2017 - pathway lending · technical training to the small businesses who need it most in the...

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

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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

mailto:clint.gwin%40pathwaylending.org?subject=I%20read%20your%20Stakehold%20Insights%20report

mailto:hank.helton%40pathwaylending.org?subject=I%20read%20your%20Stakehold%20Insights%20report

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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

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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%

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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

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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

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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

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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


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



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

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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

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LOANS ORIGINATED

$10.5MM

BUSINESSESFUNDED

AVERAGELOAN SIZE $169M

37


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




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

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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


84


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




DEPLOYMENT STATUS

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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

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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


83

MEMPHIS HISTORIC IMPACTS

QUALIFIED CDFI

CLIENT PROFILE

82%13%27%

INVESTMENT AREA

WOMEN OWNED

MINORITY OWNED

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TENNESSEE AFFORDABLE MULTIFAMILY HOUSING LOAN FUND

LOANS ORIGINATED

$24.9MM

PROPERTIES IMPACTED

AVERAGELOAN SIZE $4.15MM

5


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



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

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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


7


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



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

2017 - pathway lending · technical training to the small businesses who need it most in the...

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