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Previous: CHRIS CRAFT INDUSTRIES INC, 8-K, EX-99, 2000-11-15 |
Next: CHURCH LOANS & INVESTMENTS TRUST, 10QSB, EX-27, 2000-11-15 |
For the quarterly period ended September 30, 2000
OR
Commission File No. 0-8117
State of Organization - Texas
Internal Revenue Service — Employer Identification No. 75-6030254
5305 I-40 West
Amarillo, Texas 79106
Registrant’s telephone number: 806-358-3666
Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___
As of September 30, 2000, 7,000,806 shares of the Registrant’s shares of beneficial interest were outstanding.
Transitional Small Business Disclosure Format (check one) Yes ___ No X(A Real Estate Investment Trust)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets (Unaudited)
September 30, 2000 and March 31, 2000
ASSETS
September 30, 2000 March 31, 2000
------------------ --------------
CASH AND CASH RECEIVABLES $ 161,563 $ 387,087
RECEIVABLES
Mortgage loans and church bonds - performing 22,420,950 22,141,873
Interim construction loans - performing 13,082,809 8,827,383
Nonperforming mortgage loans, church bonds and
interim construction loans 5,625,910 5,967,657
Less: Allowance for possible credit losses (1,478,172) (1,388,172)
------------------ --------------
39,651,497 35,548,741
Accrued interest receivable 346,797 258,593
Notes receivable 952,434 599,969
------------------ --------------
Total receivables 40,950,728 36,407,303
PROPERTY AND EQUIPMENT, net 158,439 166,275
REAL ESTATE ACQUIRED THROUGH FORECLOSURE - 968,349
OTHER ASSETS 21,786 15,926
------------------ --------------
TOTAL ASSETS $ 41,292,516 $ 37,944,940
================== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Notes payable and line of credit:
Related party $ 2,815,945 $ 2,820,128
Other 15,437,721 12,043,064
------------------ --------------
18,253,666 14,863,192
------------------ --------------
Secured savings certificates - 726,000
Accrued interest payable 138,053 108,320
Other 705,495 660,250
------------------ --------------
Total liabilities 19,097,214 16,357,762
------------------ --------------
SHAREHOLDERS' EQUITY
Shares of beneficial interest, no par value; authorized
shares unlimited, 7,007,402 shares issued 20,623,866 20,623,866
Undistributed net income 1,587,926 979,802
Treasury shares, at cost (6,596 shares) (16,490) (16,490)
------------------ --------------
Total shareholders' equity 22,195,302 21,587,178
------------------ --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 41,292,516 $ 37,944,940
=================- ==============
These condensed financial statements should be read
only in connection
with the accompanying notes to condensed financial
statements.
-1-
(A Real Estate Investment Trust)
Condensed Statements of Income (Unaudited)
Three-month and six-month periods ended September 30, 2000 and 1999
Three-month periods ended Six-month periods ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
INTEREST INCOME AND FEES
Interest and fees on mortgage
loans, church bonds, and
interim construction loans $ 1,503,148 $ 963,149 $ 2,532,547 $ 2,576,374
Interest on temporary
investments 25,202 25,210 41,128 30,558
------------- -------------- ------------- ---------------
Total interest income and fees 1,528,350 988,359 2,573,675 2,606,932
------------- -------------- ------------- ---------------
DEBT EXPENSE
Interest 423,903 250,507 751,493 496,036
Amortization of commissions
paid to brokers - 2,770 1,183 7,829
------------- -------------- ------------- ---------------
Total debt expense 423,903 253,277 752,676 503,865
------------- -------------- ------------- ---------------
Net interest income 1,104,447 735,082 1,820,999 2,103,067
PROVISION FOR POSSIBLE
CREDIT LOSSES 45,000 45,000 90,000 90,000
------------- -------------- ------------- ---------------
Net interest income
less provision for
possible credit losses 1,059,447 690,082 1,730,999 2,013,067
OTHER INCOME 81,654 2,136 184,934 4,792
OTHER OPERATING EXPENSES
General and administrative 145,695 161,941 300,155 320,474
Board of Trust Managers' fees 13,054 13,588 27,541 27,891
------------- -------------- ------------- ---------------
Total other operating expenses 158,749 175,529 327,696 348,365
------------- -------------- ------------- ---------------
Income before provision
for taxes 982,352 516,689 1,588,237 1,669,494
------------- -------------- ------------- ---------------
PROVISION FOR INCOME TAXES - - - -
------------- -------------- ------------- ---------------
NET INCOME $ 982,352 $ 516,689 $ 1,588,237 $ 1,669,494
============= ============== ============= ===============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 7,000,806 7,000,806 7,000,806 7,000,806
============= ============== ============= ===============
NET INCOME PER SHARE $ .14 $.07 $.23 $.24
============= ============== ============= ===============
DIVIDENDS PER SHARE - - .14 .10
============= ============== ============= ===============
These condensed financial statements should be read only in connection
with the accompanying notes to condensed financial statements.
-2-
(A Real Estate Investment Trust)
Condensed Statements of Cash Flows (Unaudited)
Six-month periods ended September 30, 2000 and 1999
Six-month periods ended September 30,
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,588,237 $ 1,669,494
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 7,836 7,836
Amortization of debt expense 1,183 7,829
Amortization of loan discounts (17,285) (42,751)
Provision for possible credit losses 90,000 90,000
Gain on sale of other real estate (180,662) -
Changes in:
Accrued interest receivable (88,204) (152,827)
Accrued interest payable 29,733 (101,610)
Other liabilities 45,245 (42,147)
Other, net (21,073) (11,468)
------------- ----------------
Net cash provided by operating activities 1,455,010 1,424,356
------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in mortgage and interim construction
loans and church bonds (17,129,411) (8,502,090)
Payments received on mortgage and interim
construction loans and church bonds 12,953,940 9,228,529
Advances of notes receivable (601,651) (266,873)
Payments received on notes receivable 249,186 164,768
Proceeds from sale of other real estate 1,163,041 -
------------- ----------------
Net cash provided (used) by investing activities (3,364,895) 624,334
------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on notes payable 19,288,028 11,128,606
Principal payments on:
Secured savings certificates (726,000) (1,344,376)
Notes payable (15,897,554) (11,148,996)
Cash dividends paid (980,113) (700,081)
------------- ----------------
Net cash provided (used) by financing activities 1,684,361 (2,064,847)
------------- ----------------
Decrease in cash and cash equivalents (225,524) (16,157)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 387,087 181,068
------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 161,563 $ 164,911
============= ================
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ 721,760 $ 597,646
============= ================
Real estate acquired through foreclosure $ - $ 611,292
============= ================
These condensed financial statements should be read
only in connection
with the accompanying notes to condensed financial
statements.
-3-
(A Real Estate Investment Trust)
Notes to Condensed Financial Statements (Unaudited)
See Summary of Significant Accounting Policies in the Trust's Annual Report on Form 10- KSB405 for a summary of the Trust's significant accounting policies.
The unaudited condensed financial statements included herein were prepared from the books of the Trust in accordance with generally accepted accounting principles and reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results of operations and financial position for the interim periods. Such financial statements generally conform to the presentation reflected in the Trust's Annual Report to Shareholders. The current interim period reported herein is included in the fiscal year subject to independent audit at the end of that year and is not necessarily an indication of the expected results for the fiscal year.
Weighted average interest rates and net interest rate margins at September 30, 2000 and 1999, were as follows:
Mortgage loan and Total Net interest
church bond portfolio indebtedness rate margin
--------------------- ------------ ------------
September 30, 2000 10.67% 8.50% 2.17%
September 30, 1999 9.86% 7.31% 2.55%
Scheduled principal payments on mortgage loans, church bonds and interim loans and indebtedness (including notes payable) outstanding at September 30, 2000, for the five twelve-month periods subsequent to September 30, 2000, follow:
Twelve-month period Mortgage loans, church bonds
ending September 30, and interim loans Indebtedness
-------------------- ---------------------------- ------------
2001 $ 19,158,204 $ 18,253,666
2002 1,476,126 -
2003 1,477,418 -
2004 1,402,008 -
2005 1,430,024 -
=============== ===============
-4-
(A Real Estate Investment Trust)
Notes to Condensed Financial Statements (Unaudited)
Mortgage loans, church bonds and interim construction loans on which the accrual of interest had been discontinued amounted to $5,625,910 and $2,522,099 at September 30, 2000 and 1999, respectively. If interest on these mortgage loans, church bonds and interim construction loans had been accrued as earned, interest and fees on loans in the accompanying condensed statements of income would have been increased by approximately $305,000 and $153,000 for the six-month periods ended September 30, 2000 and 1999, respectively. Interest income actually recognized during 2000 and 1999 was approximately $323,000 and $32,000, respectively.
Secured Savings Certificates (Certificates) are issued in amounts of $1,000 or more and have single maturity dates from 30 days to 10 years from date of issue. With respect to an individual Certificate, interest rate and frequency of payment of interest (either monthly, quarterly, semiannually, annually or at maturity) are fixed at the time of issuance of the Certificate. Effective July 1997, Church Loans discontinued the sale of Certificates.
Certificates are secured under the terms of an indenture that requires, among other things, the pledge of mortgage notes receivable with total unpaid principal amounts not less than 100% of the aggregate principal amount of Certificates outstanding.
This information is an integral part of the
accompanying condensed financial statements
-5-
(A Real Estate Investment Trust)
Item 2. Management’s Discussion and Analysis or Plan of Operation
Results of Operations - Three-Month and Six-Month Periods Ended September 30, 2000 as Compared to the Three-Month and Six-Month Periods Ended September 30, 1999:
The Trust's revenues are derived from interest income earned on loans as well as, to a lesser degree, interest earned on church bonds and short-term investments. Such revenues (decreased) increased by $(43,827) and $539,999 for the six-month and three-month periods ended September 30, 2000, respectively, as compared to the corresponding periods in 1999. Included in the 2000 periods is the revenue recognized from interest payments received on two large loans that the interest is recognized on a cash basis, which amounted to approximately $292,000. Included in the 1999 periods is the revenue recognized on a loan, which was paid in full and had been accounted for as a nonperforming loan by the Trust and certain interest payments had been credited to principal. Therefore, the pay-off resulted in an additional recognition of interest income of approximately $611,000 during June 1999. Additionally, average loan balances and rate of returns increased during the 2000 periods. Loans outstanding were $41,129,669 and $34,470,948 at September 30, 2000 and 1999, respectively. The average rate of return of the mortgage loan and church bond portfolio increased from 9.86% at September 30, 1999 to 10.67% at September 30, 2000.
The most significant expense item is interest expense which comprised the majority of total operating expense for each of the three-month and six-month periods ended September 30, 2000 and 1999. The increase of $173,396 and $255,457 in interest expense during the three-month and six-month periods ended September 30, 2000, respectively, resulted from an increase in the average total amount of indebtedness as compared to the same periods ended September 30, 1999 and an increase in the weighted average interest rate on all indebtedness from 7.31% at September 30, 1999 to 8.50% at September 30, 2000.
Other income was $184,934 and $81,654 for the six-month and three-month periods ended September 30, 2000 and was greater than the $4,792 and $2,136 for the same periods in 1999, primarily due to the gain on sale of other real estate of $180,662 and $79,518 for the same periods during 2000.
-6-
(A Real Estate Investment Trust)
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders:
The annual meeting of shareholders of the Trust was held on July 21, 2000. At such meeting, each of the individuals named below was elected to the Board of Trust Managers of the Trust to serve until the next annual meeting of the shareholders of the Trust:
Number of shares
For Against
--- -------
Mike Bahn 3,941,555 7,509
Larry Brown 3,940,043 9,021
Terry Hays 3,941,555 7,509
Alfred J. Smith 3,941,555 7,509
Bill R. McMorries 3,941,555 7,509
Steve Rogers 3,941,555 7,509
Jack R. Vincent 3,941,555 7,509
Additionally, shareholders voted to ratify Clifton Gunderson P.L.L.C. as auditors for the year ending March 31, 2001 as follows:
For 3,902,707
Against 796
Abstain 45,561
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits: None.
(b) Reports on Form 8-K: None
-7-
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| By |
/s/ B. R. McMorries ______________________________ B. R. McMorries, Chairman |
Dated: 11/14/2000 |
| By |
/s/ Kelly Archer ______________________________ Kelly Archer Chief Financial Officer |
Dated: 11/14/2000 |
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