-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LCdNVoemPkV079Lyw23fOxmN0AH8ahq5VDC+tWe07gBO4Lu3yYH46Ejp9LoMH2he QMRv+5hP8GZUH0WTmqdcVg== 0000950148-95-000799.txt : 19951119 0000950148-95-000799.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950148-95-000799 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRESIDENTIAL MORTGAGE CO CENTRAL INDEX KEY: 0000757078 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [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: 95592257 BUSINESS ADDRESS: STREET 1: 21031 VENTURA BLVD CITY: WOODLAND HILLS STATE: CA ZIP: 91364 BUSINESS PHONE: 8189928999 10-Q 1 QUARTERLY REPORT 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, 1995 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 incorporation or organization) 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 Sheets Unaudited December 31, 1994 and September 30, 1995
SEPTEMBER 30, DECEMBER 31, 1995 1994 Assets Cash & cash equivalents $ 10,013,000 $ 19,628,000 Accounts receivable, net 9,462,000 5,549,000 Interest receivable 924,000 1,125,000 Loans receivable, net (note 2) 46,992,000 53,045,000 Loans held for sale 2,380,000 12,011,000 Excess yield receivable 462,000 888,000 Real estate acquired in settlement of loans 5,336,000 7,621,000 Property and equipment, net 1,484,000 1,322,000 Goodwill 1,752,000 1,749,000 Other assets 1,243,000 809,000 ------------- ------------- $ 80,048,000 $ 103,747,000 ============= ============= Liabilities and Partners' Capital Liabilities: Thrift certificates payable $ 54,811,000 $ 69,501,000 Accounts payable, accrued expenses and interest payable 5,292,000 5,610,000 Partnership withdrawals payable 1,120,000 1,120,000 Notes payable 8,450,000 14,778,000 Mortgages payable - secured by real estate acquired in settlement of loans 1,095,000 2,313,000 ------------- ------------- $ 70,768,000 $ 93,322,000 ------------- ------------- Partners' Capital 9,280,000 10,425,000 ------------- ------------- $ 79,983,000 $ 103,747,000 ============= =============
See accompanying Notes to Consolidated Financial Statements and Management's discussion and Analysis of Financial Condition and Results of Operations 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, 1995 1994 1995 1994 Interest Income: Interest and fees on loans receivable 2,223,000 2,614,000 6,803,000 8,296,000 Interest on deposits with banks 125,000 151,000 584,000 284,000 ------------ ------------ ------------ ------------ Total interest income 2,348,000 2,765,000 7,387,000 8,580,000 Interest Expense: Interest on thrift certificates greater than $100,000 0 5,000 6,000 24,000 Interest on other thrift certificates 927,000 746,000 2,948,000 2,071,000 Interest on notes payable 321,000 430,000 1,125,000 1,472,000 ------------ ------------ ------------ ------------ Total interest expense 1,248,000 1,181,000 4,079,000 3,567,000 ------------ ------------ ------------ ------------ Net interest income 1,100,000 1,584,000 3,308,000 5,013,000 Provision for loan losses 861,000 2,064,000 1,861,000 2,749,000 ------------ ------------ ------------ ------------ Net interest income after provision for loan losses 239,000 (480,000) 1,447,000 2,264,000 Noninterest income: Trustee and reconveyance fees 797,000 815,000 2,320,000 2,505,000 Other income 229,000 334,000 822,000 879,000 Gain on Sale of Loans 2,360,000 649,000 5,690,000 1,263,000 ------------ ------------ ------------ ------------ 3,386,000 1,798,000 8,832,000 4,647,000 Noninterest expense: General and administrative 1,778,000 1,669,000 4,920,000 4,986,000 Salaries, employee benefits and personnel services 2,268,000 1,918,000 5,960,000 5,660,000 Amortization of organization costs 56,000 111,000 129,000 150,000 Depreciation and amortization 127,000 115,000 366,000 386,000 Expenses on real estate acquired in settlement of loans 218,000 450,000 243,000 1,385,000 Net loss (gain) on sales of real estate acquired in settlement of loans 47,000 (123,000) 373,000 (6,000) ------------ ------------ ------------ ------------ 4,494,000 4,140,000 11,991,000 12,561,000 ------------ ------------ ------------ ------------ Net income before tax provision (869,000) (2,822,000) (1,712,000) (5,650,000) ------------ ------------ ------------ ------------ Tax provision (53,000) 0 (567,000) 0 ------------ ------------ ------------ ------------ Net income (816,000) (2,822,000) (1,145,000) (5,650,000) ============ ============ ============ ============
See accompanying Notes to Consolidated Financial Statements and Management's discussion and Analysis of Financial Condition and Results of Operations 4 PRESIDENTIAL MORTGAGE COMPANY (A California Limited Partnership) AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Nine months ended September 30, 1995 and 1994
Nine Months Nine Months Ended Ended 9-30-95 9-30-94 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Net income (1,145,000) (5,650,000) Depreciation & Amortization 495,000 536,000 Provision for loan losses 1,861,000 2,749,000 Net (gain) loss on sales of real estate acquired in settlement of loans 373,000 (6,000) (Increase) decrease in asset accounts: Accounts Receivable (3,913,000) (6,073,000) Interest receivable 201,000 558,000 Excess yield receivable 426,000 242,000 Goodwill (3,000) (106,000) Other assets (563,000) (748,000) Increase (decrease) in liability accounts: Accounts payable and accrued expenses (318,000) (1,149,000) Net cash provided by (used in) operating ------------ ------------ activities (2,586,000) (9,647,000) ------------ ------------ Cash flows from investing activities: (Increase) Decrease in Loans Receivable 15,260,000 11,835,000 Increase in Property & Equipment (204,000) (638,000) Decrease in Mortgages Payable on Other Real Estate 1,218,000 207,000 Decrease in Other Real Estate (2,285,000) (341,000) Proceeds from repayment of receivable from related party 0 0 ------------ ------------ Net cash provided by (used in) investing 13,989,000 11,063,000 activities ------------ ------------ Cash flow from financing activities: Distribution to Partners 0 0 Withdrawal of Partnership Shares 0 0 Decrease in Thrift Certificates (14,690,000) 7,009,000 Decrease in Line of Credit (6,328,000) (5,485,000) Proceeds from issuance of partnership shares 0 0 ------------ ------------ Net cash provided by (used in) financing (21,018,000) 1,524,000 activities ------------ ------------ Net decrease in Cash and Cash Equivalents (9,615,000) 2,940,000 Cash and Cash Equivalents at Year End 19,628,000 13,219,000 ------------ ------------ Cash and Cash Equivalents at Sept 30, 10,013,000 16,159,000 ============ ============
See accompanying Notes to Consolidated Financial Statements and Management's discussion and Analysis of Financial Condition and Results of Operations 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:
@ 9-30-95 @ 12-31-94 Interest bearing loans $ 51,639,000 $ 58,780,000 Deferred loan fees, net (972,000) (1,428,000) Allowance for loan losses (3,675,000) (4,307,000) ------------ ------------ Total $ 46,992,000 $ 53,045,000 ============ ============
The following is a summmary of Allowance for Loan Losses: Balance at 12-31-94 $ 4,307,000 Additions to reserve 1,861,000 Charge offs/recoveries (2,493,000) ------------ Balance at 9-30-95 $ 3,675,000 ============
6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Total consolidation assets of Presidential Mortgage Company (referred to herein as the "Partnership" with respect to consolidated information, and as "Presidential" with respect to the unconsolidated operations of Presidential Mortgage Company) decreased $23.7 million (22.8%) to $80.0 million at September 30, 1995 from $103.7 million at December 31, 1994. The decrease resulted primarily from declines in cash and cash equivalents, loans receivable, excess yield receivable, real estate acquired in settlement of loans ("OREO") and interest receivable, offset by increases in accounts receivable. Loans receivable decreased by $6.0 million (11.4%), to $47.0 million from $53.0 million, as a result of loan pay offs and loan sales. Cash and cash equivalents decreased by $9.6 million (49.0%), to $10.0 million from $19.6 million. However, this decline in cash and cash equivalents was offset by a $3.9 million (70.5%) increase in accounts receivable, to $9.5 million at September 30, 1995 from $5.6 million at December 31, 1994. Accounts receivable reflected $3.6 million due for loans sold as of September 30, 1995, for which payment was not received until October 1995. Excess yield receivable decreased $.4 million, (48.0%) to $.5 million from $.9 million. OREO declined by $2.3 million (30.0%), to $5.3 million at September 30, 1995 from $7.6 million at December 31, 1994, reflecting sales of OREO. Interest receivable declined by $.2 million (17.9%), to $.9 million from $1.1 million, primarily due to the reduction of the loan portfolio. Total liabilities decreased $22.5 million (24.1%) to $70.8 million at September 30, 1995 from $93.3 at December 31, 1994. The decrease resulted from declines in notes payable, thrift certificates payable, accounts payable, accrued expenses and interest payable and mortgages payable on OREO. Notes payable decreased by $6.3 million (42.8%), to $8.4 million from $14.8 million, due to pay down of the bank debt. Thrift certificates payable decreased by $14.7 million (21.1%) to $54.8 million from $69.5 million, reflecting the reduction in total assets of Pacific Thrift and Loan Company ("Pacific Thrift"). Accounts payable, accrued expenses and interest payable decreased by $.3 million (5.7%), to $5.3 million from $5.6 million at December 31, 1994, primarily due to a $.4 million reduction in accrued expenses for the environmental remediation of OREO acquired by Pacific Thrift after receiving a lower bid for completion of the work. Mortgages payable on OREO decreased by $1.2 million (52.7%), to $1.1 million from $2.3 million, due to sale of OREO. Total partnership capital decreased by $1.1 million (10.6%) to $9.3 million from $10.4 million, due to net losses of $1.1 million incurred during the nine months ended September 30, 1995. RESULTS OF OPERATIONS GENERAL The Partnership incurred a net operating loss of $.9 million before tax provision for the quarter ended September 30, 1995, compared with a net operating loss of $2.8 million for the quarter ended September 30, 1994. The reduction in the net operating loss in the first three quarters of 1995 was due primarily to increases in noninterest income and decreases in noninterest expenses from the same period of 1994. Net operating losses for the nine months ended September 30, 1995 were $1.7 million before tax provision and $1.1 million after tax provision reflecting a tax benefit due to Pacific Thrift's net operating loss carryforwards of $.6 million, compared with net operating losses of $5.7 million for the nine months ended September 30, 1994. Pacific Thrift has a remaining net operating loss carryforward of $6.8 million as of December 31, 1994, which may be used to offset tax liability on future taxable income of Pacific Thrift. NET INTEREST INCOME Net interest income before provision for loan losses decreased by $.5 million (30.5%) for the third quarter of 1995, and by $1.7 million (34.0%) for the nine months ended September 30, 1995, compared to the same periods of 1994, as a result of the reduction in total interest income and increase in total interest expense. Total interest income decreased by $.4 million (15.1%) for the third quarter of 1995 and by $1.2 million (13.9%) for the nine months ended September 30, 1995, compared to the same periods of 1994, due to reductions in the loan portfolio. Total interest expense increased by $.1 million (5.7%) for the third quarter of 1995 and by $.5 million (14.3%) for the nine months ended September 30, 1995, compared to the same periods of 1994, due to higher market interest rates on thrift certificates by Pacific Thrift. PROVISION FOR LOAN LOSSES The provision for loan losses was $.9 million for the third quarter and $1.9 million for the nine months ended September 30, 1995, compared with $2.1 million and $2.7 million for the same periods of 1994. The total allowance for loan losses was $3.7 million at September 30, 1995 compared with $4.3 million at December 31, 7 1994, reflecting sales and payoffs of loans as to which reserves had previously been taken and improvements in status in some portfolio loans. The calculation of the adequacy of the allowance for loan losses is based on a variety of factors, including loan classifications and underlying loan collateral values, and is not directly proportional to the level of nonperforming loans. The ratio of nonaccrual loans past due 90 days or more to total loans was 2.53% at September 30, 1995. The ratio of the allowance for loan losses to nonaccrual loans past due 90 days or more was 281.61% at September 30, 1995. NONINTEREST INCOME Total noninterest income increased by $1.6 million (88.3%) for the quarter and by $4.2 million (90.0%) for the nine months ended September 30, 1995, compared to the same periods of 1994, due to increase in gains on sale of loans by Pacific Thrift. Gains on sale of loans increased by $1.7 million (263.7%) for the third quarter of 1995 and by $4.4 million (350.5%) for the three quarters ended September 30, 1995, compared to the same periods of 1995. Pacific Thrift has sold a total of $106 million of loans during the first nine months of 1995, for a total gain on sale of $5.6 million. These sales included $98 million of securitizable loans, for a gain on sale of $5.4 million, $7 million of portfolio loans, for a gain on sale of $.2 million and $1 million of home improvement loans, sold at par value. Trustee and reconveyance fees decreased by less than $.1 million (2.2%) for the third quarter of 1995 and by $.2 million (7.4%) for the nine months ended September 30, 1995, compared to the same periods of 1994. NONINTEREST EXPENSE Noninterest expense increased by $.4 million (8.6%) for the third quarter and decreased by $.6 million (4.5%) for the nine months ended September 30, 1995, compared to the same periods of 1994. Reductions in noninterest expense were primarily due to reductions in expenses on OREO, partially offset by increases in salaries, employee benefits and personnel services and net losses on sales of OREO. General and administrative expenses increased by $.1 million (6.5%) for the third quarter of 1995 but decreased by $.1 million (1.3%) for the nine months ended September 30, 1995, compared to the same periods of 1994. Salaries, employee benefits and personnel services increased by $.4 million (18.2%) for the third quarter and by $.3 million (5.3%) for the nine months ended September 30, 1995, compared to the same periods of 1994. Expenses on OREO decreased by $.2 million (51.5%) for the third quarter and by $1.1 million (82.5%) for the nine months ended September 30, 1995, compared to the same periods of 1994. The Partnership recognized net losses on sales of OREO of $47,000 for the third quarter of 1995 and $.4 million for the nine months ended September 30, 1995, compared with gains of $.1 million and $6,000 for the same periods of 1994. LIQUIDITY AND CAPITAL RESOURCES 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. The primary source of Pacific Thrift's liquidity is the cash and cash equivalents maintained by Pacific Thrift in connection with its deposit-taking and lending activities. At September 30, 1995, cash and cash equivalent assets totalled $10.0 million, compared with $19.6 million at December 31, 1994. However, this did not reflect an additional receivable of $3.6 million for loans sold as of September 30, 1995 which was paid for in October 1995. Pacific Thrift is subject to certain leverage and risk-based capital adequacy standards applicable to FDIC-insured institutions. At September 30, 1995, Pacific Thrift was classified as "adequately capitalized" by the FDIC, and its regulatory capital ratios met the FDIC regulatory definition of "well capitalized." However, because Pacific Thrift is currently subject to a Cease and Desist Order, which requires it to maintain a certain capital level (which it currently meets), Pacific Thrift may be classified by the FDIC as "adequately capitalized." See Annual Report on Form 10-K for the year ended December 31, 1994, Item 1. "Business - Supervision and Regulation - Regulatory Actions." At September 30, 1995, the Partnership had no material outstanding commitments to fund loans. Certificates of deposit which are scheduled to mature in one year or less from September 30, 1995 totalled $36.3 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 Partnership used $2.6 million in cash from operating activities from January 1, 1995 through September 30, 1995. This includes a deduction from cash for the $3.6 million receivable for loans sold at September 30, 1995 which were paid for in October 1995. 8 The Partnership realized $14.0 million from investing activities for the nine months ended September 30, 1995, primarily due to a net decrease of $15.3 million in loans receivable. The Partnership used $21.0 million in financing activities for the nine months ended September 30, 1995, primarily reflecting a $14.7 million decrease in thrift certificates and a $6.3 million decrease in 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 Partnership's Annual Report on Form 10-K for the year ended December 31, 1994. 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, 1995. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. None. (b) Reports on Form 8-K. On September 28, 1995, the Partnership filed a Report on Form 8-K dated September 12, 1995, regarding a termination of Ernst & Young, LLP, as independent public accountants of the Partnership and the appointment of BDO Seidman, LLP as the Partnership's independent public accountants. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. PRESIDENTIAL MORTGAGE COMPANY (Registrant) November 10, 1995 JOEL R. SCHULTZ ----------------------------------------------- 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 November 10, 1995 CHARLES J. SIEGEL ----------------------------------------------- Charles J. Siegel, Chief Financial and Accounting Officer of the Registrant EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 9-MOS DEC-31-1994 SEP-30-1995 5,333 180 4,500 0 0 0 0 53,047 3,675 80,048 54,811 8,450 5,787 1,720 0 0 0 9,280 80,048 6,803 584 0 7,387 2,954 4,079 3,308 1,861 0 11,991 (1,712) (1,712) 0 0 (1,145) 0 0 6.09 1,305 911 948 0 4,307 2,494 1 3,675 3,675 0 0
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