
working capital and were back to building trailers.
“This is a distressed county – one of the poorest in
the nation,” says Greene. “We’ve got 40 skilled
employees, and we’re glad to be able to
take care of them.”
LOCAL FAMILY KEEPS DOORS OPEN FOR LARGEST
PRIVATE EMPLOYER IN HANCOCK COUNTY
Formed in partnership with the State of Tennessee and Member Banks of the Tennessee Bankers Association, this perpetual revolving loan fund provides capital to small, disadvantaged, and early stage businesses located in Tennessee’s 92 rural counties (excludes Davidson, Knox, and Shelby Counties).
Tennessee Rural Opportunity Fund
11
Finnikin was left to start over. He met with dozens
of bankers to try to find the funding he needed, but
none could make the loan, even after the family
sold their home to try to come up with the money to
start the company again. That’s when a referral to
Pathway Lending changed everything.
“After that first partnership failed, I swore I’d never
go into business with anyone ever again,” says
Finnikin. “But Pathway quickly became the business
partner I needed. Since day one they’ve been there;
not just with the money I needed, but with hands-on
help with my accounting systems. When so many
others didn’t, Pathway believed in me.”
Finnikin now has a full-time employee and a growing
loyal customer base. Through it all, he and his wife
never doubted that they’d succeed. “My daughters
are watching me,” says Finnikin. “I know they’re
seeing that it takes perseverance and integrity to be
successful and we’re proud of that.”
Growing up in Jamaica, Tiekel Finnikin spent
countless hours helping his grandmother
while she sold toys, fruit, jewelry and
everything in between. They’d even spend Christmas
morning selling on street corners.
“I learned early that before you ever try to sell your
product or service, you have to sell yourself,” says
Finnikin. “There were plenty of people competing
for a very small number of customers, so the ability
to build relationships and trust was a critical skill I
learned very young.”
After attending Knoxville College on a track and
field scholarship, Finnikin applied the perseverance
it took to compete every weekend to finding a career.
Starting from the bottom at each, Finnikin worked
his way up through food service, technology sales,
and cell phone repair.
“At every job, I worked very, very hard to
gain the skills needed to be successful,” says
Finnikin. “Each time, I’d master as much as I
could, but I always wanted a bigger challenge.
That’s when I decided to start my own business.”
As a skilled electronics repairman, Finnikin decided
to open his own cell phone repair center with a
partner. That partnership, however, crumbled and
client profile:
KNOXVILLE TECHNOLOGY & JOBS FUND
13
LOANS ORIGINATED
$10.5MM
BUSINESSESFUNDED
AVERAGELOAN SIZE $169M
37
HISTORIC LOAN IMPACTS
LOW OR MODERATE
CLIENT PROFILE
65%42%25%
INCOME
WOMEN OWNED
MINORITY OWNED
FUND CAPITALIZATION(data as of 12/31/17)BANKS $ 5,360,000DONATED CAPITAL $ 0 TOTAL CAPITAL $ 5,360,000
OUTSTANDING $ 3,673,505COMMITMENTS $ 21,898TOTAL $ 3,695,404
LOANS OUTSTANDING & LOAN COMMITMENTS(data as of 12/31/17)
DEPLOYMENT RATIO 65%DEPLOYED & COMMITTED RATIO 66%
DEPLOYMENT STATUS
Through a partnership with Knox County, this fund provides loans to small businesses and technology companies in East Tennessee, including Anderson, Blount, Campbell, Claiborne, Cocke, Grainger, Jefferson, Knox, Loudon, Monroe, Morgan, Roane, Sevier, Scott, and Union Counties.
Knox County Technology & Jobs Fund
client profile:
iDROPPED
12
SKILLED TRADESMAN COMMITS TO DREAM OF
ENTREPRENEURSHIP
Longtime stylist Tabitha Parsley and master
barber Robert Collins worked for years at the
original location of Red’s Class Barbershop in
Indianapolis. After relocating to Nashville to help
run the second location, these young entrepreneurs
dreamed of owning their own shop.
“One day we looked at each other and realized
we were doing everything it takes to own our own
business but were working for other people,” said
Parsley. “We can do this for ourselves. Let’s do it –
let’s make it happen.”
As fate would have it, the owners of the Nashville
Red’s location were ready to sell.
“It was a rare opportunity to purchase a turn-key
business that we knew after years of hard work
and dedication,” said Collins. “And we knew that
together we could make something great!”
After a year of research, Parsley and Collins were
ready to take the leap from employees to owners,
but still needed the funding to move forward.
The final piece fell into place when their banker
referred them to Pathway Lending.
“We’re young, and even though we’ve got all this
experience in our industry, we’ve never actually owned
a business,” said Parsley. “Pathway stepped right in,
though. We appreciate knowing our lender not only backs
us financially, but also believes in our vision and our
future endeavors as a new business. We’ve got the whole
Pathway team behind us!”
They took the leap and business is booming under
their new brand, “Collins & Co. Barber Shop.” Extensive
experience in the field, a passion for numbers, funds
from Pathway Lending, and mentoring from the previous
owner have helped make sure these entrepreneurs are
styled for success for years to come.
client profile: COLLINS & CO. BARBER SHOP
NASHVILLE OPPORTUNITY FUND
In partnership with the Metropolitan Development Housing Agency (MDHA), this fund addresses the financing needs of underfunded small businesses and underserved commercial corridors throughout Davidson County.
Nashville Opportunity Fund
EXPERIENCED STYLISTS MAKE THE CUT AS FIRST-TIME
BUSINESS OWNERS
14
LOANS ORIGINATED
$17.5MM
BUSINESSESFUNDED
AVERAGELOAN SIZE $140.1M
84
HISTORIC LOAN IMPACTS
LOW OR MODERATE
CLIENT PROFILE
70%25%20%
INCOME
WOMEN OWNED
MINORITY OWNED
FUND CAPITALIZATION(data as of 12/31/17)BANKS $12,000,000DONATED CAPITAL $ 230,000 TOTAL CAPITAL $12,230,000
OUTSTANDING $ 9,021,086COMMITMENTS $ 938,886TOTAL $ 9,595,972
LOANS OUTSTANDING & LOAN COMMITMENTS(data as of 12/31/17)
DEPLOYMENT RATIO 75%DEPLOYED & COMMITTED RATIO 83%
DEPLOYMENT STATUS
15
BANKS (SBJOF TAX CREDIT) $ 7,500,000BANKS (CITC) $ 7,500,000DONATED CAPITAL $ 1,000,000 TOTAL CAPITAL $16,000,000
FUND CAPITALIZATION(PROPOSED)
Uneven cash flow is a hurdle many contractors face when they seek traditional bank financing to help cover expenses between projects and
payments. The numbers didn’t tell the whole story for Clarence Howard, owner of River City Railroad. Despite 40 years in the industry and a great reputation, Clarence’s cash flow issues prevented him from securing a traditional loan.
“In contracting, payments lag at least 30 days, and often stretch to 60 or 90,” said Clarence. “I worry about paying my employees more than I worry about myself. They’ll always eat before I do.”
A term loan from Pathway Lending now helps Clarence cover payroll for his 15-20 employees between project payments. Now he’s a stronger borrower who’s doing more for Memphis.
client profile:
RIVER CITY RAILROAD
17
MINORITY CONTRACTOR’S SMALL BUSINESS IS DOING BIG THINGS FOR ICONIC MEMPHIS
TROLLEY SYSTEM
MEMPHIS SMALL BUSINESSOPPORTUNITY FUND
His most visible project is MATA’s Pavement Improvement Project that helped bring Memphis’ iconic trolleys back online. As a subcontractor on the original trolley line installation, his company has come full circle with the rail scene in Memphis.
“Working with Pathway Lending has made it so my own bank wants to work with me on additional funding,” says Clarence. “Memphis is booming, and we’re proud to be a part of that.”
A new collaboration with Epicen-ter Memphis to provide respon-sible loan capital and technical training to the small businesses in Shelby, Fayette, and Tipton Counties in Tennessee; Tunica, DeSoto, Tate, Marshall, and Ben-ton Counties in Mississippi; and Crittenden County in Arkansas.
Memphis Small Business Opportunity Fund
LOANS ORIGINATED
$14.6MM
BUSINESSESFUNDED
AVERAGELOAN SIZE $123.4M
83
MEMPHIS HISTORIC IMPACTS
QUALIFIED CDFI
CLIENT PROFILE
82%13%27%
INVESTMENT AREA
WOMEN OWNED
MINORITY OWNED
16
18
TENNESSEE AFFORDABLE MULTIFAMILY HOUSING LOAN FUND
LOANS ORIGINATED
$24.9MM
PROPERTIES IMPACTED
AVERAGELOAN SIZE $4.15MM
5
HISTORIC LOAN IMPACTS
CLIENT PROFILE
LOW OR MODERATE100% 316 373
INCOME
UNITS RENOVATED
UNITS PRESERVED
FUND CAPITALIZATION(data as of 12/31/17)BANKS $12,318,930DONATED CAPITAL $ 525,000 TOTAL CAPITAL $12,943,930
OUTSTANDING $10,483,247COMMITMENTS $ 0TOTAL $10,483,247
LOANS OUTSTANDING & LOAN COMMITMENTS(data as of 12/31/17)
DEPLOYMENT RATIO 82%DEPLOYED & COMMITTED RATIO 82%
DEPLOYMENT STATUS
Through a grant from the CDFI Fund and in conjunction with TBA Member Banks, this fund provides permanent financing to developers of Low-Income Housing Tax Credit properties. This fund covers in all 95 counties to help provide safe and affordable housing in Tennessee.
Tennessee Affordable Multifamily Housing Loan Fund
Nearly 30 year ago, Phil Owen and Robert Trent founded First Cumberland Properties “to provide working families
with extraordinary housing.” Now leaders in the affordable housing industry in the state, Owen and Trent have utilized Pathway Lending’s Tennessee Affordable Multifamily Housing Fund on three projects to continue their mission.
With loans from Pathway Lending, the company has been able to protect and improve Section 8 housing for low income families in communities throughout Tennessee – so far, they’ve retained or renovated nearly 400 affordable housing units.
In East Nashville, the team used their Pathway Lending loan to buy out their partners on the property and refinance the debt to retain the 195 affordable units at Berkshire Place Apartments. They also worked with Pathway and Family Affair Ministries to bring a Dollar General to the neighborhood so that tenants wouldn’t have to travel far for basic necessities like groceries.
Owen and Trent have also tapped into the Energy Efficiency Loan program at Pathway Lending to make upgrades and renovations to Wedgewood Towers, another affordable housing complex in South Nashville.
“Not only did Pathway help us purchase the property, we used their 2% energy loan program to replace the HVAC system,” says Trent. “We’re saving more than $55,000 a year on energy bills, plus another $40,000 a year in maintenance costs. Those are savings that allows us to make additional improvements and additional programs for our residents.”
In Knoxville, 195 units at Holston Oaks Apartments have been completely renovated, and a playground, community room, pool, and community green space have been added to the property. “What we’ve been able to do at Holston Oaks is nothing short of incredible,” says Trent. “Safe, decent, and affordable multifamily rental housing is more important than ever, and we’re grateful to have Pathway Lending as a partner on these projects.”
client profile: FIRST CUMBERLAND PROPERTIES
TOTAL LOAN ORIGINATIONS $20,292,117 BANK PARTICIPATIONS $ 9,808,869
19
STATEWIDE
Charles Owens’ dad started studying Jung
Moo Kwan, which literally means “Righteous
Martial Arts,” in Huntsville in the 1980s.
He kept the practice strong by bringing classes to
churches wherever he was serving as the preacher.
“Lucky for me I grew up in the practice, so whenever
doors were open for class, I was there training,” says
Owens. “As I got older, dad let me help teach and my
passion for martial arts just kept growing.”
After getting married and moving to Hartselle,
Alabama, Owens spent more than a decade teaching
at the local Civic Center. As classes grew, sharing
space and scheduling around other programs
became more difficult. Owens and his wife Meghan
knew it was time to purchase their own space.
After months of searching for rental properties to
house the studio, the Owens family decided to buy
a historic building right in downtown Hartselle. As
a new entrepreneur, Owens had trouble securing
a traditional loan, but his banker told him about
Pathway Lending.
“I’ve always had that entrepreneurial spirit,” said
Owens. “But once we started having kids, I wanted
to build something we could all be proud of that also
let my kids see the importance of hard work.”
With a loan from Pathway, Owens purchased
and renovated the building, and bought all
the equipment he needed for the new dojo.
client profile:
JMK MARTIAL ARTS & FITNESS
ALABAMA SMALL BUSINESS OPPORTUNITY FUND
NEW ENTREPRENEUR TURNS PASSION INTO
FAMILY BUSINESS
“It’s been wonderful to work with Pathway – they
always go the extra mile, not just with financing,
but also with helping me with questions on my
finances,” says Owens.
Now an LLC, JMK Martial Arts & Fitness is uniquely
recognized as one of just 31 authentic martial arts
institutes by the World KiDo Federation.
Since opening the dedicated studio, JMK has
doubled their enrollment and recently launched an
instructor development program to keep up with
growth. “We’re creating an opportunity for people
to have a side income down the road,” says Owens.
And now, all three of his children are enrolled in
JMK classes.
“It’s humbling to take my dad’s legacy and passing
that on to my own next generation,” says Owens.
“Sowing the seeds and watching this practice grow
is humbling, but I consider it an honor.”
LOANS ORIGINATED
$773M
BUSINESSESFUNDED
AVERAGELOAN SIZE $77.3M
7
HISTORIC LOAN IMPACTS
LOW OR MODERATE
CLIENT PROFILE
71%27% 7%
INCOME
WOMEN OWNED
MINORITY OWNED
FUND CAPITALIZATION(data as of 12/31/17)BANKS $ 4 , 6 0 0 , 0 0 0DONATED CAPITAL $ 0 TOTAL CAPITAL $ 4,600,000
OUTSTANDING $ 691,362COMMITMENTS $ 50,000TOTAL $ 741,362
LOANS OUTSTANDING & LOAN COMMITMENTS(data as of 12/31/17)
DEPLOYMENT RATIO 15%DEPLOYED & COMMITTED RATIO 16%
DEPLOYMENT STATUS
20 21
INCOME STATEMENT 2017 2016 $ Change % ChangeREVENUE PROGRAM REVENUEInterest Income Loans $4,993,588 $4,120,297 $873,291 21.2%Interest Income Deposits 163,810 97,455 $66,355 68.1%Financing Fees and Charges 321,995 455,667 $(133,627) -29.3%Management Fees 88,550 149,576 $(61,026) -40.8%TOTAL Interest and Program Service Revenue 5,567,943 4,822,995 $744,948 15.4%
Grant Revenue to Support Program Services 3,690,686 1,433,077 $2,257,609 157.5%
TOTAL Program Related Income 9,258,629 6,256,072 $3,002,557 48.0%
Interest Expense (1,351,217) (1,186,067) $(165,150) 13.9%
Net Earned Income 7,907,412 5,070,005 $2,837,407 56.0%
Provision for Loan Losses (2,437,250) (1,041,400) $(1,395,850) 134.0%
Net Income Earned After Provision 5,470,162 4,028,605 1,441,557 35.8%
PROGRAM SERVICES & FUNDRAISING EXPENSESSalaries and Benefits 2,947,830 2,040,000 $540,830 22.5%Professional Services 250,380 292,542 $(42,162) -14.4%Travel 146,418 116,674 $29,744 25.5%Marketing 19,282 3,893 $15,389 395.3%Occupancy 106,105 74,597 $31,508 42.2%Other Program Expenses 1,083,473 978,940 $104,533 10.7%TOTAL PROGRAM SERVICES EXPENSES 4,553,488 3,873,646 $679,842 17.6%
SUPPORT SERVICES EXPENSESSalaries and Benefits 475,604 460,489 $15,115 3.3%Professional Services 15,204 13,458 $1,746 13.0%Other Support Expenses 44,415 39,427 $4,988 12.7%Depreciation 7,179 7,382 $(203) -2.7%TOTAL SUPPORT SERVICES EXPENSES 542,402 520,756 21,646 4.2%
Contributed Loan Capital 6,200,00 40,000 6,160,000 15400.0%
CHANGE IN NET ASSETS 6,574,272 (325,797) 6,900,069 2117.9%
RATIOS (as of 12/31) 2017 2016
Net Assets/Total Assets 21.33% 19.2%
Allowance for Loan Losses/Total Loans 5.51% 5.70%
Delinquencies > 90 days 0 0
Net Loan Losses/Outstanding Loans 2.16% -0.17%
Earned Income/Program Expense 111% 103%
Deployment Ratio 70% 69%
Staffing Level 28 24
Commercial Loans (>$50,000) 40%Commercial Real Estate Loans 33%Energy Efficiency Loans 12%Multi-Family Loans 11%Micro Loans 3%
TOTAL PORTFOLIO O/S (12/31/17):
$89,890,424
OUTSTANDING PORTFOLIO COMPOSITION
22
BALANCE SHEET 2017 2016 $ Change % ChangeASSETSCash and Cash EquivalentsOperations $2,447,794 $1,624,991 $822,803 50.6%Restricted Cash - Lending 39,024,895 35,290,530 $3,734,365 10.6%Restricted Cash - Loan Loss Reserves 5,446,431 4,703,179 $743,252 15.8%Total Cash 46,919,120 41,618,700 5,300,420 12.7%Loans Outstanding 89,890,424 78,066,687 $11,823,737 15.1%Allowance for Loan Losses (4,949,712) (4,450,606) $(499,106) 11.2%Net Loans 84,940,712 73,616,081 11,324,631 15.4%Grants Receivables 2,639,553 310,768 $2,328,785 749.4%Accrued Interest Receivables 438,604 358,358 80,246 22.4%Other Assets 612,133 593,380 $18,753 3.2%Property and Equipment, net 1,535,357 1,575,165 $(39,808) -2.5%TOTAL ASSETS $137,085,479 $118,072,452 $19,013,027 16.1%
LIABILITIESAccounts Payable $78,242 $93,000 $(14,758) -15.9%Interest Payable 499,754 496,392 $3,362 0.7%Lines of Credit Payable 26,000,000 20,500,000 5,500,000 26.8%Mortgage Payable 934,589 1,058,557 $(123,968) -11.7%Notes Payable (Program Borrowings) 16,095,026 16,098,353 $(3,327) 0.0%Notes Payable (Program EQ2) 62,797,718 56,047,718 6,750,000 12.0%Other Deferred Revenue 299,643 289,181 $10,462 3.6%Funds Managed for Third Parties - 106,484 $(106,484) -100.0%Other Liabilities 1,140,498 717,030 423,468 59.1%TOTAL LIABILITIES $107,845,470 $95,406,715 $12,438,755 13.0%
NET ASSETSUnrestricted $28,595,723 $22,205,958 $6,389,765 28.8%Temporarily Restricted 644,286 459,779 184,507 40.1%TOTAL NET ASSETS $29,240,009 $22,665,737 $6,574,272 29.0%TOTAL NET ASSETS AND LIABILITIES $137,085,479 $118,072,452 $19,013,027 16.1%
2017 FINANCIALS
2017 PERCENTAGE ASSETS
Total Loans O/S Total Program Debt Total Net Assets Total Assets
Percent Net Assets to Total Assets
23
total loans originated$226,237,084
historic loan loss rate1.85%
• Appalachian Community Capital• Bank of America• Capital Bank• CapStar Bank• CB&S Bank• Centennial Bank• Citizens Bank (Carthage)• Citizens Bank (Elizabethton)• Commercial Bank and Trust• Community Bank & Trust• Decatur County Bank• F&M Bank (Clarksville)• Farmers Bank• First Advantage Bank• First Community Bank
of East TN• First National Bank of Oneida• First Tennessee Bank• FirstBank• Franklin Syngery Bank• Home Trust Bank• INSBANK
• Legends Bank• Macon Bank and Trust Company• McKenzie Banking Company• Paragon Bank• Peoples Bank• Pinnacle Bank• Regions Bank• Reliant Bank• Renasant Bank• Simmons Bank• SunTrust Bank• Tennessee Bank & Trust• Tennessee State Bank• The Bank of Nashville
(A Division of Synovus)• TNBANK• TriStar Bank• Truxton Trust• US Bank• Wayne County Bank• Wells Fargo Bank• Wilson Bank & Trust
Thank you to all of the organizations that have shown their commitment to communities in Tennessee and Alabama by partnering
with Pathway Lending. Your support is greatly appreciated.
FOUNDATIONS & PUBLIC STAKEHOLDERS:
PRIVATE STAKEHOLDERS:
• Alabama Department of Economic & Community Affairs
• Appalachian Regional Commission
• Bank of America Charitable Foundation
• Community Development Financial Institutions Fund (US Department of Treasury)
• Foundation For The Carolinas (Bank of America)
• Joe C. Davis Foundation
• Metropolitan Development & Housing Agency (Nashville, TN)
• Metropolitan Government of Nashville & Davidson County
• Regions Foundation
• Tennessee Bankers Association
• Tennessee Department of Economic & Community Development
• Tennessee Department of Environment & Conservation
• Tennessee Department of Revenue
• Tennessee Department of Treasury Small and Minority-Owned Business Assistance Program
• Tennessee Housing Development Agency
• Tennessee Valley Authority
• University of Tennessee
• US Department of Agriculture
• US Small Business Administration
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