History of The Loan Company

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). The Partnership business was 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 1990’s. The Limited Partners’ average annual return for the five-year period ending December 31, 1995 was 9.99%!
1989 The Limited Partner 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 million. 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.
August 2000 The Partnership Agreement was amended and restated in its entirety with the assistance of the Limited Partner Committee. The name of the Partnership was changed to The Loan Company of San Diego, a California Limited Partnership.
September 2000 The Limited Partners approved restructuring the GP’s interest in the Partnership. 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 million. 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 million. This offering was ended in August 2005 with capital standing at $36,233,212.
2005 Security law mandated 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 additional Limited Partners could be added to the Partnership.
During the Quiet Period, several amendments to the Partnership Agreement were proposed and approved, including 1) the size of the Limited Partner 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 2005, the name of the corporate general partner was changed from The Loan Company, a California Corporation to Corporate GP, a California Corporation.
In December 2005, the Partnership’s lines of credit were increased to $12 million.
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 July 2006, Laurie Dunlop, the Partnership’s longtime CPA and Chief Financial Officer, received an option for 4% equity interest in the corporate GP.

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 Marks, CPA, joined The Loan Company assisting 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 million. The residential real estate market began to decline. The Partnership grew 9.23% to $45,492,136 and yielded 9.39%.

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.
2008 John Lloyd became president of the Partnership. Geno Altiery joined loan servicing. The residential real estate market imploded. The Partnership grew 12.86% to $51,342,513 and yielded 8.1%, a testimony to the mission statement, business plan, and management. Ed Mateer retired from The Loan Company.

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.
2009 The Partnership’s bank was seized by the FDIC in July 2009 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.

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

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.

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.
2010 The General Partner left the 6% withdrawal fee in place for capital requests. Regents Bank provided $5,000,000 line of credit to the Partnership in March. Also 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.

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 Partnership department.

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