2018 Annual Report

2018 Annual Report

2018 Annual Report

Annual Report

for the year ended 31 Dec 2018

Letter From Our Chief Executive offered by banks to deliver the capi- tal they need to experience growth, stay competitive, and to retain tal- ent. consistently communicated to me that we are different simply because we do what we say we are going to do.

It is in this trend and struggle that NAC finds both purpose and op- portunity. 2018 saw our team sur- pass over $100 million in cumulative funding to rural businesses in the form of affordably priced long term loans. In doing so, NAC has helped create or save over 1,200 jobs. There are companies, jobs, and growth that would not be here today with- out the important work done by the men and women at NAC. The direct correlation between the success of our economic develop- ment efforts and our shareholder value is a dream come true for many of us. How rare is it to find a legiti- mate opportunity where purpose and profits align? And behind each of these loans are real people and real stories of the American entrepreneur some- times fighting to grow and other times dreaming to launch their busi- nesses. These proprietors and their companies provide opportunity, livelihood, optimism, and hope to real people, real employees, and real communities. Hopefully, the re- lationships we have formed and the manner in which we serve has led to positive influence in real lives. I personally like to step back and reflect on NAC’s mission statement at the end of each year as both a guardrail and measuring stick of the Company’s success. It’s easy for us to see the growth in numbers, but most rewarding to me has been the feedback we receive from our cli- ents, NAC’s borrowers, who have

The character, integrity, and the pursuit of excellence are embod- ied by all 16 members of our team. Purposeful people do purposeful things and I believe that through these people, NAC has been faith- ful in stewarding the resources it has been given: capital, influence, and people. Thanks to 2018’s earnings, new term debt recently issued by our senior lender, and a substantial cash posi- tion, NAC begins 2019 with a strong balance sheet and all the capital it needs to achieve its objective for 2019: $100 million in originations. We know that 2019 will bring its chal- lenges, just as we are already expe- riencing early headwinds due to the federal government shutdown. However, I’m optimistic as to what 2019 holds, thanks to the incred- ible support NAC receives from our teammates, investors, lenders, bor- rowers, and partners at the USDA. We remain grateful for the trust you have placed in us and hopeful that we can continue our work in a man- ner that is profitable, purposeful, and, most importantly, faithful to our mission and Calling. With Gratitude,

2018 was truly a breakout year for NAC and our team. Coming off of meaning- ful growth in 2017, we set out to stretch ourselves with objectives targeting 100% top and bottom line growth. Not only did the team exceed these objectives, but NAC was able to post financial numbers well beyond any of our expectations for the year with 129% revenue growth, 179% EBITDA growth, and 158% Net Income growth. This growth was largely driven by a three-fold increase in year over year originations. Thanks to a strong secondary market, lower cost of capital, and fiscal discipline the Company was able to achieve EBIT- DA margins that exceeded 50%. While shareholder value creation is one of the hallmarks of our respon- sibility as stewards of capital, NAC looks far beyond that in measuring success. We hold the fundamental belief that access to properly priced capital is the lifeblood of a free mar- ket system. 2018 saw America’s economy continue its trend of trans- ferring wealth and resources, includ- ing both people and capital, from rural to urban markets. Many of Amer- ica’s rural areas can no longer rely on conventional resources and loans

Florida | Georgia | Nevada | North Carolina | Texas www.northavenue.com | [email protected] Contents Letter from Our Chief Executive 3 Stewards of Capital, Influence & People 4 NAC Portfolio 6 In Their Words 8 Employee Spotlight 10 Borrower Spotlight 12 NAC Leadership & Team 14 NAC Advisory Board 16 A Year of Growth 18 Nationwide Reach 20

Ben Chatraw Chief Executive

NAC Mission Statement

North Avenue Capital exists to honor God through excellence, integrity, and growth as stewards of capital, influence, and people.

3

Stewardship /'st(y)ōō,erd,SHip/ (Noun) an ethic that embodies the responsible planning and managing of resources Stewards of Capital, Influence, & People Annual Report for the year ended 31 Dec 2018 NAC’s mission statement revolves around stewardship. The Company sees capital, influence, and people as the primary resources with which we have been entrusted. Ultimately, NAC’s team recognizes we will be judged based on how successfully we utilize these resources to generate growth, integrity, and excellence. Capital

People Purposeful companies attract purposeful people. NAC’s team is truly world class. From former military battlefield leaders to entrepreneurs to career USDA experts, NAC’s team has lived and worked all across America and the world developing experience in a huge diversity of fields. Yet, each team member is united by a common mission and purpose at NAC. We invest in our people by supporting ongoing development that empowers them to challenge and sharpen one another on a daily basis in our collective pursuit of excellence.

10 16 NAC Employee Growth +60%

2017 2018

Revenue Growth

NAC’s commitment to steward- ship begins with the capital that our investors and equity holders have entrusted to us. NAC seeks to maximize long term ROI by maximizing profit relative to over- all risk. It is our belief that prop- erly underwritten and structured USDA business loans present one of the best risk adjusted returns available in current market condi- tions. NAC recognizes that proper stewardship of capital via investor returns opens the door to greater opportunities which in turn gen- erate greater profit, more jobs, and more meaningful influence. NAC views our opportunity to positively influence the lives of others as an important measure of success. This influence is demon- strated not only through our rela- tionships with borrowers, strategic vendors, the USDA, and others, but also more tangibly through the capital NAC deploys to gen- erate jobs and drive economic growth in rural communities. Influence

$8.5M

179% Earnings Growth

$3.7M

2017

2018

40% $1.5M

Investor Distributions Paid to Date

Balance Sheet Equity Growth

Cumulative Jobs Created/Saved

$60M Originations Growth

North Avenue Capital works closely with our borrowers to strategically notify local and national media outlets when deals close. Want to learn more about our borrowers, their stories, and how they are impacting their communities? In The News

1,200

3x

826

$20M

593

45

2018

2015

2016 2017

2018

2017

USDA Guaranteed Fees

$70M Conditional USDA Commitments

$3M

Visit our Website at:

$0

www.northavenue.com Click on ‘News’ or ‘Stories’

$20M

+$50M

NAC Contribution

NAC Usage

2017 2018

4

5

Annual Report

for the year ended 31 Dec 2018

NAC Portfolio North Avenue Capital has reviewed over $1.3 billion in potential loans ultimately resulting in $110 million in capital being deployed across a diverse range of industries in rural America. To date, our portfolio has performed without a single loan loss.

Industry: Event & Hospitality Loan Amount: $1.4M Jobs Saved/Created: 4 Location: Florida

Industry: Portable Toilets Loan Amount: $3.1M Jobs Saved/Created:17 Location: North Dakota

Industry: Auto Parts Manufacturing Loan Amount: $9M Jobs Saved/Created: 103 Location: Florida

Industry: Hotel Loan Amount: $5M Jobs Saved/Created: 20 Location: Indiana

Industry: Manufacturing Loan Amount: $3.2M Jobs Saved/Created: 450 Location: Florida

Industry: Battery Recycling Loan Amount: $10M Jobs Saved/Created: 45 Location: Nevada

Industry: Hotel Loan Amount: $5M Jobs Saved/Created: 12 Location: Tennessee

Industry: Commercial Real Estate Loan Amount: $9.5M Jobs Saved/Created: 95 Location: Arkansas

Industry: Borrow Pit/Sand Mine Loan Amount: $10M Jobs Saved/Created: 8 Location: Florida

Industry: Parking Lot Loan Amount: $5M Jobs Saved/Created: 7 Location: Texas

Industry: Wholesale/ Retail Nursery Loan Amount: $2.2M Jobs Saved/Created: 40 Location: North Carolina

Industry: Lodging/ Restaurant/Bar Loan Amount: $3.1M Jobs Saved/Created: 40 Location: North Carolina

Industry: Engineering & Manufacturing Loan Amount: $4.3M Jobs Saved/Created: 110 Location: Illinois

Industry: Honey Distribution Loan Amount: $1.8M Jobs Saved/Created: 5 Location: Georgia

Industry: Meat Processing Loan Amount: $1.9M Jobs Saved/Created: 22 Location: Texas

Industry: Resort/Hotel Loan Amount: $4.5M Jobs Saved/Created: 410 Location: Michigan

Industry: Adventure Park Loan Amount: $5M Jobs Saved/Created: 27 Location: Texas

Industry: Kart Racing Loan Amount: $5M Jobs Saved/Created: 30 Location: Texas

Industry: Winery/Event Venue Loan Amount: $1.6M Jobs Saved/Created: 42 Location: Illinois

Industry: Int’l Auto Exports Loan Amount: $1.8M Jobs Saved/Created: 10 Location: Minnesota

Industry: Commercial Real Estate Loan Amount: $7.3M Jobs Saved/Created: 30 Location: Georgia

Industry: Waterpark Loan Amount: $10M Jobs Saved/Created: 167 Location: Texas

6

7

Annual Report

for the year ended 31 Dec 2018

In Their Words

“The NAC team has been extraordinarily effective in helping their clients secure funding for their businesses using the USDA loan program. NAC has repeatedly proven that they are seasoned professionals with the required knowledge, perseverance and professionalism required to serve their cli- ents’ unique financing needs through the USDA approval process.” -Scott Luttrell, Chairman /Investor

Borrowers, Employees, & Investors alike trust North Avenue Capital to be an honest, forth- right organization that will stand behind them as they launch into an effectively capitalized future. We pride ourselves in leading the charge with a capable set of individuals from vari- ous backgrounds. Here are a few thoughts about 2018.

“Ben and his team try to do things the right way. I’ve called on them for some advice and as a sounding board outside of my business, and Ben and his team have been very helpful.” -Wil Massengill, Five Oaks, Borrower

“NAC was a game changer for us because if we were to try to go through other avenues of different lending options we could not have this project. The way that it was laid out to us, and the way it’s performed all the way to closing has been spot on.” -Dan Laubacker, St. Mark’s Pond, Borrower

“We endeavor to influence the people and businesses we partner with, and how can you lead someone to a place you have never been or are unwilling to go? We’ve lived the fight to start something new, faced the challenge of establishing a culture tethered to our values, and stand unwavering in our

commitment of service to others.” -Mike Wilson, Commercial Lender

“We hold our Lenders and Architects to a high standard and take tremen- dous pride in the fact that our portfolio has yet to suffer a single dollar of loan losses and has maintained an on-time payment rate in excess of 99%.” -Joseph Rowell, Chief Operating Officer

“As successful as NAC has been to date, I’m more impressed by HOW they run their business than WHAT they have accomplished. Their character, integrity, thoughtfulness, desire for win-win value creation, and creativity in finding solutions is evident and helps explain the level of their success.” -Craig Wenning, Board Member

“NAC’s greatest achievement in 2018 was expanding our team with indi- viduals who are not only experts in their respective areas of specialty but who embody NAC’s Core Values, which helps drive us toward our Mission.” -Eric Johnson, President

“The team did what they would say. They nailed their KPIs and are building a functioning repeatable system and process that is poised to continue to grow.” -Len Mazur, Investor

“Throughout 2018, NAC worked to gain a greater understanding of its USDA partners’ aims for the Business & Industry Program. These conver- sations have helped us better align with our shared mission of improving economic growth in America.” -Anne MacDonald, Board Member

“I can confidently say that without North Avenue Capital, this transaction would have never happened. We’d still be out there wandering around in the woods looking for money.” -Barry Owens, Treetops, Borrower

8

9

Annual Report

for the year ended 31 Dec 2018

Ben Mathewson joined NAC in 2016, making him one of the longest standing Commercial Lenders. He works with diligence and strives for not only personal advances, but team advanc- es. Employee Spotlight: Be n Ma t h ews on

ience and pursue his dream of be- ing central to an entrepreneurial endeavor. NAC is unlike traditional lending firms, combining rugged hustle with refined investment prowess offer- ing Ben a healthy mix of autonomy and accountability that has driven both his personal growth and the firm’s organizational success. “My position and daily duties are akin to owning one’s own business. Hard work and agility are required and rewarded.” - Ben Mathewson “My position and daily duties are akin to own- ing one’s own business. Hard work and agility are required and re- warded.” - Ben Mathewson Ben was born and raised in a rural Nebraska community where his fa- ther and brother still operate the family’s 3rd generation cattle ranch. It was this experience and connec- tion to rural America that made his providential encounter with NAC at a job fair for Service Academy grad- uates in 2016 so intriguing. That same background, coupled with his military work ethic, makes him uniquely qualified to under- stand and address the needs of the businesses he serves. “A missed rain, a hail storm, anoth- er company closing shop: these can

all have severe and lasting impacts on rural communities,” Ben remarks regarding the economic sensitivity that remains in rural America. “Our capital creates ripples; NAC helps job-creating businesses to grow, which in turn puts food on the plates of hundreds of families.” Ben shares NAC’s unending com- mitment to excellence and honor in pursuing opportunities to help rural businesses survive and thrive, along with the communities and families they support, using innovative loan structures that are tailored to their unique needs. And when he’s not hopping from sea to shining sea to steward a new deal along, Ben serves in his most important capacity as husband to Carly and father to big sister Isla and little “player to be named later.” NAC couldn’t do what it does and wouldn’t be where it is without high-character men and women leading and investing in the mission of the firm. Ben raises the standard every day he wears the NAC jersey.

Ben Mathewson has been a vital part of the North Avenue Capital team since he completed his mili- tary commission 2½ years ago and became a Commercial Lender. His impact has been so profound that he also serves as Area Man- ager and helps manage the op- erations of NAC’s Nevada branch. After graduating from the Air Force Academy and serving as a Finance Officer stationed across the globe, Ben was ready to take his exper- Deals Ben Has Influenced or Closed at NAC: Applied Fiber Holdings The Frying Pan & American Fish Company Five Oaks Nursery & Tree Farm The Manor at 12 Oaks Farm St. Mark’s Pond

“At the end of the day, business is all about people and relationships, and NAC’s success is directly correlated to the quality of the people on our team.” -Ben Chatraw, Chief Executive

11

10

Annual Report

for the year ended 31 Dec 2018

With the 3rd generation taking the helm, a South Georgia beekeeping and honey distribution operation uses a USDA loan to move from regional prominence to the national stature they are. Borrower Spotlight: Weeks Honey Farm

“Pleasant words are like a honeycomb, sweet to the soul and healing to the bones.” Proverbs 16:24 Eric Johnson, President of North Avenue Capi- tal, said this about Ray and Weeks Honey: “Weeks Honey is growing fast, creating new jobs in their community, and doing so with a legacy of integrity and excellence. The USDA loan is a great fit for this rural, family business.”

Currently available in 28 states & in nearly 3,000 stores including Whole Foods, Sprouts, Kroger & more. “NAC Gave Weeks Honey the Boost They Needed...” - Jill Stuckey, Former USDA State Director of GA Donnie “Ray” Crosby is a man of faith, a devoted husband, a loving father, an expert beekeeper, and, most recent- ly, the 3rd generation CEO of Weeks Honey Farm, Inc. (Weeks Honey). Ray’s grandparents, Margaret & Fla- val Weeks, founded Weeks Honey in 1960, initially taking a hobby and setting out to meet local demand for pure, raw, unfiltered honey. His mother, Sharon Weeks Crosby, has been involved with the company from its inception and spent over 25 years at the helm, leading Weeks

“Pleasant words are a honeycomb, Sweet to the soul and healing to the bones!” Proverbs 16:24

Honey to regional prominence. Under Ray’s leadership, the dream of national distribution is coming true at a furi- ous pace. Having expanded distribu- tion from 150 to 3,000 retail locations in 2018, it is clear that consumers un- derstand the value of Weeks Hon- ey’s 100% US-made honey. He said, “My grandparents started this in- credible company more than 50 years ago, and my parents contin- ued the legacy of quality and integ- rity. I’m honored to carry on the torch to new markets, with new products, and the loan from North Avenue Capital will allow us to do just that.” As with any growing consumer prod- uct, Ray needed capital to effectively manage inventory, fill orders, and keep the momentum going. The USDA loan, underwritten and funded by NAC, is a key ingredient to realizing the dream.

“NAC provided real value for my family 3rd Generation Family-Owned Honey Farm in Georgia and me. Not just with the USDA loan, but they introduced us to a new CPA, gave valuable input on our marketing strategy, and have taken a genuine interest in our business,” added Ray. With fresh capital and shelf-space in the nation’s leading grocery stores, including Whole Foods, Sprouts, Kroger, Albertson’s, and many more, Ray expects Weeks Honey to be selling their honey in over 3,000 re- tail locations by the end of 2018. The nutritional value of honey is un- matched and undisputed…even the Bible agrees. Weeks Honey routinely reminds customers that...

“Weeks Honey is a great example...It’s just the type of project that the USDA likes to get behind...” - - Jill Stuckey, Former USDA State Director of GA

12

13

Annual Report

for the year ended 31 Dec 2018

NAC Leadership

Team NAC

North Avenue Capital saw a year of growth in 2018. By adding five members to the team, NAC was able to create more opportunity in creating and cultivating deal flow. The new staff, com- ing from all different backgrounds has helped to solidify a firm foundation for a successful launch into 2019.

BEN CHATRAW Chief Executive Leadership, Strategy, Purpose, Under- writing, Marketing, Execution

ALEX LOUIS Managing Partner

ERIC JOHNSON President

BEN MATHEWSON Commercial Lender

CLINT JUSTICE Senior Loan Architect

ALEX DESTINO Exec Director of Business Intelligence & Marketing

CHRISTY KROSNER Servicing Manager & Loan Architect

Strategic Relationships, Originations, Execution

Originations, Leadership, Technical Expertise, Execution

Offices Nationwide 5 Headquarters: Ponte Vedra, FL Offices: Dallas, TX Hahira, GA Henderson, NV Raleigh, NC

EDWARD BHAWANIE Business Development

JASON HOERR Commercial Lender

DAVID LAVENDER Senior Credit Manager

JIM SLAIGHT Commercial Lender

TeamMembers 16

Operations, Servicing, Underwriting, Relationships, Leadership, Execution JOSEPH ROWELL Chief Operating Officer

BO WEATHERSBEE Chief Financial Officer Capital Stack, ROI, Cost of Capital, Financial Controls, Reporting, Execution

KAITLYN CROWDER Operations & Marketing Specialist

MARIA JULIANA FUEYO Loan Architect

MIKE WILSON Commercial Lender

Importance of “Team” NAC’s team is strategically dispersed among five state offices across the country. In order to stay connected, the team attends a 3-day annual meet- ing where they work to cultivate strategies, goals, and objectives while visit- ing loan sites and developing as a team. 15

“NAC is aiming to nearly double production in 2019, a goal that we couldn’t hope to set, much less achieve, without a cohesive, capable, and committed team. These men and women are the real deal!” -Joseph Rowell, Chief Operating Officer

14

NAC Advisory Board Annual Report for the year ended 31 Dec 2018

Borrower Brief

North Florida’s Newest Premier Wedding & Event Venue

42-Acre, Private Woodland Property

Green Cove Springs, Florida

Scott Luttrell Advisory Board Chairman

Brian Walck Board Member

Chris Dance Board Member

Craig Wenning Board Member

For years, Steve Magiera had a desire to retire, but not in the traditional sense. He wanted to break free from the corporate life and build a legacy of his own by starting and cultivating his own business. Through careful research, Steve discov- ered a notable lack of affordable event options for the residents of North Florida. Having found the perfect piece of land, Steve simply needed a financial partner to stand behind him and his start-up. North Avenue Capital stepped in with a loan structure that allowed Steve to see his vision become reality. “I feel so fortunate to have found NAC in 2017, as traditional lending options weren’t going to meet the unique requirements of this project.” -Steve Magiera, Owner Today The Manor’s weekends and weekdays are booking fast for wed- dings, corporate events, retreats, team- building outings, business meetings, and more. Magiera is thrilled to have The Manor be a backdrop for memo- ries of families and friends. Interested in an event at The Manor at 12 Oaks? Visit The Manor online at: www.themanor12oaks.com

Anne MacDonald Board Member

Mr. Luttrell founded LCM Group in 1988 out of his desire to diversify capital and focus on the growing opportunities in the rapidly growing alternative investment sector and currently serves as CEO and Chief Investment Officer. Mr. Luttrell currently serves as the Chair- man of the Investment Committee for the YMCA Retirement Fund, serves on Southern Methodist University’s Cox School Execu- tive Board, is Chairman of the HOI (Helping Others Internationally), Board of Directors of East-West Ministries, and the Board of Trustees to the National Christian Foun- dation of North Texas. Mr Luttrell also serves on the Board of Advisors to Ballast Point Ventures and Mangrove Partners.

In addition to her role as an Advisory Board Member, Ms. MacDonald serves as North Av- enue Capital’s Senior Advisor on Rural Devel- opment and Strategic Partnerships. Ms. Mac- Donald is a policy consultant to Fortune 100 companies and a Senior Advisor to Texas A&M University’sSchoolofAgriculturalEconomics. Over the course of 10 years, she has worked in the White House, Pentagon, State De- partment, and post-Administration of- fice of President George W. Bush and Mrs. Laura Bush, where she served as the Chief of Staff to the former First Lady. In these diverse roles, Ms. MacDonald has had a di- rect impact on rebuilding communities af- ter natural disasters and various conflicts.

Mr. Walck currently serves as Director of a number of non-profit organizations and ministries. In connection with this service, Mr. Walck holds the position of Executive Director of Videre, a non-profit organiza- tion focused on providing business train- ing and affordable debt-based financing to entrepreneurs in Ghana and Senegal. Having led the distribution of more than 100 business loans through this program, Mr. Walck has firsthand knowledge of the impact debt-based capital can have on both businesses and their local economies. In addition to managing several entre- preneurial investments, Mr. Walck serves as the lead Mission’s Pastor at the Vil- lage Church in the Dallas metro area.

Mr. Dance is President of Havenshare Fi- nancial, LLC where he provides compre- hensive family office services for high net worth families. In this role, Mr. Dance over- sees activities including investment man- agement, tax and estate planning, legal services, and operations management. Prior to Havenshare, he served in executive- level positions at Mt. Vernon Investments, Glow Networks, and Excel Communication in roles ranging from Investment Manager to Business Unit President to General Counsel, overseeinganIPO,a$1billionacquisition,and the sale of a company for more than $3 billion.

Mr. Wenning is the Chief Executive Officer of Annandale Capital, an investment man- agement firm based in Dallas, Texas that focuses on advancing each client’s distinct investment objectives through asset al- location, manager selection, research, portfolio customization, and reporting. PriortojoiningAnnandalein2009,Mr.Wenning served as the Senior Director of Operations of Watermark Community Church and was Vice President of Symmetry Capital Advisors, LLC, where he managed money for high net worth individuals and families. Prior to business school, Mr. Wenning held various manage- ment roles at the technology startup Life- Minders.com. His efforts culminated in help- ing take LifeMinders public on the NASDAQ.

Portfolio Manager Company Leader Investment Professional

Executive Leader Sophisticated Investor Experienced Director

Strategic Thinker Policy Leader DC Veteran

Entrepreneurial Investor Non-Profit Leader Successful Executive

Family Office Leader Business Founder Strategic Investor

NAC’s Digital Footprint

“...The company deployed over $60M in capital into the areas of our country that need it the most, generating over 1,200 jobs and, in doing so strengthening com- munities.” -Ben Chatraw, Chief Executive “2018 was a breakout year for NAC...”

200% Q4 Website Traffic Growth

1,200

48

In Quarter 4 2018, NAC grew website traffic by 200% compared to Quarter 4 2017.

Cumulative Jobs Created or Saved since NAC’s Founding

On average, for every loan NAC makes, 48 rural jobs are created or saved.

Q4 2018 New Visitors: 2,800 Q4 2017 New Visitors: 930

16

17

States with NAC Closed Loans 12

USDA Approval Rate 93%

A Year of Growth

$1.3B Loans Underwritten

Purposeful People are Attracted to Purposeful Companies In 2018, NAC substantially increased head count, adding new team mem- bers who bring a wide variety of back- grounds and expertise. A USDA loan requires a special mix of people and talent to source, underwrite, and ser- vice. The right skill set combines exten- sive banking and credit expertise, keen understanding of the dynamics and trade-offs of risk and return tradition- ally found in private equity, a high level of attention to detail, and an entrepre- neurial spirit. NAC’s success in 2018 was largely a result of combining the right teamwith these essential skill sets. Nationwide Reach Expands Through Strengthened Relationships with State Offices Each USDA B&I loan must be approved by the USDA Rural Development of- fice in the state in which the loan was originated. NAC has now closed loans in nearly a dozen states and has active projects in over half of the U.S. Main- taining a sharp focus on USDA lending has enabled NAC to efficiently sub- mit loan requests and subsequently receive approval on 93% of the firm’s submitted packages from a wide range of states. This success is a result of an alignment of NAC’s loan struc- tures and the USDA’s program regu- lations, but more importantly, a com- mitment to the heart and mission of both NAC and the USDA B&I program.

Loan Originations Triple from Previous Year The NAC team closed over $60M in USDA B&I loans in 2018, representing 207% year-over-year growth from the prior year. This significant increase in production was driven by expanding NAC’s nationwide reach, strengthen- ing NAC’s market reputation among industry participants, and establish- ing several effective sourcing chan- nels. NAC was also able to grow our pipeline to over $300M eligible loans setting the stage for an even greater origination volume in 2019. In 2017, NAC formed a strategic fi- nancial relationship with a leading commercial bank. NAC and the bank expanded the relationship in 2018 to provide NAC with even greater ac- cess to capital to fund loans across the country. NAC has proven our commit- ment to financial stability and cred- it-worthiness demonstrated by our strong historical performance, clean track record of third-party audits and credit exams, and close adherence to all relevant compliance and regula- tions. Each of these factors has played an essential role in enabling NAC to strengthen and grow our balance sheet and secure long term investment from investors and financial institutions. Access to Capital Broadens with Senior Banking Relationship

In 2018, NAC was the fastest growing USDA B&I Lender in the country. $60M Loans Originated

Cumulative Originations $110M

Revenue Growth 128%

Cumulative Originations

$110M

Origination Growth 207%

1,200

$50M

Loan Paid In Full 1

Jobs Created/ Saved

$30M

$10M

Loans in Delinquency 0

Closed Deals 22

2015

2016

2017

2018

“NAC’s exciting growth in 2018 was driven by a combination of hustle and teamwork. While those factors will always remain an important part of NAC’s culture, perhaps the Company’s greatest lesson from the year was the importance of systematizing the lead generation and qualification process. NAC will invest over $500,000 in 2019 into systematic marketing and business intelligence. This investment is already yielding fruit via the generation of more than 10 new leads each week. The steady increase of new leads combined with the expansion of a very talented commercial lending team gives me great optimism that we can meet NAC’s very ambitious goals for 2019.” -Eric Johnson, President

Loan Losses $0

North Avenue Capital Quick Stats 2018

19

18

for the year ended 31 Dec 2018

Annual Report

North Avenue Capital has active projects in 26 states across the United States of America and Puerto Rico. NAC’s team of commercial lenders and network of affiliates source deals through a variety of marketing channels. Nationwide Reach

NAC’s USDA Loans are available to a wide variety of industries - not only agriculture.

Top-Rated Golf and Ski Resort in Northern Michi- gan

World’s Only Clean Battery Recycling Publically-Traded Company in Nevada

Northeast Florida’s Premier Wedding and Event Venue

Largest Portable Toilet Supplier in North Dakota

North Avenue Capital has the experience and expertise to analyze and underwrite any business operating in the countless indus- tries eligible for a USDA loan. NAC’s current portfolio represents a diverse group of businesses - all supporting local economies. NAC Loans by Industry

17%

17%

24%

Manufacturing Commercial Real Estate

23%

Retail Trade

States with Active North Avenue Capital Projects North Avenue Capital Offices

Entertainment Hospitality

2019 Marketing Expansion North Avenue Capital Affiliates

19%

RetailTrade Entertainment

Hospitality

Manufacturing CommercialRealEstate

North Avenue launched the NAC Affiliate Program in 2018. This nationwide program allows NAC Affiliates to offer their clients ac- cess to NAC’s long-term debt financing. Affiliate Program

National Reach Local Presence

22 Longer amortization periods improve borrowers’ cash flow. Average Term

$5M NAC makes loans between $1 Million and $25 Million. Average Loan

8% Average Interest Rate A USDA loan provides access to capital at affordable rates.

To learn more about the Affiliate Program, please visit northavenue.com/affiliates

20

21

www.northavenue.com

Interested in Growing Your Business with North Avenue Capital? (866) 526-4950

[email protected] www.northavenue.com