<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Sept. 30, 1996
______________
Commission file number 33-4001
_____________
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1393535
______________________________________________________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
______________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 851-2000
__________________
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
____ ____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date, November
1, 1996:
COMMON STOCK, $.01 Par Value - 1,000 Shares
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CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
INDEX
Page
Number
Part I.FINANCIAL INFORMATION
Item 1.Financial Statements
Balance Sheet ...........................................3
Statement of Operations .................................4
Statement of Changes in Stockholder's Equity ............5
Statement of Cash Flows .................................6
Notes to Financial Statements ...........................7
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations .....................8
Part II.OTHER INFORMATION
Item 1.Exhibits and Reports on Form 8-K........................9
Signatures.....................................................10
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CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
BALANCE SHEET
(Unaudited)
September 30, December 31,
1996 1995
ASSETS
Cash $ 43,762 $ 33,298
___________ ___________
TOTAL ASSETS $ 43,762 $ 33,298
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Payable to Edward D. Jones & Co., L.P.$ 478,356 $ 474,786
Accrued Expenses 3,500 6,500
_____________ ___________
TOTAL LIABILITIES 481,856 481,286
_____________ ___________
Stockholder's Equity:
COMMON STOCK - $.01 par value, 1,000 shares
authorized, issued and outstanding 10 10
Paid-in-Capital 300,490 300,490
Retained (deficit) (738,594) (748,488)
_____________ ___________
TOTAL STOCKHOLDER'S EQUITY (438,094) (447,988)
_____________ ___________
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 43,762 $ 33,298
=========== ===========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues:
Residual income $ 213 $ - $14,079 $ 18,305
_______ _______ _______ _______
- - 14,079 18,305
_______ _______ _______ _______
Expenses:
Professional fees - - 3,615 7,220
Registration, filing and
other fees 225 - 570 345
_______ _______ _______ _______
- - 4,185 7,565
_______ _______ _______ _______
Income (loss) before income
taxes (12) - 9,894 10,740
Provision for (benefit from)
income taxes - - - -
_______ _______ _______ _______
Net income (loss) $ (12) $ - $ 9,894 $ 10,740
====== ====== ====== ======
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
(Unaudited)
Nine Months Ended September 30, 1996 and 1995
Common Paid-In Retained
Stock Capital (Deficit) Total
Balance December 31, 1994 10 300,490 (759,228) (458,728)
Net income $ - $ - $ 10,740 $ 10,740
_________ _________ _________ _________
Balance September 30, 1995$ 10 $ 300,490 $(748,488)$ (447,988)
======== ======== ======== ========
Balance December 31, 1995 $ 10 $ 300,490 $(748,488)$ (477,988)
Net income - - 9,894 9,894
_________ _________ __________ _________
Balance September 30, 1996$ 10 $ 300,490 $(738,594)$ (438,094)
======== ======== ======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30
1996 1995
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $9,894 $10,740
Adjustments to reconcile net income to net
cash provided by operating activities -
Increase in payable to Edward D. Jones
& Co., L.P. 3,570 345
Increase (Decrease) in accrued expenses (3,000) 3,000
_____________ _____________
Net cash provided by operating
activities 10,464 14,085
_____________ _____________
Net increase in cash 10,464 14,085
CASH, beginning of period 33,298 19,213
_____________ _____________
CASH, end of period $43,762 $33,298
============ =============
The accompanying notes are an integral part of these financial
statements.
<PAGE>
CORNERSTONE MORGAGE INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The financial information included herein is unaudited. However,
in the opinion of management, such information includes all
adjustments, consisting solely of normal recurring adjustments which
are necessary for a fair presentation of the results of interim
operations. These interim results should be read in connection with
the annual statement Form 10-K.
The results of operations for the three and nine months ended
September 30, 1996, are not necessarily indicative of the results to
be expected for the full year.
FUTURE OPERATIONS
Cornerstone Mortgage Investment Group, Inc. (the "Company" or
"Cornerstone") was incorporated in the state of Delaware on January 9,
1986, as a wholly owned, limited purpose subsidiary of Edward D. Jones
& Co., L.P. ("EDJ"), a Missouri limited partnership. EDJ organized
the Company and currently owns all the issued and outstanding capital
stock of the Company.
Cornerstone was organized for the limited purpose of issuing and
selling secured mortgage bonds (the "Bonds"), which are collateralized
by Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corporation (FHLMC) and Federal National Mortgage Association
(FNMA) Certificates.
Due to revisions of the Internal Revenue Code enacted, effective
January 1, 1987, Cornerstone no longer issues bonds. Cornerstone will
continue operations until such time as the Bonds previously issued are
retired or mature.
<PAGE>
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
MANAGEMENT'S FINANCIAL DISCUSSION
Residual income of $14,079 and $18,305 was earned during the nine
months ended September 30, 1996 and September 30, 1995. Residual
income of $213 and $0 was earned during the three months ended
September 30, 1996 and 1995. No series were issued during these
periods.
Expenses for the three months ended September 30, 1996 and
September 30, 1995, were $225 and $0, respectively, and were for
trustee, accounting registration, filing and other fees. Expenses for
the nine months ended September 30, 1996 and 1995, were $4,185 and
$7,565, respectively. These expenses represented professional,
registration and filing fees.
The outstanding principal balance and remaining collateral value
relating to series issued by Cornerstone Mortgage Investment Group,
Inc. are $6,600,000 and $6,606,175 as of September 30, 1996.
<PAGE>
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
Item 1:Legal Proceedings:
There are no material pending legal proceedings, other than
routine litigation incidental to the business, to which the
Registrant is party.
Item 2.Changes in Securities:
No change.
Item 3.Default upon Senior Securities:
No default.
Item 4.Submission of Matters to a Vote of Security Holders:
Nothing to report.
Item 5.Other Information:
Nothing to report.
Item 6:Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Exhibit
_________ __________________
4.1 Indenture dated as of June 15, 1986, between
the Company and Boatmen's Trust Company of St.
Louis, as Trustee, relating to Secured Mortgage
Bonds (incorporated by reference to Exhibit
4(a) to Registration Statement on Form S-1, as
amended, File No. 33-4001).
4.2 First Supplemental Indenture dated August 28,
1986 (incorporated by reference to Exhibit 1 to
the Current Report on Form 8-K filed on
September 19, 1986).
4.3 Second Supplemental Indenture dated September
26, 1986 (incorporated by reference to Exhibit
1 to the Current Report on Form 8-K filed on
October 6, 1986).
4.4 Third Supplemental Indenture dated October 31,
1986 (incorporated by reference to Exhibit 1 to
the Current Report on Form 8-K filed on
November 12, 1986).
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ended September
30, 1996.
<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.
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
(Registrant)
/s/John C. Heisler Chairman of the Board,
___________________ Chief Financial Officer,
John C. Heisler Chief Accounting Officer
and Director November 7, 1996
/s/Philip R. Schwab President, Chief Executive
___________________ Officer and Director November 7, 1996
Philip R. Schwab
<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.
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
(Registrant)
Chairman of the Board,
____________________ Chief Financial Officer,
John C. Heisler Chief Accounting Officer
and Director November 7, 1996
President, Chief Executive
____________________ Officer and Director November 7, 1996
Philip R. Schwab
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
financial statements from Cornerstone Mortgage Investment Group, Inc. for
the quarter ended September 30, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000790524
<NAME> CORNERSTONE MORTGAGE INVESTMENT GROUP, INC
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 43,762
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 43,762
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 43,762
<CURRENT-LIABILITIES> 481,856
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> (438,104)
<TOTAL-LIABILITY-AND-EQUITY> 43,762
<SALES> 14,079
<TOTAL-REVENUES> 14,079
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,185
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<INCOME-PRETAX> 9,894
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,894
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,894
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</TABLE>
