-----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, WKNNs5fM2RrpfVmDKCHTwRjDoZdF3h9IKl7Wqe0DO9FQ4QotpQbrziiaRpWZUWAW 1LgJUesyUwJ6HFRH3iWFEw== 0000950148-95-000197.txt : 19950511 0000950148-95-000197.hdr.sgml : 19950511 ACCESSION NUMBER: 0000950148-95-000197 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 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: 95533882 BUSINESS ADDRESS: STREET 1: 21031 VENTURA BLVD CITY: WOODLAND HILLS STATE: CA ZIP: 91364 BUSINESS PHONE: 8189928999 10-Q 1 FORM 10-Q 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 JUNE 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 incorporation or organization) (IRS Employer Identification Number)
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 Sheet Unaudited December 31, 1993 and June 30, 1994
JUNE 30, DECEMBER 31, 1994 1993 Assets Cash & cash equivalents $ 13,124,512 13,219,565 Accounts receivable, net 3,666,202 4,133,661 Interest receivable 1,580,336 2,091,425 Loans receivable, net (note 2) 82,460,869 84,754,592 Excess yield receivable 727,789 895,220 Real estate acquired in settlement of loans 5,603,223 6,003,295 Property and equipment, net 1,373,004 1,215,496 Goodwill 1,753,336 1,621,781 Other assets 1,284,557 388,555 -------------------- ----------------- Total Assets $ 111,573,828 114,323,590 ==================== ================= Liabilities and Partners' Capital Liabilities: Thrift certificates payable $ 66,550,809 62,420,561 Accounts payable, accrued expenses and interest payable 4,479,353 5,266,440 Partnership withdrawals payable 1,120,379 1,120,379 Notes payable 20,800,000 23,800,000 Mortgages payable - secured by real estate acquired in settlement of loans 1,512,786 1,777,278 -------------------- ----------------- $ 94,463,327 94,384,658 -------------------- ----------------- Partners' Capital 17,110,501 19,938,932 -------------------- ----------------- Total Liabilities & Partners' Capital $ 111,573,828 114,323,590 ==================== =================
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 SIX MONTHS ENDED June 30, June 30, June 30, June 30, 1994 1993 1994 1993 Interest Income: Interest and fees on loans receivable 3,448,753 4,030,901 6,296,493 7,955,414 Interest on deposits with banks 64,910 483 131,019 1,451 ---------- --------- ---------- --------- Total interest income 3,513,663 4,031,384 6,427,512 7,956,865 Interest Expense: Interest on thrift certificates greater than $100,000 4,830 77,831 18,844 154,638 Interest on other thrift certificates 662,938 722,242 1,324,259 1,429,081 Interest on notes payable 532,433 635,788 1,042,165 1,326,522 ---------- --------- ---------- --------- Total interest expense 1,200,201 1,435,861 2,385,268 2,910,241 ---------- --------- ---------- --------- Net interest income 2,313,462 2,595,523 4,042,244 5,046,624 Provision for loan losses 467,999 464,150 684,978 848,483 ---------- --------- ---------- --------- Net interest income afer provision for loan losses 1,845,463 2,131,373 3,357,266 4,198,141 Noninterest income: Trustee and reconveyance fees 812,993 929,132 1,690,392 1,947,925 Other income 278,415 357,415 545,895 563,701 Gain on sale of Title I loans 0 (4,823) 0 15,177 ---------- --------- ---------- --------- 1,091,408 1,281,724 2,236,287 2,526,803 Noninterest expense: General and administrative 1,806,754 1,413,881 3,317,427 2,610,658 Salaries, employee benefits and personnel services 1,983,037 1,349,255 3,741,824 2,811,029 Amortization of organization costs 25,346 (6,484) 38,892 2,581 Depreciation and amortization 136,106 40,420 271,363 79,605 Expenses on real estate acquired in settlement of loans 587,823 191,235 935,664 409,474 Net loss (gain) on sales of real estate acquired in settlement of loans 198,722 222,921 116,814 215,811 ---------- --------- ---------- --------- 4,737,788 3,211,228 8,421,984 6,129,158 ---------- --------- ---------- --------- 0 12,700 0 71,788 ---------- --------- ---------- --------- Net income (1,800,917) 189,169 (2,828,431) 523,998 ========== ========= ========== =========
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) Six months ended June 30, 1994 and 1993
Six Months Six Months Ended Ended 6-30-94 6-30-93 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Net income (2,828,431) 523,998 Depreciation & Amortization 310,255 469,516 Provision for loan losses 684,978 848,483 Net (gain) loss on sales of real estate acquired in settlement of loans 116,814 215,811 (Increase) decrease in asset accounts: Accounts Receivable 467,459 (1,547,836) Interest receivable 511,089 1,093,725 Excess yield receivable 167,431 (205,206) Goodwill (131,555) (15,171) Other assets (934,894) (958,918) Increase (decrease) in liability accounts: Accounts payable and accrued expenses and Interest Payable (787,087) 1,008,841 Net cash provided by (used in) operating ---------- ----------- activities (2,423,941) 1,433,243 ---------- ----------- Cash flows from investing activities: (Increase) Decrease in Loans Receivable 1,608,745 14,436,284 Increase in Property & Equipment (428,871) (1,227) Decrease in Mortgages Payable on Other Real Estate (264,492) (73,597) Decrease in Other Real Estate 283,258 1,096,136 Proceeds from repayment of receivable from related party 0 354,621 ---------- ----------- Net cash provided by (used in) investing activities 1,198,640 15,812,217 ---------- ----------- Cash flow from financing activities: Distribution to Partners 0 (1,943,435) Withdrawal of Partnership Shares 0 (1,282,500) Increase in Thrift Certificates 4,130,248 14,742,252 Decrease in Line of Credit (3,000,000) (29,150,000) Proceeds from issuance of partnership shares 0 34,097 ---------- ----------- Net cash provided by (used in) financing 1,130,248 (17,599,586) activities ---------- ----------- Net decrease in Cash and Cash Equivalents (95,053) (354,126) Cash and Cash Equivalents at Year End 13,219,565 789,412 ---------- ----------- Cash and Cash Equivalents at June 30, 13,124,512 435,286 ========== ===========
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 Management'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 origi- nated and loans paid off. 2) Loans Receivable The following is a summmary of Loans Receivable:
@ 6-30-94 @ 12-31-93 Interest bearing loans $ 85,948,647 $ 89,482,481 Deferred loan fees, net (1,467,165) (1,605,488) Allowance for loan losses (2,020,613) (3,122,401) ----------------- ---------------- Total $ 82,460,869 $ 84,754,592 ================= ================ The following is a summmary of Allowance for Loan Losses: Balance at 12-31-93 $ 3,122,400 Additions to reserve 684,978 Charge offs/recoveries (1,786,765) ----------------- Balance at 6-30-94 $ 2,020,613 =================
-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 $2.7 million (2%) to $111.6 million at June 30, 1994 from $114.3 million at December 31, 1993. The decline was due primarily to reductions in loans receivable, interest receivable and OREO (other real estate acquired in settlement of loans). Loans receivable decreased by $2.3 million (3%), due to use of proceeds from loan payoffs and sales of loans to pay down Presidential's bank debt. Interest receivable decreased by $.5 million (24%), due to reduced interest rates charged on loans. OREO decreased by $.4 million (7%) due to sales of OREO during the first and second quarters of 1994. Accounts receivable decreased by $.4 million (10%), to $3.7 million from $4.1 million. Total liabilities increased $.1 million (0.1%) to $94.5 at June 30, 1994 from $94.4 at December 31, 1993. The increase was due to the increase of $4.1 million (7%) in thrift certificates issued by the Company's wholly owned subsidiary, Pacific Thrift and Loan Company ("Pacific Thrift"), to $66.5 million at June 30, 1994 from $62.4 million at December 31, 1993. This increase was partially offset by reductions in notes payable and accounts and interest payable. Notes payable decreased $3.0 million (13%), to $20.8 million at June 30, 1994 from $23.8 million at December 31, 1993, as Presidential continued to pay down the bank debt. Accounts and interest payable decreased $.8 million (15%), to $4.5 million at June 30, 1994 from $5.3 million at December 31, 1993. Total partnership capital decreased by $2.8 million (14%) to $17.1 million at June 30, 1994 from $19.9 at December 31, 1993, due to net operating losses in the first and second quarters of 1994. RESULTS OF OPERATIONS The Company incurred a net operating loss of $1.8 million for the quarter ended June 30, 1994, compared with a net operating profit of $.2 million for the quarter ended June 30, 1993. For the six months ended June 30, 1994, the Company incurred a net operating loss of $2.8 million, compared with a net operating profit of $.5 million for the first six months of 1993. The net loss in the first two quarters of 1994 was due primarily to declines in net interest income and increases in non-interest expense. Total interest income declined by $.5 million (13%), to $3.5 million for the quarter ended June 30, 1994 compared with $4.0 million for the quarter ended June 30, 1993. For the year-to-date, total interest income declined by $1.6 million (19%), to $6.4 million for the first two quarters of 1994 compared with $8.0 million for the first two quarters of 1993. Net interest income after provision for loan losses decreased by $.3 million (13%) to $1.8 million in the second quarter of 1994 compared with $2.1 million in the second quarter of 1993, and by $.8 million (20%) in the first two quarters of 1994, to $3.4 million for the first two quarters of 1994 compared with $4.2 million for the first two quarters of 1993. Declines in interest income reflect declines in the loan portfolio and reductions in interest rates on loans receivable. Noninterest income declined $.2 million (15%) for the quarter ended June 30, 1994, to $1.1 million for the second quarter of 1994 from $1.3 million for the second quarter of 1993. For the year-to-date ended June 30, 1994, noninterest income declined $.3 million (11%), to $2.2 million for the first two quarters of 1994 compared with $2.5 million for the first two quarters of 1993. These declines were primarily due to reduced foreclosures serviced by the Company's trust deed service company subsidiaries. Noninterest expense increased $1.5 million (48%) for the quarter ended June 30, 1994, to $4.7 million for the second quarter of 1994 from $3.2 million for the second quarter of 1993. For the year-to-date ended June 30, 1994, noninterest expense increased $2.3 million (37%), to $8.4 million for the first two quarters of 1994 compared with $6.1 million for the first two quarters of 1993. Increases for the 1994 second quarter consisted primarily of a $.4 million (28%) increase in general and administrative expenses, a $.7 million (47%) increase in salaries, employee benefits and personnel services, and a $.4 million (207%) increase in expenses on OREO. Increases for the first two quarters of 1994 consisted primarily of a $.7 million (27%) increase in general and administrative expenses, a $.9 million (33%) increase in salaries, employee benefits and personnel services, and a $.5 million (128%) increase in expenses on OREO. The increases in general and administrative expenses were due to an increase in professional fees and a write off of certain fixed assets, and the increases in salaries and employee benefits were due to increased staffing by Pacific Thrift and a reduction in the amount of loan origination fees deferred under FASB 91. The increase in expenses on OREO was due to a management decision to upgrade certain OREO properties in order to sell those properties for cash. -6- 7 PROVISION FOR LOAN LOSSES The provision for loan losses was $.5 million for the second quarter of 1994, which was substantially unchanged from the provision for the second quarter of 1993. For the first two quarters of 1994, the provision for loan losses totalled $.7 million, which was 19% less than the $.8 million provision for the first two quarters of 1993. The total allowance for loan losses was $2.0 million at June 30, 1994, compared with $3.1 million at December 31, 1993. Management believes that a lower allowance for loan losses at June 30, 1994 was warranted due to the reduction in total delinquencies at June 30, 1994 from total delinquencies at June 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 June 30, 1994, cash and cash equivalent assets totalled $13.1 million, compared with $13.2 million at December 31, 1993. 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 June 30, 1994, as a result of an operating loss of $1.0 million for the first two quarters of 1994 and a difference in accounting treatment for certain sales of senior loan participation interests between regulatory and generally accepted accounting principles, Pacific Thrift was classified as "adequately capitalized under the FDIC's leverage and risk-based capital 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." At June 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 June 30, 1994 totalled $36.2 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 $2.4 million in cash from operating activities from December 31, 1993 through June 30, 1994, primarily reflecting the $2.8 million net operating loss. The Company realized cash flow from investing activities of $1.2 million from December 31, 1993 through June 30, 1994, primarily from a net $1.6 million reduction in loans receivable and a net $.3 million decrease in OREO. The Company realized $1.1 million from financing activities from December 31, 1993 through June 30, 1994, reflecting $4.1 million in proceeds from issuance of thrift certificates, used to fund lending activity of Pacific Thrift. Presidential used $3.0 million in cash proceeds from loan payments and sales of loans to pay down of the bank debt. No distributions or withdrawal payments were made to limited partners in accordance with the restrictions on such payments under the bank loan agreement. 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. -7- 8 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 June 30, 1994. 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 no Reports on Form 8-K during the second quarter of 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
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