-----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, I59zWq3YcKf2RQK+E9Yh3FYEFewLUw8M9lKMp93lC0ReCn5ID37QkvWjdXT9W4WW h5lYi0dycNUqS7miKfQcEw== 0000950148-96-000905.txt : 19960517 0000950148-96-000905.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950148-96-000905 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96567424 BUSINESS ADDRESS: STREET 1: 21031 VENTURA BLVD CITY: WOODLAND HILLS STATE: CA ZIP: 91364 BUSINESS PHONE: 8189928999 10-Q 1 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 MARCH 31, 1996 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 X NO . 2 PRESIDENTIAL MORTGAGE COMPANY (A California Limited Partnership) AND SUBSIDIARIES Consolidated Balance Sheets Unaudited December 31, 1995 and March 31, 1996
MARCH 31, DECEMBER 31, 1996 1995 Assets Cash & cash equivalents $10,158,000 $10,489,000 Accounts receivable, net 15,917,000 3,337,000 Interest receivable 931,000 903,000 Loans receivable, net (Note 2) 45,276,000 43,908,000 Loans held for sale 11,361,000 12,577,000 Receivable from related party 333,000 347,000 Excess yield receivable 2,467,000 2,725,000 Real estate acquired in settlement of loans 3,259,000 3,156,000 Property and equipment, net 1,542,000 1,398,000 Goodwill 1,778,000 1,808,000 Other assets 2,008,000 1,909,000 ----------- ----------- $95,030,000 $82,557,000 =========== =========== Liabilities and Partners' Capital Thrift certificates payable Full-paid certificates 37,814,000 35,881,000 Installment certificates 34,967,000 24,275,000 ----------- ----------- Total thrift certificates payable 72,781,000 60,156,000 Accounts payable and accrued expenses 3,399,000 4,018,000 Accrued interest payable 306,000 273,000 Payable to related party 665,000 281,000 Mortgage notes payable 653,000 611,000 Note payable 6,500,000 6,771,000 Note payable to related party 600,000 600,000 Partnership withdrawals payable 1,120,000 1,120,000 ----------- ----------- $86,024,000 $73,830,000 ----------- ----------- Partners' capital 9,006,000 8,727,000 ----------- ----------- $95,030,000 $82,557,000 =========== ===========
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 March 31, March 31, 1996 1995 Interest Income: Interest and fees on loans receivable 2,278,000 2,386,000 Interest on investments 130,000 226,000 ---------- ---------- Total interest income 2,408,000 2,612,000 Interest Expense: Interest on thrift certificates greater than $100,000 0 4,000 Interest on other thrift certificates 1,010,000 976,000 Interest on notes payable 217,000 425,000 ---------- ---------- Total interest expense 1,227,000 1,405,000 ---------- ---------- Net interest income 1,181,000 1,207,000 Provision for loan losses 725,000 446,000 ---------- ---------- Net interest income afer provision for loan losses 456,000 761,000 Noninterest income: Trustee and reconveyance fees 857,000 785,000 Other income 238,000 308,000 Gain on sale of loans 4,712,000 1,515,000 ---------- ---------- 5,807,000 2,608,000 Noninterest expense: General and administrative 2,085,000 1,413,000 Salaries, employee benefits and personnel services 2,781,000 1,623,000 Amortization of organization costs 26,000 28,000 Related party fees 472,000 174,000 Depreciation and amortization 107,000 116,000 Expenses on real estate acquired in settlement of loans 60,000 161,000 Net loss on sales of real estate acquired in settlement of loans 105,000 77,000 ---------- ---------- 5,636,000 3,592,000 ---------- ---------- Net income (loss) before tax provision 627,000 (223,000) ---------- ---------- Tax provision (benefit) 348,000 (430,000) ---------- ---------- Net income 279,000 207,000 ========== ==========
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) Three months ended March 31, 1996 and 1995
Three Months Three Months Ended Ended 3-31-96 3-31-95 Cash flows from operating activities: Adjustments to reconcile net income to net cash used in operating activities: Net income 279,000 207,000 Depreciation and amortization 133,000 144,000 Provision for loan losses 725,000 446,000 Net (gain) loss on sales of real estate acquired in settlement of loans 105,000 77,000 (Increase) decrease in asset accounts: Accounts Receivable (12,566,000) (6,203,000) Interest receivable (28,000) 472,000 Excess yield receivable 258,000 362,000 Goodwill 30,000 73,000 Other assets (125,000) 270,000 Increase (decrease) in liability accounts: Accounts payable and accrued expenses and interest payable (202,000) (312,000) ----------- ----------- Net cash used in operating activities (11,391,000) (4,464,000) ----------- ----------- Cash flows from investing activities: (Increase) decrease in loans receivable (877,000) 5,331,000 (Increase) in property & equipment (251,000) (307,000) Increase (decrease) in mortgages payable on other real estate 42,000 (511,000) (Increase) decrease in other real estate (208,000) 40,000 ----------- ----------- Net cash provided by (used in) investing (1,294,000) 4,553,000 activities ----------- ----------- Cash flow from financing activities: Increase (decrease) in thrift certificates 12,625,000 (469,000) (Decrease) in line of credit (271,000) (969,000) ----------- ----------- Net cash provided by (used in) financing 12,354,000 (1,438,000) activities ----------- ----------- Net decrease in cash and cash equivalents (331,000) (1,349,000) Cash and cash equivalents at year end 10,489,000 19,628,000 ----------- ----------- Cash and cash equivalents at March 31, 10,158,000 18,279,000 =========== ===========
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 originated and loans paid off. 2) Loans Receivable The following is a summary of Loans Receivable: @ 3-31-96 @ 12-31-95 ----------- ----------- Interest bearing loans $50,846,000 $49,023,000 Deferred loan fees, net (845,000) (886,000) Allowance for loan losses (4,725,000) (4,229,000) ----------- ----------- Total $45,276,000 $43,908,000 =========== =========== The following is a summary of Allowance for Loan Losses: Balance at 12-31-95 $4,229,000 Additions to reserve 725,000 Charge offs/recoveries (229,000) ---------- Balance at 3-31-96 $4,725,000 ========== 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 "Partnership" with respect to consolidated information, and as "Presidential" with respect to the unconsolidated operations of Presidential Mortgage Company) increased $12.5 million (15.2%) to $95.0 million at March 31, 1996 from $82.5 million at December 31, 1995. The increase resulted primarily from a $12.6 million increase (381.8%) in accounts receivable, to $15.9 million at March 31, 1996 from $3.3 million at December 31, 1995, due to loan sales made in March, for which payment was received in April 1996. The increase in accounts receivable was offset by a decrease in loans held for sale, which decreased by $1.2 million (9.5%), to $11.4 million at March 31, 1996 from $12.6 million at December 31, 1995. Loans receivable increased by $1.4 million (3.2%), to $45.3 million at March 31, 1996 from $43.9 million at December 31, 1995, reflecting an increase in origination of portfolio loans by Pacific Thrift and Loan Company ("Pacific Thrift"), the Partnership's primary operating subsidiary. Excess yield receivable decreased $.2 million (7.4%) to $2.5 million from $2.7 million. Real estate acquired in settlement of loans ("OREO") increased by $.1 million (3.1%), to $3.3 million at March 31, 1996, from $3.2 million at December 31, 1995. Total liabilities increased $12.2 million (16.5%) to $86.0 million at March 31, 1996 from $73.8 at December 31, 1995. The increase resulted primarily from a $12.6 million (20.9%) increase in thrift certificates payable, to $72.8 million at March 31, 1996 from $60.2 million at December 31, 1995. Payables to related party increased by $.4 million (133.3%) to $.7 million at March 31, 1996 from $.3 million at December 31, 1995 due to the accrual of fees payable to the Partnership's general partner which may not be paid under the terms of the Partnership's bank loan without the bank's consent. Total partnership capital increased by $.3 million (3.4%) to $9.0 million at March 31, 1996 from $8.7 million at December 31, 1995, due to net income of $.3 million reported for the quarter ended March 31, 1996. RESULTS OF OPERATIONS GENERAL The Partnership reported net income of $.3 million for the three months ended March 31, 1996, after an income tax expense of $.3 million. For the three months ended March 31, 1995, the Partnership reported net income of $.2 million, after recognizing a tax benefit of $.4 million from net operating loss carryforwards of Pacific Thrift. The Partnership has a deferred tax asset of $.9 million at March 31, 1996, which management believes is more likely than not to be utilized in 1996. INTEREST INCOME Total interest income decreased by $.2 million (7.7%), to $2.4 million for the quarter ended March 31, 1996 compared to $2.6 million for the quarter ended March 31, 1995. This resulted from a shorter holding period on loans originated for sale, which reduced the yield on loans held for sale pending the sale date of such loans. Interest on investments also declined by $.1 million (50.0%), to $.1 million from $.2 million, due to a decrease in investments. Total interest expense decreased by $.2 million (14.3%), to $1.2 million for the quarter ended March 31, 1996 from $1.4 million for the quarter ended March 31, 1995, due primarily to a decrease of $.2 million (50.0%) in interest payments on the bank loan, to $.2 million from $.4 million. Net interest income before provision for loan losses remained substantially unchanged at $1.2 million for the quarter ended March 31, 1996 compared to the quarter ended March 31, 1995. PROVISION FOR LOAN LOSSES The provision for loan losses increased by $.3 million (75.0%), to $.7 million for the quarter ended March 31, 1996, from $.4 million for the quarter ended March 31, 1995. The total allowance for loan losses was $4.7 million at March 31, 1996, compared to $4.2 at December 31, 1995. 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 1.4% at March 31, 1996, compared to 1.6% at December 31, 1995. 7 NONINTEREST INCOME Total noninterest income increased by $3.2 million (123.1%), to $5.8 million for the quarter ended March 31, 1996 from $2.6 million for the quarter ended March 31, 1995. The increase is due primarily to an increase of $3.2 million (213.3%) in gains on loans originated for sale, to $4.7 million for the quarter ended March 31, 1996 from $1.5 million for the quarter ended March 31, 1995, reflecting a substantial increase in the volume of loans sold that were originated for sale. During the quarter ended March 31, 1996, the Partnership originated $60.9 million and sold $61.8 million of loans originated for sale, compared to originations of $25.9 million and sales of $29.5 million for the quarter ended March 31, 1995. Trustee and reconveyance fees increased by $.1 million (12.5%), to $.9 million for the quarter ended March 31, 1996 compared to $.8 million for the quarter ended March 31, 1995. Other income declined by $.1 million for the quarter, to $.2 million from $.3 million. NONINTEREST EXPENSE Noninterest expense increased by $2.0 million (55.6%), to $5.6 million for the quarter ended March 31, 1996, from $3.6 million for the quarter ended March 31, 1995. The increase primarily reflects an increase in salaries, employee benefits and personnel services of $1.2 million (75.0%), due to the increase in loan volume and related loan representative commissions, and hiring of additional support personnel to handle the increased loan volume. In addition, general and administrative expenses increased by $.7 million (50.0%), to $2.1 million for the quarter ended March 31, 1996 from $1.4 million for the quarter ended March 31, 1995, due to additional expenses related to the increase in loan originations. Related party fees increased by $.3 million (150.0%), reflecting an increase in fees payable to the general partner due to increased loan volume and fees based on net income. 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 March 31, 1996, cash and cash equivalent assets totalled $10.2 million, compared with $10.5 million at December 31, 1995. However, this did not reflect accounts receivable of $12.1 million for loans sold as of March 31, 1996 which was paid in April 1996. Pacific Thrift is subject to certain leverage and risk-based capital adequacy standards applicable to FDIC- insured institutions. At March 31, 1996, Pacific Thrift met the FDIC regulatory definition of "well capitalized." However, because Pacific Thrift is currently subject to a Memorandum of Understanding requiring it to maintain a certain capital level (which it currently meets), Pacific Thrift is classified by the FDIC as "adequately capitalized." See Annual Report on Form 10-K for the year ended December 31, 1995, Item 1. "Business - Supervision and Regulation -- Regulatory Actions." At March 31, 1996, the Partnership had no material outstanding commitments to fund loans. Certificates of deposit which are scheduled to mature in one year or less from March 31, 1996 totalled $35.8 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 $11.4 million in cash from operating activities from January 1, 1996 through March 31, 1996. This includes a deduction from cash for the $12.6 million increase in accounts receivable, which was primarily due to loans sold at March 31, 1996, and which was paid in April 1996. The Partnership used $1.3 million in investing activities for the three months ended March 31, 1996, primarily due to a net increase of $.9 million in loans receivable and loans held for sale. The Partnership realized $12.4 million from financing activities for the three months ended March 31, 1996, primarily reflecting an increase of $12.6 million in thrift certificates and a decrease of $.3 million 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. 8 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. There has been no change in the legal actions described in the Annual Report on Form 10-K, except as follows: On April 23, 1996, Consolidated Reconveyance Company ("CRC") was served with a complaint by seven individuals suing both individually and on behalf of the general public in a purported class action filed in the Superior Court of Los Angeles County, California. The complaint names over 50 defendants, including numerous title insurance companies and trust deed services companies, generally alleging that the title insurance companies did not make certain refunds of certain trustee sale guarantee (TSGs) fees which they were required to make under the terms of a settlement of a previous case (in which CRC was not named), and that the trust deed services companies failed to purchase less costly alternative products, to request and remit refunds in the cost of TSGs or to advise the members of the class of their right to a refund from the title insurance companies. The complaint seeks restitution of all excess charges, an injunction against the practices cited and attorneys fees. The case is still in the pleading stage, discovery has not yet commenced and the purported class of plaintiffs has not yet been certified. Management believes that CRC has charged TSG fees in compliance with applicable law, and that this action will not have a material adverse effect on the earnings or financial condition of the Partnership. 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 March 31, 1996. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. None. (b) Reports on Form 8-K. None. 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, on May 14, 1996. PRESIDENTIAL MORTGAGE COMPANY (Registrant) May 14, 1996 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 May 14, 1996 CHARLES J. SIEGEL ----------------- Charles J. Siegel, Chief Financial and Accounting Officer of the Registrant EX-27 2 FDS
9 1000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 3121 237 6800 0 0 0 0 61362 4725 95030 72781 6500 5023 1720 0 0 0 9006 95030 2278 130 0 2408 1010 1227 1181 725 0 5636 627 627 0 0 279 0 0 6.18 781 722 950 0 4229 229 0 4725 4725 0 0
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