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 June 30, 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 June 30, 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.
<PAGE>
PART I
FIRST CHURCH FINANCING CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
June 30, June 30,
1997 1996
<S> <C> <C>
Revenues:
Interest income $242,441 $256,378
Other income 11,808 12,783
Total revenues 254,249 269,161
Expenses:
Interest expense 210,422 222,744
Amortization of deferred
issuance costs 10,512 12,127
Servicing fees 9,083 9,603
Other 3,869 3,149
Total expenses 233,886 247,623
Income before income 20,363 21,538
Provision for income taxes 8,000 8,400
Net income $ 12,363 $ 13,138
</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 Six Months Ended
June 30, June 30,
1997 1996
<S> <S> <S>
Revenues:
Interest income $488,795 $528,436
Other income 23,838 59,646
Total revenues 512,633 588,082
Expenses:
Interest expense 424,223 460,725
Amortization of deferred
issuance costs 24,283 61,235
Servicing fees 18,302 20,025
Other 11,828 15,399
Total expenses 478,636 557,384
Income before income taxes 33,997 30,698
Provision for income taxes 13,400 12,000
Net income $ 20,597 $ 18,698
</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>
June 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 9,384 $ 4,623
Assets held by trustee 293,024 307,046
Accrued interest receivable 78,858 81,375
Mortgage loans held by trustee
(net of purchase discount of
$326,736 and $350,575,
respectively) 9,926,912 10,227,998
Deferred issuance costs 325,111 349,395
Tax refund due from Parent 5,332 15,756
Other assets 5,024 8,792
Total assets $10,643,645 $10,994,985
LIABILITIES AND STOCKHOLDER'S
EQUITY
Accrued interest payable $ 219,584 $ 228,416
Mortgage-Backed bonds payable 9,972,000 10,305,000
Due to affiliate 480 586
Note payable to affiliate 55,000 85,000
Total liabilities 10,247,064 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 125,950 105,352
Total stockholder's equity 396,581 375,983
Total liabilities and
stockholder's equity $10,643,645 $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 Six Months Ended
June 30, June 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 20,597 $ 18,698
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Gain on liquidation of mortgage loans (10,288) (45,032)
Amortization of discount on
mortgage loans (13,550) (14,614)
Amortization of deferred issuance
costs 24,283 61,235
Amortization of other deferred costs 3,768 3,766
Change in assets and liabilities:
Decrease (Increase) in -
Assets held by trustee 14,022 56,737
Accrued interest receivable 2,517 (12,266)
Tax refund due from Parent 10,424 -
Increase (Decrease) in -
Accrued interest payable (8,830) (42,118)
Due to affiliate (106) 2,734
Accrued income taxes payable - (14,500)
Net cash provided by operating activities 42,837 14,640
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from -
Principal payments received on
mortgage loans 324,924 1,330,950
Net cash provided by investing activities 324,924 1,330,950
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for -
Repayment of mortgage-backed bonds (333,000) (1,348,000)
Net repayments on notes payable
to affiliate (30,000) (5,000)
Net cash used in financing activities (363,000) (1,353,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 4,761 (7,410)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 4,623 9,366
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,384 $ 1,956
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid during the period $ 433,160 $ 503,000
Income taxes paid during the period $ 2,976 $ 26,500
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these statements.
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 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
June 30, 1997, consist of the following:
<TABLE>
<CAPTION>
Outstanding
Principal
Original Amount
Date of Stated Principal at
Series Rate Bonds Maturity Amounts 6/30/97
<S> <C> <C> <C> <C> <C>
1 8.25% 3/1/93 3/10/08 $ 4,586,000 $2,763,000
2 8.75% 8/1/94 8/10/09 4,456,000 3,207,000
3 8.00% 12/1/95 12/10/10 4,223,000 4,002,000
$13,265,000 $9,972,000
</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.
<PAGE>
MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
Results of Operations - Three Months Ended
June 30, 1997 and 1996
The Company issued no new Bonds during the second quarter of 1997 or
1996. A total of $112,000 of Bonds were repaid during the second quarter
of 1997 compared to $141,000 in the second quarter of 1996. The difference
in Bond repayments during each of the second quarter periods is primarily
due to different prepayment amounts received on the Loans.
Revenues, consisting primarily of interest, were $254,000 in the
second quarter of 1997 compared to $269,000 in the second quarter of 1996.
Total expenses, consisting primarily of interest, were $234,000 in the
second quarter of 1997 compared to $248,000 in the second quarter of 1996.
The decreases in revenues and expenses for the second quarter of 1997
compared to the second quarter of 1996 are due to loan repayments and bond
redemptions during and between such periods. Net income for the second
quarter of 1997 was $12,000 compared to $13,000 in the second quarter of
1996.
Results of Operations - Six Months Ended
June 30, 1997 and 1996
The Company issued no new series of Bonds in the first six months of
1997 or 1996. A total of $333,000 of Bonds were repaid during the first
six months of 1997 compared to $1,348,000 in the first six months of 1996.
The difference in Bond repayments during each period is primarily due to
different prepayment amounts received on the Loans.
Revenues, consisting primarily of interest income, were $513,000 in
1997 compared to $588,000 in 1996. Total expenses, consisting primarily of
interest expense, were $479,000 in 1997 compared to $557,000 in 1996. The
decreases in revenues and expenses for the first six months of 1997
compared to the first six months of 1996 are due to loan repayments and
bond redemptions during and between such periods. Net income for the first
six months of 1997 was $21,000 compared to $19,000 for the first six months
of 1996.
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 $333,000 in the first six months
of 1997 compared to $1,331,000 in the first six months of 1996. 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 June 30, 1997, there were $9,972,000 of Bonds outstanding
collateralized by $10,254,000 of Loans at maturity value.
<PAGE>
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: August 12, 1997 By
Scott D. Rolfs
President
Dated: August 12, 1997 By
Dennis A. Wallestad
Secretary & Treasurer
<PAGE>
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 9,384
<SECURITIES> 0
<RECEIVABLES> 9,926,392<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,643,645
<CURRENT-LIABILITIES> 0
<BONDS> 9,972,000
0
0
<COMMON> 1,000
<OTHER-SE> 395,581
<TOTAL-LIABILITY-AND-EQUITY> 10,643,645
<SALES> 0
<TOTAL-REVENUES> 512,633
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 54,413
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 424,223
<INCOME-PRETAX> 33,997
<INCOME-TAX> 13,400
<INCOME-CONTINUING> 20,597
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,597
<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>
