<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, 2000
[ ] 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., Anaheim, California 92801
(Address of principal executive offices)
(714) 229-3619
(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, 2000, 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, 2000 and 1999, Statement
of Operations for the three months ended March 31, 2000 and 1999,
and Statements of Cash Flows for the three months ended March 31, 2000
and 1999 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, 2000 and 1999 and for the three months ended March 31, 2000
and 1999 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, 2000 and 1999 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, 2000 vs. Three Months Ended March 31, 1999
During the three months ended March 31, 2000, the Company incurred
a net gain of $4,527 as compared to a net gain of $15,206 for the
same three months ended March 31, 1999, a decrease in net income of
($10,679). Net interest income after provision for note receivable losses
decreased to $88,423, a decrease of ($15,510) (or 15%) from $103,933 for
the three months ended March 31, 1999. This decrease is attritiburable to a
decrease in the weighted average yield (WAY)on Notes Receivable and an increase
in weighted average cost (WAC) on Notes Payable . The Company's cost of funds
(i.e., interest expense) during this period increased $68,801 (or 36%); i.e.,
$259,140 for the three month period ending March 31, 2000 as compared to
$190,339 for the three months ended March 31, 1999. This increase is
attributable to an increase in Notes Payable and an increase in the (WAC) on
Notes Payable. At March 31, 2000, the company had outstanding debt securities
(Notes Payable) of $17,325,023, up from $13,011,592 at March 31, 1999, an
increase of 33%.
The Company's operating expenses for the three months ended March
31, 2000 decreased to $80,851 from $81,393 for the same period ending
March 31, 1999, a decrease of .6%. This is attributable primarily to
decreased in salaries and legal and accounting expenses over the same
period in 1999.
The Company did not experience any material adverse effects on its results
of operation or financial conditions as a result of year 2000 issues.
Remediation costs associated with Year 2000 were minimal for the Company. It
believes remediation costs will continue to be nominal through completion of
Year 2000.
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Liquidity and Capital Resources
Three Months Ended March 31, 2000 vs. Three Months Ended March 31, 1999
Net increase in cash during the three months ending March 31, 2000
was $640,897, compared to a net increase of $540,017 for the three months
ended March 31, 1999, an increase of $100,880. Net cash provided by
operating activities totaled $1,492 for the three months ended March
31, 2000, a decrease of ($10,764) over $12,256 provided by operating
activities during the three months ended March 31, 1999. This
difference is attributable primarily to a decrease in Net Income during the
three month period ending March 31, 2000 as compared to the same
period in 1999.
Net cash used by investing activities totaled $(1,182,263) during the
three months ended March 31, 2000, compared to $(27,604) used during
the three months ended March 31, 1999, an increase of $(1,154,659). This
difference is attributable to an increase in net cash flow from Notes
Receivable purchased during the three month period ending March 31, 2000 as
compared to the same period in 1999.
Net cash provided by financing activities totaled $1,821,688 for this
three month period in 2000, an increase of $1,266,303, or (228%), from
$555,365 provided by financing activities during the three month period
ending March 31, 1999. This difference is attributable to an increase in
net cash flow from the Company's outstanding debt securities (Notes Payable)
during the three month period ending March 31, 2000 as compared to the same
period in 1999.
At March 31, 2000, the Company's cash, which includes cash reserves
and cash available for investment in the Mortgage Loans, was $836,669,
up from $807,670 at March 31, 1999, a increase of $28,999.
<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: May 12, 1999 MINISTRY PARTNERS INVESTMENT CORPORATION
(Registrant)
By: /s/ Stephen A. Ballas
Stephen A. Ballas, President
By: /s/ Brian Scharkey
Brian Scharkey,
Principal Accounting Officer
<PAGE>
MINISTRY PARTNERS INVESTMENT CORPORATION
Financial Statements
For the quarters ended March 31, 2000 and 1999
BALANCE SHEETS
March 31,
2000 1999
ASSETS:
Cash - ECCU $836,669 $807,670
Loan receivable 43,343 58,925
Notes receivable 1,7467,592 13,135,739
Allowance for loan loss (22,500) (11,000)
Interest receivable 85,493 85,578
Prepaid offering expense 9,488 15,794
Prepaid expenses 11,977 4,483
Furniture, fixtures & equipment (net) 6,131 5,163
Total assets $18,438,193 $14,102,352
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable 3,000 0
Salaries payable 4,602 4,150
Accrued expenses - ECCU 20,079 19,471
Line of credit - ECCU 0 0
Notes payable 17,325,022 13,011,592
Income taxes payable 126 4,753
Total liabilities $17,352,829 $13,039,966
Equity:
Common stock, 100,000 shares, no par value 1,000,000 1,000,000
Retained earnings 85,364 62,386
Total equity 1,085,364 1,062,386
Total liabilities and equity 18,438,193 $14,102,352
The accompanying notes are an integral part of these financial
statements
<PAGE>
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Three months ended March 31,
2000 1999
Income:
Interest income
Note receivable and loans receivable $331,262 $291,209
Interest-bearing accounts 18,801 4,063
Total Interest Income $350,063 $295,272
Interest expense:
Line of credit 0 379
Notes payable 259,141 189,960
Total interest Expense 259,141 190,339
Net interest income 90,922 104,933
Provision for notes receivable losses 2,500 1000
Net interest income after provision
for notes receivable losses 88,422 103,933
Operating expenses:
Salary and benefits 30,337 37,058
Marketing and promotion 13,202 7,160
Office operations 25,096 21,169
Legal and accounting 12,216 16,006
Total operating expenses 80,851 81,393
Income / (loss) before taxes 7,571 22,540
Provision for taxes 3,044 7,335
Net income (loss) 4,527 15,206
Retained earnings, beginning 80,837 47,180
Retained earnings, ending 85,364 62,386
Earnings per share 0.05 0.15
The accompanying notes are an integral part of these financial
statements
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STATEMENTS OF CASH FLOWS
Three months ended March 31,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,527 $15,206
Adjustments to reconcile net income
to net cash provided by operation activities
Depreciation and amortization 841 505
Provision for notes receivable 2,500 1,000
Increase in accrued interest receivable (3,503) (2,797)
Decrease in prepaid expense 5,114 4,095
Decrease in accounts receivable - 1,155
Decrease in acct payable (3,225) 2,906
Decrease in income taxes payable (4,762) (12,396)
Prior year adjustment - 2,582
Net cash provided by operating activities $1,492 $12,256
CASH FLOWS FROM INVESTING ACTIVITIES
Principal payments received on loans receivable 4,136 3,625
Purchase of notes receivable (8,651,707) (109,393)
Principal payments received on notes receivable 7,465,308 79,846
Purchase of property and equipment - (1,681)
Net cash used by investing activities (1,182,263) $($27,604)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances made on the LOC - 291,000
Amounts paid on the LOC - (291,000)
Principal payments made on notes payable (1,910,764) (1,056,257)
Proceeds from borrowings on notes payable 3,732,431 1,611,622
Net cash provided by financing activities $1,821,667 $555,365
Net increase in cash and cash equivalents $640,896 $540,017
Cash and cash equivalents at beginning $195,773 $267,653
Cash and cash equivalents at end $836,669 $807,670
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MINISTRY PARTNERS INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
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.
Notes Receivable
Interest income on notes receivable is recognized over the term of
the note and is generally computed using the simple interest method.
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2. Related party transactions
MPIC maintains all of its funds at the parent, ECCU. Total funds
held with ECCU were $836,669 and $807,670 at March 31, 2000 and
1999, respectively. Interest earned on these funds were $18,801 and
$4,063 for the three months ended March 31, 2000 and 1999,
respectively.
MPIC utilized physical facilities and other services of ECCU. A
charge of $2,612 - 2000 and $2,456 - 1999 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 California and
are the collateral for certain notes payable. This pool of first
trust deed notes was retired in early 1996.
During 1997, 1998, 1999 and 2000, MPIC participated in church loans
made by ECCU. Interest is at variable rates of interest; ranging from
7.250% to 11.000%, yielding an average of 8.154%. ECCU services these
loans, charging a service fee.
An allowance for doubtful accounts has been established for notes
receivable of $22,500 as of March 31, 2000. At March 31, 1999 the
allowance for doubtful accounts was $11,000. The Company has no experience
of loan loss and, as of March 31, 2000 and 1999, none of the loans are
impaired. Management believes all of the notes are adequately secured and
fully collectible.
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4. Line of credit - ECCU
MPIC has an unsecured $2,100,000 line of credit with ECCU, of which
$ -0- and $-0- was borrowed at March 31, 2000 and 1999,
respectively. Interest at March 31, 2000 and 1999 was 8.750% and
7.750%, respectively, and varies according to ECCU's cost of funds.
5. Notes payable
MPIC has unsecured notes payable at March 31, 2000, as follows:
Total Interest Rate
Private Placement $ 131,558 7.70 - 8.30
CA Public Offering 361,501 6.90 - 8.66
National Offering 561,312 5.24 - 7.21
Special Offering 9,377,975 5.24 - 7.04
National A-1 Offering 6,762,177 5.24 - 6.98
International Offering 130,499 5.37 - 6.69
$ 17,325,022 5.24 - 8.66
Future maturities at March 31 are as follows:
2000 1999
1999 -0- 9,944,802
2000 13,373,095 2,192,437
2001 2,772,128 249,117
2002 529,320 290,188
2003 303,273 285,048
2004 192,978 50,000
2005 154,228 -0-
$ 17,325,022 $ 13,011,592
6. 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, 2000 and 1999,
$361,501 and $391,942, respectively, were outstanding.
7. 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 has been completely sold. At March 31,
2000 and 1999, $561,312 and $1,481,433, respectively, were
outstanding.
In December 1997, MPIC received approval from the Securities and
Exchange Commission to offer $25,000,000 of Class A1 unsecured notes
payable nation wide. In December 1997, MPIC registered $15,000,000
of the National A1 notes. By November 29, 1999 $12,064,110 of the
$15,000,000 had been sold. MPIC deregistered the remaining $2,935,890
on November 29, 1999. On November 30,1999, MPIC registered another
$12,500,000 of the National A1 offering. This offering is currently
available in California, Colorado and Oregon. At March 31, 2000 and
1999,$ 6,762,177 and $ 5,247,500, respectively, were outstanding in
total National A1 notes.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-END> MAR-31-2000 Mar-31-1999
<CASH> $836,669 $807,670
<SECURITIES> $0 $0
<RECEIVABLES> $17,596,428 $13,280,242
<ALLOWANCES> ($22,500) ($11,000)
<INVENTORY> $0 $0
<CURRENT-ASSETS> $2,193,980 $2,210,692
<PP&E> $11,050 $6,852
<DEPRECIATION> ($4,919) ($1,689)
<TOTAL-ASSETS> $18,438,193 $14,102,352
<CURRENT-LIABILITIES> $15,251,962 $11,403,836
<BONDS> $0 $0
$0 $0
$0 $0
<COMMON> $1,000,000 $1,000,000
<OTHER-SE> $85,364 $62,386
<TOTAL-LIABILITY-AND-EQUITY>$18,438,193 $14,102,352
<SALES> $0 $0
<TOTAL-REVENUES> $350,063 $295,272
<CGS> $0 $0
<TOTAL-COSTS> $339,991 $271,732
<OTHER-EXPENSES> $0 $0
<LOSS-PROVISION> $2,500 $1,000
<INTEREST-EXPENSE> $259,140 $190,339
<INCOME-PRETAX> $7,571 $22,540
<INCOME-TAX> $3,044 $7,335
<INCOME-CONTINUING> $0 $0
<DISCONTINUED> $0 $0
<EXTRAORDINARY> $0 $0
<CHANGES> $0 $0
<NET-INCOME> $4,527 $15,206
<EPS-BASIC> $0.05 $0.15
<EPS-DILUTED> $0.05 $0.15
</TABLE>
