Mortgage defaults, home foreclosures and bank bailouts have dominated the financial headlines over the past two years.
And Madison's largest community development lender hasn't escaped the turmoil either.
"It's been a very interesting couple of years, to say the least," says Salli Martyniak, president of Forward Community Investments, which is celebrating its 15th anniversary Friday with a breakfast at the Madison Concourse Hotel.
FCI acts as a non-profit bank, making loans for community-based real estate projects, including low-income housing, neighborhood centers or small business incubators. It collects funds from donors or institutions, pays them a small amount of interest, then loans the money back out at below market rates.
Established in a basement meeting at the First Baptist Church on Madison's near west side in 1994, Forward Community Investments has grown steadily. By the end of the year it will have made nearly $20 million in loans to non-profits statewide, extending its reach from the Illinois border to Lake Superior.
"Things have definitely fallen into more capable hands since we kind of cooked up the idea," says co-founder Wynn Davies.
Davies and local activist Sue Lloyd launched the organization, originally known as the Madison Area Community Development Loan Fund. Later renamed the Dane Fund, it again changed its name in 2006 to Forward Community Investments to reflect a growing statewide focus.
Today, the financial institution counts more than $8 million in assets and a staff of five that includes former Monona State Bank president Earle Edwards.
Despite the unstable economy, FCI closed a record 18 loans worth more than $4 million in 2008. These loans helped in the development of 168 units of affordable housing, established 40 daycare slots for low-income children, created 64 new jobs and leveraged another $13.6 million in outside financing, according to its annual report.
Loans included $130,000 to Common Wealth Development of Madison to finance early costs for the redevelopment of the Garver Feed Mill into an arts incubator; $412,000 to Independent Living Senior Housing of Sun Prairie and $500,000 to the Council for the Spanish Speaking in Milwaukee to redevelop its offices.
Last year, FCI also made its largest loan ever: $1.4 million to Rural Wisconsin Health Cooperative for an electronic medical records computer system. The cooperative includes St. Joseph's Health Services in Hillsboro; Tomah Memorial Hospital; Memorial Hospital of Lafayette County and Boscobel Area Healthcare.
"I've been most proud of the way we've been able to reach outside of Dane County to the rest of the state," says Martyniak, who worked for WHEDA and Firstar Bank before taking the reins at FCI in 2003 from former director Larry Martin.
Previously, Forward Community Investments helped finance the Goodman Community Center's new facility in the Theo Kupfer Foundry building at 149 Waubesa St. It also financed construction of the Social Justice Center at 1202 Williamson St.
But make no mistake. The past 18 months have proven a challenge - not just for the private banks but for community development financial institutions nationwide.
According to the most recent figures, these institutions' loans "at risk" increased in the second quarter of 2009 to 10.5 percent, up from 9.2 percent on March 31. This was after things had showed some improvement in terms of both delinquencies and charge-offs during the first quarter.
"The way I put it now is that things have stabilized to the point where we're seeing a consistent level of distress," says Mark Pinsky, who heads the Opportunity Finance Network, a Philadelphia-based trade association for the nation's estimated 1,200 community development financial institutions.
The default rates for the non-profit community lenders remain basically in line with private sector financial institutions, Pinsky notes. But he says the banks, which provide the funds or participate in loans to the community lenders, are feeling pinched.
Martyniak agrees that the financial problems of the private sector have affected her group's ability to raise investments and find banks to participate in loans. Its investor base is 65 percent banks and credit unions, 25 percent from foundations, 7 percent from individuals and 3 percent from religious organizations.
"Financial institutions, which have been significant resources and partners, are experiencing their own financial challenges," she says.
Still, Martyniak notes that FCI has only experienced one default in its history: a $46,000 loan to a small day care center in McFarland. The group did facilitate a $1.09 million loan to Genesis Development Corp., a business incubator off the South Beltline that has been struggling with vacancies. That note is assigned to the city of Madison, however, meaning FCI carries no liability for repayment. But FCI does have another $200,000 loan outstanding with Genesis. Otherwise, FCI is reporting no past due loans as of Dec. 31, 2008.
The Obama administration is counting on lenders like Forward Community Investments to help ease the credit crunch going forward. Treasury Secretary Timothy Geithner stressed the importance of the community development financial institutions industry during his confirmation hearings before the Senate Finance Committee in January.
"A major thrust of our efforts to stabilize the U.S. financial system is to ensure that credit begins to flow again to qualified small business borrowers and others whose access to credit has been unfairly curtailed or seized up," he said. "Community banks, including many CDFI participants, are a vital lifeblood to credit for many small businesses."
Forward Community Investment's 15th anniversary celebration runs from 7:30-10 a.m. at the Concourse. The featured speaker is Robert Egger, considered one of the most powerful voices in the country for the non-profit sector. Not to mention making Oprah Magazine's 2006 list of "Sexiest Men Alive."
"He's a rock star," says Martyniak.
