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 March 31, 1997
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 March 31, 1997 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.
PART I
FIRST CHURCH FINANCING CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
[CAPTION]
For the Three Months Ended
March 31, March 31,
1997 1996
<TABLE>
<S> <C> <C>
Revenues:
Interest income $246,355 $272,057
Other income 12,029 46,864
Total revenues 258,384 318,921
Expenses:
Interest expense 213,801 237,980
Amortization of deferred issuance
costs 13,771 49,109
Servicing fees 9,219 10,422
Other 7,959 12,251
Total expenses 244,750 309,762
Income before income taxes 13,634 9,159
Provision for income taxes 5,400 3,600
Net income $ 8,234 $ 5,559
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these statements.
<PAGE>
FIRST CHURCH FINANCING CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited)
[CAPTION]
March 31, December 31,
1997 1996
<TABLE>
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 647 $ 4,623
Assets held by trustee 218,249 307,046
Accrued interest receivable 80,124 81,375
Mortgage loans held by trustee
(net of purchase discount of
$338,545 and $350,575,
respectively) 10,078,203 10,227,998
Deferred issuance costs 335,624 349,395
Tax refund due from Parent 11,332 15,756
Other assets 6,908 8,792
Total assets $10,731,087 $10,994,985
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest payable $ 174,834 $ 228,416
Mortgage-backed bonds payable 10,084,000 10,305,000
Due to affiliate 3,035 586
Note payable to affiliate 85,000 85,000
Total liabilities 10,346,869 10,619,002
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 113,587 105,352
Total stockholder's equity 384,218 375,983
Total liabilities and
stockholder's equity $10,731,087 $10,994,985
</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 Three Months Ended
March 31, March 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,234 $ 5,559
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on liquidation of mortgage loans (5,203) (39,360)
Amortization of discount on mortgage
loans (6,825) (7,504)
Amortization of deferred issuance costs 13,771 49,109
Amortization of other deferred costs 1,884 1,884
Change in assets and liabilities:
Decrease (Increase) in -
Assets held by trustee 88,797 162,323
Accrued interest receivable 1,251 (13,581)
Tax refund due from Parent 4,424 -
Increase (Decrease) in -
Accrued interest payable (53,582) (93,116)
Due to affiliate 2,449 1,473
Accrued income taxes payable - 3,600
Net cash provided by operating
activities 55,200 70,387
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from -
Principal payments on mortgage loans 161,824 1,160,983
Net cash provided by investing
activities 161,824 1,160,983
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for -
Principal payment of notes payable to
affiliates - (30,000)
Redemption of mortgage-backed bonds (221,000) (1,207,000)
Net cash used in financing activities (221,000) (1,237,000)
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,976) (5,630)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 4,623 9,366
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 647 $ 3,736
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid during the period $ 265,683 $ 331,000
Income taxes paid during the period $ 976 $ -
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these statements.
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 1997
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
March 31, 1997, consist of the following:
[CAPTION]
Outstanding
Original Principal
Date of Stated Principal Amount
Series Rate Bonds Maturity Amounts at 3/31/97
<TABLE>
<C> <C> <C> <C> <C> <C>
1 8.25% 3/1/93 3/10/08 $ 4,586,000 $ 2,783,000
2 8.75% 8/1/94 8/10/09 4,456,000 3,227,000
3 8.00% 12/1/95 12/10/10 4,223,000 4,074,000
$13,265,000 $10,084,000
</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
March 31, 1997 and 1996
The Company issued no new Bonds during the first quarter of 1997 or
1996. A total of $221,000 of Bonds were repaid during the first quarter of
1997 compared to $1,207,000 in the first quarter of 1996. The difference
in Bond repayments during each of the quarters is primarily due to
different prepayment amounts received on the underlying Loans.
Revenues, consisting primarily of interest, were $258,000 in the first
quarter of 1997 compared to $319,000 in the first quarter of 1996. Total
expenses, consisting primarily of interest, were approximately $245,000 in
the first quarter of 1997 compared to $310,000 in the first quarter of
1996. The decreases in revenues and expenses for the current year quarter
are due primarily to the large redemption of Bonds during the first quarter
of 1996. Net income for the first quarter of 1997 was approximately $8,000
compared to $6,000 in the first quarter of 1996.
Each series of Bonds is structured in a manner such that funds 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 church mortgage loans securing the Bonds have
been received by the Company as scheduled. Principal payments received on
the mortgage loans were $162,000 in the first quarter of 1997 compared to
$1,161,000 in the first quarter of 1996.
Ziegler Financing Corporation, a related corporation, acts as servicer
for the Loans for which it receives a fee. Servicing fees paid Ziegler
Financing Corporation were approximately $9,000 in the first quarter of
1997 and $10,000 in the first quarter of 1996. The fee is equal to 0.292%
of the average outstanding principal balance of the Loans during the
preceding month. At March 31, 1997, there were $10,084,000 of Bonds
outstanding collateralized by $10,417,000 of Loans at maturity value.
RECENT DEVELOPMENTS
Effective March 31, 1997, Eugene H. Rudnicki retired as President and as
Director of the Issuer and Senior Vice President of the Underwriter.
Scott D. Rolfs replaced Mr. Rudnicki as President and as a Director of the
Issuer on May 1, 1997. Mr. Rolfs, age 30, recently was named Vice
President of the Underwriter. From July 1993 until May 1, 1997, Mr. Rolfs
served as Assistant Vice President of the Underwriter.
Effective April 30, 1997, Lynn R. Van Horn resigned as Secretary and
Treasurer and as Director of the Issuer and Senior Vice President of the
Underwriter. Dennis A. Wallestad replaced Mr. Van Horn as Secretary and
Treasurer of the Issuer on May 1, 1997. Mr. Wallestad, age 34, recently
succeeded Mr. Van Horn as Senior Vice President/Chief Financial Officer of
the Underwriter.
PART II
Items 1 through 5.
Not applicable
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: May 15, 1997 By /s/ Scott D. Rolfs
Scott D. Rolfs
President
Dated: May 15, 1997 By /s/ Dennis A. Wallestad
Dennis A. Wallestad
Secretary & Treasurer
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 647
<SECURITIES> 0
<RECEIVABLES> 10,078,203<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,731,087
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 10,084,000
0
0
<COMMON> 1,000
<OTHER-SE> 383,218
<TOTAL-LIABILITY-AND-EQUITY> 10,731,087
<SALES> 0
<TOTAL-REVENUES> 258,384
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 30,949
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 213,801
<INCOME-PRETAX> 13,634
<INCOME-TAX> 5,400
<INCOME-CONTINUING> 8,234
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,234
<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>
