His Story with Ken Dubuque

I became involved in the creation of TMF after joining Guaranty Federal Bank in late 1998. Kenny Jastrow (my boss), working closely with the ever-expanding Linda Walker, was the initial creator of the idea. Having built a similar organization in Maryland with Mellon Bank, I enthusiastically supported the concept of stimulating economic growth and jobs in underserved communities. We wanted to create an opportunity for financial institutions to not only meet their Community Reinvestment Act regulatory requirements but also leverage that investment via Bank Enterprise Act awards.

The regulators loved our idea. However, there was red tape, not to mention a bit of skepticism from similar local or group-specific entities around the state. Jim Reid, emblazoned with Southern Dallas Development Corporation (“SDDC”), saved the day. SDDC was already in place with infrastructure, the Office of Thrift Supervision was easing the regulatory path, and the state was onboard (sort of). A small army of lawyers and accountants was moving mountains of paper, and Guaranty was writing a big check. In January 1999, Texas Mezzanine Fund was born as a for-profit entity to provide flexible funding options.

We needed more capital. With a 15-year goal of $25 million, letters were written, and doors were knocked on. I lied a bit on the phone: “You don’t want to be the only thrift not participating, do you?” Voila, $10 million! We also needed clients. A few loan officers (that’s all we had) blanketed the state with the offer of funding, at a reasonable rate, for small businesses having difficulty obtaining bank financing. Easy, right? Nope. The local, regional, and group-specific nonprofit lending organizations were competitors. Banks were skeptical. We called Janie Barrera (Accion), Margo Weisz (Austin CDC), and Amos Brown (Third Coast CDC) and asked how we could work together. Three new board members later and with a promise to finance their loans, we were on our way. Washington Mutual (thanks, Betty Wilkes) and Jefferson Heritage (thanks, Tom Phillips) soon joined. With success, other thrifts and banks joined, including Comerica, First Bank & Trust, Inwood National Bank, Wachovia, and Wells Fargo, to name a few. Accion and SDDC became investors. By 2003, almost $12 million in business loans were made. TMF hired its own staff.

In 2006, I ran into Rick Perry, the then-governor of Texas (almost literally - he was running, I was meandering at a 10K fun run in Austin sponsored by Guaranty). He asked if I knew anything about “this TMF” because he wanted to get involved. I explained what it was, but respectfully declined “government help.” His smile became a frown. Thinking quickly, I said, “We’re having a 7-year celebration. Would you like to be our keynote speaker?” He accepted, and on August 8, 2006, TMF's accomplishments were celebrated at the Driskill Hotel in Austin.

There were a few bumps along the way; however, success built on success. Guaranty lowered its profile to ensure equal membership for all shareholders. By the end of 2007, TMF had loaned more than $37 million to over 120 businesses, created almost 1700 jobs, and financed over 275 affordable housing units. The underlying capital was over $15 million (leveraging more than $129 million).

I retired from the board to focus on Guaranty becoming a public company in 2008. Unfortunately, that year, the country was hit by a financial tsunami, and things didn’t go as planned. I left banking, moved to New York City, and turned in my western hat and boots.

I often think of what we built. Without a doubt, one of my proudest moments is seeing where TMF is today.

Congratulations!

Ken Dubuque (formerly of Guaranty Bank) was instrumental in getting Texas Mezzanine Fund started. From 1999 to 2008 as Board Chair, he led TMF to success built upon success. Ken now resides in New York City.