-----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, JAV0dFky4mqps31cc4Ui2YAA+FJ0HutshWUUEJWfGeg39knUX9fI7LFnDMXFrAqY gBxbhNd4Wz9YF98gv+dxfA== /in/edgar/work/20000814/0000841501-00-000008/0000841501-00-000008.txt : 20000921 0000841501-00-000008.hdr.sgml : 20000921 ACCESSION NUMBER: 0000841501-00-000008 CONFORMED SUBMISSION TYPE: 10-QT PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OWENS MORTGAGE INVESTMENT FUND CENTRAL INDEX KEY: 0000841501 STANDARD INDUSTRIAL CLASSIFICATION: [6221 ] IRS NUMBER: 680023931 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-QT SEC ACT: SEC FILE NUMBER: 000-17248 FILM NUMBER: 695671 BUSINESS ADDRESS: STREET 1: 2221 OLYMPIC BLVD STREET 2: P O BOX 2308 CITY: WALNUT CREEK STATE: CA ZIP: 94595 BUSINESS PHONE: 5109353840 MAIL ADDRESS: STREET 1: 2221 OLYMPIC BLVD STREET 2: P O BOX 2308 CITY: WALNUT CREEK STATE: CA ZIP: 94595 FORMER COMPANY: FORMER CONFORMED NAME: OWENS MORTGAGE INVESTMENT FUND II DATE OF NAME CHANGE: 19920703 10-QT 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM l0-Q Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For Quarter Ended June 30, 2000 Commission file number O-17248 OWENS MORTGAGE INVESTMENT FUND, a California Limited Partnership (Exact Name of Registrant as Specified In Its Charter) California 68-0023931 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2221 Olympic Boulevard Walnut Creek, California 94595 (Address of principal executive office) (Zip Code) (925) 935-3840 (Registrant'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_________ PART I. FINANCIAL INFORMATION Item 1. Financial Statements
OWENS MORTGAGE INVESTMENT FUND (A California Limited Partnership) Balance Sheets June 30, 2000 and December 31, 1999 (UNAUDITED) June 30 December 31 2000 1999 ASSETS Cash and cash equivalents $ 4,546,613 $ 5,216,326 Certificates of deposit 50,000 250,000 Loans secured by trust deeds 208,174,928 200,356,517 Less: Allowance for loan losses (4,000,000) (4,000,000) ----------- ----------- 204,174,928 196,356,517 Real estate held for sale, net of allowance for losses of $1,336,000 in 2000 and 1999 14,745,125 12,397,722 Interest receivable 2,060,831 2,150,952 Notes receivable from General Partner 1,178,000 - ----------- ----------- Total Assets $226,755,497 $216,371,517 =========== =========== LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Accrued distributions payable $ 606,129 $ 577,281 Due to General Partner 620,433 751,759 Accounts payable and accrued liabilities 491,180 430,664 ----------- ----------- Total Liabilities 1,717,742 1,759,704 ----------- ----------- PARTNERS' CAPITAL: General partners 2,197,641 2,104,936 Limited partners (Subject to Redemption) 222,840,114 212,506,877 ----------- ----------- Total Partners' Capital 225,037,755 214,611,813 ----------- ----------- Total Liabilities and Partners' Capital $226,755,497 $216,371,517 =========== ===========
See accompanying notes to interim financial statements
OWENS MORTGAGE INVESTMENT FUND (A California Limited Partnership) STATEMENTS OF INCOME For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) For the Three Months Ended For the Six Months Ended June 30 June 30 June 30 June 30 2000 1999 2000 1999 ---- ---- ---- ---- REVENUES: Interest income on loans secured by trust deeds $ 5,878,120 $ 4,768,312 $ 11,446,222 $ 9,457,032 Gain on sale of real estate - 18,324 - 18,324 Other income 41,926 95,255 121,226 250,197 ----------- ----------- ------------ ----------- Total revenues 5,920,046 4,881,891 11,567,448 9,725,553 ----------- ----------- ------------ ----------- OPERATING EXPENSES: Management fees to General Partner 868,121 523,157 1,961,659 923,328 Servicing fees to General Partner 130,493 119,093 257,432 232,120 Promotional interest to General Partner 23,172 6,053 46,857 30,370 Administrative 7,875 5,000 15,750 12,500 Legal and accounting 45,768 23,684 90,877 110,157 Real estate operations, net (108,705) (38,995) (240,141) (67,876) Other 16,993 2,309 21,969 62,760 ------------ ` ----------- ------------- ------------ Total operating expenses 983,717 640,301 2,154,403 1,303,359 ------------ ----------- ----------- ----------- Net income $ 4,936,329 $ 4,241,590 $ 9,413,045 $ 8,422,194 ============ =========== =========== =========== Net income allocated to General Partner $ 48,514 $ 41,177 $ 92,518 $ 83,166 ============ =========== =========== =========== Net income allocated to limited partners $ 4,887,815 $ 4,200,413 $ 9,320,527 $ 8,339,028 ============ =========== =========== =========== Net income allocated to limited partners per weighted average limited partnership unit $.022 $.021 $.043 $.041 ==== ==== ==== ==== Weighted average limited partnership units 221,217,000 203,848,000 218,768,000 203,080,000 =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
OWENS MORTGAGE INVESTMENT FUND (A California Limited Partnership) Interim Statements of Cash Flows For the Six Months Ended June 30, 2000 and 1999 (UNAUDITED) June 30 June 30 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 9,413,045 $ 8,422,194 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of real estate properties - (18,324) Changes in operating assets and liabilities: Interest receivable 90,121 (43,081) Other receivables - 59,074 Accounts payable and accrued liabilities 60,516 (128,668) Due to General Partner (131,326) 120,677 -------------- ------------- Net cash provided by operating activities 9,432,356 8,411,872 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of loans secured by trust deeds (37,893,048) (49,097,872) Principal collected 657,350 839,383 Loan payoffs 21,388,374 31,838,247 Sales of loans secured by trust deeds at face value 6,165,913 4,529,000 Investment in real estate properties (34,646) (75,763) Net proceeds from disposition of real estate properties 237,113 327,398 Investment in corporate joint venture (2,446,120) (57,067) Repayment received from corporate joint venture 581,250 56,141 Proceeds from maturities of certificates of deposit 200,000 184,006 Proceeds from maturity of commercial paper - 3,084,044 ------------ ------------- Net cash used in investing activities (11,143,814) (8,372,483) ------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of partnership Units 12,782,404 9,709,152 Accrued distributions payable 28,848 14,972 Partners' cash distributions (3,560,158) (3,202,651) Partners' capital withdrawals (8,209,349) (9,519,365) ------------ ------------- Net cash used in financing activities 1,041,745 (2,997,892) ------------- -------------- INCREASE IN CASH AND CASH EQUIVALENTS (669,713) (2,958,503) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,216,326 8,260,599 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,546,613 $ 5,302,096 ============ ===========
See note 2 for supplemental disclosure of non-cash investing and financing activities. See accompanying notes to interim financial statements OWENS MORTGAGE INVESTMENT FUND (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 2000 (1) Summary of Significant Accounting Policies In the opinion of the management of the Partnership, the accompanying unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial information included therein. These financial statements should be read in conjunction with the audited financial statements included in the Partnership's Form 10-K for the fiscal year ended December 31, 1999 filed with the Securities and Exchange Commission. The results of operations for the three-month and six-month periods ended June 30, 2000 are not necessarily indicative of the operating results to be expected for the full year. (2) Loans Secured by Trust Deeds The Partnership's investment in loans delinquent greater than ninety days is $8,281,000 and $7,415,000 as of June 30, 2000 and December 31, 1999, respectively. As of June 30, 2000, $6,017,000 of the delinquent loans has a specific related allowance for credit losses totaling $1,135,000. There is a non-specific allowance for credit losses of $2,865,000 for the remaining delinquent balance and for other current loans. The Partnership has discontinued the accrual of interest on all loans that are delinquent greater than ninety days. As of June 30, 2000 and December 31, 1999, loans past maturity totaled approximately $40,705,000 and $29,451,000, respectively. Of the past maturity loans at June 30, 2000, $6,441,000 represent loans for which interest payments are delinquent more than ninety days. During the quarter ended June 30, 2000 and 1999, the Partnership refinanced loans totaling $11,148,000 and $0, respectively. During the quarter ended June 30, 2000, the Partnership sold for cash full and partial interests in four loans to third parties and to related parties in the amounts of $2,710,000 and $300,000, respectively. The sale of these loans resulted in no gain or loss in the accompanying financial statements. During the quarter ended June 30, 2000, the Partnership foreclosed on a loan in the amount of $685,000. During the six months ended June 30, 2000, the Partnership sold two delinquent loans at book value to the General Partner for notes receivable in the total amount of $1,178,000. The General Partner subsequently foreclosed on the loans. OWENS MORTGAGE INVESTMENT FUND (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 2000 (3) Transactions with Affiliates The General Partner of the Partnership, Owens Financial Group, Inc. (OFG), is entitled to receive from the Partnership a management fee of up to 2.75% per annum of the average unpaid balance of the Partnership's mortgage loans at the end of each of the preceding twelve months for services rendered as manager of the Partnership. All of the Partnership's loans are serviced by OFG, in consideration for which OFG receives up to .25% per annum of the unpaid principal balance of the loans. OFG, at its sole discretion may, on a monthly basis, adjust the management and servicing fees as long as they do not exceed the allowable limits calculated on an annual basis. In determining the management and servicing fees and hence the yield to the Partnership, OFG may consider a number of factors, including the then-current market yields. Even though the fees for a particular month may exceed one-twelfth of the maximum limits, at the end of the calendar year the sum of the fees collected for each of the twelve months may not exceed the stated limits. Management fees amounted to approximately $868,000 and $523,000 for the three months ended June 30, 2000 and 1999, respectively, and $1,962,000 and $923,000 for the six months ended June 30, 2000 and 1999, respectively. Service fee payments to OFG approximated $130,000 and $119,000 for the three months ended June 30, 2000 and 1999, respectively, and $257,000 and $232,000 for the six months ended June 30, 2000 and 1999, respectively. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward Looking Statements Some of the information in this Form 10-Q may contain forward-looking statements. Such statements can be identified by the use of forward-looking words such as "may," "will," "expect," "anticipate," "estimate," "continue" or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial conditions or state other forward-looking information. When considering such forward-looking statements you should keep in mind the risk factors and other cautionary statements in the Partnership's Prospectus. Although management of the Partnership believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there are certain factors, in addition to these risk factors and cautioning statements, such as general economic conditions, local real estate conditions, adequacy of reserves, or weather and other natural occurrences that might cause a difference between actual results and those forward-looking statements. Results of Operations Three Months Ended June 30, 2000 Compared to 1999 The net income increase of $695,000 (16.4%) for 2000 compared to 1999, was due to: an increase in interest income on loans secured by trust deeds of $1,110,000; an increase in net income from real estate operations of $70,000; and The net income increase in 2000 as compared to 1999, was offset by: a decrease in other income of $53,000; and an increase in management fees to General Partner of $345,000. Interest income on loans secured by trust deeds increased $1,110,000 (23.3%) for the three months ended June 30, 2000, as compared to the same period in 1999. This increase was a result of an increase in the weighted average yield of the loan portfolio from 10.81% for the three months ended June 30, 1999 to 11.17% for the three months ended June 30, 2000. In addition, the average loan portfolio grew by 9.6% for the quarter ended June 30, 2000 as compared to 1999. Real estate operations resulted in an increase in net income of $70,000 during the three months ended June 30, 2000 as compared to 1999. This increase in income is a result of increased occupancy and rental rates on several of the Partnership's properties during the end of 1999 and the first quarter of 2000. Management fees to the General Partner are paid pursuant to the Partnership Agreement between the General Partner and Limited Partners. Other income decreased by $53,000 (56.0%) due primarily to a decrease in interest income earned on investments (money market funds, certificates of deposit, etc.) as the Partnership was able to remain fully invested in loans secured by deeds of trust during most of the three months ended June 30, 2000. Six Months Ended June 30, 2000 Compared to 1999 The net income increase of $991,000 (11.8%) for 2000 compared to 1999, was due to: an increase in interest income on loans secured by trust deeds of $1,989,000; an increase in net income from real estate operations of $172,000; a decrease in legal and accounting expenses of $19,000; and a decrease in other expenses of $41,000. The net income increase in 2000 as compared to 1999, was offset by: a decrease in other income of $129,000; and an increase in management fees to General Partner of $1,038,000. Interest income on loans secured by trust deeds increased $1,989,000 (21.0%) for the six months ended June 30, 2000, as compared to the same period in 1999. This increase was a result of an increase in the weighted average yield of the loan portfolio from 10.76% for the six months ended June 30, 1999 to 11.24% for the six months ended June 30, 2000. In addition, the average loan portfolio grew by 10.9% for the quarter ended June 30, 2000 as compared to 1999. Real estate operations resulted in an increase in net income of $172,000 during the six months ended June 30, 2000 as compared to 1999. This increase in income is a result of increased occupancy and rental rates on several of the Partnership's properties during the end of 1999 and the first quarter of 2000. Legal and accounting expenses and other expenses decreased by $19,000 (17.5%) and $41,000 (65.0%), respectively, during the six months ended June 30, 2000 as compared to 1999. These decreases were due primarily to legal and registration expenses incurred during the six months ended June 30, 1999 as a result of a new Form S-11 Registration Statement filed with the Securities and Exchange Commission and changes made to the Partnership Agreement during that period. Management fees to the General Partner are paid pursuant to the Partnership Agreement between the General Partner and Limited Partners. Other income decreased by $129,000 (51.5%) due primarily to a decrease in interest income earned on investments (money market funds, certificates of deposit, etc.) as the Partnership was able to remain fully invested in loans secured by deeds of trust during the six months ended June 30, 2000. Financial Condition June 30, 2000 and December 31, 1999 Loan Portfolio The number of Partnership mortgage investments decreased from 142 to 126 and the average loan balance increased from $1,411,000 to $1,652,000 between December 31, 1999 and June 30, 2000. Approximately $8,281,000 (4.0%) and $7,415,000 (3.7%) of the loans invested in by the Partnership were more than 90 days delinquent in payment as of June 30, 2000 and December 31, 1999, respectively. Of these amounts, approximately $1,162,000 (0.6%) and $850,000 (0.4%) were in the process of foreclosure. Loans more than 90 days delinquent increased by $866,000 (11.7%) from December 31, 1999 to June 30, 2000. A loan loss reserve in the amount of $4,000,000 was maintained on the books of the Partnership as of June 30, 2000 and December 31, 1999, respectively. As of June 30, 2000 and December 31, 1999, approximately 37% and 40% of the Partnership's mortgage loans are secured by real property in Northern California. The decrease in the percentage of loans secured by real property in Northern California has primarily been due to the payoff of several of those loans and the purchase of new loans secured by properties outside of Northern California. As the real estate market in Southern California and other parts of the Western United States has improved, more loans secured by real estate in those areas have been invested in by the Partnership. In general, there has been increased competition in the lending business in Northern California, particularly in the San Francisco Bay Area, and the General Partner has increasingly sought loans in areas outside of this region. The Partnership's investment in construction loans rose by $10,076,000 (44.4%) since December 31, 1999. Improvement in real estate market conditions have made development and, thus, construction loans more attractive. All but one of the Partnership's construction loans are first trust deeds and none of these loans is delinquent in payments more than 90 days as of June 30, 2000. The Partnership's investment in unimproved land rose by $5,261,000 (34.1%) since December 31, 1999. All of the Partnership's loans secured by unimproved land are first trust deeds. In addition, only one of these loans, in the amount of $802,000, is more than 90 days delinquent in payment as of June 30, 2000. Real Estate Properties Held for Sale The Partnership currently holds title to fourteen properties that were foreclosed on from January 1, 1993 through June 30, 2000 in the amount of $10,658,000, net of allowance for losses of $1,336,000. Since 1993, the Partnership's investment in real estate held for sale has increased due to the General Partner's decision to stop acquiring from the Partnership all property subject to foreclosure. When the Partnership acquires property by foreclosure, it typically earns less income on those properties than could be earned on mortgage loans and may not be able to sell the properties in a timely manner. During the three months ended June 30, 2000, the Partnership acquired one property through foreclosure. In addition, during the three months ended June 30, 2000, no properties were sold by the Partnership. Seven of the Partnership's fourteen properties do not currently generate revenue. Expenses from rental properties have increased from approximately $122,000 to $164,000 (34.4%) for the three months ended June 30, 1999 and 2000, respectively, and revenues associated with these properties have increased from $161,000 to $273,000 (69.6%), thus generating a net income from real estate held for sale of $109,000 during the three months ended June 30, 2000. The increase in income is a result of increased occupancy and rental rates on several of the Partnership's properties during the end of 1999 and the first quarter of 2000. Investment in Corporate Joint Venture In 1995, the Partnership foreclosed on a $571,853 loan and obtained title to a commercial lot in Los Gatos, California that secured the loan. In 1997, the Partnership contributed the lot to a limited liability company (the Company) formed with an unaffiliated developer to develop and sell a commercial office building on the lot. The Partnership is providing construction financing to the Company at prime plus two percent. During the three months ended June 30, 2000 and the year ended December 31, 1999, the Partnership advanced an additional $1,503,000 and $1,417,000, respectively, to the Company for development. In addition, the Partnership received repayment of advances from the Company in the amount of $581,000 during the three months ended June 30, 2000. The total investment in the Company was $4,087,000 and $2,222,000 as of June 30, 2000 and December 31, 1999, respectively. The Company began construction in July 1999 which was substantially completed in June 2000. In April 2000, the Company entered into a contract to sell the completed building and entered into a reverse, like-kind exchange, whereby the proceeds attributable to the Partnership's interest in the Company from the sale of the building (appoximately $3,333,000) will be reinvested into the purchase of a retail commercial development in Greeley, Colorado. The sale of the building took place in July 2000 and the exchange was completed. A new shareholder that will act as the property manager of the Greely property will be admitted to the Company in August, 2000. Notes Receivable from General Partner Notes receivable from General Partner increased by $1,178,000 (100%) during the six months ended June 30, 2000 as a result of the Partnership selling two delinquent loans at book value to the General Partner for notes receivable in the total amount of $1,178,000. The General Partner subsequently foreclosed on the loans. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities increased from approximately $431,000 as of December 31, 1999 to $491,000 as of June 30, 2000 ($60,000 or 13.9%) due primarily to a higher progress billing payable on the Los Gatos office building construction as of June 30, 2000. Asset Quality Some losses are normal when lending money and the amounts of losses vary as the loan portfolio is affected by changing economic conditions and financial experiences of borrowers. There is no precise method of predicting specific losses or amounts that ultimately may be charged off on particular segments of the loan portfolio. The conclusion that a Partnership loan may become uncollectible, in whole or in part, is a matter of judgment. Although lenders such as banks and savings and loans are subject to regulations that require them to perform ongoing analyses of portfolio, loan to value ratios, reserves, etc., and to obtain current information regarding its borrowers and the securing properties, the Partnership is not subject to these regulations and has not adopted these practices. Rather, management of the General Partner, in connection with the quarterly closing of the accounting records of the Partnership and the preparation of the financial statements, evaluates the Partnership's mortgage loan portfolio. Based upon this evaluation, a determination is made as to whether the allowance for loan losses is adequate to cover potential losses of the Partnership. As of June 30, 2000, management believes that the allowance for loan losses of $4,000,000 is adequate. As of then, loans secured by trust deeds include $8,281,000 in loans delinquent over 90 days, of which $1,162,000 was invested in loans that were in the process of foreclosure. Due to the loan-to-value criteria established by the General Partner, in its opinion, the mortgage loans held by the Partnership appear in general to be adequately secured. The General Partner's judgment of the adequacy of loan loss reserves includes consideration of: economic conditions; borrower's financial condition; evaluation of industry trends; review and evaluation of loans identified as having loss potential; and quarterly review by Board of Directors. Liquidity and Capital Resources Purchases of Units and loan payoffs provide the capital for mortgage investments. A substantial increase in general market interest rates could have an adverse affect on the Partnership, because then the Partnership's investment yield could be lower than other debt-related investments. In that event, purchases of additional Units could decline, which, in turn, would reduce the liquidity of the Partnership and its ability to make additional mortgage investments. In contrast, a significant increase in the dollar amount of loan payoffs and/or additional limited partner investments without the origination of new loans of the same amount would increase the liquidity of the Partnership. This increase in liquidity could result in a decrease in the yield paid to limited partners as the Partnership would be required to invest the additional funds in lower yielding, short term investments. The Partnership has not and does not intend to borrow money for investment purposes. There was little variation in the percentage of capital withdrawals to total capital invested by the limited partners between 1994 and 1998, excluding regular distributions of net income to limited partners. The annualized withdrawal percentage increased during 1999 and 2000 primarily due to an increase in the maximum quarterly amount which could be withdrawn by limited partners from $75,000 to $100,000 as a result of a change in the Partnership Agreement in December 1998. Withdrawal percentages have been 7.37%, 6.11%, 7.85%, 6.63%, 7.33%, and 7.99% for the years ended December 31, 1994, 1995, 1996, 1997, 1998 and 1999 and 7.55% (annualized) for the six months ended June 30, 2000. These percentages are the annual average of the limited partners capital withdrawals in each calendar quarter divided by the total limited partner capital as of the end of each quarter. The limited partners may withdraw, or partially withdraw, from the Partnership and obtain the return of their outstanding capital accounts at $1.00 per Unit (book value) within 61 to 91 days after written notices are delivered to the General Partner, subject to the following limitations, among others: No withdrawal of Units can be requested or made until at least one year from the date of purchase of those Units, for Units purchased on or after February 16, 1999, other than Units received under the Partnership's Reinvested Distribution Plan. Any such payments are required to be made only from net proceeds and capital contributions (as defined) during said 91-day period. A maximum of $100,000 per partner may be withdrawn during any calendar quarter. The General Partner is not required to establish a reserve fund for the purpose of funding such payments. No more than 10% of the outstanding limited partnership interest may be withdrawn during any calendar year except upon dissolution of the Partnership. Contingency Reserves The Partnership maintains cash, cash equivalents and marketable securities as contingency reserves in an aggregate amount of 2% of the limited partners' capital accounts to cover expenses in excess of revenues or other unforeseen obligations of the Partnership. Although the General Partner believes that contingency reserves are adequate, it could become necessary for the Partnership to sell or otherwise liquidate certain of its investments to cover such contingencies on terms which might not be favorable to the Partnership. Current Economic Conditions The current economic climate in Northern California and the Western United States is generally strong. Despite the Partnership's ability to purchase mortgage loans with relatively strong yields which has resulted in increased net yields paid to the limited partners, increased competition or changes in the economy could again have the effect of reducing mortgage yields in the future. Current loans with relatively high yields could be replaced with loans with lower yields, which in turn could reduce the net yield paid to the limited partners. In addition, if there is less demand by borrowers for loans and, thus, fewer loans for the Partnership to invest in, it will invest its excess cash in shorter-term alternative investments yielding considerably less than the current investment portfolio. The General Partner has the ability to purchase delinquent loans from the Partnership as long as certain criteria outlined in the Partnership Agreement are met. Although the General Partner has purchased delinquent loans and foreclosed properties from the Partnership in the past, they are not required to do so; therefore, the Partnership could sustain losses with respect to loans secured by properties located in areas of declining real estate values. This could result in a reduction of the net income of the Partnership for a year in which those losses occur. There is no way of making a reliable estimate of these potential losses at the present time. Year 2000 Issues The General Partner so far has experienced no disruptions in the operations of its internal information systems during its transition to the year 2000. The General Partner is not aware that any of its vendors experienced any disruptions during their transition to the year 2000. The General Partner will continue to monitor the transition to year 2000 and will act promptly to resolve any problems that occur. If the General Partner or any third parties with which it has business relationships experience problems related to the year 2000 transition that have not yet been discovered, it could have a material adverse impact on the General Partner and the Partnership. PART II. OTHER INFORMATION Item 1. Legal Proceedings The Partnership is not presently involved in any material legal proceedings. Item 6(b). Reports on Form 8-K A report on Form 8-K was filed by the Partnership on May 5, 2000. This Form 8-K reported the change in the Partnership's certifying accountant from KPMG LLP to Grant Thornton LLP effective April 28, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Dated: August 11, 2000 OWENS MORTGAGE INVESTMENT FUND, a California Limited Partnership By: Owens Financial Group, Inc, General Partner Dated: August 11, 2000 By: /William C. Owens/ --------------- ------------------ William C. Owens, President Dated: August 11, 2000 By: /Bryan H. Draper/ --------------- ----------------- Bryan H. Draper, Chief Financial Officer Dated: August 11, 2000 By: /Melina A. Platt/ --------------- ----------------- Melina A. Platt, Controller EX-27 2 0002.txt FDS --
5 (Replace this text with the legend) 841501 OWENS MORTGAGE INVESTMENT FUND 1 U.S. DOLLARS 3-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 1 4,596,613 0 2,060,831 0 0 6,657,444 14,175,125 0 226,755,497 1,717,742 0 0 0 0 225,037,755 226,755,497 0 5,920,046 0 983,717 0 0 0 4,936,329 0 4,936,329 0 0 0 4,936,329 .022 .022
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