<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE
30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE AT OF 1934 FOR THE TRANSITION PERIOD FROM
_________________ TO_____________________
Commission file number 2-63708
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
(Exact name of registrant as specified in its charter)
WASHINGTON 91-0609840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
West 929 Sprague Ave., Spokane, WA 99204
(Address of principal executive offices) (Zip Code)
(509)838-3111
(Registrant's telephone number, including area code)
__________________________________________________________
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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 / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS: (Not Applicable)
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes / / No / / N/A
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
130 SHARES - Common "A" at July 31, 1996
0 SHARES - Common "B" at July 31, 1996
<PAGE>
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
Part I - Financial Information: Index
Item 1. Financial Statements
Consolidated Condensed Balance Sheets --
June 30, 1996 (Unaudited) and
September 30, 1995
Consolidated Condensed Statements of Income
Three and Nine Months Ended June 30, 1996
and 1995 (Unaudited)
Consolidated Condensed Statements of Cash Flows
Nine Months Ended June 30, 1996 and 1995
(Unaudited)
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
<PAGE>
Part I - Financial Information
METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
(Unaudited)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 10,668,122 $32,798,627
Investments:
Trading Securities, at market
Available-for-Sale Securities,
at market 54,320,432 31,829,980
Held-to-Maturity Securities,
at amortized cost (market value
$119,553,143 and $182,063,885) 125,609,443 188,073,542
Accrued Interest on Investments 2,801,710 2,372,891
-------------- ------------
Total Cash and Investments 193,399,707 255,075,040
-------------- ------------
Real Estate Contracts and Mortgage
Notes and Other Receivables 731,332,126 629,085,029
Real Estate for Sale and
Development - Including
Foreclosed Real Estate 85,936,951 91,105,003
-------------- ------------
Total Receivables and
Real Estate Assets 817,269,077 720,190,032
Less Allowance for Losses (8,477,002) (8,116,065)
-------------- ------------
Net Receivables and
Real Estate Assets 808,792,075 712,073,967
-------------- ------------
Deferred Acquisition Costs 74,145,892 74,521,803
Land, Building and Equipment - net
of accumulated depreciation 8,435,690 8,148,850
Other Assets, net of allowance 32,485,124 28,648,340
-------------- --------------
TOTAL ASSETS $1,117,258,488 $1,078,468,000
============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
(Unaudited)
<S> <C> <C>
LIABILITIES
Life Insurance and Annuity Reserves $825,609,979 $781,716,153
Debenture Bonds 192,210,710 201,311,873
Other Debt Payable 21,520,897 25,552,451
Securities Sold, Not Yet Purchased
Accounts Payable and Accrued
Expenses 17,766,280 15,558,818
Deferred Income Taxes Payable 13,489,035 12,254,475
Minority Interest in Consolidated
Subsidiaries 1,510,525 1,503,788
-------------- --------------
TOTAL LIABILITIES 1,072,107,426 1,037,897,558
-------------- --------------
STOCKHOLDERS' EQUITY
Preferred Stock, Series A, B, C, D,
E Cumulative with Variable Rate,
$10 Par Value, Authorized 8,325,000
Issued 2,152,365 Shares and
2,162,711 Shares (Liquidation
Preference $49,015,661 and
$47,825,310, respectively) 21,523,647 21,627,106
Class A Common Stock - Voting,
$2,250 Par Value, Authorized
222 Shares, Issued 130 Shares,
respectively 293,417 293,417
Additional Paid-In Capital 16,305,360 14,917,782
Retained Earnings 8,074,059 4,561,554
Net Unrealized Gains (Losses) on
Investments (1,045,421) (829,417)
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY 45,151,062 40,570,442
-------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,117,258,488 $1,078,468,000
============== =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES:
Insurance Premiums Earned $ 750,000 $ 725,000 $ 2,250,000 $ 2,225,000
Interest and Earned Discounts 22,572,267 21,632,908 67,247,148 64,859,056
Real Estate Sales 13,326,831 10,102,055 36,618,195 29,064,369
Fees, Commissions, Service
and Other Income 1,069,167 1,431,697 2,521,857 2,964,196
Realized Investment Gains (Losses) (3,039) 307,515 21,051 (12,965)
Realized Gains on Sales of
Receivables 7,602,836 600,689 8,738,556 1,068,702
---------- ---------- ---------- ----------
TOTAL REVENUES 45,318,062 34,799,864 117,396,807 100,168,358
---------- ---------- ---------- ----------
EXPENSES:
Insurance Policy and Annuity
Benefits 12,127,104 11,649,869 35,936,979 33,872,181
Interest Expense 4,315,805 3,869,359 12,396,569 12,704,980
Cost of Real Estate Sold 12,851,751 9,578,780 35,381,532 27,927,865
Provision for Losses on Real
Estate Assets 1,353,838 822,094 3,625,331 2,885,227
Salaries and Employee
Benefits 2,609,658 2,466,458 7,444,466 7,289,653
Commissions to Agents 2,692,753 3,668,471 8,054,364 9,870,934
Other Operating and
Underwriting Expenses 1,793,455 1,308,502 4,952,040 4,233,185
Less Increase in Deferred
Acquisition Costs 65,442 (854,895) (136,558) (2,447,035)
---------- ---------- ---------- ----------
TOTAL EXPENSES 37,809,806 32,508,638 107,654,723 96,336,990
---------- ---------- ---------- ----------
Income Before Income Taxes and
Minority Interest 7,508,256 2,291,226 9,742,084 3,831,368
Provision For Income Taxes (2,563,902) (659,396) (3,324,295) (1,184,944)
---------- ---------- ---------- ----------
Income Before Minority
Interest 4,944,354 1,631,830 6,417,789 2,646,424
Income of Consolidated
Subsidiaries Allocated to
Minority Stockholders (38,464) (41,257) (74,662) (48,178)
---------- ---------- ---------- ----------
NET INCOME $ 4,905,890 $ 1,590,573 $ 6,343,127 $ 2,598,246
========== ========== ========== ==========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1996 1995
<S> <C> <C>
Net Cash Provided By
Operating Activities $38,669,083 $ 27,056,461
----------- -----------
Cash Flows From Investing Activities:
Sale of Subsidiaries, Net of Cash Given (1,406,873)
Principal Payments on Real Estate
Contracts and Mortgage Notes
and Other Receivables 87,452,164 68,639,822
Proceeds From Real Estate Sales 9,600,449 2,641,454
Proceeds From Investment Maturities 23,497,107 2,098,271
Proceeds from Sale of Available
for Sale Securities 31,684,176 92,723,926
Purchase of Available for Sale
Securities (4,289,580) (34,387,059)
Purchase of Held to Maturity Securities (12,181,445) (1,423,700)
Proceeds From Sale Real Estate Contracts
and Mortgage Notes and Other
Receivables 135,535,851 27,189,632
Acquisition of Real Estate Contracts and
Mortgage Notes and Other Receivables (297,574,808) (157,416,396)
Additions to Real Estate Held (23,267,320) (28,446,593)
Capital Expenditures (1,012,383) (735,003)
----------- ------------
Net Cash Used In Investing Activities (50,555,789) (30,522,519)
------------ ------------
Cash Flows From Financing Activities:
Net Change Short Term Borrowings from
Brokers and Banks (4,750,375) (46,797,500)
Receipts From Life and Annuity Products 84,971,944 113,843,087
Withdrawals on Life and Annuity Products (75,290,856) (87,056,993)
Repayment to Banks and Others (2,002,042) (397,926)
Issuance of Debenture Bonds 7,650,338 44,257,648
Issuance of Preferred Stock 1,596,054 3,949,300
Repayment of Debenture Bonds (19,276,305) (38,206,505)
Cash Dividends (2,830,622) (3,587,088)
Redemption of Capital Stock (311,935) (395,172)
----------- -----------
Net Cash Provided By (Used In)
Financing Activities (10,243,799) (14,391,149)
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents (22,130,505) (17,857,207)
Cash and Cash Equivalents at Beginning
of Period 32,798,627 29,275,716
----------- -----------
Cash and Cash Equivalents at End
of Period $ 10,668,122 $ 11,418,509
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENT
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments necessary to present fairly the financial position
as of June 30, 1996, and the results of operations for the three
and nine months ended June 30, 1996 and 1995 and changes in cash
flows for the nine months ended June 30, 1996 and 1995. The
results of operations for the nine month period ended June 30,
1996 and 1995 are not necessarily indicative of the results to
be expected for the full year.
2. The principal amount of receivables as to which payments were in
arrears more than three months was $23,000,000 at June 30, 1996
and $17,500,000 at September 30, 1995.
3. Metropolitan Mortgage & Securities Co., Inc. had no outstanding
legal proceedings other than normal proceedings associated with
receivable foreclosures, and/or the general business activities
of the Company.
4. Certain amounts in the prior year's consolidated condensed
financial statements have been reclassified to conform with the
current year's presentation. These reclassifications had no
effect on net income or retained earnings as previously
reported.
5. On January 31, 1995 the Company concluded an agreement with
Summit Securities, Inc. (Summit), whereby it sold Metropolitan
Investment Securities, Inc. (MIS) to Summit, at a sale price of
$288,950, which approximated the current book value of MIS at
date of sale. On May 31, 1995 the Company concluded an agreement
with Summit, whereby it sold Old Standard Life Insurance Company
(OSL) to Summit effective May 31, 1995, at a sale price of
$2,722,000, which approximated the current book value of OSL at
date of sale, with future contingency payments based on the
earnings of OSL. The sales price plus estimated future
contingency payments approximates the actuarial appraised
valuation of OSL.
6. In December 1995, the Company reassessed the appropriateness of
the classifications of its securities investments. Based on
this reassessment, the Company transferred $72,572,322 of
securities from the Held-to-Maturity classification to the
Available-for-Sale classification. This transfer was based on
guidance included in the special report issued by the Financial
Accounting Standards Board, "A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and
Equity Securities".
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Completed Transactions:
In May 1996, Metropolitan Mortgage & Securities Co., Inc. (Metro
or the Company) and its subsidiary Western United Life Assurance
Company (WULA) participated as two of the four co-sellers in a
receivable securitization sponsored by Tryon Mortgage Funding, Inc.
Approximately $122.9 million of receivable collateral, with $115.4
million from Metro and WULA, was sold in the securitization with
proceeds, after costs, of approximately $120.2 million, with $113.0
million allocated to Metro and WULA. With an amortized cost of
approximately $105.9 million in the receivables sold in the
securitization, Metro and WULA recorded approximately $7.1 million in
gains from their portion of the sale. Tryon Mortgage Funding, Inc.
sold in a public offering approximately $115.5 million in varying
classes of mortgage pass-through certificates. In addition to the
certificates sold to the general public, approximately $7.4 million
in support class certificates and residual class certificates were
returned to the various co-sellers of the collateral included in the
securitization. Metro and WULA received approximately $106.6
million, after costs, from the public offering and received
approximately $6.4 million (fair market value) in support class and
residual class certificates.
On January 31, 1995, Metro and Summit Securities, Inc. (Summit)
completed a purchase/sale transaction whereby 100% of the outstanding
common stock of Metropolitan Investment Securities, Inc. (MIS) was
sold to Summit. The cash purchase/sale price was $288,950, the
approximate net book value of MIS at closing, MIS is a limited-
purpose broker dealer and the exclusive broker/dealer for the
securities sold by Metro and Summit. It is anticipated that this
sale will not materially effect the future business operations of
MIS. Additionally, by agreement, effective January 31, 1995, Metro
discontinued its property development division, which consisted of a
group of employees experienced in real estate development. On the
same date, Summit commenced the operation of a property development
subsidiary employing these same individuals who had previously been
employed by Metro. Summit Property Development Corporation, a 100%
owned subsidiary of Summit, has negotiated an agreement with Metro to
provide future property development services.
On May 31, 1995, Metro and Summit completed a purchase/sale
transaction whereby 100% of the outstanding common stock of Old
Standard Life Insurance Company (OSL) was sold to Summit. The cash
purchase/sale price was $2,722,000, the approximate net book value of
OSL at closing, with future contingency payments based on the
earnings of OSL. The purchase/sale price plus estimated future
contingency payments approximated the actuarial appraised valuation
of OSL. OSL is engaged in the business of acquiring receivables
using funds derived from the sale of annuities and funds derived from
receivable cash flows. The purchase of OSL decreased total assets by
approximately $48.9 million while total liabilities decreased by
approximately $46.2 million. Significant assets acquired included
cash and cash equivalents of $4.1 million, investments of $9.4
million, receivables of $32.1 million, real estate of $.5 million,
deferred acquisition costs of $2.6 million and other assets of $.2
million. Significant liabilities assumed included insurance annuity
reserves of $44.5 million and accounts payable and other liabilities
of $1.7 million.
Pending Transactions:
During July 1996, the Company finalized the first phase of a
sale transaction with a major insurance company wherein the Company
received $19.7 million for the sale of lottery receivables,
resulting in a pre-tax gain from the sale of approximately $1.5
million. Additionally in August 1996, the Company completed the
second phase of the sale receiving approximately $5.7 million,
resulting in additional pre-tax gains of approximately $298,000.
Financial Condition and Liquidity:
As of June 30, 1996, the Company had cash or cash equivalents of
$10.7 million and liquid investments (trading or available-for-sale
securities) of $54.3 million compared to $20.1 million in cash and
cash equivalents and $62.0 million in liquid investments at March 31,
1996, $6.6 million in cash and cash equivalents and $77.8 million in
liquid investments at December 31, 1995 and $32.8 million in cash and
cash equivalents and $31.8 million in liquid investments at September
30, 1995. Management believes that cash, cash equivalents and
liquidity provided by other investments are adequate to meet planned
asset additions, debt retirements or other business operational
requirements during the next twelve months. At June 30, 1996, total
cash and investments, including held-to-maturity securities, were
$193.4 million as compared to $199.6 million at March 31, 1996,
$202.6 million at December 31, 1995 and $255.1 million at September
30, 1995. During the nine month period ended June 30, 1996, the
decrease in total cash and investments of approximately $61.7 million
along with cash generated from operations and cash provided by
financing sources was primarily used in funding the $96.7 million
increase in net receivables and real estate assets. During the
period ended December 31, 1995, the Company reassessed its securities
classifications and transferred approximately $72.6 million from the
held-to-maturity classification to the available-for-sale
classification. This transfer was based on guidance provided by the
financial Accounting Standards Board through their special report for
implementation of SFAS No.115 on accounting for debt securities.
The receivable portfolio totaled $731.3 million at June 30, 1996
compared to $723.5 million at March 31, 1996, $687.6 million at
December 31, 1995 and $629.1 million at September 30, 1995. During
the nine months ended June 30, 1996, the increase primarily resulted
from the acquisition of receivables totaling $297.6 million plus an
additional $27.0 million in loans to facilitate the sale of real
estate being partially offset by principal collections on receivables
of $87.5 million, a reduction for the cost basis of receivables sold
of $126.8 million and reductions due to foreclosed receivables of
approximately $11.4 million. Other adjustments related to underlying
debt assumptions, accrued interest and discount amortization resulted
in increases of approximately $3.3 million during the period.
Real estate held for sale and development decreased to $85.9
million at June 30, 1996 from $88.8 million at March 31, 1996, $91.0
million at December 31, 1995 and $91.1 million at September 30, 1995.
For the nine months ended June 30, 1996, real estate additions of
$34.6 million, including $11.4 million of foreclosed receivables,
were more than offset by costs of real estate sold of $35.4 million,
depreciation of $2.5 million and chargeoffs to the allowance for
losses of $1.9 million.
Life insurance and annuity policy reserves increased $43.9
million during the nine months ended June 30, 1996 to approximately
$825.6 million from $781.7 million at September 30, 1995. This
increase resulted from credited earnings of $34.2 million along with
$9.7 million of new cash flow as receipts from sales of new life and
annuity products of $85.0 million exceeded withdrawals of $75.3
million from existing policies. Net debenture bonds outstanding
decreased by $9.1 million to $192.2 million at June 30, 1996 from
$201.3 million at September 30, 1995. Net cash outflow from
maturities less issuance of new debentures was approximately $11.6
million which was offset by the $2.5 million increase in credited
interest held. Additionally, the Company had cash flow, net of
redemptions, of approximately $1.3 million from the sale of preferred
stock and reinvestment of preferred stock dividends during the nine
months ended June 30, 1996. During the nine month period ended June
30, 1996, the Company decreased the portion of its other debt payable
represented by short term borrowings by $4.8 million to an
approximate outstanding amount of $19.4 million in short term
borrowings on June 30, 1996.
Total assets increased by $38.8 million to $1,117.3 million at
June 30, 1996 from $1,078.5 million at September 30, 1995. During
the nine month period, the Company primarily used cash flow from life
insurance and annuity products along with existing cash and
investments to increase its receivable portfolio and pay maturing
debentures. At June 30, 1996 the Company had net unrealized losses
on securities available-for-sale in the amount of $1.0 million as
compared to unrealized losses of $.8 million at September 30, 1995.
Net unrealized losses on securities available-for-sale is presented
as a separate component of stockholders' equity.
Results of Operations:
The Company recorded net income before preferred dividends for
the nine months ended June 30, 1996 of $6,343,000 compared to
$2,598,000 in the prior year's period. Comparing the current year's
nine month period with the prior year's similar period, increases in
the net interest spread, increased gains from the sale of real
estate, sale of investment securities and the sale of receivables,
were only partially offset by a reduction in other fees and
commission revenues, increases in the provision for losses on
receivables and other real estate assets, an increase in general
operating expenses and related provision for income taxes.
For the nine month period ended June 30, 1996, the Company
reported a positive spread on its interest sensitive assets and
liabilities of $21.1 million as compared to $20.5 million in the
prior year's period. While there has been some contraction in
portfolio investment earnings rates in the current year's period, the
Company has also experienced reduced renewal rates on some of its
life and annuity policies. Currently the Company continues to
control life and annuity policy surrenders by maintaining current
market credited rates. Normally the Company's investment earnings
rates are not as sensitive to market conditions as is its life and
annuity policy rates and thus a sustained rise in interest rates
could have a negative impact on its net interest spread as its
liabilities reprice faster than its assets. Any effect on the net
interest spread by controlling surrenders is normally offset by
improvement in the amortization of insurance and annuity related
acquisition costs. The degree of amortization on insurance and
annuity related acquisition costs is a direct result of the projected
rate of these customer surrenders and the future spread earnings. In
the current year's period ended June 30, 1996, the amortization of
deferred policy acquisition costs was approximately $615,000 less
than in the prior year's similar period primarily due to a reduction
in surrenders and the sale of OSL.
During the nine months ended June 30, 1996, the Company realized
net gains from the sale of investments of $21,000 compared to net
losses of $13,000 in the prior year's period. Additionally, in the
current year's period the Company realized gains of $8.7 million from
the sale of approximately $135.5 million of receivable investments,
while in the prior year sales of approximately $27.2 million of
receivable investments produced realized gains of $1.1 million. The
Company realized gains of $1.2 million on sales of $36.7 million of
real estate in the current year's period compared to net gains of
$1.1 million on sales of $29.1 million in the prior year. It has
been the policy of management to actively sell its real estate in
order to return the investment to an earning asset. In addition to
returning these assets to earning status, the Company has been able
to reduce other operating expenses associated with its real estate,
such as insurance, taxes, maintenance and amenities.
In the nine months ended June 30, 1996, the Company recorded
other fees and commission revenues of $2.5 million as compared to
$3.0 million in the prior year. The reduction in the current year is
primarily the result of the sales of subsidiaries, MIS and OSL.
In the nine months ended June 30, 1996, the Company made
provisions for losses on receivables and real estate assets of
approximately $3.6 million as compared to $2.9 million in the prior
year's period. The increased provision is the result of increased
activity in the receivable portfolio and the real estate asset
portfolio. The Company has experienced a slight increase in
receivable delinquency rates, however, a stable to improving real
estate market has offset the effects of the delinquency rate
increases.
During the nine months ended June 30, 1996, the Company
capitalized approximately $2.9 million less in deferred acquisition
costs associated with receipts from sales of life insurance and
annuity products. This reduction is primarily the result of the sale
of OSL in May 1995 along with the Company's managed reduction of the
sales of life insurance and annuity products. In the current year's
period, without the benefit of OSL, receipts from the sales of life
and annuity products was approximately $85.0 million as compared to
$113.8 million in the prior year, which included OSL for the eight
months through May 1995. After amortization, the net increase of
deferred acquisition costs in the current year's period was
approximately $140,000 as compared to $2.4 million in the prior
year's similar period.
New Accounting Rules:
In May 1993, Statement of Financial Accounting Standards No.114
(SFAS No.114) "Accounting by Creditors for Impairment of a Loan" was
issued. Additionally, in October 1994, SFAS No.118 "Accounting by
Creditors for Impairment of a Loan-Income Recognition and
Disclosures" (an amendment to SFAS No.114) was issued. SFAS No.114
(as amended by SFAS No.118) requires certain impaired loans be
measured based on the present value of expected cash flows discounted
at the loans' effective interest rate or the fair value of the
collateral. The Company was required to adopt the new standard by
October 1, 1995. The adoption of SFAS No.114 and SFAS No.118 had no
material effect on the consolidated financial statements.
The Company adopted the provisions of SFAS No.115, "Accounting
for Certain Investments in Debt and Equity Securities" on September
30, 1993. Additionally, under guidance issued by the Financial
Accounting Standards Board for the implementation of SFAS No.115, the
Company transferred approximately $72.6 million in Held-to-Maturity
investments to Available-for-Sale investments during the three month
period ending December 31, 1995.
In March 1995, SFAS No.121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of", was
issued. SFAS No.121 requires certain long-lived assets, such as the
Company's real estate assets, be reviewed for impairment in value
whenever events or circumstances indicate that the carrying value of
an asset may not be recoverable. In performing the review, if
expected future undiscounted cash flows from the use of the asset or
the fair value, less selling costs, from the disposition of the asset
is less than its carrying value, an impairment loss is to be
recognized. The Company is required to adopt this new standard by
October 1, 1996. The Company does not anticipate that the adoption
of SFAS No.121 will have a material effect on the Company's
consolidated financial statements.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings or actions pending
or threatened against Metropolitan Mortgage & Securities Co., Inc. or
to which its property is subject.
Item 2. Changes in Securities
N/A
Item 3. Defaults Upon Senior Securities
N/A
Item 4. Submission of Matters to a Vote of Security Holders
N/A
Item 5. Other Information
N/A
Item 6. Exhibits and Reports on Form 8-K
N/
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
(Registrant)
/s/ C. PAUL SANDIFUR, JR.
Date August 15, 1996
--------------- ---------------------------------------------
C. Paul Sandifur, Jr.
Chairman, President, Chief Executive Officer
/s/ BRUCE J. BLOHOWIAK
Date August 15, 1996
--------------- ---------------------------------------------
Bruce J. Blohowiak
Executive Vice President, Chief Operating
Officer and Director
/s/STEVEN CROOKS
Date August 15, 1996
--------------- ---------------------------------------------
Steven Crooks
Vice President
(Principal Accounting Officer)
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0
21,524
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