By Thomas A. Parmalee
Teresa Carlson, one of the most recognizable bankers in funeral service, has worked at The Bancorp for the past seven years, spearheading an innovative lending program with the backing of Homesteaders Life Company.
A married mother of three, she would never dream of becoming a funeral director … would she?
That question may not have such a clear-cut answer.
In a couple years, the 54-year-old Carlson expects to graduate from Des Moines Area Community College, where she’s enrolled in the mortuary science/funeral service program.
Fortunately, she has a study buddy of sorts in Steve Shaffer, the president, CEO and board chair of Homesteaders Life Company, who enrolled at the same time.
The idea started almost as a whimsy, but the more Carlson thought about it, the more serious she became.
After all, she kept running into people who worked in funeral service who were not licensed funeral directors, but they were investing time in earning arrangement conference and cremation certificates.
“I just started thinking that if I am really going to understand my borrowers, I have to do as much as I can to understand their business,” Carlson said. “I do know from a financial standpoint, but do I really know what they are going through every day? No.”
Figuring out if going to mortuary college was feasible was the next step – and she quickly determined that if she attended DMACC, she could work at the Homesteaders headquarters in Des Moines when she needed to be on campus.
“It’s a great online program,” she said, noting that since she earned her undergraduate degree in business law from California State University, Fresno, in 1993, it took some time to get comfortable with the format. “Online school … I don’t even know what that means because I just never did it,” she explained.
While she initially registered for five classes in the fall of 2023, she quickly realized that was too many – and she dropped four of them.
“It was just so much work,” she said.
Now, she’s mastered the flow of taking two classes a semester, although she’s been told by a counselor that when she takes anatomy, she should not take any other classes.
It’s been so much fun working her way toward earning her funeral director’s license, she said.
“I study on planes with flash cards, and I am not kidding,” she said.
Shaffer had his own reasons for going back to school.
“At Homesteaders, we are deeply connected to this space, and I am always looking for ways to gain a fuller understanding of the experience and needs of our customers,” he said. “Going to mortuary school is giving me a deeper insight into the day-to-day experience of so many of our customers. It’s offered a better understanding of the acute grief experiences of families … I have always admired funeral providers, but taking these classes has given me an even greater appreciation for the power of commemoration and life celebration in helping families begin a meaningful grief journey and navigate their loss.”
Having someone like Carlson in the program at the same time has been rewarding and gratifying, Shaffer said.
“We’re so aligned in our commitment to the funeral space, that it’s been fun to take that alignment into our coursework,” he said. “We’re enjoying digging deeper into the front lines together.”
He joked, “I may have borrowed her notes from time to time. Teresa really hates it when I do that and end up getting a higher score on the test.”
For her part, Carlson takes advantage of any free minute during the day to work in her study time. She’s also made it a priority to meet internship requirements.
“I did about 40 of my hours last summer in Boston, where my daughter was doing an internship,” she said. “So, I’ve been chipping away at it.”
Fortunately, some classes she normally would have taken were waived given her credentials as an undergraduate and her experience in the workforce.
“When we applied, we had to send our transcripts in, and Steve jokingly said his came on stone tablets,” she laughed. “I’ll end up having to take 16 classes in total to earn my funeral director’s and embalming license.”
Shaffer caught some people off guard with his decision to earn a funeral director’s license.
“My family – and my co-workers – think I’m crazy,” he said. “Going back to school at 60 when I already have a job has been an interesting challenge. I thought it would be easier, but it’s been surprisingly difficult to get back into the habit of being a good student. It gives me a greater appreciation for the challenge of so many mortuary students who are actively taking classes and working full-time.”
But his efforts are paying off, Shaffer said. “I had a good base of understanding in the space before, but it’s nothing compared to the depth I’m gaining through these classes,” he said. “It’s fascinating to dig deep into things I’ve had a limited knowledge of before – like funeral customs and anatomy.”
The Finish Line in Sight
Carlson intends to graduate from the program by the end of 2027.
“I’m trying to use the summers to do extra,” she said. “The program is great: I get the course materials delivered to my house. And Dr. Kevin Patterson, a professor of mortuary science, is a great guy.”
She has a preceptor in Iowa as well as one in Los Angeles, and they supervise her efforts, including when she has to observe an arrangement conference or make arrangements herself.
While the bar is set high, Shaffer is hoping to keep pace with his friend.
“I wouldn’t mind taking my time, but Teresa won’t let me,” he said. “She is already insisting on taking MOR 335 and 336 (Embalming) at the same time.”
Carlson appreciates how the college encourages students to interact.
“I have found a group that is kind of my age,” she said. “There is a vast group that is much younger, but DMACC forces us to get to know each other.”
For instance, every instructor has students share a paragraph about themselves. Often, students will be asked to reply to three classmates to earn points. “That gives us opportunities to get to know each other,” she said. “I tell them, ‘This is who I am.’”
The notion of having to embalm to earn her license does not phase Carlson.
“You have to do five embalming cases, and you also do one at the college – it is almost like your final test,” she said.
While some have urged her to simply get a license from an institution in California, where you can become licensed without an embalming requirement, she has shrugged off that idea.
“I want to go through the whole thing,” she said. “Honestly, I do want to learn.”
She continued, “Would I like to own a funeral home years from now, post-retirement … maybe. I am enjoying so much learning more about the profession and all this intricate stuff that funeral directors have to do – stuff that I have not really thought about.”
A California Girl
Carlson grew up in Central California and has been living in Los Angeles ever since she married her Prince Charming about 26 years ago.
All her life, she has been a banker.
“My eighteenth birthday was my first day working for a bank,” she said. “I was a teller, and when I applied, you had to get fingerprinted. At first, they pointed out that I wasn’t yet 18, but I told them I would be in a couple weeks.”
That was good enough for the bank. They shrugged and said, “That works,” – and she’s been working in the banking profession ever since, she said.
“I worked as a teller and literally worked at a bank my whole college career before moving up to being a supervisor,” she said.
For a college student, it was perfect as the bank closed early on Saturdays, leaving her with the weekends free to cheer the football team and enjoy college life.
After graduating, she worked at a fax/copier service, dispatching teams to various offices to fix equipment.
“But at the end of the day, banking was what I enjoyed,” she said – and it wasn’t long before a friend encouraged her to reach out to Regency Bank in Fresno, which was seeking an administrative assistant.
It had to be better than working at the fax/copier dealership, she thought.
And so it was: She began working for the manager of the bank’s Small Business Administration lending department.
While she had earned her degree in business administration with an emphasis in business law, it was not finance per se, and she learned a lot about numbers, metrics and loans as she went along.
Ultimately, she found a place in the department that entailed more than being an administrative assistant.
“I started going out on calls with the guys – I would literally just tag along,” she said. “I learned the feel of how they spoke to borrowers.”
While the bank still needed her to focus on marketing and some administrative assistant work, it gave her the chance to start generating SBA loans around 2000.
“I did SBA loans for a long time, specializing in the hotel industry,” she said. “Then, I was recruited by Live Oak Bank in 2013.”
At first, she was a bit skeptical of Live Oak’s pitch, as its vision was for her to focus on only one vertical: funeral service.
It was a profession she knew nothing about.
But she got to know the business and had a great experience working with Live Oak for almost two years.
“My daughter was very young, and the job just entailed so much travel,” she said. “We would go see every borrower prior to closing a loan, and I was flying three weeks a month. It was just too much.”
Another recruiter – this one from Mission Valley Bank in Los Angeles – tracked her down, which was a better fit as it allowed her to stay closer to home. She stayed there almost three years before making her way to The Bancorp in 2017, where she’s been ever since as a vice president.
“The Bancorp kind of found me … they are based in Delaware, but my department is in Raleigh, North Carolina,” she said.
She has helped the bank, which is publicly traded on the Nasdaq Global Select Market and recently had a market capitalization of over $2 billion, build a funeral service loan department from the ground up.
“I told them it was specialized, and they needed to understand goodwill,” she explained. “I gave them my closed loans and told them … if you can do these deals because these deals have closed, we can do this.”
She continued chatting with executives from the bank, and she was ultimately hired a couple months later.
Ever since, she’s fought hard to make the bank’s funeral home lending program a success.
Teaming Up with Homesteaders
“You eventually run out of SBA money … it is a given,” Carlson said. “That led us to the whole relationship with Homesteaders.”
The Bancorp Bank, a wholly owned banking subsidiary of The Bancorp, Inc., announced the partnership in February 2022.
The Conventional Loan Program is run through the bank’s commercial lending business, offering financing specifically for the acquisition and refinancing of multi-unit funeral home businesses across the country
“The Bancorp is excited to be working with such a great company like Homesteaders to bring new financing options to the funeral industry,” said Jeff Nager, executive vice president and head of commercial lending at The Bancorp, when the program was launched. “As a national SBA lender, for years we have worked directly with operators who are looking to strengthen their business through expansion, acquisition, or debt refinancing. With our new Conventional Loan Program, we are able to offer significantly larger financing options tailored to the funeral industry through a streamlined process.”
The Conventional Loan Program combines the bank’s expertise with that of Homesteaders to truly meet the current needs of multi-unit business owners in the funeral home industry.
“Homesteaders has worked closely with The Bancorp and funeral home owners to understand what is truly missing in the marketplace in terms of conventional lending. It was important for us to enter the space with a program that was competitive, different, and better than what is currently offered,” Shaffer said when the program was launched. “This is another meaningful way to commit our resources to support the long-term success of the funeral profession. I am confident that our partnership with The Bancorp has resulted in the most compelling funeral home business Conventional Loan Program available today.”
Some loan features of the program include:
- Loan amounts: $5-20 million.
- Uses: Best suited to large-scale transactions (e.g., commercial real estate).
- Terms: 25 years for real estate, 10 years for business acquisition/goodwill.
- Up to 100% financing.
- Competitive interest rates.
- Not collateral dependent.
The first year the program was launched, it did $24 million in loans.
But Carlson continued to educate the profession about the program, which ballooned to $83 million in the second year and then $100 million in the third year. This year, it’s on track to loan out $125 million.
“Every year, we are trying to kick it up,” she said.
That compares with about $10.5 million in SBA loans Carlson wrote last year.
She expressed appreciation to Shaffer and Homesteaders for helping make the program such a success.
“I facilitate the loans, and the bank is the lead because they are the bank … they underwrite the loans, service the loans, etc. It is such a great partnership.”
Homesteaders enjoys the partnership as well, Shaffer said.
“Our funeral home lending program addressed a significant need among funeral professionals, and the growth of the program over the last three years has affirmed its broad appeal,” he said. “To date, we’ve helped secure more than $200 million in small business loans to support dozens of funeral businesses across the country. That number continues to grow as more funeral providers recognize Homesteaders and The Bancorp as reliable, long-term partners to finance their business’s growth.”
Homesteaders will continue to invest in and grow the funeral home lending program because it knows independent operators need capital support. “And we are well positioned to provide it,” Shaffer said. “I continue to be surprised at the lack of alternatives. There is really nothing else in the space meeting this need. We’re in a season where the space is desperate for capital, and preneed carriers are perfectly positioned to provide it. I encourage independent operators to ask their preneed carriers why they aren’t matching Homesteaders’ capital investment in the funeral space – more of them should be.”
The program’s success comes as no surprise to Shaffer.
“We are bringing a solution to the market that no one else has. We’re helping independent funeral home owners grow and transition their business and get access to capital at a time when it’s very difficult for providers to access sensible financing options.”
He continued, “Funeral providers can’t transition their businesses to other independent owners without access to capital. There is so much volatility in the markets right now. Having a secure funding vehicle offered by a stable carrier fully invested in the space is a no-brainer for funeral providers. This program helps independent providers who want to stay independent do just that. And the best part is that, as a mutual company, we get to share the returns from this program with our funeral home partners through growth rates, loyalty programs and competitive commissions.”
Making Dreams Come True
While everyone in the banking sector is waiting for the Trump administration to publicize new rules related to SBA lending, the Homesteaders program continues to grow and thrive, Carlson said.
“For our funeral home conventional product, there are no changes, so I am still full speed ahead,” she said.
The product does two things: It provides a real estate loan and a loan on goodwill, so “you are able to put this puzzle together,” Carlson said.
Given the special nature of the funeral profession with the value of real estate and goodwill both playing a key role, it can be challenging to get a deal done.
But Carlson loves that.
“How can I figure this thing out?” she asked. “How do we all get together and facilitate this loan, so everyone walks away happy?”
Conventional loans made through the program with Homesteaders need not be large – often they are in the $5 million to $10 million range, she said.
She is hoping to devise a program that would allow for loans to be given out for construction or remodeling projects, instead of focusing strictly on refinancings, partner buyouts and purchases.
There is no other vertical other than funeral service that Carlson would rather be involved with, she said.
“They are so passionate about their work,” she said. “I always try to understand their position when I call … what have they dealt with that day? … They are dealing with the absolute worst time of people’s days and lives, so I have really tried to understand what their day-to-day is and what I can do to help.”
Asked about the recent turmoil in the economy and how that might affect mergers and acquisitions in the funeral sector, Carlson said she does not expect it to have the same impact as in other industries.
“Owners are getting elderly, and that is not going to change,” she said. “They are not going to wait five years for this to settle down – and that is probably the biggest difference between our industry and everything else.”
She also observed that when a funeral home goes up for sale, it’s very likely that it will not be put up for sale again for another 15 or 20 years. There is simply not much turnover in ownership, so when an attractive business gets put on the market, potential buyers know they may not get another chance to make the acquisition.
“This industry is not flipping funeral homes like restaurants or other businesses,” she said.
Asked about private equity’s increasing involvement in funeral service, Carlson said it can work out beautifully when investors partner with funeral professionals with expertise.
“Milestone Funeral Partners comes to mind,” she said. “They are fantastic and very sharp, and they have partners in private equity, and it works out for them. If private equity partners with people with true funeral experience and allows them to run the business, so it gives families proper service, I am all for it.”
She added, “But you better have the right person if you are going to plop into a market … you have to earn your stripes in the community.”
Looking at the Big Picture
Whenever she talks to funeral home owners, Carlson reminds herself she has their attention, which is precious.
During that moment, she strives to get owners to look at the big picture – not only a purchase they may be considering but what else they want to do to sustain and grow the business. It may be something as simple as putting a new roof on top of a flagship location.
“Also, what are the cars looking like and what does the funeral home look like?” she said. “Does it need some fresh paint?”
The bottom line is that she urges owners to tell her what is going on and what they want to do. “You have them take that moment and pause for a bit,” she said.
She also has a golden rule: She’ll never arrange a loan for someone who does not need the money.
“I want owners to make sure they understand expenses and income – and that they aren’t just treading water as they run the business,” she said. “Make sure you have an accountant, make investments in technology and get software into the funeral home, so that you are really tracking cases.”
Her final piece of advice for funeral homes is to
simply make time to check on the financials of their business, which may include deciding whether to refinance, keeping the profit-and-loss statement up to date, and regularly communicating with your accountant.
“I also want them to take a minute … just slow down. Take a look around, try to take yourself out of the equation and see things from your clients’ perspective. If you feel things are tired or worn, you need to fix that.”
You also need to evaluate where you want to go with your business.
“Is there a way to gain case volume? Maybe you need to hire someone part time and then ramp them up to full time. Take one day a month and just pause and look around.”
As for Shaffer, he hopes the joint commitment both he and Carlson are making to educating themselves and striving to serve the profession on a higher level than ever before will inspire others.
“I’m hopeful that the investment Teresa and I are making mortuary school will challenge allied professionals to make deeper commitments to the space, whether that’s through getting licensed or simply by learning more and increasing their personal investment in the space,” he said.
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