The Early Years:

1974

The original Partnership, Phar-Way, was formed by Roy Pharis and Steve Dillaway as General Partners, with initial capital of $18,000. The Partnership’s primary purpose during the highly inflationary 1970’s was to buy and sell “fixer-up” real estate.

1981

The Partnership properties were sold, Roy Pharis was bought out, and the Partnership evolved into trust deed investments. Phar-Way II was formed and Steve Dillaway became the sole General Partner (GP) and conducted Partnership business as a part-time activity. While its capital base had certainly grown, it remained small ($82,537 at January 1, 1985).

1985

The GP acquired a line of credit directly to the Partnership, secured by its trust deeds and personally guaranteed by the GP. The aim was to increase the Partnership’s capital base, increase the Partnership’s yield, and decrease the Partnership’s risk.

1986

The GP began devoting full time to the Partnership. At December 31, 1986, the Partnership capital was $270,828. By December 31, 1990, the net worth of the Partnership was $2,928,828.

1988

The GP took steps to protect the Partnership in the event of a severe recession or his inability to continue as GP. First, the Partnership began investing a majority of its portfolio in First Trust Deeds, rather than junior trust deeds. Second, the line of credit terms were negotiated so in the event the line of credit matured and was not in default, the obligation would automatically convert to a three-year term.

These decisions proved prudent and protected the Partnership against the huge losses suffered by the savings and loan industry and others in real estate lending in the early 1990s. The Limited Partners’ average annual return for the five-year period ending December 31, 1995 was 9.99%!

The foundation laid in the late 1980s again proved itself in the Great Recession beginning in 2005 and enduring through the end of the decade (the official Recession was June 2007 through December 2009). The Partnership’s lowest return to Limited Partners during that era was 6.44% in 2010.

1989

The Limited Partners Committee was established. The Committee is composed of veteran business persons and attorneys who meet quarterly with the GP to review Partnership activities and advise in setting goals and policies.

Simultaneously, a licensing agreement with The Loan Company, a California Corporation, wholly owned by the GP, allowed the Partnership to use The Loan Company name and logo in San Diego County.

1990

The Partnership books were converted from a cash basis to an accrual method of accounting.

1992

The Partnership accumulated cash. To attract qualified borrowers, the GP reduced the interest rate charged and extended the typical loan term from three to five years. To protect the Partnership against interest rate fluctuation, the GP began underwriting adjustable rate mortgages and amortized loans for a major part of the loan portfolio.

Strengthening the Partnership’s Infrastructure to Assist Growth and Longevity:

1997

Ed Mateer became the Chief Underwriter, bringing twenty-five years of real estate lending, brokering, and appraising acumen to upper management.

The Partnership undertook an offering to raise capital to $10,000,000. This goal was reached during the first quarter of 2000.

Key-man insurance in the amount of $500,000 was put in place in the event of Steve Dillaway’s death.

1999

A Reserve for Doubtful Accounts was established.

2000

In August, with the assistance of the Limited Partners Committee, the Partnership Agreement was amended and restated in its entirety.

In September, the Limited Partners approved the amended and restated Partnership. The name of the Partnership was changed to The Loan Company of San Diego, a California Limited Partnership.

Also, the GP’s interest in the Partnership was restructured. The GP’s share of net profits remained the same, but was divided between Steve Dillaway, an individual, and The Loan Company, a California Corporation. Simultaneously, Ed Mateer acquired a 20% equity interest in the corporate GP. The establishment of the corporate GP eliminated the need to dissolve the Partnership or find a new GP in the event of the death, disability, or retirement of Steve Dillaway.

2001

Pursuant to the restructuring approved in September 2000, Steve Dillaway transferred one-half of his GP interest to the Corporation. In February, the Partnership began an offering with the intention of raising capital to $20,000,000. This goal was reached in September 2003.

2002

Since the year ending December 31, 2002, The Loan Company’s financial statements have been audited and an Independent Auditors’ Report has been issued.

2004

The Partnership began an offering with the intention of raising capital to $40,000,000.

2005

In August, the above offering was ended with capital standing at $36,233,212. Security law mandates a six-month Quiet Period before undertaking a new offering (August 1, 2005 through February 2, 2006). During this time, no investment monies could be accepted and no Limited Partners could be added to the Partnership.

During the Quiet Period, several amendments to the Partnership Agreement were proposed, including, 1) the size of the Limited Partners Committee was increased; 2) provisions were made for Steve Dillaway’s GP interest to be converted to a Preferred Limited Partner interest upon his dissociation (death, retirement, or incapacity); and 3) the Limited Partners’ ability to withdraw capital was enhanced.

In June, the name of the corporate General Partner was changed from The Loan Company, a California Corporation to Corporate GP, a California Corporation.

In December, the Partnership’s lines of credit were increased to $12,000,000.

2006

In February, the Partnership began an offering with the intention of raising capital to $100 million over the next four to five years. This was a private offering open only to individuals who satisfy stringent suitability requirements.

In April, the Partnership Agreement was amended to provide that in the event of Steve Dillaway’s death, disability or retirement, his GP interest would be converted to a Preferred Limited Partner interest.  The Limited Partners Committee was expanded to not less than three or more than seven members. And the Limited Partners’ ability to withdraw capital was enhanced.

In July, Laurie Dunlop, the Partnership’s longtime CPA and Chief Financial Officer, received an option for 4% equity interest in Corporate GP.

Partnership capital grew 13.6% to $41,646,930 and yielded 8.75%.

The Recession Years — 2007 to Present:

2007

John Lloyd joined Ed Mateer in the underwriting of loans. Darcy Peters joined The Loan Company in loan processing and assisting in loan origination. Elizebeth Poe, CPA, joined The Loan Company to assist Laurie Dunlop, CFO.

John Lloyd and Laurie Dunlop were granted options to acquire stock in Corporate GP.

The Partnership increased its line of credit to $15,000,000.

June 2007 was marked the official beginning of the Recession by the National Bureau of Economic Research, the official marker of U.S. economic cycles.

Though the residential real estate market began to decline, Partnership capital grew 9.23% to $45,492,136 and yielded 9.39%.

2008

John Lloyd became President of the Partnership. Geno Altiery joined loan servicing.

The residential real estate market imploded. JP Morgan Chase acquired Bears Stearns at a fire sale in March. Lehman Brothers filed bankruptcy in September. President George W. Bush signed the Trouble Asset Relief Program (TARP) in October.

Partnership capital grew 12.86% to $51,342,513 and yielded 8.1%, a testimony to the mission statement, business plan and management.

2009

In January, Ed Mateer retired from The Loan Company.

In February, President Barack Obama signed the American Recovery and Reinvestment Act of 2009 (also known as The Stimulus Bill or The Recovery Act).

In July, the Partnership’s bank was seized by the FDIC and the Partnership was advised its line of credit would not be renewed. The General Partner froze capital (not income) withdrawals for the quarter ending March 31 and placed a 6% withdrawal fee on capital (not income) withdrawals for the quarters ending June 30, September 30, and December 31. All Partners seeking to withdraw capital were satisfied.

The Partnership began a new offering in July 2009 with the intention of raising capital to $100,000,000.

December 2009 was marked the official end of the Recession by the National Bureau of Economic Research, the official marker of U.S. economic cycles.

Though the effects of the recession continued, the Partnership’s capital remained virtually unchanged at $51,330,294 and yielded 6.57%, a continuing testimony to the mission statement, business plan and management.

2010

The General Partner left the 6% withdrawal fee in place for capital requests.

In March, the Partnership adopted a generic Notice of Right of First Refusal to facilitate capital account transfers between Partners and third parties in the event the Partnership is unable to satisfy a Partner’s request to withdraw capital. Also, Regents Bank provided a $5,000,000 line of credit to the Partnership.

The Partnership’s capital increased to $53,984,445 and yielded 6.44%, a continuing testimony to the mission statement, business plan and management.

2011

The General Partner removed the 6% withdrawal fee beginning the first quarter of 2011.

Loan Broker Services–the entity which prepared loan documents on behalf of the Partnership and was owned by the General Partner–was transferred to the Partnership at January 1, 2011 to be operated as a separate department.

Effective January 1, 2011, to enhance transparency, commission points paid by borrowers are held in escrow until reviewed by the Limited Partners Committee. Further, commission income paid to the General Partners is capped, which directly benefits the Partnership in the form of underwriting point income.

Key-man life insurance was acquired on John Lloyd, President, and Laurie Dunlop, CFO.

Vibra Bank provided a second line of credit facility in the amount of $2,500,000.

The hangover of the Great Recession persists, yet the Partnership’s capital increased to $54,841,766 and yielded 7.13%, a continuing testimony to the mission statement, business plan and management.

2012

John Lloyd, President, and Laurie Dunlop, CFO, exercised stock options and became shareholders in Corporate GP, adding stability and continuity to the Partnership succession plan.

Regents Bank doubled the Partnership credit facility to $10,000,000.

The Great Recession’s effect persists in the economy, yet the Partnership’s capital increased by 13.08% to $62,014,565 and yielded 7.94%, a continuing testimony to the mission statement, business plan and management.

2013

A succession plan has been in place for several years and the management team is in place and ready to assume Steve Dillaway’s withdrawal from day-to-day operations.

Partnership capital grew 18.8% to $73,673,172 and yielded 8.04%.

2014

Effective January 1, 2014, Steve Dillaway retired from operations, but continued as individual General Partner and President of Corporate GP. Steve’s share of commission income passes to the Partnership, which directly benefits the Partnership in the form of underwriting point income.

The offering begun in July 2009 was closed effective August 31, 2014. A six-month Quiet Period began October 1, 2014.

In June, The Loan Company expanded into contiguous space and refreshed its offices.

In September, Teri King, with 30 years of banking experience, joined The Loan Company as Office Administrator and assistant in every phase of operations.

Partnership capital grew 15% to $84,772,034 and yielded 8.10%.

2015

Effective January 1, 2015, JES Commissions was fully integrated into the Partnership as a separate department. To eliminate conflicts and enhance accountability, all Partnership underwriters will be compensated by salary, a portion of which may be based on department earnings.

In April, ending a six-month Quiet Period, the Partnership began an offering with the intention of raising capital to $150,000,000 over the next four to five years.

Ivan Lavinsky, a California attorney, a Limited Partner, and a Limited Partners Committee member, agreed to serve as corporate counsel to Corporate GP.

Partnership capital grew 15% to $97,420,185 and yielded 7.95%.

2016

Effective January 1, 2016, Corporate GP changed officers: Steve Dillaway stepped down as President, John Lloyd replaced Steve as President, and Ivan Lavinsky replaced John as Vice President. Laurie Dunlop continued as Secretary of Corporate GP; Steve, John, and Laurie continued as Directors.

The Loan Company annexed an adjacent suite of offices to accommodate its expanding number of employees and anticipation of growth.

2017

Effective January 1, 2017, long-time employee and first Chief Financial Officer, Laurie Dunlop, announced she would leave The Loan Company to pursue her own business venture. Simultaneously, Corporate GP purchased Laurie’s shares (5%), resulting in 55% Steve Dillaway, 32% John Lloyd, and 13% Ed Mateer. Laurie continued into 2018, transferring her responsibilities to others.

After reviewing and considering off-the-shelf software upgrade options, the General Partner recognized that proprietary software would be in the Partnership’s best interests.  The development of proprietary loan origination and servicing software referred to as OM began in April. This undertaking came with the understanding that OM would be a years-long developmental process.

In December, the Partnership received its long-anticipated California Financing Lenders (CFL) License. Previously, the Partnership operated exclusively under the Bureau of Real Estate (BRE), formerly the Department of Real Estate. Going forward the Partnership will have additional options.

At yearend, the Partnership had twelve employees. Partnership capital grew 18% to $141,763,442 and yielded 8.02%.

2018

In January, Phase 1 of OM–loan origination–was placed in service.

In May, the current offering was closed and a six-month Quiet Period commenced (May 30, 2018 through November 30, 2018). In accordance with security law, no investment monies could be accepted and no Limited Partners could be added to the Partnership.

On December 1, with Partnership capital at approximately $158,000,000, the Partnership began an offering with the intention of raising capital to $250,000,000 over the next four to five years.

Partnership capital grew 13% to $159,703,000 and yielded 8.25%.

2019

Effective March 5, 2019, John Lloyd’s and Darcy Peters’ employment with The Loan Company of San Diego ended. Ivan Lavinsky was hired as President of TLC.

In April, Angela Kasten was promoted to Chief Financial Officer and Elizebeth Poe was promoted to Controller.

A review and tightening of our underwriting was undertaken as well as a rebalancing of our portfolio with less emphasis on bridge loans and more emphasis on mini-perm loans with 5-10 year terms with variable rates and amortization.

In October, we suspended accepting new partners. We also ceased our proprietary software project and wrote-off the previously capitalized development cost.

Partnership capital grew 13% to $180,960,685 and yielded 7.35%.

2020

As a precaution to COVID-19, on March 18, all employees were placed on work-at-home status until further determination. On March 19, California Governor Gavin Newsom announced a statewide shelter-in-place order. The partnership continued its suspension of accepting new partners due to the unknown effects of Covid on the economy. Regardless of these events, TLC originated $73,955,342 in loans. TLC took a cautious approach to understanding how Covid would impact the economy and, more specifically, how the lending environment would be affected.  In August, we hired 20-year mortgage veteran, Greg Adelman, as Portfolio Development Manager. Greg also assists President in the underwriting of new loans. The Partnership originated $34,923,500 in new loans and yielded 6.351%.

2021

Our COVID-19 Protocol was in effect until March 1, 2021. In March, Yolanda McCollum was hired as Chief Financial Officer. Yolanda comes to us with more than 15 years of accounting experience. Although traditional bank interest rates continued to drop to new lows, TLC originated $76,769,496 in new loans. The Loan Company yielded a 7.37% return.. 

2022

This was a very busy year of lending. It was an exciting year returning to some form of normalcy, post-COVID-19 Pandemic.

The Partnership originated $80,060,665 in new loans. Capital grew to $196,000,000 with a yield of 6.8%.

2023

The Loan Company’s success continued in 2023 as another busy year for lending. We updated our loan servicing system which provided greater operational efficiency and facilitated even faster loan closings. In October, the Licensing Agreement was extended through December 2030.

2024

Effective January 2024, Ivan Lavinsky’s employment with The Loan Company of San Diego ended. Michelle McGuire Richardson was hired as President of TLC. Michelle McGuire Richardson brings 30+ years of banking, lending, operations and leadership experience to The Loan Company. As a risk professional, Michelle understands that risk is a necessary part of any success story. The Loan Company continues to ‘stay the course’ to ensure company, borrower and partner success.