-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, fP3+XxzCH1etNlPmP6Vi1JCni7/ve9bBaBtaNK3loiJsiJiEJZyWz/fmzFunJOjh qGlD+E+pIDuym860TpfgwQ== 0000950148-95-000199.txt : 19950511 0000950148-95-000199.hdr.sgml : 19950511 ACCESSION NUMBER: 0000950148-95-000199 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19950502 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRESIDENTIAL MORTGAGE CO CENTRAL INDEX KEY: 0000757078 STANDARD INDUSTRIAL CLASSIFICATION: 6189 IRS NUMBER: 953611304 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14500 FILM NUMBER: 95533912 BUSINESS ADDRESS: STREET 1: 21031 VENTURA BLVD CITY: WOODLAND HILLS STATE: CA ZIP: 91364 BUSINESS PHONE: 8189928999 10-Q 1 FORM 10-Q FOR PERIOD ENDED SEPTEMBER 30, 1994 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT ------------------ /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994 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 2-94289 PRESIDENTIAL MORTGAGE COMPANY (Exact name of Registrant as specified in its charter) California 95-3611304 (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 21031 Ventura Boulevard Woodland Hills, California 91364 (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code (818) 992-8999 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 NO X . -- -- 2 PRESIDENTIAL MORTGAGE COMPANY (A California Limited Partnership) AND SUBSIDIARIES Consolidated Balance Sheets Unaudited December 31, 1993 and September 30, 1994
SEPTEMBER 30, DECEMBER 31, 1994 1993 Assets Cash & cash equivalents $ 16,159,469 $ 13,219,565 Accounts receivable, net 10,206,139 4,133,661 Interest receivable 1,533,272 2,091,425 Loans receivable, net (note 2) 70,171,466 84,754,592 Excess yield receivable 653,538 895,220 Real estate acquired in settlement of loans 6,350,052 6,003,295 Property and equipment, net 1,467,908 1,215,496 Goodwill 1,727,642 1,621,781 Other assets 986,064 388,555 ------------- ------------ $ 109,255,550 $ 114,323,590 ============= ============ Liabilities and Partners' Capital Liabilities: Thrift certificates payable $ 69,429,707 $ 62,420,561 Accounts payable, accrued expenses and interest payable 4,117,353 5,266,440 Partnership withdrawals payable 1,120,379 1,120,379 Notes payable 18,314,768 23,800,000 Mortgages payable - secured by real estate acquired in 1,984,748 1,777,278 settlement of loans ------------- ------------ $ 94,966,955 $ 94,384,658 ------------- ------------ Partners' Capital 14,288,595 19,938,932 ------------- ------------ $ 109,255,550 $ 114,323,590 ============= ============
See accompanying Notes to Consolidated Financial Statements and Management's discussion and Analysis of Financial Condition and Results of Operations -2- 3 PRESIDENTIAL MORTGAGE COMPANY (A California Limited Partnership) AND SUBSIDIARIES Consolidated Statements of Income Unaudited
THREE MONTHS ENDED NINE MONTHS ENDED September 30, September 30, September 30, September 30, 1994 1993 1994 1993 Interest Income: Interest and fees on loans receivable 3,262,742 3,623,386 9,559,235 11,578,800 Interest on deposits with banks 151,078 505 283,600 1,956 ------------ ----------- ------------ ------------- Total interest income 3,413,820 3,623,891 9,842,835 11,580,756 Interest Expense: Interest on thrift certificates greater than $100,000 4,867 75,274 23,711 229,912 Interest on other thrift certificates 746,474 714,076 2,070,733 2,143,157 Interest on notes payable 430,068 609,204 1,472,233 1,935,726 ------------ ----------- ------------ ------------- Total interest expense 1,181,409 1,398,554 3,566,677 4,308,795 ------------ ----------- ------------ ------------- Net interest income 2,232,411 2,225,337 6,276,158 7,271,961 Provision for loan losses 2,063,759 574,538 2,748,737 1,423,021 ------------ ----------- ------------ ------------- Net interest income afer provision for loan losses 168,652 1,650,799 3,527,421 5,848,940 Noninterest income: Trustee and reconveyance fees 814,352 972,427 2,504,744 2,920,352 Other income 334,369 485,449 878,761 1,049,150 Gain on sale of Title I loans 0 0 0 15,177 ------------ ----------- ------------ ------------- 1,148,721 1,457,876 3,383,505 3,984,679 Noninterest expense: General and administrative 1,668,716 1,744,570 4,986,143 4,355,228 Salaries, employee benefits and personnel services 1,917,934 1,360,989 5,659,758 4,172,018 Amortization of organization costs 111,072 5,000 149,964 7,581 Depreciation and amortization 114,736 42,633 386,099 122,238 Expenses on real estate acquired in settlement of loans 449,736 278,449 1,385,400 687,923 Net loss (gain) on sales of real estate acquired in settlement of loans (122,915) 260,689 (6,101) 476,500 ------------ ----------- ------------ ------------- 4,139,279 3,692,330 12,561,263 9,821,488 ------------ ----------- ------------ ------------- Net income before management fee (2,821,906) (583,655) (5,650,337) 12,131 ------------ ----------- ------------ ------------- Management fee (Note 3) 0 0 0 1,213 ------------ ------------ ------------ ------------- Net income (2,821,906) (583,655) (5,650,337) 10,918 ============ =========== ============ =============
See accompanying Notes to Consolidated Financial Statements and Management's discussion and Analysis of Financial Condition and Results of Operations -3- 4 PRESIDENTIAL MORTGAGE COMPANY (A California Limited Partnership) AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Nine months ended September 30, 1994 and 1993
Nine Months Nine Months Ended Ended 9-30-94 9-30-93 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Net income (5,650,337) 10,918 Depreciation & Amortization 536,063 725,086 Provision for loan losses 2,748,737 1,423,021 Net (gain) loss on sales of real estate acquired in settlement of loans (6,101) 476,500 (Increase) decrease in asset accounts: Accounts Receivable (6,072,478) (508,412) Interest receivable 558,153 (64,286) Excess yield receivable 241,682 (22,693) Goodwill (105,861) (220,000) Other assets (747,473) (1,182,182) Increase (decrease) in liability accounts: Accounts payable and accrued expenses and Interest Payable (1,149,087) (1,007,705) Net cash provided by (used in) operating ---------- ---------- activities (9,646,702) (369,753) ---------- ---------- Cash flows from investing activities: (Increase) Decrease in Loans Receivable 11,834,389 4,759,760 Increase in Property & Equipment (638,511) (109,634) Decrease in Mortgages Payable on Other Real Estate 207,470 (2,299,489) Decrease in Other Real Estate (340,656) 5,985,087 Proceeds from repayment of receivable from related party 0 0 ---------- ---------- Net cash provided by (used in) investing 11,062,692 8,335,724 activities ---------- ---------- Cash flow from financing activities: Distribution to Partners 0 (1,753,395) Withdrawal of Partnership Shares 0 (1,405,500) Increase in Thrift Certificates 7,009,146 5,400,788 Decrease in Line of Credit (5,485,232) (7,100,000) Proceeds from issuance of partnership shares 0 34,097 ---------- ---------- Net cash provided by (used in) financing 1,523,914 (4,824,010) activities ---------- ---------- Net decrease in Cash and Cash Equivalents 2,939,904 3,141,961 Cash and Cash Equivalents at Year End 13,219,565 453,278 ---------- ---------- Cash and Cash Equivalents at Sept 30, 16,159,469 3,595,239 ========== ==========
See accompanying Notes to Consolidated Financial Statements and Management's discussion and Analysis of Financial Condition and Results of Operations -4- 5 PRESIDENTIAL MORTGAGE COMPANY (A California Limited Partnership) AND SUBSIDIARIES Notes to Combined Financial Statements 1) The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments (all of which are of a normal recurring nature) which are necessary to fairly state the Partnership's financial position, its cash flows and the results of its operations. The Partnership presumes that users of the interim financial information herein have read or have access to the audited financial statements and Manage- ment's Discussion and Analysis of Financial Condition and Results of Operations for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnote and other disclosures which would substantially duplicate the disclosure contained in the Partnership's most recent annual report has been omitted. The interim financial information herein is not necessarily representative of operations for a full year for various reasons including changes in interest rates, volume of loans originated and loans paid off. 2) Loans Receivable The following is a summmary of Loans Receivable:
@ 9-30-94 @ 12-31-93 Interest bearing loans $ 74,533,988 $ 89,482,481 Deferred loan fees, net (1,195,230) (1,605,488) Allowance for loan losses (3,167,292) (3,122,401) ----------- ------------ Total $ 70,171,466 $ 84,754,592 =========== ============
The following is a summmary of Allowance for Loan Losses: Balance at 12-31-93 $ 3,122,400 Additions to reserve 2,748,737 Charge offs/recoveries (2,703,845) ----------- Balance at 9-30-94 $ 3,167,292 ===========
-5- 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Total consolidated assets of Presidential Mortgage Company (referred to herein as the "Company" with respect to consolidated information, and as "Presidential" with respect to the unconsolidated operations of Presidential Mortgage Company) decreased $5.0 million (4%) to $109.3 million at September 30, 1994 from $114.3 million at December 31, 1993. The decline was due primarily to reductions in loans receivable, which decreased by $14.6 million (17%), to $70.2 million at September 30, 1994 from $84.8 million at December 31, 1993. Interest receivable decreased by $.6 million (27%), to $1.5 million at September 30, 1994 from $2.1 million at December 31, 1993. Partially offsetting these declines were increases of $6.1 million (149%) in accounts receivable, primarily owed in connection with a loan sale completed at the end of September, and $3.0 million (23%) in cash and cash equivalents. Total liabilities increased $.6 million (1%) to $95.0 at September 30, 1994 from $94.4 at December 31, 1993. The increase was primarily due to a $7.0 million (11%) increase in thrift certificates issued by the Company's wholly owned subsidiary, Pacific Thrift and Loan Company ("Pacific Thrift"). Thrift certificates increased to $69.4 million at September 30, 1994 from $62.4 million at December 31, 1993. Offsetting this increase was a decrease of $5.5 million (23%) in notes payable, to $18.3 million at September 30, 1994 from $23.8 million at December 31, 1993, as Presidential continued to pay down the bank debt. In addition, accounts and interest payable decreased $1.2 million (23%), to $4.1 million at September 30, 1994 from $5.3 million at December 31, 1993. Total partnership capital decreased by $5.6 million (28%) to $14.3 million at September 30, 1994 from $19.9 at December 31, 1993, primarily due to net operating losses during the first three quarters of 1994. RESULTS OF OPERATIONS The Company incurred a net operating loss of $2.8 million for the quarter ended September 30, 1994, compared with a net operating loss of $.6 million for the quarter ended September 30, 1993. For the nine months ended September 30, 1994, the Company incurred a net operating loss of $5.6 million, compared with a net operating profit of $.01 million for the first nine months of 1993. The net operating losses in the first three quarters of 1994 were due primarily to declines in net interest income after provision for loan losses and increases in noninterest expense. Total interest income declined by $.2 million (6%) for the quarter and by $1.8 million (15%) for the nine months ended September 30, 1994 compared with the same periods of 1993. Net interest income after provision for loan losses declined by $1.4 million (90%) for the quarter and by $2.3 million (40%) for the nine months ended September 30, 1994, due to a substantial increase in the provision for loan losses in the third quarter of 1994. Noninterest income declined by $.4 million (27%) for the quarter and by $.6 million (15%) for the nine months ended September 30, 1994 compared with the same periods of 1993, primarily due to declines in fees for foreclosure services earned by the Company's two trust deed service company subsidiaries. Noninterest expense increased by $.4 million (12%) for the quarter and by $2.8 million (28%) for the nine months ended September 30, 1994 compared with the same periods of 1993. The primary increases were for salaries, employee benefits and personnel services, general and administrative expenses and expenses on OREO. Salaries, employee benefits and personnel services increased by $.5 million (41%) for the quarter and by $1.5 million (36%) for the nine months ended September 30, 1994 compared with the same periods of 1993, primarily due to increased staffing at Pacific Thrift and reduced deferral of loan origination costs pursuant to FASB 91. General and administrative expenses remained materially unchanged for the third quarter but increased by $.6 million (14%) for the nine months ended September 30, 1994 compared with same periods of 1993, primarily due to increased professional fees. Expenses on OREO increased $.1 million (62%) for the quarter and $.7 million (101%) for the nine months ended September 30, 1994 compared with the same period of 1993, due to management's decision to upgrade certain OREO for sale. PROVISION FOR LOAN LOSSES The provision for loan losses was $2.0 million for the third quarter of 1994, compared with $.6 million for the third quarter of 1993. For the nine months ended September 30, 1994, the total provision for loan losses was $2.7 million, 93% higher than the $1.4 million provision for loan losses for the first nine months of 1993. Approximately half of the increase was due to management's decision to reserve a higher percentage of the balance of Title I loans since these loans have no further insurance reserves. The remainder of the increased reserve was due to an increase for two classified loans at Pacific Thrift and a management policy decision at Pacific Thrift to -6- 7 increase the general reserves on current and adequately secured loans. After the increase in the provision in the third quarter of 1994, the total allowance for loan losses was $3.2 million at September 30, 1994, compared with $3.1 million at September 30, 1993. Total delinquencies at September 30, 1994 remained lower than total delinquencies at September 30, 1993 and December 31, 1993. LIQUIDITY AND CAPITAL RESOURCES The primary source of the Company's liquidity is the cash and cash equivalents maintained by Pacific Thrift in connection with its deposit-taking and lending activities. At September 30, 1994, cash and cash equivalent assets totalled $16.2 million, compared with $13.2 million at December 31, 1993. The increase in cash was due to cash payments received on loan sales during the quarter. Presidential does not maintain significant cash and cash equivalent assets on its own behalf, and uses substantially all of its cash flow to pay down the bank debt on a monthly basis. Pacific Thrift is subject to certain leverage and risk-based capital adequacy standards applicable to FDIC-insured institutions. At September 30, 1994, as a result of the adjustments made to Pacific Thrift's provision for loan losses and differences in accounting treatment for sales of senior loan participation interests between regulatory and generally accepted accounting principles, Pacific Thrift was classified as "significantly undercapitalized" under the FDIC's capital adequacy guidelines. See the Company's Annual Report on Form 10-K for the year ended December 31, 1993, Item 1. "Business -- Supervision and Regulation -- Governmental Policies and Recent Legislation -- Capital Adequacy Guidelines," and see the Company's Report on Form 8-K dated December 19, 1994. At September 30, 1994, the Company had no material outstanding commitments to fund loans. Certificates of deposit which are scheduled to mature in one year or less from September 30, 1994 totalled $46.5 million. Based upon historical experience, management believes that a significant portion of such deposits will be renewed and will remain with Pacific Thrift. As indicated in the Statements of Cash Flows, the Company utilized $9.6 million in cash from operating activities from December 31, 1993 through September 30, 1994, reflecting primarily the $5.6 million net loss for the first three quarters of 1994 and a $6.0 million increase in accounts receivable due to a sale of loans completed by Pacific Thrift in September. The Company realized cash flow from investing activities of $11.0 million from December 31, 1993 through September 30, 1994, primarily from a net decrease of $11.8 million in loans receivable. The Company realized $1.5 million from financing activities from December 31, 1993 through September 30, 1994, reflecting a $7.0 million increase in thrift certificates issued by Pacific Thrift, used to fund lending activity by Pacific Thrift. Presidential used $5.5 million in cash from proceeds of loan payments and sales of loans to pay down the bank debt. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. There have been no material developments in legal proceedings since the date of filing of the Company's Annual Report on Form 10-K for the year ended December 31, 1993. ITEM 2. CHANGES IN SECURITIES. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to the vote of security holders during the quarter ended September 30, 1994. -7- 8 ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. None. (b) Reports on Form 8-K. The Company filed a Report on Form 8-K dated December 19, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. PRESIDENTIAL MORTGAGE COMPANY (Registrant) May 1, 1995 JOEL R. SCHULTZ - - ------------------ ------------------------------------- Date Joel R. Schultz, Chief Managing Officer of Registrant; President of Presidential Services Corporation ("PSC"), general partner of Presidential Management Company, a California limited partnership, general partner of the Registrant May 1, 1995 CHARLES J. SIEGEL - - ------------------ ------------------------------------- Date Charles J. Siegel, Chief Financial and Accounting Officer of the Registrant -8- -----END PRIVACY-ENHANCED MESSAGE-----