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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 September 30, 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) 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 September 30, 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
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The attached Balance Sheets as of September 30, 2000 and 1999, Statement
of Operations for the nine months ended September 30, 2000 and 1999,
and Statements of Cash Flows for the nine months ended September 30, 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
September 30, 2000 and 1999 and for the nine months ended September 30, 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 September 30, 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
Nine Months Ended September 30, 2000 vs. Nine Months Ended September 30, 1999
During the nine months ended September 30, 2000, the Company incurred
a net gain of $7,947 as compared to a net gain of $38,712 for the
same nine months ended September 30, 1999, a decrease in net income of
$30,765. This decrease is attributable primarily to an increase in Salaries
& Benefits and Office Operations combined with a decrease in net interest income
over the same period last year. Salaries increased due to a nonrecurring
recruiting fee associated with the acquisition of a new president.
Office Operations increased due to increases in Information Services and
Accounting & Management Services. Net interest income after provision for note
receivable losses decreased to $285,152, a decrease of $19,954 (or 7%) from
$305,106 for the nine months ended September 30, 1999. This decreases is
attributable primarily to a decrease in the Company's net interest margin. The
Company's cost of funds (i.e., interest expense) during this period increased
$211,118 or 35%; i.e., $817,016 for the nine month period ending September 30,
2000 as compared to $605,898 for the nine months ended September 30, 1999.
This increase is attributable to an increase in Notes Payable. At September
30,2000, the company had outstanding debt securities (Notes Payable) of
$17,544,612, up from $14,081,158 at September 30, 1999, an increase of 25%.
The Company's operating expenses for the nine months ended September
30, 2000 increased to $270,035 from $238,771 for the same period ending
September 30, 1999, an increase of 13%. This is attributable primarily to
increases in Salaries & Benefits and Office Operations for the company
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
Nine Months Ended September 30, 2000 vs. Nine Months Ended September 30, 1999
Net increase in cash during the nine months ending September 30, 2000
was $252,847, compared to a net increase of $1,237,495 for the nine months
ended September 30, 1999, a decrease of $984,648. Net cash used by
operating activities totaled $25,009 for the nine months ended September
30, 2000, an increase in net cash used by operating activities of $23,888 over
$1,121 used by operating activities during the nine months ended September 30,
This difference is attributable primarily to a decrease in net income over the
same period in 1999.
Net cash used by investing activities totaled $1,763,402 during the
nine months ended September 30, 2000, compared to $386,314 used during
the nine months ended September 30, 1999, an increase in cash used of
$1,377,088 or 356%. This increase is attributable to an increase in net
Notes Receivable (purchase of Notes Receivable minus payments received on Notes
Receivable) during the nine month period ending September 30, 2000 as compared
to the same period in 1999.
Net cash provided by financing activities totaled $2,041,258 for this
nine month period in 2000, an increase of $416,328, or 26%, from
$1,624,930 provided by financing activities during the nine month period
ending September 30, 1999. This difference is attributable to an increase in
net funds provided by Notes Payable (proceeds from borrowings on Notes Payable
minus principal payments made on Notes Payable) during the nine month period
ending September 30, 2000 as compared to the same period in 1999.
At September 30, 2000, the Company's cash, which includes cash reserves
and cash available for investment in the Mortgage Loans, was $448,620,
down from $1,505,148 at September 30, 1999, a decrease of $1,056,528.
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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: October 26, 2000 MINISTRY PARTNERS INVESTMENT CORPORATION
(Registrant)
By: /s/ Stephen A. Ballas
Stephen A. Ballas,
President
By: /s/ Brian Scharkey
Brian Scharkey,
Principal Accounting Officer
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MINISTRY PARTNERS INVESTMENT CORPORATION
Financial Statements
For the quarters ended September 30, 2000 and 1999
BALANCE SHEETS
September 30,
2000 1999
ASSETS:
Cash - ECCU $ 448,620 $ 1,505,148
Loan receivable 34,995 51,311
Notes receivable 18,057,078 13,497,867
Allowance for loan loss (27,500) (17,000)
Interest receivable 115,991 85,104
Prepaid offering expense 9,020 6,895
Prepaid expenses 23,284 6,622
Furniture, fixtures & equipment (net) 4,450 7,812
Total assets $18,665,938 $15,143,759
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable $ 9,018 $ (55,325)
Salaries payable 4,930 4,210
Accrued expenses - ECCU 21,512 19,886
Line of credit - ECCU - -
Notes payable 17,544,612 14,081,158
Income taxes payable 0 7,742
Total liabilities 17,580,072 14,057,671
Stockholder's Equity:
Common stock, 100,000 shares, no par value 1,000,000 1,000,000
Retained earnings 85,866 86,088
Total stockholder's equity 1,085,866 1,086,088
Total liabilities and stockholder's equity $18,665,938 $15,143,759
The accompanying notes are an integral part of these financial
statements
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STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Nine months ended September 30,
2000 1999
Income:
Interest income
Notes receivable and loan receivable $1,069,667 $894,771
Interest-bearing accounts 40,001 23,233
Total Interest Income 1,109,668 918,004
Interest expense:
Line of credit 10,965 5,278
Notes payable 806,051 600,620
Total interest Expense 817,016 605,898
Net interest income 292,652 312,106
Provision for notes receivable losses (7,500) (7,000)
Net interest income after provision
for notes receivable losses 285,152 305,106
Operating expenses:
Salary and benefits 130,252 116,617
Marketing and promotion 31,129 27,953
Office operations 73,378 61,062
Legal and accounting 26,276 31,539
Ministry Support 9,000 1,600
Total operating expenses 270,035 238,771
Income before taxes 15,117 66,335
Provision for taxes 7,170 27,623
Net income 7,947 38,712
Retained earnings, beginning 77,919 47,376
Retained earnings, ending $85,866 $86,088
Earnings per share 0.08 0.39
The accompanying notes are an integral part of these financial
statements
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STATEMENTS OF CASH FLOWS
Nine months ended September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $7,947 $38,712
Adjustments to reconcile net income
to net cash provided by operation activities
Depreciation and amortization 2,522 2,053
Provision for notes receivable 7,500 7,000
Increase in accrued interest receivable (34,002) (2,323)
(Increase) decrease in prepaid expense (5,724) 10,855
Decrease in accounts receivable - 1,155
Increase (Decrease)in acct payable 4,554 (51,944)
Decrease in income taxes payable (7,806) (9,407)
Prior year adjustment 0 2,778
Net cash used by operating activities (25,009) (1,121)
CASH FLOWS FROM INVESTING ACTIVITIES
Principal payments received on loans receivable 12,484 11,239
Purchase of notes receivable (20,551,652) (2,065,981)
Principal payments received on notes receivable 18,775,766 1,674,307
Purchase of property and equipment - (5,879)
Net cash used by investing activities (1,763,402) (386,314)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances made on the LOC 1,640,000 1,551,000
Amounts paid on the LOC (1,640,000) (1,551,000)
Principal payments made on notes payable (6,678,924) (3,724,322)
Proceeds from borrowings on notes payable 8,720,182 5,349,252
Net cash provided by financing activities 2,041,258 1,624,930
Net increase in cash and cash equivalents 252,847 1,237,495
Cash and cash equivalents at beginning 195,773 267,653
Cash and cash equivalents at end $448,620 $1,505,148
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MINISTRY PARTNERS INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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 two 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.
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2. Related party transactions
MPIC maintains all ,of its funds at the parent, ECCU. Total funds
held with ECCU were $448,620 and $1,505,148 at September 30, 2000 and
1999, respectively. Interest earned on these funds were $40,001 and
$23,233 for the nine months ended September 30, 2000 and 1999,
respectively.
MPIC utilized physical facilities and other services of ECCU. A
charge of $7,825 - 2000 and $8,324 - 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
7.000% to 10.375%, yielding an average of 8.233%. ECCU services these
loans, charging a service fee.
An allowance for doubtful accounts has been established for notes
receivable of $27,500 as of September 30, 2000. At September 30, 1999 the
allowance for doubtful accounts was $17,000. The Company has no experience
of loan loss and, as of September 30, 2000 and 1999, 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 September 30, 2000 and 1999 are
stated as follows:
2000 1999
Start up
Cost $ 63,292 $ 63,292
Accumulated amortization 63,292 63,292
------ ------
-0- -0-
Organization
Cost 15,438 15,438
Accumulated amortization 15,438 15,438
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-0- -0-
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-0- -0-
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5. Line of credit - ECCU
MPIC has an unsecured $2,100,000 line of credit with ECCU, of which
$-0- and $-0- was borrowed at September 30, 2000 and 1999,
respectively. Interest at September 30, 2000 and 1999 was 9.500% and
8.000%, respectively, and varies according to ECCU's cost of funds.
6. Notes payable
MPIC has unsecured notes payable at September 30, 2000, as follows:
Total Interest Rate
Private Placement $ 37,775 7.88 - 7.88
CA Public Offering 141,652 7.35 - 7.95
National Offering 777,183 5.42 - 7.21
Special Offering 8,487,514 5.42 - 7.58
National A-1 Offering 7,954,508 5.34 - 7.50
International Offering 145,980 5.46 - 6.76
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$ 17,544,612
Future maturities at September 30 are as follows:
2000 1999
1999 $ 0 $ 6,256,420
2000 7,301,224 6,510,096
2001 8,321,800 586,284
2002 967,651 292,608
2003 312,897 293,961
2004 147,150 141,789
2005 493,890 0
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$17,544,612 $ 14,081,158
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 September 30, 2000 and 1999,
$141,652 and $354,585, 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 has been completely sold. At September 30,
2000 and 1999, $777,183 and $1,204,285, 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
$12,500,000 of the National A1 offering. This offering is currently
available in California, Colorado and Oregon. At September 30, 2000 and
1999,$ 7,954,508 and $ 5,966,542, respectively, were outstanding in
total National A1 notes.
