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, 1998
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, 1998 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
March 31, March 31,
1998 1997
<S> <C> <C>
Revenues:
Interest income $213,734 $246,355
Other income 24,871 12,029
Total revenues 238,605 258,384
Expenses:
Interest expense 184,689 213,801
Amortization of deferred issuance
costs 25,899 13,771
Servicing fees 8,164 9,219
Other 7,916 7,959
Total expenses 226,668 244,750
Income before income taxes 11,937 13,634
Provision for income taxes 4,700 5,400
Net income $ 7,237 $ 8,234
</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>
March 31, December 31,
1998 1997
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,499 $ 4,607
Assets held by trustee 226,222 270,679
Accrued interest receivable 66,459 71,867
Mortgage loans held by trustee
(net of purchase discount of
$261,889 and $286,608,
respectively) 8,401,511 9,077,790
Deferred issuance costs 258,793 284,540
Tax refund due from Parent 11,971 16,670
Other assets - 1,256
Total assets $8,966,455 $9,727,409
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest payable $ 153,726 $ 190,368
Mortgage-backed bonds payable 8,353,000 9,086,000
Due to affiliate 2,035 585
Note payable to affiliate 35,000 35,000
Total liabilities 8,543,761 9,311,953
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 152,063 144,825
Total stockholder's equity 422,694 415,456
Total liabilities and
stockholder's equity $8,966,455 $9,727,409
</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,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,237 $ 8,234
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on liquidation of mortgage loans (18,796) (5,203)
Amortization of discount on mortgage
loans (6,075) (6,825)
Amortization of deferred issuance costs 25,899 13,771
Amortization of other deferred costs 1,256 1,884
Change in assets and liabilities:
Decrease (Increase) in -
Assets held by trustee 44,457 88,797
Accrued interest receivable 5,408 1,251
Tax refund due from Parent 4,700 4,424
Increase (Decrease) in -
Accrued interest payable (36,642) (53,582)
Due to affiliate 1,450 2,449
Net cash provided by operating
activities 28,894 55,200
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from -
Principal payments on mortgage loans 700,998 161,824
Net cash provided by investing
activities 700,998 161,824
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for -
Redemption of mortgage-backed bonds (733,000) (221,000)
Net cash used in financing activities (733,000) (221,000)
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,108) (3,976)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 4,607 4,623
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,499 $ 647
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid during the period $220,631 $265,683
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, 1998
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. Comprehensive Income, as
required to be reported by Statement of Financial Accounting Standards No.
130, is equal to Net Income.
Note B -- Mortgage-Backed Bonds
Mortgage-Backed Bonds (the "Bonds") originally issued and outstanding at
March 31, 1998, consist of the following:
<TABLE>
<CAPTION>
Outstanding
Original Principal
Date of Stated Principal Amount
Series Rate Bonds Maturity Amounts at 3/31/98
<C> <C> <C> <C> <C> <C>
1 8.25% 3/1/93 3/10/08 $ 4,586,000 $2,016,000
2 8.75% 8/1/94 8/10/09 4,456,000 2,410,000
3 8.00% 12/1/95 12/10/10 4,223,000 3,927,000
$13,265,000 $8,353,000
</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.<PAGE>
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
March 31, 1998 and 1997
The Company issued no new Bonds during the first quarter of 1998 or
1997. A total of $733,000 of Bonds were repaid during the first quarter of
1998 compared to $221,000 in the first quarter of 1997. 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 $239,000 in the first
quarter of 1998 compared to $258,000 in the first quarter of 1997. Total
expenses, consisting primarily of interest, were approximately $227,000 in
the first quarter of 1998 compared to $245,000 in the first quarter of
1997. The decreases in revenues and expenses for the first three months of
1998 compared to the first three months of 1997 are due to loan repayments
and bond redemptions during and between such periods. Net income for the
first quarter of 1998 was approximately $7,000 compared to $8,000 in the
first quarter of 1997.
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 Loans securing the Bonds have been received
by the Company as scheduled. Principal payments received on the Loans were
$701,000 in the first quarter of 1998 compared to $162,000 in the first
quarter of 1997.
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 $8,000 in the first quarter of
1998 and $9,000 in the first quarter of 1997. The fee is equal to 0.292%
of the average outstanding principal balance of the Loans during the
preceding month. At March 31, 1998, there were $8,353,000 of Bonds
outstanding collateralized by $8,663,000 of Loans at maturity value.
<PAGE>
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
<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.
FIRST CHURCH FINANCING
CORPORATION
Dated: May 14, 1998 By /s/ Scott D. Rolfs
Scott D. Rolfs
President
Dated: May 14, 1998 By /s/ Dennis A. Wallestad
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1499
<SECURITIES> 0
<RECEIVABLES> 8401511<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8966455
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 8353000
0
0
<COMMON> 1000
<OTHER-SE> 421694
<TOTAL-LIABILITY-AND-EQUITY> 8966455
<SALES> 0
<TOTAL-REVENUES> 238605
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 41979
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 184689
<INCOME-PRETAX> 11937
<INCOME-TAX> 4700
<INCOME-CONTINUING> 7237
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7237
<EPS-PRIMARY> 0
<EPS-DILUTED> 0<F3>
<FN>
<F1>Mortgage loans net of purchase discount.
<F2>Registrant has an unclassified balance sheet.
<F3>Not applicable.
</FN>
</TABLE>
