SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-Q
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For Quarter Ended March 31, 1999
Commission file number O-17248
OWENS MORTGAGE INVESTMENT FUND,
a California Limited Partnership
(Exact Name of Registrant as specified In Its charter)
California 68-0023931
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2221 Olympic Boulevard
Walnut Creek, California 94595
(Address of principal executive office) (Zip Code)
(925) 935-3840
(Registrant's Telephone number,
including area code)
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_________
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
BALANCE SHEETS
March 31, 1999 and December 31, 1998
March 31 December 31
1999 1998
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 16,825,716 $ 8,260,599
Certificates of deposit 350,000 434,006
Commercial paper - 3,084,044
Loans secured by trust deeds 179,834,286 182,721,465
Less: Allowance for loan losses (3,500,000) (3,500,000)
----------- ------------
176,334,286 179,221,465
Real estate held for sale, net of allowance
for losses 10,505,942 9,971,202
Interest receivable 1,589,982 1,380,530
Other receivables - 59,074
----------- -----------
Total Assets $205,605,926 $202,410,920
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued distributions payable $ 537,933 $ 522,827
Due to General Partner 349,436 391,098
Accounts payable and accrued liabilities 150,660 156,193
----------- -----------
Total Liabilities 1,038,029 1,070,118
----------- -----------
PARTNERS' CAPITAL:
General partners 2,015,755 1,967,069
Limited partners (Units Subject to Redemption) 202,552,142 199,373,733
----------- -----------
Total Partners' Capital 204,567,897 201,340,802
----------- -----------
Total Liabilities and Partners' Capital $205,605,926 $202,410,920
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
<TABLE>
<CAPTION>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1999 and 1998 (Unaudited)
For the Three Months Ended
March 31 March 31
1999 1998
---- ----
<S> <C> <C>
REVENUES:
Interest income on loans secured by trust deeds $ 4,688,720 $ 4,707,266
Gain on sale of real estate - 1,042,704
Other income 154,942 112,841
------------ ------------
Total revenues 4,843,662 5,862,811
----------- -----------
OPERATING EXPENSES:
Management fees to General Partner 400,171 486,171
Servicing fees to General Partner 113,027 107,641
Promotional interest 24,317 23,969
Administrative 7,500 14,129
Legal and accounting 86,473 55,786
Real estate operations, net (28,882) 49,973
Other 60,452 3,435
------------- ---------------
Total operating expenses 663,058 741,104
------------ -------------
Net income $ 4,180,604 $ 5,121,707
========= ===========
Net income allocated to general partner $ 41,174 $ 50,710
=========== =============
Net income allocated to limited partners $ 4,139,430 $ 5,070,997
========= ===========
Net income allocated to limited partners
per weighted average limited partnership unit
(203,312,000 and 192,678,000 average units) $ .020 $.026
==== ====
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
<TABLE>
<CAPTION>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1999 and 1998 (Unaudited)
March 31 March 31
1999 1998
<S> <S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,180,604 $ 5,121,707
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of real estate by limited partnership - (1,017,831)
Loss on sale of real estate properties - 2,701
Changes in operating assets and liabilities:
Interest receivable (209,452) (142,718)
Other receivables 59,074 53,509
Accrued distributions payable 15,106 (15,191)
Due to General Partner (41,662) 410,932
Accounts payable and accrued liabilities (5,533) -
----------- ------------
Net cash provided by operating activities 3,998,137 4,413,109
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of loans secured by trust deeds (9,788,276) (8,164,033)
Principal collected 396,324 488,794
Loan payoffs 11,737,965 9,863,394
Investment in real estate properties (56,544) (19,127)
Net proceeds from disposition of real estate properties 90,331 -
Investment in limited partnership - (838,419)
Distributions received from limited partnership - 3,575,910
Investment in corporate joint venture (27,361) (26,142)
Maturity of commercial paper 3,084,044 -
Maturity of certificate of deposit 84,006 -
----------- -----------
Net cash provided by investing activities 5,520,489 4,880,377
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of partnership Units 5,367,556 5,509,894
Partners' cash distributions (1,593,383) (1,575,916)
Partners' capital withdrawals (4,727,682) (3,275,561)
----------- -----------
Net cash (used in) provided by financing activities (953,509) 658,417
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 8,565,117 9,951,903
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 8,260,599 3,073,115
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 16,825,716 $ 13,025,018
=========== ===========
See note 3 for supplemental disclosure of non-cash investing activities.
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(1) Summary of Significant Accounting Policies
In the opinion of the management of the Partnership, the accompanying
unaudited financial statements contain all adjustments, consisting of
normal, recurring adjustments, necessary to present fairly the
financial information included therein. These financial statements
should be read in conjunction with the audited financial statements
included in the Partnership's Form 10-K for the fiscal year ended
December 31, 1998 filed with the Securities and Exchange Commission.
The results of operations for the three-month period ended March 31,
1999 are not necessarily indicative of the operating results to be
expected for the full year.
(2) Loans Secured by Trust Deeds
The Partnership's investment in loans delinquent greater than ninety
days is $9,376,000 and $8,710,000 as of March 31, 1999 and December 31,
1998, respectively. As of March 31, 1999, $7,393,000 of the delinquent
loans has a specific related allowance for credit losses totaling
approximately $1,965,000. There is a non-specific allowance for credit
losses of $1,535,000 for the remaining delinquent balance and for other
current loans. There was no additional allowance for credit losses
during the three months ended March 31, 1999.
As of March 31, 1999 and December 31, 1998, loans past maturity totaled
approximately $22,059,000 and $23,418,000, respectively. Of the past
maturity loans at March 31, 1999, $7,436,000 represent loans for which
interest payments are delinquent more than ninety days.
(3) Real Estate Held for Sale
During the three months ended March 31, 1999, the Partnership acquired
through foreclosure a 91% interest in 92 residential lots in Lake Don
Pedro, California, on which it had a trust deed investment of $541,165.
(4) Transactions with Affiliates
The General Partner of the Partnership, Owens Financial Group, Inc.
(OFG), is entitled to receive from the Partnership a management fee of
up to 2.75% per annum of the average unpaid balance of the
Partnership's mortgage loans at the end of each of the preceding twelve
months for services rendered as manager of the Partnership.
All of the Partnership's loans are serviced by OFG, in consideration
for which OFG receives up to .25% per annum of the unpaid principal
balance of the loans.
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(4) Transactions with Affiliates, Continued
OFG, at its sole discretion may, on a monthly basis, adjust the
management and servicing fees as long as they do not exceed the
allowable limits calculated on an annual basis. In determining the
management and servicing fees and hence the yield to the Partnership,
OFG may consider a number of factors, including the then-current market
yields. Even though the fees for a month may exceed one-twelfth of the
maximum limits, at the end of the calendar year the sum of the fees
collected for each of the twelve months is equal to or less than the
stated limits. Management fees amounted to approximately $400,000 and
$486,000 for the three months ended March 31, 1999 and 1998,
respectively. Service fee payments to OFG approximated $113,000 and
$108,000 for the three months ended March 31, 1999 and 1998,
respectively.
.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months Ended March 31, 1999 Compared to 1998
The net income decrease of approximately $941,000 (18%) for the three months
ended March 31, 1999 as compared to 1998 was due to:
The decrease in gain on sale of real estate of approximately $1,043,000 (100%).
The gain on sale of real estate for the three months ended March 31, 1998 was
from sales of homes in the WV-OMIF Partners development limited partnership. The
final homes in this limited partnership were sold in 1998. Therefore, there were
no sales and no gain recognized in 1999.
The decrease in gain on sale of real estate was partially offset by a decrease
in management fees paid to the General Partner of $86,000 (18%) which are paid
pursuant to the Partnership Agreement and net income from real estate operations
of $29,000 for the quarter ended March 31, 1999 as compared to a net loss of
$50,000 for the quarter ended March 31, 1998.
Interest income on loans secured by trust deeds decreased $19,000 (0.4%) for the
three months ended March 31, 1999, as compared to the same period in 1998. This
decrease was a result of a decrease in the weighted average yield of the loan
portfolio from 11.09% as of March 31, 1998 to 10.77% as of March 31, 1999 even
though the average loan portfolio grew by approximately 4.0% for the quarter
ended March 31, 1999 as compared to 1998. The decrease in interest income for
the quarter was also due to an increase in delinquent loans of approximately 8%
as of March 31, 1999 as compared to 1998.
Financial Condition
March 31, 1999 and December 31, 1998
Loan Portfolio
The number of Partnership mortgage investments decreased from 188 to 177 and the
average loan balance increased from approximately $972,000 to $1,016,000 as of
December 31, 1998 and March 31, 1999, respectively. These average loan increases
reflect the Partnership's ability to invest in larger mortgage loans meeting the
Partnership's objectives.
Prior to May 1, 1993, the General Partner followed a policy of purchasing all
interest receivables of delinquent loans. However, on loans originated by the
General Partner on or after May 1, 1993, and effective November 1, 1994, for
certain other loans originated prior to May 1, 1993, the General Partner adopted
the policy not to purchase delinquent interest or principal. As of March 31,
1999 and December 31, 1998, there were approximately $8,569,000 and $7,904,000,
respectively, in loans held by the Partnership on which payments were more than
90 days delinquent and on which such delinquent interest was not being purchased
by the General Partner. The General Partner purchased approximately $23,000 and
$110,000 in delinquent interest receivables of the Partnership during the three
months ended March 31, 1999 and the year ended December 31, 1998, respectively.
Approximately $9,376,000 (5.2%) and $8,710,000 (4.8%) of the loans invested in
by the Partnership were more than 90 days delinquent in payment as of March 31,
1999 and December 31, 1998, respectively. Of these amounts, approximately
$3,111,000 (1.7%) and $3,657,000 (2.0%) were in the process of foreclosure.
Loans more than 90 days delinquent increased by $666,000 (7.7%) from December
31, 1998 to March 31, 1999, primarily due to one large loan which became
delinquent during the quarter. Management believes that the loan, with an
outstanding principal balance of approximately $1,553,000, is adequately secured
and that no additional loan loss reserve for this loan is necessary.
A loan loss reserve in the amount of $3,500,000 was recorded on the books of the
Partnership as of March 31, 1999 and December 31, 1998. The General Partner
believes that this loan loss reserve is adequate.
As of March 31, 1999 and December 31, 1998 approximately 55% and 48%,
respectively, of the mortgage loans made or invested in by the Partnership are
secured by real property located in Northern California. The increase in the
percentage of loans secured by real property in Northern California has
primarily been due to three new loans originated during the quarter in the total
amount of $2,125,000 which are secured by properties in Northern California and
the continued funding of construction loans located in Northern California. In
addition, four large loans located outside of Northern California in the total
amount of approximately $4,350,000 were paid off during the quarter.
The Partnership's investment in loans secured by single family residences has
decreased by 58% since December 31, 1998 primarily due to the foreclosure of one
property located in Lake Don Pedro, California in the amount of $541,000 and the
payoff of three loans in the total amount of $1,003,000. In addition, the
Partnership's investment in loans secured by unimproved land has increased by
3%. All of the Partnership's loans secured by unimproved land or land in the
process of being developed are first trust deeds. In addition, only one of these
loans in the amount of $802,200 is more than 90 days delinquent in payment as of
March 31, 1999.
The following amount of delinquent loans held by the Partnership have been
acquired and foreclosed upon by the General Partner from January 1, 1994 through
March 31, 1999:
Delinquent Year
Principal Interest Foreclosed
58,000 4,417 1994
1,184,223 252,810 1995
2,320,000 86,981 1996
613,400 50,625 1997
-- -- 1998
-- -- 1999
The General Partner has purchased from the Partnership all delinquent interest
receivable on those loans foreclosed on in 1994 and 1995, but did not purchase
the delinquent interest on the loans foreclosed on in 1996 and 1997. Of these
foreclosed loans, the Partnership held three mortgages due from the General
Partner totaling $765,332. In addition, the Partnership held a mortgage in the
amount of $1,150,000 secured by a property sold by the Partnership to the
General Partner during the year ended December 31, 1998. All loans due to the
Partnership by the General Partner were paid off in full in November 1998.
Real Estate Properties Held for Sale
The Partnership currently holds title to twelve properties that were foreclosed
on from January 1, 1993 through March 31, 1999 in the amount of $9,673,000, net
of allowance for losses of $1,184,000. Since 1993, the Partnership's investment
in real estate held for sale has increased due to the General Partner's decision
to stop acquiring from the Partnership property subject to foreclosure on which
the Partnership has a trust deed investment on property acquired by the
Partnership through foreclosure. When the Partnership acquires property by
foreclosure, it typically earns less income on those properties than could be
earned on mortgage loans. During the three months ended March 31, 1999, the
Partnership acquired through foreclosure a 91% interest in 92 residential lots
in Lake Don Pedro, California, on which it had a trust deed investment of
$541,165.
Six of the Partnership's twelve properties do not currently generate revenue.
Expenses from rental properties have decreased from approximately $220,000 to
$151,000 (31%) for the three months ended March 31, 1998 and 1999, respectively,
due to expenses incurred on the Sonora Vista property in the first quarter of
1998 prior to the sale of the property to the General Partner and legal,
insurance and payroll expenses incurred on the Merced and Oakland properties in
the first quarter of 1998 which were not incurred in 1999. In addition, revenues
associated with these properties have increased from $170,000 to $180,000
(5.9%), thus generating net income from real estate held for sale of $29,000
during the three months ended March 31, 1999. The increase in rental revenues is
due to the increased number of properties held which are generating income and
to increased occupancy rates on those properties as of March 31, 1999 as
compared to 1998.
Investment in Corporate Joint Venture
In 1995, the Partnership foreclosed on a $571,853 loan and obtained title to a
commercial lot in Los Gatos, California that secured the loan. In 1997, the
Partnership contributed the lot to a limited liability company (the Company)
formed with an unaffiliated developer to develop and sell a commercial office
building on the lot. The Partnership is providing construction financing to the
Company at prime plus two percent.
During the three months ended March 31, 1999 and 1998, the Partnership advanced
an additional $27,361 and $26,141, respectively, to the corporate joint venture
for development. The total investment in the corporate joint venture was
$832,922 and $805,561 as of March 31, 1999 and December 31, 1998, respectively.
The Company received all development approvals in the third quarter of 1998 and
expects to begin construction in June of 1999.
Interest Receivable and Due to General Partner
Interest receivable increased from approximately $1,381,000 as of December 31,
1998 to $1,590,000 as of March 31, 1999 ($209,000 or 15%), due primarily to
payments on certain loans received from the General Partner on April 1, 1999
which were accrued as of March 31, 1999.
Due to General Partner decreased from approximately $391,000 as of December 31,
1998 to $349,000 as of March 31, 1999 ($42,000 or 11%) due primarily to a
decrease in the management fees owed to the General Partner for the quarter
ended March 31, 1999. Management fees are paid pursuant to the Partnership
Agreement.
Cash and Cash Equivalents, Certificates of Deposit and Commercial Paper
Cash and cash equivalents, certificates of deposit and commercial paper have
increased from approximately $11,779,000 as of December 31, 1998 to $17,176,000
as March 31, 1999, respectively ($5,397,000 or 46%). This increase is primarily
attributable to the rollover of limited partner income and principal collected
on loans (including loan payoffs) during the quarter ended March 31, 1999
without the investment in new loans of the same amount.
Asset Quality
Some losses are normal when lending money and the amounts of losses vary as the
loan portfolio is affected by changing economic conditions and financial
experiences of borrowers. There is no precise method of predicting specific
losses or amounts that ultimately may be charged off on particular segments of
the loan portfolio.
The conclusion that a Partnership loan may become uncollectible, in whole or in
part, is a matter of judgment. Although lenders such as banks and savings and
loans are subject to regulations that require them to perform ongoing analyses
of portfolio, loan to value ratios, reserves, etc., and to obtain current
information regarding its borrowers and the securing properties, the Partnership
is not subject to these regulations and has not adopted these practices. Rather,
management of the General Partner, in connection with the quarterly closing of
the accounting records of the Partnership and the preparation of the financial
statements, evaluates the Partnership's mortgage loan portfolio. Based upon this
evaluation, a determination is made as to whether the allowance for loan losses
is adequate to cover potential losses of the Partnership. As of March 31, 1999
management believes that the allowance for loan losses of $3,500,000 is
adequate. As of then, loans secured by trust deeds include $9,376,000 in loans
delinquent over 90 days, of which $3,111,000 was invested in loans that were in
the process of foreclosure. Due to the loan-to-value criteria established by the
General Partner, in its opinion, the mortgage loans held by the Partnership
appear in general to be adequately secured.
The General Partner's judgment of the adequacy of loan loss reserves includes
consideration of:
economic conditions;
borrower's financial condition;
evaluation of industry trends;
review and evaluation of loans identified as having loss potential; and
quarterly review by the Board of Directors.
Liquidity and Capital Resources
Purchases of Units and loan payoffs provide the capital for mortgage
investments. Although general market interest rates have most recently declined,
a substantial increase in such rates could have an adverse affect on the
Partnership, because then the Partnership's investment yield could be lower than
other debt-related investments. In that event, purchases of additional Units
could decline, which, in turn, would reduce the liquidity of the Partnership and
its ability to make additional mortgage investments. In contrast, a significant
increase in the dollar amount of loan payoffs and/or additional limited partner
investments without the origination of new loans of the same amount would
increase the liquidity of the Partnership. This increase in liquidity could
result in a decrease in the yield paid to limited partners as the Partnership
would be required to invest the additional funds in lower yielding, short term
investments. The Partnership has not and does not intend to borrow money for
investment purposes.
There has been little variation in the percentage of capital withdrawals to
total capital invested by the limited partners in recent years, excluding
regular distributions of net income to limited partners, and no substantial
change is expected. Withdrawal percentages have been 7.37%, 6.11%, 7.85%, 6.63%
and 7.33% for the years ended December 31, 1994, 1995, 1996, 1997 and 1998 and
9.32% (annualized) for the three months ended March 31, 1999. These percentages
are the annual average of the limited partners capital withdrawals in each
calendar quarter divided by the total limited partner capital as of the end of
each quarter.
The limited partners may withdraw, or partially withdraw, from the Partnership
and obtain the return of their outstanding capital accounts at $1.00 per Unit
(book value) within 61 to 91 days after written notices are delivered to the
General Partner, subject to the following limitations, among others:
No withdrawal of Units can be requested or made until at least one year
from the date of purchase of those Units, on or after the date of the most
recent Prospectus dated 2/16/99, other than Units received under the
Partnership's Reinvested Distribution Plan.
Any such payments are required to be made only from Net Proceeds and
Capital Contributions (as defined) during said 91-day period.
A maximum of $100,000 per partner may be withdrawn during any calendar
quarter.
The General Partner is not required to establish a reserve fund for the
purpose of funding such payments.
No more than 10% of the outstanding limited partnership interest may be
withdrawn during any calendar year except upon dissolution of the
Partnership.
Contingency Reserves
The Partnership maintains cash, cash equivalents and marketable securities as
contingency reserves in an aggregate amount of 2% of the limited partners'
capital accounts to cover expenses in excess of revenues or other unforeseen
obligations of the Partnership. Although the General Partner believes that
contingency reserves are adequate, it could become necessary for the Partnership
to sell or otherwise liquidate certain of its investments to cover such
contingencies on terms which might not be favorable to the Partnership.
Current Economic Conditions
Although the current economic climate in Northern California and the Western
United States is generally strong, many areas outside of the San Francisco Bay
Area and throughout the Western United States continue to experience depressed
values created by the real estate recession of the early 1990's. Other than the
loss incurred in February 1998 on the sale to the General Partner of the
manufactured-home development in Sonora, California, acquired through
foreclosure, the Partnership has not sustained any material losses to date. This
has been due primarily to the General Partner's pre-May 1, 1993 practice of
purchasing delinquent interest and loans from the Partnership prior to
foreclosure. The General Partner has ceased such practices, except as to loans
that pre-exist the change in policy and other very limited exceptions. The
General Partner expects that it will not purchase delinquent interest or
principal on delinquent loans in the future, and therefore, the Partnership
could sustain losses with respect to loans secured by properties located in
areas of declining real estate values. This could result in a reduction of the
net income of the Partnership for a year in which those losses occur. There is
no way of making a reliable estimate of these potential losses at the present
time.
Despite the Partnership's ability to purchase mortgage loans with relatively
strong yields during 1997, 1998 and the quarter ended March 31, 1999, there has
been competition from a variety of lenders that has had the effect of reducing
mortgage yields over the past two years and could have the effect of reducing
mortgage yields further in the future. Current loans with relatively high yields
could be replaced with loans with lower yields, which in turn could reduce the
net yield paid to the limited partners. In addition, if there is less demand by
borrowers for loans and, thus, fewer loans for the Partnership to invest in, it
will invest its excess cash in shorter-term alternative investments yielding
considerably less than the current investment portfolio.
Year 2000 Readiness
Many computer systems may experience difficulty processing dates beyond the year
1999; as a consequence, some computer hardware and software at most companies
will need to be modified or replaced prior to the year 2000 in order to remain
functional. The General Partner depends on the use of computers and related
systems to provide timely, accurate information essential to the management and
operation of the Partnership. These systems include both information technology
(IT) and non-information technology (non-IT) systems. For IT and non-IT systems
developed by independent third parties (externally-developed), the vendors and
suppliers have represented that these systems are Year 2000 compliant; however,
internal testing of these systems has not been completed. The computer programs
used to account for mortgage loan investments, investments in Units and other
items are internally-developed IT systems. These IT systems have been reviewed
by independent consultants to determine whether these programs are able to
recognize the year 2000 and all required modifications have been completed. The
consultants are currently in the process of testing all modifications that have
been made. The testing is expected to be completed by August of 1999.
Although not anticipated by the General Partner, a failure to adequately address
the Year 2000 issue could result in the misstatement of reported information,
the inability to accurately track mortgage investments and payments due or other
operational problems. If IT systems are not operational in the Year 2000, the
General Partner has determined that they can operate manually for several months
while correcting the system problems before experiencing material adverse
effects on the Partnership's and the General Partner's business and results of
operations. However, shifting portions of daily operations to manual processes
may result in time delays and increased processing costs. Additionally, the
Partnership and General Partner may not be able to provide borrowers and
investors with timely and pertinent information, which may negatively affect
customer relations and lead to the potential loss of new loans and limited
partner investments.
The General Partner is in the process of assessing Year 2000 issues with third
parties, comprised primarily of certain financial institutions and other
vendors, with whom the Partnership has a material business relationship (Third
Parties). Currently, the Partnership believes that if a significant portion of
these financial institutions is non-compliant for a substantial length of time,
the Partnership's operations and financial condition would be materially
adversely affected. Non-compliance by other Third Parties is not expected to
have a material effect on the Partnership's results of operations and financial
condition. The General Partner has sent letters to these and other Third Parties
requesting representations of their Year 2000 readiness and is currently
awaiting replies from the Third Parties.
The total costs to remedy Year 2000 issues will be paid by the General Partner.
None of such costs will be reimbursed by the Partnership.
The worst case scenario from the impact of Year 2000 cannot presently be
predicted.
Forward Looking Statements and Other Year 2000 Risk Factors
The foregoing analysis of Year 2000 issues includes forward-looking statements
and predictions about possible or future events, results of operations and
financial condition. As such, this analysis may prove to be inaccurate because
of the assumptions made by the General Partner or the actual development of
future events. No assurance can be given that any of these forward-looking
statements and predictions will ultimately prove to be correct or even
substantially correct.
Various other risks and uncertainties could also affect the Year 2000 analysis
causing the effect on the Partnership to be more severe than discussed above.
The General Partner's Year 2000 compliance testing cannot guarantee that all
computer systems will function without error beyond the Year 2000. Risks also
exist with respect to Year 2000 compliance by Third Parties, such as the risk
that an external party, who may have no relationship to the Partnership or the
General Partner, but who also has a significant relationship with one or more
Third Parties, may have a system failure that adversely affects the
Partnership's ability to conduct business. While the General Partner is
attempting to identify such external parties, no assurance can be given that it
will be able to do so. Furthermore, Third Parties with direct relationships with
the Partnership, whose systems have been identified as likely to be Year 2000
compliant, may suffer a breakdown due to unforeseen circumstances. It is also
possible that the information collected by the General Partner for these Third
Parties regarding their compliance with Year 2000 issues may be incorrect.
Finally, it should be noted that the foregoing discussion of Year 2000 issues
assumes that to the extent the General Partner's systems fail, whether because
of unforeseen complications or because of Third Parties' failure, switching to
manual operations will allow the Partnership to continue to conduct its
business. While the General Partner believes this assumption to be reasonable,
if it is incorrect, the Partnership's results of operations would likely be
adversely affected.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not presently involved in any material legal proceedings.
Item 6(b). Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this report
is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: May 12, 1999 OWENS MORTGAGE INVESTMENT FUND,
a California Limited Partnership
By: Owens Financial Group, Inc., General Partner
Dated: May 12, 1999 By: /s/William C. Owens
William C. Owens, President
Dated: May 12, 1999 By: /s/ Bryan H. Draper
Bryan H. Draper, Chief Financial Officer
Dated: May 12, 1999 By: /s/ Melina A. Platt
Melina A. Platt, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 841501
<NAME> Owens Mortgage Investment Fund
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 16,825,716
<SECURITIES> 350,000
<RECEIVABLES> 1,589,982
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,765,698
<PP&E> 176,334,286
<DEPRECIATION> 0
<TOTAL-ASSETS> 205,605,926
<CURRENT-LIABILITIES> 1,038,029
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 204,567,897
<TOTAL-LIABILITY-AND-EQUITY> 205,605,926
<SALES> 0
<TOTAL-REVENUES> 4,843,662
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 663,058
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,180,604
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,180,604
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,180,604
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
