Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-20345
FIRST CHURCH FINANCING CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1670677
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 North Main Street, West Bend, Wisconsin 53095
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 334-5521
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 ( )
The number of shares outstanding of the registrant's Common Stock, par
value $1.00 per share, at September 30, 1996 was 1,000 shares.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a)
and (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
<PAGE>
PART I
FIRST CHURCH FINANCING CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30, September 30,
1996 1995
<S> <C> <C>
Revenues:
Interest income $253,011 $195,043
Other income 10,829 8,646
Total revenues 263,840 203,689
Expenses:
Interest expense 219,593 168,746
Amortization of deferred issuance
costs 12,206 11,825
Servicing fees 9,453 7,115
Other 5,144 5,274
Total expenses 246,396 192,960
Income before income taxes 17,444 10,729
Provision for income taxes 7,000 4,300
Net income $ 10,444 $ 6,429
</TABLE>
The accompanying notes to condensed financial statements are an integral part
of these statements.
<PAGE>
FIRST CHURCH FINANCING CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, September 30,
1996 1995
<S> <C> <C>
Revenues:
Interest income $781,446 $596,360
Other income 70,477 45,275
Total revenues 851,923 641,635
Expenses:
Interest expense 680,319 518,683
Amortization of deferred issuance
costs 73,441 44,784
Servicing fees 29,478 21,956
Other 20,544 18,249
Total expenses 803,782 603,672
Income before income taxes 48,141 37,963
Provision for income taxes 19,000 15,200
Net income $ 29,141 $ 22,763
</TABLE>
The accompanying notes to condensed financial statements are an integral part
of these statements.
<PAGE>
FIRST CHURCH FINANCING CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,385 $ 9,366
Assets held by trustee 227,140 360,424
Accrued interest receivable 82,431 71,045
Mortgage loans held by trustee
(net of purchase discount of
$361,960 and $432,437,
respectively) 10,353,211 11,727,624
Deferred issuance costs 359,367 432,808
Other assets 10,676 16,328
Total assets $11,034,210 $12,617,595
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest payable $ 179,270 $ 276,768
Mortgage-Backed bonds payable 10,390,000 11,897,000
Due to affiliate 12,672 200
Note payable to affiliate 85,000 90,000
Accrued income taxes payable 1,707 17,207
Total liabilities 10,668,649 12,281,175
Stockholder's equity
Common stock, $1 par value;
50,000 shares authorized
1,000 shares issued and
outstanding 1,000 1,000
Additional paid-in capital 269,631 269,631
Retained earnings 94,930 65,789
Total stockholder's equity 365,561 336,420
Total liabilities and
stockholder's equity $11,034,210 $12,617,595
</TABLE>
The accompanying notes to condensed financial statements are an integral part
of these balance sheets.
<PAGE>
FIRST CHURCH FINANCING CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
Sept. 30, Sept. 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 29,141 $ 22,763
Adjustments to reconcile net income
to net cash provided by operating
activities:
Gain on liquidation of mortgage
loans (48,852) (24,701)
Amortization of discount on
mortgage loans (21,625) (16,186)
Amortization of deferred issuance
costs 73,441 44,784
Amortization of other deferred costs 5,653 5,652
Change in assets and liabilities:
Decrease (Increase) in -
Assets held by trustee 133,284 230,798
Accrued interest receivable (11,386) 5,571
Increase (Decrease) in -
Credit balance in bank account - 865
Accrued interest payable (97,498) (190,001)
Due to B. C. Ziegler and Company 7,472 (2,344)
Accrued income taxes payable (15,500) 11,700
Net cash provided by operating
activities 54,130 88,901
CASH FLOWS FROM INVESTING ACTIVITIES
Principal payments received on
mortgage loans 1,444,889 719,297
Net cash provided by investing
activities 1,444,889 719,297
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of mortgage-backed bonds (1,507,000) (815,000)
Net cash used in financing
activities (1,507,000) (815,000)
NET DECREASE IN CASH AND
CASH EQUIVALENTS (7,981) (6,802)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 9,366 6,802
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 1,385 $ -
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid during the period $ 775,345 $537,000
Income taxes paid during the period $ 34,500 $ 3,500
</TABLE>
The accompanying notes to condensed financial statements are an integral part
of these statements.
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 1996
Note A -- Basis of Presentation
The condensed financial statements included herein have been prepared by
First Church Financing Corporation (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Management
believes, however, that these condensed financial statements reflect all
adjustments which are, in the opinion of management, necessary to provide a
fair statement of the results for the periods presented. All such adjustments
are of a normal recurring nature. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes thereto included in the Company's latest annual report on Form 10-K.
Note B -- Mortgage-Backed Bonds
Mortgage-Backed Bonds (the "Bonds") originally issued and outstanding at
September 30, 1996, consist of the following:
<TABLE>
<CAPTION>
Outstanding
Principal
Date of Stated Principal Amount At
Series Rate Bonds Maturity Amounts 9/30/96
<S> <C> <C> <C> <C> <C>
1 8.25% 3/1/93 3/10/08 $ 4,586,000 $ 2,893,000
2 8.75% 8/1/94 8/10/09 4,456,000 3,355,000
3 8.00% 12/1/95 12/10/10 4,223,000 4,142,000
$13,265,000 $10,390,000
</TABLE>
The stated maturity is the date by which all Bonds will be fully paid.
Mandatory redemptions will be made from principal payments on the Mortgage
Loans (the "Loans") which serve as collateral for the Bonds. The Loans
generally require regular installments of principal and interest based upon a
15-year amortization schedule. The receipt of scheduled principal payments
will cause a substantial portion of the Bonds to have shorter maturities.
The Bonds will be redeemed, without premium or penalty, to the extent
funds are available in the interest and principal payment accounts maintained
by the trustee. Redemptions from such available funds (other than funds from
prepayments of Loans) commence six months from the date of issue of a Bond
series and continue on a semiannual basis thereafter.
All interest and principal collected on the Loans, less a servicing fee
paid to Ziegler Financing Corporation, a related entity, is to be deposited
with the trustee of the Bonds. Any amounts deposited with the trustee in
excess of amounts required for payment of interest on and principal of the
Bonds and an amount to be maintained in an interest reserve fund will be
returned to the Company.
The Bonds of any series may be redeemed in whole by the Company at such
time as the aggregate principal amount of the outstanding Bonds for the series
is 20% or less of the aggregate principal amount of the Bonds originally
issued for that series. Redemptions will also be made from unscheduled
prepayments on the Loans, if such prepayments should occur. Prepayments over
and above the regular principal installments may be made by the mortgagor from
borrowed funds on a monthly or quarterly basis commencing one year after the
issue of a Bond series and from unborrowed funds on a monthly or quarterly
basis after the issue of a Bond series. Redemptions from such prepayments may
be made after the same periods of time.
MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
Results of Operations - Three Months Ended
September 30, 1996 and 1995
The Company issued no new Bonds during the third quarter of 1996 or
1995. A total of $159,000 of Bonds were repaid during the third quarter of
1996 compared to $188,000 in the third quarter of 1995.
Revenues, consisting primarily of interest, were $264,000 in the third
quarter of 1996 compared to $204,000 in the third quarter of 1995. Total
expenses, consisting primarily of interest, were $246,000 in the third quarter
of 1996 compared to $193,000 in the third quarter of 1995. The increases in
revenues and expenses for the third quarter of 1996 compared to the third
quarter of 1995 are due to a third series of Bonds which was issued in
December 1995. Net income for the third quarter of 1996 was $10,000 compared
to $6,000 in the third quarter of 1995.
Results of Operations - Nine Months Ended
September 30, 1996 and 1995
The Company issued no new series of Bonds in the first nine months of
1996 or 1995. A total of $1,507,000 of Bonds were repaid during the first
nine months of 1996 compared to $815,000 in the first nine months of 1995.
Revenues, consisting primarily of interest income, were $852,000 in 1996
compared to $642,000 in 1995. Total expenses, consisting primarily of
interest expense, were $804,000 in 1996 compared to $604,000 in 1995. The
increases in revenues and expenses for the first nine months of 1996 compared
to the first nine months of 1995 are due to the third series of Bonds
outstanding which was issued in December 1995. Net income for the first nine
months of 1996 was $29,000 compared to $23,000 for the first nine months of
1995.
Each series of Bonds is structured in a manner such that funds to be
received from the Loans are sufficient to fund interest and principal payments
on the Bonds as well as all other expenses of the Company. All payments of
principal and interest on the Loans securing the Bonds have been received by
the Company as scheduled. Principal payments including any prepayments
received on the Loans were $1,445,000 in the first nine months of 1996
compared to $719,000 in the first nine months of 1995. Ziegler Financing
Corporation, a related corporation, acts as servicer for the Loans for which
it receives a fee. The fee is equal to 0.292% of the average outstanding
principal balance of the Loans during the preceding month. At September 30,
1996, there were $10,390,000 of Bonds outstanding collateralized by
$10,715,000 of Loans at maturity value.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. Description
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
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.
FIRST CHURCH FINANCING CORPORATION
Dated: November 12, 1996 By /s/Eugene H. Rudnicki
Eugene H. Rudnicki
President
Dated: November 12, 1996 By /s/Lynn R. Van Horn
Lynn R. Van Horn
Secretary & Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from First
Church Financing Corporation financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,385
<SECURITIES> 10,353,211<F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,034,210
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 10,390,000
0
0
<COMMON> 1,000
<OTHER-SE> 364,561
<TOTAL-LIABILITY-AND-EQUITY> 11,034,210
<SALES> 0
<TOTAL-REVENUES> 851,923
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 123,463
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 680,319
<INCOME-PRETAX> 48,141
<INCOME-TAX> 19,000
<INCOME-CONTINUING> 29,141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,141
<EPS-PRIMARY> 0<F3>
<EPS-DILUTED> 0<F3>
<FN>
<F1>Mortgage loans net of purchase discount
<F2>Registrant has an unclassified balance sheet
<F3>Not applicable
</FN>
</TABLE>
