<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 333-4028LA
MINISTRY PARTNERS INVESTMENT CORPORATION
(exact name of small business issuer as specified in charter)
California 33-0489154
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
1150 N. Magnolia Ave., Suite 290, Anaheim, California 92801
(Address of principal executive offices)
(714) 226-3619
(Issuer'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
At March 31, 1997, registrant had issued and outstanding 100,000 shares
of its no par value common stock, all of which were held by Evangelical
Christian Credit Union. No market exists for the Common Stock. Registrant
estimates the aggregate market value of such shares to be not greater than
$1,000,000.
Transitional Small Business Disclosure Format (check one):
YES NO X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The attached Balance Sheets as of March 31, 1997 and 1996, Statement
of Operations for the three months ended March 31, 1997 and 1996,
and Statements of Cash Flows for the three months ended March 31, 1997 and
1996 of Registrant (the "Company") have been prepared by the Company
without an audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at
March 31, 1997 and 1996 and for the three months ended March 31, 1997 and
1996 have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The results of operations for the
periods ended March 31, 1997 and 1996 are not necessarily indicative of the
results for the full year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The financial information included herein should be read in conjunction
with the Financial Statements, including the Notes thereto.
Results of Operations
Three Months Ended March 31, 1997 vs.Three Months Ended March 31, 1996
During the three months ended March 31, 1997, the Company incurred
a net loss of $(33,754) as compared to a net loss of $(1,492) for the same
three months ended March 31, 1996, a decrease in net income of $(32,262).
Interest income, net, for the period, decreased to $20,930, a decrease of
51% from $43,081 for the three months ended March 31, 1996. These
decreases are attributable primarily to a reduction in the Company's
Mortgage Loan investments during a lengthy registration process with the
Securities and Exchange Commission (SEC) in which maturing investor funds
could not be reinvested, nor new sales transacted. For the same reason,
the Company's cost of funds (i.e., interest expense) during this period
decreased $23,740 (or 31%); i.e., $52,688 for the three month period ending
March 31, 1997 as compared to $76,428 for the three months ended
March 31, 1996. At March 31, 1997, the company had outstanding debt
securities (Notes Payable) of $3,447,728, down from $3,652,438 at
March 31, 1996, a decrease of 6%.
The Company's general and administrative expenses for the three months
ended March 31, 1997 increased to $57,473 from $46,334 for the same
period ending March 31, 1996, an increase of 24%. This is attributable
to an increase of $10,507 in office operations expenses, primarily audit-
related, over the same period in 1996.
<PAGE>
Liquidity and Capital Resources
Three Months Ended March 31, 1997 vs.Three Months Ended March 31, 1996
Net increase in cash during the three months ending March 31, 1997
was $180,064, compared to a net increase of $66,035 for the three months
ended March 31, 1996, an increase of $114,029. Net cash used by operating
activities totaled $(8,466) for the three months ended March 31, 1997,
an increase of $14,575 over $6,109 provided by operating activities
during the three months ended March 31, 1996. This difference is
attributable primarily to a reduction in income from Notes Receivable
due to interest rate adjustments and the cessation of sales while
completing SEC registration during the three month period ending
March 31, 1997 as compared to the same period in 1996.
Net cash used by investing activities totaled $(683,641) during the
three months ended March 31, 1997, compared to $(283,380) used during
the three months ended March 31, 1996, an increase of $(400,261) or 141%.
This difference is attributable to an increase in Notes Receivable
purchased during the three month period ending March 31, 1997
as compared to the same period in 1996.
Net cash provided by financing activities totaled $872,171 for this
three month period in 1997, an increase of $528,866 or 154%, from $343,305
provided by financing activities during the three month period ending March
31, 1996. This difference is attributable to an increase in the Company's
outstanding debt securities (Notes Payable) during the three month period
ending March 31, 1997 as compared to the same period in 1996.
At March 31, 1997, the Company's cash, which includes cash reserves
and cash available for investment in the Mortgage Loans, was $340,467, up
from $262,468 at March 31, 1996, an increase of $77,999 (30%).
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As of the date of this Report, there is no material litigation, threatened or
pending, against the Company. The Company's management is not aware of any
disagreements, disputes or other matters which may lead to the filing of
legal proceedings involving the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-k
None
SIGNATURE
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.
Dated: March 14, 1997 MINISTRY PARTNERS INVESTMENT CORPORATION
(Registrant)
By: /s/ John C. Garmo
John C. Garmo, President
By: /s/ Brian Scharkey
Brian Scharkey,
Principal Accounting Officer
<PAGE>
MINISTRY PARTNERS INVESTMENT CORPORATION
Financial Statements
For the quarters ended March 31, 1997 and 1996
BALANCE SHEETS
March 31,
1997 1996
ASSETS:
Cash - ECCU $ 340,467 $ 262,469
Notes receivable 4,015,891 5,240,330
Interest receivable 23,641 28,162
Prepaid offering expense 9,797 29,259
Prepaid expenses 50,503 2,194
Prepaid income taxes 0 2,133
Organization and start up cost,net 0 14,216
Total assets 4,440,299 5,578,763
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable 0 0
Accrued interest payable 0 0
Accrued expenses - ECCU 10,249 13,676
Line of credit - ECCU 0 905,113
Notes payable 3,447,728 3,652,438
Total liablities 3,457,977 4,571,227
Equity:
Common stock, 100,000 shares, no par value 1,000,000 1,000,000
Retained earnings (17,678) 7,536
Total equity 982,322 1,007,536
Total liabilities and equity 4,440,299 5,578,763
The accompanying notes are an integral part of these financial statements
<PAGE>
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Three months ended March 31,
1997 1996
Income:
Loan interest $ 73,618 $ 119,509
Cost of funds - interest expense:
Line of credit 4,076 7,663
Notes payable 48,612 68,765
Total COF 52,688 76,428
Interest income, net 20,930 43,081
Expenses:
Salary and benefits 28,767 29,049
Marketing and promotion 2,481 2,150
Office operations 17,967 7,460
Legal expense 4,893 3,524
Amortization 2,585 3,877
Income tax expense 780 274
Loan servicing-ECCU 0 0
Total expenses 57,473 46,334
Other income:
Interest 2,789 1,761
Organizational income 0 0
Total other income 2,789 1,761
(Loss) / Income before taxes (33,754) (1,492)
Provision for taxes 0 0
Net (loss) income (33,754) (1,492)
Retained earnings, beginning 16,076 9,028
Retained earnings, ending (17,678) 7,536
Earnings per share (0.34) (0.01)
The accompanying notes are an integral part of these financial statements
<PAGE>
STATEMENTS OF CASH FLOWS
Three months ended March 31,
1997 1996
Cash flows from operating activities:
Income - notes receivable $ 84,909 $ 115,479
Interest received - ECCU 2,789 1,761
Organizational income 0 0
Cash paid to suppliers, vendors and ECCU (43,476) (34,703)
Interest paid - borrowers and ECCU (52,688) (76,428)
Net cash provided (used) by operating activities (8,466) 6,109
Cash flows from investing activities:
Notes receivable purchased (1,259,379) (589,021)
Collections on notes receivable 581,069 305,380
Prepaid offering expenses (5,331) 261
Net cash used by investing activities (683,641) (283,380)
Cash flows from financing activities:
Line of Credit--ECCU, net (417,904) 121,546
Notes Payable, borrowings 1,510,393 261,139
Notes Payable, repayments (220,318) (39,380)
Common Stock purchased--ECCU 0 0
Net cash provided by financing activities 872,171 343,305
Net increase in Cash 180,064 66,035
Cash at beginning of period 160,403 196,433
Cash at end of period 340,467 262,468
Reconciliation of net income to cash
provided by operating activities
Net loss (33,754) (1,492)
Adjustments to reconcile net income to
net cash provided by operating activities-
Amortization 2,585 3,877
Prior period adjustment 4,205 0
Decrease (increase) in interest receivable 11,291 (4,030)
Decrease in prepaid expenses 5,931 9,683
Decrease in prepaid income taxes 780 2,048
Increase (decrease) in accounts payable and
accrued expenses 496 (3,977)
Net cash provided (used) by operating activities (8,466) 6,109
<PAGE>
MINISTRY PARTNERS INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
1. Summary of Significant accounting policies
Nature of Business
Ministry Partners Investment Corporation (MPIC) was incorporated in
California in 1991 and is a wholly-owned subsidiary of Evangelical
Christian Credit Union (ECCU). The Company provides funds for real
property secured loans for the benefit of Evangelical churches and
church organizations through funding provided by members of and
persons associated with such churches and organizations. The
Company's offices, as well as those of its loan origination source,
ECCU, are located in the state of California and substantially all of
the business and operations of the Company are currently conducted in
California and its mortgage loan investments are concentrated in
California.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as
of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Prepaid offering expense
Prepaid offering expense is related to a proposed public offering of
unsecured notes. It is being amortized over a three year period.
Organization and start up costs
Organization and start up costs have been capitalized and are being
amortized, using the straight-line method over a five-year period.
Notes Receivable
Interest income on notes receivable is recognized over the term of
the note and is generally computed using the simple interest method.
<PAGE>
2. Related party transactions
MPIC maintains all of its funds at the parent, ECCU. Total funds
held with ECCU were $340,467 and $262,468 at March 31, 1997 and
1996, respectively. Interest earned on these funds were $2,789 and
$1,762 for the three months ended March 31, 1997 and 1996,
respectively.
MPIC utilized physical facilities and other services of ECCU. A
charge of $2,984 - 1997 and $2,598 - 1996 was made for these services
which is included in Office Operations. The method used to arrive at
the periodic charge is based on the fair market value of services
provided. Management asserts that such method is reasonable.
Notes payable are substantially to members of ECCU.
3. Notes receivable
In March 1992, MPIC purchased a pool of first trust deed seasoned
loans from ECCU for the then outstanding balance. Loan maturities
extend through 2001, although the majority were due in 1995 and 1996.
Interest rates range from 7.025% to 11.50%, yielding an average of
9.138%. The loans were made to churches in Southern Calfiornia and
are the collateral for certain notes payable. This pool of first
trust deed notes was retired in early 1996.
During 1996 and 1997, MPIC participated in church loans made by ECCU.
Interest is at variable rates of interest; ranging from 7.50% to
10.00%. ECCU services these loans, charging a service fee.
No allowance for doubtful accounts has been established for the notes
receivable. The Company has no experience of loan loss and, as of
March 31, 1997 and 1996, none of the loans are impaired. Management
believes all of the notes are adequately secured and fully
collectible.
4. Organization and start up costs
Organization and start up costs at March 31, 1997 and 1996 are
stated as follows:
1997 1996
Start up
Cost $ 63,292 $ 63,292
Accumulated amortization 63,292 52,907
-0- 11,385
Organization
Cost 15,438 15,438
Accumulated amortization 15,438 12,607
-0- 2,831
-0- 14,216
<PAGE>
5. Line of credit - ECCU
MPIC has an unsecured $2,100,000 line of credit with ECCU, of which
$ -0- and $905,113 was borrowed at March 31, 1997 and 1996,
respectively. Interest at March 31, 1997 and 1996 was 6.085% and
5.960%, respectively, and varies according to ECCU's cost of funds.
6. Notes payable
MPIC has unsecured notes payable at March 31, 1997, as follows:
Total Interest Rate
Private Placement $ 959,686 6.10 - 8.55
CA Public Offering 690,245 6.32 - 8.66
National Offering 971,541 5.80 - 7.70
Special Offering 826,256 5.80 - 7.45
$ 3,447,728
Future maturities at March 31 are as follows:
1997 1996
1996 $ - $ 1,960,957
1997 2,030,155 832,456
1998 711,411 263,705
1999 218,377 97,377
2000 394,754 497,940
2001 93,031 -0-
$ 3,447,728 $ 3,652,435
7. Public offering
In August 1994, MPIC received approval from the Department of
Corporations of the State of California to offer $6,000,000 in
unsecured notes payable, of which only $3,000,000 may be
outstanding at any one time. At March 31, 1997 and 1996,
$691,814 and $1,279,486, respectively, were outstanding.
8. National Offering
In October 1996, MPIC received approval from the Securities and
Exchange Commission to offer $5,000,000 in unsecured notes payable
nation wide. This offering is currently available in California,
Colorado and Oregon. It is pending in Arizona and Washington.
At March 31, 1997 and 1996, $971,541 and $-0-, respectively,
were outstanding.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> $340,467 $262,468
<SECURITIES> 0 0
<RECEIVABLES> $4,039,532 $5,268,492
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> $1,275,744 $1,595,983
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> $4,440,299 $5,576,627
<CURRENT-LIABILITIES> $2,647,991 $2,807,007
<BONDS> 0 0
0 0
0 0
<COMMON> $1,000,000 $1,000,000
<OTHER-SE> ($17,678) $11,739
<TOTAL-LIABILITY-AND-EQUITY> $4,440,299 $5,576,627
<SALES> 0 0
<TOTAL-REVENUES> $76,407 $121,271
<CGS> 0 0
<TOTAL-COSTS> $109,381 $122,488
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> $52,688 $76,428
<INCOME-PRETAX> ($32,974) ($1,217)
<INCOME-TAX> $780 $275
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> ($33,754) ($1,492)
<EPS-PRIMARY> ($.34) ($.01)
<EPS-DILUTED> ($.34) ($.01)
</TABLE>
