10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

☐ 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:  333-4028LA

MINISTRY PARTNERS INVESTMENT COMPANY, LLC

(Exact name of small business issuer in its charter)

CALIFORNIA (State or other jurisdiction of incorporation or organization) 26-3959348 (I.R.S. Employer Identification No.)

915 West Imperial Highway, Suite 120, Brea, California 92821

(Address of principal executive offices)

Issuer’s telephone number: (714) 671-5720

Securities registered under 12(b) of the Exchange Act: None

Securities registered under 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No ☑.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐No ☑.

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes ☑ No ☐.

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Emerging Growth Company ☐ Smaller reporting company filer ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revise accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☑.

As of May 4, 2017 (the last date any sale or exchange was made of our Class A Common Units), the aggregate market value of the registrant’s Class A Common Units held by non‑affiliates was estimated to have no value. As of June 29, 2018 (the last date any sale or exchange was made of our Series A Preferred Units), the market value of the Series A Preferred Units was estimated at $67.50 per share or $7,904,250. The registrant has sold no Class A Common Units within the past sixty days and there is no public market value for the registrant’s Class A Common Units. The number of Class A Common Units outstanding, as of December 31, 2019, was 146,522.

DOCUMENTS INCORPORATED BY REFERENCE:  None

MINISTRY PARTNERS INVESTMENT COMPANY, LLC

FORM 10-K

TABLE OF CONTENTS

			Page No.
Part I
	Item 1.	Business	3
	Item 1A.	Risk Factors	17
	Item 1B.	Unresolved Staff Comments	39
	Item 2.	Properties	40
	Item 3.	Legal Proceedings	41
	Item 4.	Mine Safety Disclosures	42
Part II
	Item 5.	Market for our Common Equity, Related Member Matters and Issuer Purchases of Equity Securities	43
	Item 6.	Selected Financial Data	45
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	70
	Item 8.	Financial Statements and Supplementary Data	71-F-52
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	72
	Item 9A.	Controls and Procedures	72
	Item 9B.	Other Information	74
Part III
	Item 10.	Managers and Executive Officers and Corporate Governance	75
	Item 11.	Executive Compensation	85
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Member Matters	86
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	87
	Item 14.	Principal Accounting Fees and Services	88
Part IV
	Item 15.	Exhibits and Financial Statements Schedules	89
	Item 16	Form 10-K Summary	92
SIGNATURES			93

Explanatory Note for Purposes of the “Safe Harbor Provisions” of Section 21E of the Securities Exchange Act of 1934, as amended

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward‑looking statements are included with respect to, among other things, our current business plan, business strategy and portfolio management. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results or outcomes to differ materially from those contained in the forward-looking statements. Important factors that we believe might cause such differences are discussed in the section entitled, “Risk Factors” in Part I, Item 1A of this Form 10-K or otherwise accompany the forward-looking statements contained in this Form 10-K. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in this Form 10-K.

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PART I
Item 1.	Business

General

Throughout this document, we refer to Ministry Partners Investment Company, LLC and its subsidiaries as “the Company,” “we,” “us,” or “our.” We are a credit union service organization (“CUSO”) organized as a California limited liability company. Our equity owners include 11 federal or state chartered credit unions. We operate as a non-bank financial services company.

Evangelical Christian Credit Union (“ECCU”) incorporated the Company under California law on October 22, 1991 under the name Ministry Partners Investment Corporation. We converted to a California limited liability company on December 31, 2008 and changed our name to Ministry Partners Investment Company, LLC.

We exist to help make evangelical ministries more effective by providing ministries with Biblically based, value-driven financial services and by providing funding services to the credit unions who serve those ministries.

Our principal executive offices are located at 915 West Imperial Highway, Suite 120, Brea, California 92821. Our telephone number is (714) 671-5720 and our website address is www.ministrypartners.org.

Our Subsidiaries

We have four wholly owned subsidiaries: Ministry Partners Funding, LLC, MP Realty Services, Inc., Ministry Partners Securities, LLC, and Ministry Partners for Christ, Inc.

Ministry Partners Funding, LLC

Ministry Partners Funding, LLC (“MPF”) is a special purpose subsidiary created in 2007. MPF’s original purpose was facilitating church mortgage securitizations by warehousing church and ministry mortgages. With the deleveraging of the Company’s loan investments commencing in 2009, MPF was dormant between December 31, 2009 and January 15, 2015. On January 15, 2015, MPF began serving as the custodian of assets pledged to

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investors in our secured investment notes. A Loan and Security Agreement governs the custodian relationship between the Company and MPF.

MP Realty Services, Inc.

We formed MP Realty Services, Inc., a California corporation, on November 13, 2009 (“MP Realty”). MP Realty Services has been operating as a corporate real estate broker since February 23, 2010 when it received a license from the California Department of Real Estate. MP Realty Services provides loan brokerage and other real estate services to churches and ministries. MP Realty Services has conducted limited operations since its inception.

Ministry Partners Securities, LLC.

Ministry Partners Securities, LLC (“MP Securities”) is a Delaware limited liability company we formed on April 26, 2010. Through MP Securities, the Company provides investment advisory and financial planning solutions for individuals, businesses, organizations, churches, charitable institutions, and faith-based organizations. MP Securities also serves as the selling agent for the Company’s public and private placement notes. MP Securities has been a member of the Financial Industry Regulatory Authority (“FINRA”) since March 2, 2011. The subsidiary also provides insurance products under the name Ministry Partners Insurance Agency, LLC through its resident license to act as an insurance producer. MP Securities received its resident license from the California Department of Insurance on March 14, 2013.

Ministry Partners for Christ, Inc.

The Company formed Ministry Partners for Christ, Inc. (“MPC”) on December 28, 2018 for religious and charitable purposes within the meaning of Section 501(c)(3) of the U.S. Internal Revenue Code of 1986. MPC is a not-for-profit corporation formed and organized under Delaware law that will make charitable grants to Christian education, and provide accounting, consulting, and financial expertise to aid evangelical Christian ministries. Although the Company has made an initial cash contribution to launch the foundation, MPC expects to start its grant making activities in the fourth quarter of 2020. On August 23, 2019, the Internal Revenue Service granted MPC tax-exempt status as a private foundation under Section 501(c)(3) of the Internal Revenue Code.

Our Business

How we generate revenue

We are a non-bank financial services company that provides financing to evangelical Christian churches, schools, and ministries and we offer investment products to our investors and clients. We generate our revenue:

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· through interest income earned on our mortgage loan investments;

· from the sale of securities, insurance products, and investment products;

· by generating fees from originating and servicing church, schools, and ministry related mortgage loans;

· through gains realized on the sale of loan participation interests to financial institutions; and

· from fee income received in exchange for providing services to credit unions.

Business Strategy

Our strategy is to generate a stable and diverse flow of income.  Due to the concentration of our loan portfolio in evangelical Christian church and ministry loans, we seek other non-financing sources of revenue to provide a more diverse and stable flow of earnings than a traditional finance company.  We believe a more diverse revenue stream will enable us to be resilient in future economic downturns.  To that end, we have focused on generating recurring fee income business by offering investment services and products, and through loan servicing generating income from our mortgage loan investments.  We continue to seek and explore other revenue sources.

Services we provide

The Company provides three primary services on a national basis to our clients for the benefit of our credit union equity members.

· We provide investment and insurance advisory services and productsto individuals, business entities, not-for-profit organizations, educational institutions, ministries and faith based organizations.

· We provide commercial mortgage loans to evangelical Christian churches and ministries.

· We provide a platform for Christian individuals and institutions to participate in funding those projects by investing in the Company’s debt securities.

Our investment and insurance advisory services and products

Through MP Securities, we offer a broad scope of investment and insurance advisory services and products for our clients, including opening customer brokerage accounts via a clearing firm agreement with the Royal Bank of Canada Dain Rauscher (RBC Dain). This business line revenue is a key component in our strategy to grow our non-interest income. Some of the services we provide our clients include offering:

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· financial plans;

· investment advisory services;

· investments in mutual funds;

· client brokerage accounts;

· life and disability insurance products; and

· fixed and variable annuities.

Our lending services and products

Our lending services consist of originating, purchasing, selling, and servicing mortgage loansmade to churches, Christian ministries, faith based organizations, Christian schools and educational institutions. Our total loans receivable net of allowance at December 31, 2019 was $129 million or 82% of our total consolidated assets. For additional information regarding our Lending Activity, see the Section captioned “Part II. Financial Condition” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Loan Types

The majority of the loans we invest in are real estate secured Christian church and ministry loans. These loans typically have 10-year balloon maturities with a rate adjustment after five years. The loans may have amortization periods up to thirty years. We secure the loans we invest in by placing liens on church, school, and ministry owned real properties. In addition, we occasionally provide construction loans, lines of credit, and letters of credit for our customers.

Originating Loans

We utilize customer referrals, our sales staff relationships and experience, and outside loan brokers to identify loan investment opportunities within our marketplace. We typically receive origination fees on loans we originate. The Company amortizes the origination fee we receive and the estimated cost to originate the loan over the life of the loan. For some borrowers, we may better serve the ministry by referring them to another church lending institution. In those cases, we may receive a finder’s fee. From time to time, we may purchase a participation interest in a loan originated by a third party originator. However, we originate the majority of our new loan investments.

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Loan Underwriting

We have developed underwriting criteria that we apply to loans we originate or purchase. We believe our underwriting process will lead to a profitable business. In general, the criteria we consider are similar to methods used by other church mortgage lenders. We use the same underwriting standards and evaluation whether we originate the loans ourselves, or purchase the loan from a third party originator.

Our Loan Servicing

We generate our loan servicing income by passing through a lower interest rate to the purchaser of the loan as compared to the face rate on the note. As an example, we may sell a loan paying 6.00% interest at a 5.50% pass through rate to a participant. In this example, we would receive 0.50% servicing income on the portion of the loan sold.

Our Loan Revenue

Interest income on our mortgage loans generates the majority of our loan revenue. For additional information regarding our loan investments, see the Section captioned “Net Interest Income and Net Interest Margin” in the “Results of Operations section” of “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Funding our mortgage loans

We raise the majority of the funds for our loan investments through issuing and selling debt securities. We offer our debt securities in both registered public offerings and private placement offerings. We market our debt securities primarily to investors who are in or associated with the Christian community. Our investors include individuals, ministries, and other Christian organizations. MP Securities is our selling agent for these debt securities. In addition, we also obtain funds by selling participation interests in our mortgage loan investments. In the past, we have also raised funds by using lines of credit from various financial institutions. Our ability to originate and fund new mortgage loans is dependent on:

· selling investor notes to institutional and high net-worth investors;

· leveraging our mortgage loan investments through the sale of loan participation interests to other financial institutions;

· expanding the sale of our debt securities; and

· increasing the amount of non-interest income we generate.

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Where we conduct our business

While we conduct most of our business in California, we own mortgage loan interests in 30 different states.

Competition

Although the demand for church financing is both broad and fragmented, we believe no one lender has a dominant competitive position in the market. We compete with church bond financing companies, banks, credit unions, denominational loan funds, real estate investment trusts, insurance companies, and other financial institutions. Many of these entities have greater marketing resources, extensive networks of offices and locations, larger staffs, and lower cost of operations due to their size. We believe, however, we have developed an efficient, effective, and economical operation that:

· specializes in identifying and creating a diversified portfolio of church mortgage loans that we or other credit unions originate;

· preserves our capital base; and

· generates consistent income for distribution to our note holders and equity investors.

We rely upon the extensive experience and relationships of our officers, management, and Board of Managers in working with ministry related financing transactions, loan origination, and investment in churches, schools, ministries, and non-profit organizations.

Employees

Effective June 1, 2017, we entered into a staffing agreement with Total HR, which provides us with payroll and staffing services. CoAdvantage, a portfolio company of Morgan Stanley Capital Partners, has subsequently acquired Total HR. The Company terminated its agreement with CoAdvantage effective December 14, 2019. Effective December 15, 2019 the Company entered into a professional employer organization agreement with ADP Totalsource DE IV, Inc. As of December 31, 2019, we had 19 full or part-time employees and four independent contractor relationships supporting business functions that were outsourced. We do not have a collective bargaining agreement with any of our employees and believe we have an excellent relationship with our employees.

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Regulation

General

As a CUSO, we are subject to the CUSO regulations publicized by the National Credit Union Administration (“NCUA”). We are also subject to various laws and regulations that govern:

· credit granting activities;

· establishment of maximum interest rates;

· disclosures to borrowers and investors in our equity securities;

· secured transactions;

· foreclosure, judicial sale, and creditor remedies that are available to a secured lender; and

· the licensure requirements of mortgage lenders, finance lenders, securities brokers, and financial advisers.

As a CUSO, we are limited in the scope of activities we may provide. In addition, the NCUA permits our federal credit union equity investors to invest in or lend to a CUSO only if the CUSO primarily serves credit unions, its membership, or the membership of credit unions contracting with the CUSO. While the NCUA lacks direct supervisory authority over our operations, our federal credit union equity owners are subject to regulations that govern the rules and conditions of an investment or loan they make or sell to a CUSO.

In addition, state chartered credit unions must follow their respective state’s guidelines that govern investments by a state chartered credit union. The California Department of Financial Institutions (“DFI”) regulates several of our equity owners.The DFI is a part of the California Department of Business Oversight (“DBO”). These credit unions must comply with DFI regulations that govern their investment in or loans they make to a CUSO.

Tax Status

We have elected to have our tax authority treat us as a partnership for U.S. tax law purposes. This election became effective with our conversion from a corporate form of organization to a limited liability company. As a result, profits and losses flow directly to our equity owners under the provisions of our governing documents. If we fail to qualify as

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a partnership in any taxable year, we will be subject to federal income tax on our net taxable income at regular corporate tax rates.

As a California limited liability company, we are subject to an annual franchise fee and, in addition, a gross receipts tax on our gross revenues from our California based activities if our gross revenues are in excess of $250 thousand per year.

Regulation of Mortgage Lenders

The California Finance Lender’s Law requires that we obtain a license to conduct our commercial lending activities from the DBO. The license provided to us by the DBO is California Finance Lender License # 603F994.

Under this license, the DBO requires us to file reports from time to time. Accordingly, the DBO has enforcement authority over our operations as a finance lender. This includes, among other things, the ability to assess civil monetary penalties, issue cease and desist orders, and initiate injunctive actions. We are also subject to licensing requirements in other jurisdictions in connection with our mortgage lending activities. Various laws and judicial and administrative decisions may impose requirements and restrictions that govern secured transactions, require specific disclosure to our borrowers and customers, establish collection, foreclosure, and repossession standards, and regulate the use and reporting of certain borrower and customer financial information.

As we expand our loan originations on a national basis, we will need to comply with laws and regulations of those states. The statutes that govern mortgage lending and origination activities vary from state to state. Because these laws are constantly changing, it is difficult to comprehensively identify, accurately interpret, and effectively train our staff with respect to all of these laws and regulations. We intend to comply with all applicable laws and regulations wherever we do business and will undertake a best efforts program to do so, including the engagement of professional consultants, legal counsel, and other experts as deemed necessary by our management.

Loan Brokerage Services

In 2009, we created a subsidiary, MP Realty, which provides loan brokerage and other real estate services to Christian organizations in connection with our mortgage financing activities. As we expand our loan brokerage activities to other states, we may be required to register with these states as a commercial mortgage broker if we are directly or indirectly marketing, negotiating, or offering to make or negotiate a mortgage loan. We intend to monitor these regulatory requirements as necessary in the event MP Realty provides services to a borrower, lender, broker, or agent outside the State of California.

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Environmental Issues Associated with Real Estate Lending

The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), a federal statute, generally imposes strict liability on all prior and current “owners and operators” of sites containing hazardous waste. However, Congress acted to protect secured creditors by providing that the term “owner and operator” excludes a person whose ownership is limited to protecting its security interest in the site. Since the enactment of the CERCLA, this “secured creditor exemption” has been the subject of judicial interpretations which have left open the possibility that lenders could be liable for clean-up costs on contaminated property that they hold as collateral for a loan. To the extent that legal uncertainty exists in this area, all creditors that have made loans secured by properties with potential hazardous waste contamination (such as petroleum contamination) could be subject to liability for cleanup costs, which costs often substantially exceed the value of the collateral property. In addition, state and local environmental laws, ordinances, and regulations can also affect the properties underlying our mortgage loan investments. An owner or control party of a site may also be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from a site.

Regulation of Financial Services

The financial services industry in the U.S. is subject to extensive regulation under federal and state laws. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) was enacted on July 21, 2010. The Dodd-Frank Act resulted in sweeping changes in the regulation of financial institutions and created a new Consumer Financial Protection Bureau and Financial Stability Oversight Council with authority to identify institutions and practices that might pose a systemic risk. We believe that many of the provisions of the Dodd-Frank Act and regulations adopted thereunder will not have a material impact on our business and operations. Certain provisions that have not been implemented, however, could affect our business and include, but are not limited to the implementation of more stringent fiduciary standards for broker dealers resulting from a rule proposed and temporarily suspended by the U.S. Department of Labor (“DOL”) and potential establishment of a new self-regulatory organization for investment advisors.

Broker Dealer Registration

U.S. broker dealers are subject to rules and regulations imposed by theUnited States Securities and Exchange Commission (“SEC”), FINRA, other self-regulatory organization, and state securities administrators covering all aspects of the securities business. Our wholly owned broker-dealer firm, MP Securities, commenced operations in 2012. As a registered broker-dealer under Section 15 of the Securities Exchange Act of 1934 (the “Exchange Act”), MP Securities is subject to regulation by the SEC and regulation by

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state securities administrators in the states in which it conducts its activities. We have registered MP Securities in the following states:

Arizona	Idaho	Minnesota	Oklahoma	Texas
California	Illinois	Missouri	Oregon	Washington
Colorado	Indiana	Nevada	Pennsylvania	West Virginia
Florida	Kansas	New York	Rhode Island
Georgia	Massachusetts	Ohio	South Carolina

MP Securities is subject to rules and regulations regarding:

· net capital;

· sales practices;

· public and private securities offerings;

· capital adequacy;

· record keeping and reporting;

· conflicts of interest involving related parties;

· conduct of officers;

· directors and employees;

· qualification and licensing of supervisory and sales personnel;

· marketing practices; and

· supervisory and oversight of personnel to ensure compliance with securities laws.

MP Securities is also subject to the financial responsibility, net capital, customer protection, record keeping, and notification rule amendments adopted by the SEC on July 30, 2013. Because MP Securities does not carry or hold customer funds or securities and relies upon a clearing firm to conduct these transactions, Rule 17a-5 requires that it file an exemption report as well as reports prepared by an independent public accountant confirming that it meets the exemption provisions. As amended, the net capital rule requires that MP Securities take into account in its computation of regulatory net capital any liabilities the Company assumes as its parent entity.

MP Securities is also subject to routine inspections and examinations by the SEC staff under Rule 17(b) of the Exchange Act. The SEC is authorized to review, if requested, the work papers of the broker dealer’s independent public accounting firm that conducts the audit. As required by amendments to Rule 17a-5 of the Exchange Act, MP Securities files an annual report with the SEC and FINRA that includes its audited financial statements,

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supporting schedules and its exemption report as a non-carrying broker-dealer. MP Securities is a member of the Securities Investor Protection Corporation (“SIPC”) and files a copy of its annual report with SIPC.

Much of the regulation of broker-dealers in the U.S. has been delegated to self-regulatory organizations, principally FINRA and the securities exchanges. FINRA adopts and amends rules (which are subject to approval by the SEC) for regulating the industry and conducts periodic examinations of member firms. The SEC, FINRA, and state securities administrators may conduct administrative proceedings that can result in censure, fine, suspension, or expulsion of a broker-dealer, its officers, or employees.

Due to our close affiliation with MP Securities, we are subject to related party transaction disclosure issues under federal and state securities laws and rules adopted by FINRA. In particular, related party transactions can raise regulatory concerns:

· in determining whether MP Securities meets its net capital requirements;

· in whether the allocation of costs is fairly treated in any expense sharing arrangements, or management services agreements entered into with the Company;

· in regards to compensation paid to sales representatives in selling proprietary securities products offered by the Company; and

· complying with the suitability, know your customer, and fair practices and dealings obligations under federal and state law and rules imposed by FINRA on broker dealer firms.

MP Securities is also subject to FINRA’s review and policies governing disclosure practices when offering proprietary securities products, training its staff to identify and manage conflicts of interest and reporting on significant conflict issues, including the firm’s adopted measures to identify and manage conflicts, to the MP Securities Board of Managers and its Chief Executive Officer.

As a broker-dealer firm, MP Securities is subject to regulation regarding:

· sales methods;

· use of advertising materials;

· arrangements with clearing firms or exchanges;

· record keeping;

· regulatory reporting; and

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· conduct of managers, officers, employees, and supervision.

To the extent MP Securities solicits orders from customers; it will be subject to additional rules and regulations governing sales practices and suitability rules imposed on member firms.

MP Securities acts as a selling agent for the Company’s public and private debt securities. Due to this role, MP Securities is required to comply with FINRA’s filing requirements for these offerings. We believe that MP Securities has fully complied with its filing obligations as required under applicable FINRA, SEC, and state securities laws.

MP Securities is also required to maintain minimum net capital pursuant to rules imposed by FINRA. In general, net capital is the net worth of the entity (assets minus liabilities) less any other imposed deductions or other charges. A member firm that fails to maintain the required net capital must cease conducting business. If it does not do so, it may be subject to suspension or revocation of registration by the SEC and suspension or expulsion by FINRA. Under its Membership Agreement entered into with FINRA, MP Securities is required to maintain minimum net capital of the greater of $5,000 or one fifteenth of its aggregate indebtedness. As required by the 2013 amendments adopted by the SEC, MP Securities is required to include any liabilities assumed by the Company unless the Company is able to demonstrate that it has adequate capital to pay such expenses.

Regulation of Investment Advisers

On July 11, 2013, the State of California granted its approval for MP Securities to provide investment advisory services. As a California registered investment advisory firm, MP Securities is required to develop and maintain compliance and record keeping procedures. MP Securities must also comply with custody rules, and marketing and disclosure obligations. MP Securities is subject to the Investment Advisers Act of 1940, as amended and related regulations. The act authorizes the SEC to institute proceedings and impose fines and sanctions for violation of the Investment Advisers Act. In addition to ensuring MP Securities’ compliance with federal and state laws governing its activities as a California registered investment advisory firm, the California DBO requires that representatives hired by MP Securities meet certain qualification requirements, including complying with certain testing requirements and examinations.

Our failure to comply with the requirements of the Investment Advisers Act, related SEC rules, or regulations and provisions of the California Corporations Code and Code of Regulations could have a material adverse effect on us. We believe we are in full compliance in all material aspects with SEC requirements and California laws and regulations. As MP Securities hires new registered investment advisers, it will be required to monitor its compliance with SEC and DBO regulations.

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Fiduciary Standards

The Dodd-Frank Act authorized the SEC to consider whether broker dealer firms should be held to a standard of care similar to the fiduciary standard applied to registered investment advisors. Although the SEC has not adopted the fiduciary rule for broker dealer firms, the DOL issued final regulations in April 2016 which expanded the definition as to who will be deemed to be an “investment advice fiduciary” under the Employment Retirement Income Security Act of 1974 (“ERISA”). DOL also issued a new prohibited transaction exemption generally known as the best interest contract exemption designed to address conflicts that may arise when a person provides advice to a retail investor that may be vulnerable to conflicts of interest involving the advisory firm.

With the issuance of the DOL fiduciary rule under ERISA, fiduciary status would be extended to investment advisors and investment professionals that have previously not been considered fiduciaries. If deemed a fiduciary, the representative is held to a strict standard requiring the representative to act solely in the interests of plan participants and beneficiaries. With the adoption of the fiduciary standard, the representative is subject to personal liability to the ERISA plan for breaches of its actions under the rule. Implementation of the DOL fiduciary rule, especially in the context of a MP Securities adviser or sales representative rolling over an individual retirement account (“IRA”) into our proprietary debt securities, will require that we:

· incur additional compliance costs;

· engage in further training initiatives;

· undertake a thorough review of available transactional exemptions from the rule;

· prepare agreements to comply with such rule; and

· implement information technology revisions to our policies and procedures to comply with DOL’s fiduciary rule.

On March 15, 2018, the 5th U.S. Circuit Court of Appeals nullified the DOL’s fiduciary rule and upheld a sweeping challenge to DOL’s authority to enforce its fiduciary rule. Other courts, however, have reached a different conclusion. Individual states, in addition, may take a different approach and apply the fiduciary standard to transactions subject to that state’s regulatory authority. As a result of the Court’s decision, the DOL has announced that a new rule will be included on its regulatory agenda. On June 5, 2019, the SEC also issued its Final Interpretations to Enhance Protections and Preserve Choice for Retail Investors in Their Relationships With Financial Professionals. Under the SEC interpretation, the investment adviser has a duty to provide advice that is in the best interests of the client and requires a reasonable inquiry into the client’s objectives. The SEC interpretation permits the advisor to apply his or her judgment; provided, however,

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that there is fair disclosure and informed consent. We continue to monitor developments with the DOL fiduciary rule and the SEC’s Interpretations of the standard of conduct for investment advisers. We have adopted an assets under management fee compensation model that is applied to sales of our debt securities made by MP Security’s representatives. With this change, we believe that we will be able to:

· more closely align the compensation program used by MP Securities for its representatives with the interests of investors in our debt securities; and

· reduce the offering costs of our securities offerings, thereby increasing the net proceeds received by the Company from the sale of such securities to further the Company’s strategic objectives.

Privacy Standards

We are subject to regulations implementing the privacy protection provisions of The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (“GLBA”). The GLBA established a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms, and other financial service providers. These regulations require us to disclose our privacy policy. This includes identifying with whom we share “non-public personal information” to our investors and borrowers at the time of establishing the customer relationship and annually thereafter. The State of California’s Financial Information Privacy Act also regulates consumer’s rights under California law to restrict the sharing of financial data. In recent years, there has been a heightened legislative and regulatory focus on data security, including requiring customer notification in the event of a data breach. Congress has held several hearings in the subject and legislation has been introduces which would impose more rigorous requirements for data security and response to data breaches. As MP Securities expands its investment adviser business operations, it will also need to monitor regulatory initiatives promulgated under the Dodd-Frank Act that affect investment advisers.

Available Information

We file reports with the SEC, including annual reports on Form 10-K, quarterly reports on Form-10-Q, and current reports on Form 8-K. All of these reports are available to the public on the internet site maintained by the SEC at http://www.sec.gov. Our website address is www.ministrypartners.org. The information provided on our website is not part of this report. Therefore, we do not incorporate by reference our website information unless we specifically reference such information elsewhere in this report.

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Item 1A. RISK FACTORS

Any of the following identified risks, along with other unidentified risks, or risks we believe are immaterial or unlikely, could harm the Company. The risks and uncertainties described below are not the only risks that may have a material, adverse effect on us. Additional risks and uncertainties also could adversely affect our business, financial condition, and results of operations. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. Investors should carefully consider the risks described below in conjunction with the other information in this Form 10-K and the information incorporated by reference in this Form 10-K.

Risks Related to the Company

We may be unable to obtain sufficient capital to meet the financing requirements of our business.

Our ability to finance our operations and repay maturing obligations to our investors and credit facility lenders substantially depends on our ability to borrow money and raise funds from the sale of our debt securities. Several factors affect our ability to borrow money and sell our debt securities including:

· quality of the mortgage loan assets we own;

· the profitability of our operations;

· limitations imposed under our credit facility arrangements and trust indenture agreements that contain restrictive and negative covenants that may limit our ability to borrow additional sums or sell our publicly and privately offered debt securities; and

· the strength of the lenders from whom we borrow.

An event of default, lack of liquidity, or a general deterioration in the economy that affects the availability of credit may increase our cost of funding, make it difficult for us to renew or restructure our credit facilities, and obtain new lines of credit. Unexpected large withdrawals by investors that hold our debt securities can negatively affect our overall liquidity. As such, the Board of Managers has adopted a liquidity policy for executive management to follow.

We have expanded our methods of raising funds, including selling participations in our mortgage loan investments, and expanding the sales of our debt securities to institutional,

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corporate, and retail investors, as well as faith-based organizations and ministries. If this strategy is not viable, we will need to find alternative sources of borrowing to finance our operations. If we are unable to raise the funds we need to implement our strategic objectives, we may have to sell assets, deleverage our balance sheet, and reduce operational expenses.

Our ability to raise funds and attract new investors in our debt securities depends on our ability to attract an effective sales force in our wholly-owned licensed broker-dealer firm.

Our wholly-owned subsidiary, MP Securities, a FINRA member broker-dealer, acts as a selling agent for our notes offerings, insurance products, and investment advisory services. Our ability to attract new investors in our debt securities and increase the sale of our debt securities will substantially depend on our ability to assemble an effective advisory team. If we are unable to recruit, retain, and successfully equip a qualified group of advisors at MP Securities, we may not be able to increase sales of the Company’s debt securities, strengthen our balance sheet, and effectively utilize the investment in our core data processing and information systems we have implemented.

We depend on repeat purchases by a significant number of investors in our debt securities to finance our business.

A significant percentage of the investors who purchase our debt securities roll their matured note into a new note. There is no assurance we will maintain our historical rate of reinvestments of maturing investor notes into new investor notes. If the rate of repeat investments declines, our ability to maintain or grow our asset base could be impaired.

The following table shows the investor renewal rate for the prior three years:

2019	75%
2018	62%
2017	64%

Some of our debt securities investors may be unable to purchase our public offering notes due to FINRA’s investor suitability standards.

When handling sales of our investor notes, we must comply with FINRA’s “know your customer” and “suitability” guidelines. Some investors may not qualify under these guidelines. These guidelines help ensure that investors make appropriate investments given the:

· age;

· investment experience;

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· net worth;

· need for liquidity; and

· the mix of the investor’s portfolio.

The Company may experience losses or lower earnings if there is a drop in the real estate values that secure our mortgage loan investments.

In previous years, we have recorded additional provisions for losses related to real estate assets acquired after we initiated loan foreclosure proceedings. If we take ownership of a property as part of a foreclosure action, we could be required to write down the value of the property if the value of the property declines after we take title to the property. Further deterioration could lead to an increase in non-performing assets, increased credit losses, and reduced earnings.

We have had fluctuating earnings.

As a mortgage-financing lender, provisions for loan losses will have a significant impact on our profitability. In the past, the Company has incurred net losses due to loan loss provisions. In order to reduce the impact of these losses in the future, the Company has been diversifying its sources of revenue. Despite these improvements, we can give no assurances that we will be able to achieve and maintain consistent profits due to the uncertainties related to commercial real estate lending.

Our reserves for loan losses may prove inadequate, which could have a material, adverse effect on us.

Although we regularly evaluate our financial reserves to protect against future losses based on the probability and severity of the losses, there is no guarantee that our assessment of this risk will be adequate to cover any future potential losses. As of December 31, 2019, our allowance for loan loss totaled $1,393 thousand or 1.06% of our total loans

Unanticipated adverse events may result in reserves that will be inadequate over time to protect against potential future losses. Examples of these adverse events are:

· changes in the economy;

· events affecting specific assets;

· events affecting specific borrowers;

· mismanaged construction;

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· loss of a senior pastor;

· rising interest rates;

· failure to sell properties or assets;

· epidemics or pandemics that may affect the local or global economy; or

· events affecting the geographical regions in which our borrowers or their properties are located.

Maintaining the adequacy of our allowance for loan losses may require that we make significant and unanticipated increases in our provisions for loan losses, which would materially affect our results of operations and capital adequacy. Given the total amount of our allowance for loan losses, an adverse collection experience in a small number of loans could require an increase in our allowance. See the section captioned “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” located elsewhere in this Report for further discussion related to our process for determining the appropriate level for the allowance for loan losses.

An increase in our non-performing assets will adversely affect our earnings.

Nonperforming assets adversely affect our net income in the following ways:

· We do not accrue interest on collateral-dependent, non-performing loans.

· We are required to record allowances for probable losses as a current period charge on our income statement. This charge will show up either in the provision for loan losses or in the provision for other real estate owned assets.

· Non-interest expense increases when we write down the value of properties in our other real estate owned portfolio to reflect changing market values.

· There are legal and other professional fees associated with the resolution of problem real estate owned assets. Other real estate owned assets also incur carrying costs, such as taxes, insurance, and maintenance fees.

· The resolution of non-performing assets requires active involvement of our management team, which can divert them from focusing on the Company’s core strategic objectives.

Our losses and troubled assets could increase significantly if additional borrowers become delinquent and we are not successful in managing our non-performing assets. This in turn could have a material, adverse effect on our results of operations and financial condition.

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At December 31, 2019, $9,144 thousand of our assets, 5.8% of our total assets, we considered non-performing.At December 31, 2018, $13,601 thousand of our assets, or 8.8%, were considered non-performing. 

We rely on the use of borrowed funds and sale of debt securities to finance a substantial part of our business.

We have used borrowing facilities obtained from institutional lenders and relied upon offerings of debt securities in SEC registered and private placement offerings to fund our mortgage loans investments. Lending borrowed funds subjects us to interest rate risk. The difference, or “spread,” between the interest rates we pay on the borrowed funds and the interest rates our borrowers pay on our mortgage loan investments largely determines our interest rate risk. An increase in our borrowing costs could decrease the spread we receive on our mortgage loan investments, which could adversely affect our ability to pay interest and redeem the outstanding debt securities on our balance sheet as they mature.

Our growth is dependent on leverage, which may create other risks.

We use leverage to invest in mortgage assets, which creates net interest income for the Company. Our success is dependent, in part, upon our ability to manage our leverage effectively. We pledge a significant amount of our assets as collateral for our credit lines. Our Board of Managers has overall responsibility for our financing strategy. Leverage creates an opportunity for increased net income, but at the same time creates risks. For example, leveraging magnifies changes in our net worth. We will incur leverage only when we expect that it will enhance our investment returns. To generate a quick sell on a non-cash asset, the asset often sells at a discount. There can be no assurance that we will be able to meet our debt service obligations; and, if we must quickly sell assets to meet our debt service obligations, we risk incurring a loss on of some or all of those assets.

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The table below shows our total debt obligations payable by year over the next three years:

Total Debt Obligations by Year Payable as of December, 31 2019 (dollars in thousands)
	2020		2021		2022		Thereafter		Total
Term-debt	$	5,164	$	5,341	$	5,477	$	55,445	$	71,427
Investor debt securities (gross notes payable)		21,562		18,953		10,761		21,825		73,101
Total debt obligations payable	$	26,726	$	24,294	$	16,238	$	77,270	$	144,528
Percent of total debt obligation due per year		18%		17%		11%		54%		100%

We may not be able to finance our investments on a long-term basis with an institutional lender on attractive terms, which may require us to seek more costly financing for our investments, or to liquidate assets.

When we acquire mortgage loans that have a maturity term that exceeds the term of our institutional credit facilities, we bear the risk of being unable to refinance, extend, replace, or otherwise finance them on a long-term basis at attractive terms or in a timely manner, or at all. If it is not possible or economical for us to finance such investments on attractive terms, we may be unable to pay-down our credit facilities or be required to liquidate the assets at a loss in order to do so.

Our institutional credit facilities, shown in the table above as “Term-Debt,” mature on November 1, 2026. If we are unable to replace our credit facilities on attractive terms at maturity, we may have to rely upon less efficient forms of financing new investments. This in turn could result in fewer loan acquisitions or fewer originations of profitable mortgages, which would reduce the size of our balance sheet. A smaller balance sheet would lower the amount of earnings available to us. This would reduce funds available for debt payments, business expenses, and distributions to our equity investors.

A portion of our mortgage loans collateralizes our credit facilities; therefore, these pledged assets will be unavailable to meet our unsecured debt obligations.

Our credit facilities require that we secure the facilities with mortgage loans, maintaining a minimum collateralization ratio (“MCR”) of at least 120% for the two credit facilities in total. Loans pledged as collateral to the credit facilities will be unavailable for other cash flow purposes, including meeting our unsecured debt obligations. If at any time we fail to maintain the MCR requirements, we will be required to deliver cash or qualifying mortgage loans in an amount sufficient to meet the MCR requirements. If the Company has exceeded the MCR, we may request and receive a release of collateral up to the dollar amount sufficient for the Company to maintain the MCR requirements. As of the date of

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this Report, we are in compliance with our MCR covenants as required by our credit facilities.

The following table shows the recorded balance of loans pledged and not pledged as collateral as of December 31, 2019 (dollars in thousands):

($ in thousands)	Recorded Loan Balance
Collateral pledged to term-debt	$	85,914
Collateral pledged to Secured Investor Notes		13,019
Loans not pledged		32,116
Total loans	$	131,049

Our financing arrangements contain covenants that restrict our operations and any default under these arrangements would inhibit our ability to grow our business, increase revenue, and make distributions to our equity investors.

Our financing arrangements contain restrictions, covenants, and events of default. Failure to meet or satisfy any of these covenants could result in an event of default under these agreements. Our default under any of our financing arrangements could have a material, adverse effect on our business, financial condition, liquidity, results of operations, and our ability to make distributions to our equity investors. These restrictions also may interfere with our ability to obtain financing or engage in other business activities.

Default under one credit facility will result in a default under our other credit facilities.

Our credit facilities and debt securities generally provide for cross-default provisions. A default under one agreement will trigger an event of default under the other agreements. This gives our lenders the right to declare all amounts outstanding under their particular credit agreement to be immediately due and payable. In this case, if not immediately paid, the lender may exercise its right to foreclose on or liquidate the collateral pledged to their credit facility. For example, a default under one of our credit facilities would also constitute our default under our other credit facilities. Thus, to maintain these credit facilities, there cannot be a default under either one.

In the event of our default under our secured credit facilities, we could lose assets in excess of our assets pledged as collateral.

In the event of a default under our term-debt credit facilities, the lender has the right to foreclose on its collateral pursuant to the respective credit facility agreement and applicable commercial law. In the event of foreclosure, there is no assurance the lender will realize proceeds from the collateral sufficient to repay the debt we owe. In that case,

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the respective lender generally has the right to pursue the borrower for any deficiency between the amount the borrower owes on the defaulted loan and the value the lender realizes from its liquidation of the collateral for the loan. Thus, our assets remaining after a foreclosure by a lender under our credit facilities may not be sufficient to repay our other debt, including our investor notes.

Loss of our management team or the ability to attract and retain key employees could harm our business.

We are dependent on the knowledge, skills, institutional contacts, and experience of our senior management team. We also rely on our management team to manage our mortgage loan investments, evaluate and attract new borrowers, make prudent decisions as they relate to work-outs, modifications, and restructurings. We rely on our management team to develop relationships with institutional and faith-based ministry investors, lenders, financial institutions, broker-dealer firms, ministries, and individual investors. We can give no assurances that we will be able to recruit and retain qualified senior managers that will enable us to achieve our core strategic objectives and continue to grow our business profitably.

Our broker dealer and investment advisory business depends on fees generated from the distribution of financial products and advisory fees.

One of our strategic objectives is to increase non-interest revenues from fees generated from the distribution of financial products, such as mutual funds and annuity products. Changes in the structure or amount of fees paid by sponsors of these products could directly affect our non-interest revenue. In addition, if these products experience losses or increased investor redemptions, it could reduce the non-interest income we receive on these products.

The ability to attract and retain qualified financial advisors and associates is critical to MP Securities’ continued success.

As we continue to expand our non-interest revenue sources, we will need to attract, recruit, and retain qualified investment and financial advisors that complement the services we provide to our credit union equity owners and their members. Turnover in the financial services industry with broker dealer and advisory firms is high. If we are unable to recruit, attract, and retain qualified professionals, we could jeopardize our strategic goal of increasing non-interest income, thereby adversely affecting our net earnings and financial condition.

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As a small financial services company that operates in a niche market, we are subject to liquidity risk that could materially affect our operations and financial condition.

In recent years, reduced availability of liquidity adversely affected the financial services industry, credit markets, and financing sources for ministry loans. Reduced liquidity can particularly affect smaller lenders that have relied on short-term institutional credit facilities to enhance their liquidity needs. We have significantly improved our liquidity position through

· successfully negotiating improved terms on our credit facilities;

· selling our foreclosed assets;

· receiving payoffs on some of our mortgage loan investments; and

· increasing note sales.

However, we will need to monitor and successfully manage our liquidity requirements as necessary when we receive redemption requests for our debt securities, or a debt security investment matures and the investor does not reinvest in another debt security we may offer.

Our systems may experience an interruption or breach in security, which could subject us to increased operating costs as well as litigation and other liabilities.

We rely heavily on communications and information systems to conduct our business. Any failure, interruption, or breach in security of these systems could result in failures or disruptions in our critical business systems. The secure transmission of confidential information over the Internet and other electronic transmission and communication systems is essential to maintaining customer confidence in our services. Security breaches, computer viruses, acts of vandalism, and developments in computer capabilities could result in a breach or breakdown of the technology we use to protect customer information and transaction data.

While we have policies and procedures designed to prevent or limit the effect of the possible failure, interruption, or security breach of our information systems, there can be no assurance that any such failure, interruption or security breach will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failure, interruption, or security breach of our information systems could damage our reputation, result in a loss of a borrower, investor, or customer’s business, or expose us to civil litigation and possible financial liability.

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Our critical business systems may fail due to events out of our control, such as:

· unforeseen catastrophic events;

· cyber-attacks;

· human error;

· change in operational practices of our system vendors;

· or unforeseen problems encountered while implementing major new computer systems or upgrades to existing systems.

These events could potentially result in data loss and adversely affect our ability to conduct our business.

From time to time, we have engaged in transactions with related parties and our policies and procedures regarding these transactions may be insufficient to address any conflicts of interest that may arise.

Under our code of business conduct, we have established procedures regarding the review, approval, and ratification of transactions that may give rise to a conflict of interest between us and any employee, officer, trustee, their immediate family members, other businesses under their control, and other related persons. In the ordinary course of our business operations, we have ongoing relationships and engage in transactions with several related entities. These transactions include our largest equity owner, ECCU, and our newest equity owner, America’s Christian Credit Union (“ACCU”). While the Company believes that it has taken reasonable measures to mitigate any risks, these procedures may not be sufficient to address conflicts of interest that may arise.

Any negative changes in the financial capabilities of one or more of our equity owners could adversely affect our ability to raise additional capital.

None of our equity owners is obligated to make additional contributions or loan us additional funds. However, they may do so on a voluntary basis and, in the future, we may request our equity owners to do so. In such event, one or more of our equity owners may be unwilling or unable to make voluntary additional capital contributions or loans because their financial capabilities are at the time impaired. Also, if an equity owner’s financial status at some time in the future is deteriorated to the extent that they or their operations are ceased or otherwise come under the control of the Asset Management Assistance Center (“AMAC”), NCUA, or other regulatory agency, it is unclear what rights, if any,

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that agency will have to exercise that owner’s membership rights in our company or, if it can exercise any such rights, the manner in which it will do so.

Risks Related to the Financial Services Industry and Financial Markets

Deterioration of market conditions could negatively affect our business, results of operations, financial condition, and liquidity.

A number of factors that we cannot control affect the market in which we operate. These factors can have a potentially significant, negative impact on our business. These factors include, among other things:

· interest rates and credit spreads;

· the availability of credit, including the price, terms, and conditions under which it can be obtained;

· loan values relative to the value of the underlying real estate assets;

· default rates on special purpose mortgage loans for churches and ministries, and the amount of the related losses;

· the actual and perceived state of the real estate markets for church properties and special use facilities;

· deterioration of local, global, and national economic conditions includingepidemics or pandemics that may affect the local or global economy; or

· unemployment rates.

Significant declines in the value of real estate related assets, impairment of our borrowers’ ability to repay their obligations, and illiquidity in the markets for real estate related assets can adversely affect our mortgage loan investments. In past years, these events have had adverse effects on our business resulting in significant increases in our provision for loan losses and unavailability of financing for the acquisition and warehousing of our mortgage loan investments. Deterioration in U.S. economic conditions could harm our financial condition, income, and ability to make distributions to our equity investors.

Specifically, a widespread health emergency such as a pandemic could cause economic disruptions that could adversely affect the ability of our borrowers to make their loan payments. Such an event could also cause note investors to withdraw funds at maturity or request redemptions if they lose confidence in the U.S. and world economy. In addition, a pandemic could have an adverse impact on our personnel and operations. Accordingly, the

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Company cannot reliably predict the ultimate impact on financial markets and the Company’s business operations and financial results. The Company has worked to mitigate the impact of a pandemic on its financial results by maintaining high levels of cash relative to historic needs, enabling employees to work remotely, and limiting travel during a pandemic. As of December 31, 2019, the Company held 30% of its assets, or $25,993 thousand ($26 million), in cash and cash equivalents on its balance sheet.

Declining real estate values could harm our operations.

Declining real estate values generally reduce the level of new mortgage loan originations, since borrowers often use increases in the value of their existing properties to support the purchase of, investment in, or renovation of their worship facilities. Borrowers may also have difficulty paying principal and interest on our loans if the real estate economy weakens. Further, declining real estate values significantly increase the likelihood that we will incur losses on our foreclosed assets and on our loans in the event of default because the value of our collateral may be insufficient to cover our investment in such assets.

Any sustained period of increased payment delinquencies, foreclosures, or losses could adversely affect both our net interest income from loans as well as our ability to originate, sell, and securitize loans. These events would significantly harm our revenues, results of operations, financial condition, liquidity, business prospects, and our ability to make distributions to our equity investors.

Interest rate fluctuations and shifts in the yield curve may cause losses.

Our primary interest rate exposures relate to our mortgage loan investments and floating rate debt obligations. Changes in interest rates, including changes in expected interest rates or “yield curves,” affect our business in a number of ways. Changes in the general level of interest rates can affect our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest expense we incur in connection with our interest-bearing liabilities. Changes in the level of interest rates also can affect, among other things, our ability to originate and acquire mortgages, and the market value of our mortgage investments.

In the event of a significant rising interest rate environment, default by our mortgage loan obligors could increase our losses and negatively affect our liquidity and operating results. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control.

Our ability to grow our mortgage loan investments portfolio depends to a significant degree on our ability to obtain additional funds. Our funding strategy is dependent on our

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ability to obtain debt financing at rates that provide a positive net spread. We have used borrowing facilities obtained from institutional lenders and relied upon offerings of debt securities in SEC registered offerings and private placement offerings to fund our mortgage loans investments. Our ability to fund future investments will be severely restricted if spreads on debt financing widen or if availability of credit facilities ceases to exist.

Regulatory compliance failures could adversely affect our reputation, operating business, and core strategic objectives.

We rely on publicly offered debt securities to fund a substantial portion of our operations. As a result, we are subject to U.S. securities laws, rules, and regulations publicized by the SEC and applicable state securities statutes. Our subsidiary, MP Securities, is subject to oversight from the SEC, FINRA, the Department of Insurance, the California Department of Business Oversight, and securities regulators in the states where MP Securities conducts business. To the extent MP Securities engages in securities and insurance-related activities in a particular state, state securities and insurance administrators will have jurisdiction over the activities of our broker-dealer affiliated entity. In addition, the real estate brokerage activities of MP Realty and our mortgage lending business are subject to various state regulatory authorities. The failure to comply with obligations imposed by any regulatory authority binding on our subsidiaries or us or to maintain any of the required licenses or permits could result in investigations, sanctions, and reputation damage.

The enactment of the Dodd-Frank Act, including the adoption of the proposed new fiduciary rule or additional regulations affecting broker dealer and investment adviser firms, could affect our business.

With the enactment of the Dodd-Frank Act and increased regulatory scrutiny of financial institutions, broker dealers, and investment advisory firms, we will need to monitor the impact of regulatory changes on the broker dealer and investment advisory services we provide. Certain proposed revisions, including the adoption or revision of the proposed DOL fiduciary standard rule and enhanced regulatory oversight of incentive compensation paid to investment advisors, could affect our business.

In particular, the adoption of the DOL fiduciary standard rule could materially affect IRA accounts, IRA rollovers, and the investment of funds rolled over from an IRA into other investments. Even though the initially proposed DOL rule has been shelved, the DOL has indicated that it will issue a revised fiduciary standards rule. Given the uncertainty of an election year, we will continue to monitor the impact of new regulations proposed and/or adopted by the SEC, DOL, and FINRA on our broker dealer and investment advisory business.

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Risks Related to Our Mortgage Loan Investments

We are subject to risks related to prepayment of mortgage loans held in our portfolio, which may negatively affect our business.

Generally, our borrowers may prepay the principal amount of their mortgage loans at any time. There is intense competition from financial institutions that are looking to make commercial loans at competitive rates to qualified borrowers. If a significant number of borrowers refinance their loans with another lender, it could adversely affect our business and profitability.

Increases in interest rates during the term of a loan may adversely affect a borrower’s ability to repay a loan at maturity or to prepay a loan.

Our mortgage loans typically have large balloon payments due at maturity. When the loan matures and the balloon payment is due, the borrower must either pay the loan balance or refinance the loan with us or another lender. If interest rates are higher when the loan matures, the borrower’s payment on new financing may be higher. The borrower may not be able to afford the higher debt service hindering its ability to refinance our loan. In addition, the borrower may not be able to refinance the loan because the value of the property has decreased. If a borrower is unable to repay our loan at maturity, we could suffer a loss and we would not be able to reinvest proceeds in assets with higher interest rates. As a result, it could adversely affect our financial performance and ability to make distributions to our equity owners.

Although we seek to create a favorable spread between the interest rate return on our mortgage loan investments and our debt financing commitments, we are subject to significant interest rate risk.

Our investment and business strategy depends on our ability to finance our investments in mortgage loans that provide a positive spread as compared to our cost of borrowing. A substantial portion of our loan investments provide for a fixed interest rate with a typical five-year interest rate adjustment or maturity date. Our term-debt borrowings are also at a fixed interest rate, providing a stable cost of funds from that source at 2.52%. A significant portion of our borrowing arrangements with our note investors, however, provides for variable rates of interest that are indexed to short-term borrowing rates or fixed rates on short-term maturities. To mitigate our interest rate risks, we have previously and may in the future enter into interest rate hedging transactions that include, but are not limited to, interest rate caps and interest rate swaps. We cannot guarantee the results of using these types of instruments to mitigate interest rate risks, and as a result, the volatility of interest

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rates could result in reduced earnings or losses for us and negatively affect our ability to make distributions of earnings to our equity investors.

We are subject to the risks associated with loan participations, such as less than full control rights.

Some of our assets are participation interests in loans or co-lender arrangements in which we share the rights, obligations, and benefits of the loan with other lenders. In addition to purchasing participation interests, we have sold participation interests in loans we have originated and service. We may need the consent of these parties to exercise our rights under such loans, including rights with respect to amendment of loan documentation, enforcement proceedings in the event of default, and the institution of, and control over, foreclosure proceedings. Similarly, a majority of the participants may be able to take actions to which we object but must comply with if our participation interest represents a minority interest. The lack of full control on participation interests purchased or sold may adversely affect our business.

Church revenues fluctuate and may substantially decrease during times of economic hardship and global pandemics.

Generally, to pay their loans, churches depend largely on revenues from church member contributions. Donations typically fluctuate over time for a number of reasons, including, but not limited to:

· changes in church leadership;

· changes in church membership;

· local unemployment rates;

· credit conditions;

· local real estate markets; and

· other local economic conditions, including epidemics or pandemics that may affect the local economy; and

· other local economic decisions.

The quality of our mortgage loans depends on consistent application of sound underwriting standards.

The quality of the mortgage loans in which we invest depends largely on the adequacy and implementation of sound underwriting standards as described in our Board adopted loan

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policy. In order to achieve our desired loan risk levels we must properly observe and implement our underwriting standards, which may change depending on the state of the economy.

Because one of our managers holds a board position with our largest equity owner, our managers occasionally may have a conflict of interest with the interests of that member in their capacity as a manager of the Company.

One of our Managers holds a Board position with ECCU, who is our largest equity owner. Conflicts of interest may arise for this Manager between our interests and those of ECCU. Additionally, conflicts of interest are inherent in any transactions involving mortgage loans purchased, sold, participated, or serviced in our dealings with ECCU. Because of these relationships, this Manager may face conflicts of interest in connection with various transactions involving ECCU and the Company, including, but not limited to:

· decisions regarding our contract with ECCU for our office facilities;

· managing foreclosure actions and real estate owned properties acquired in foreclosure or other proceedings when ECCU and the Company each hold an economic interest in a mortgage loan;

· decisions relating to shared marketing programs and use of ECCU’s facilities by MP Securities personnel to offer investment products to ECCU’s members;

· decisions regarding collection and enforcement actions taken by ECCU when it acts as primary lender of a loan participation interest or as servicer for one of our mortgage loan investments; and

· decisions regarding agreements entered into with ECCU for loan underwriting, processing, marketing, and customer support and services.

We have implemented a Related Parties Transaction Policy to which all of our Managers and officers must adhere. It provides, among other things, approval of certain related party transactions by a majority of those Managers who are unrelated to the parties in the transaction.

We have further mitigated these conflicts of interest by forming a Credit Review Committee, of which all members are unrelated to ECCU. This committee makes most of the loan approval decisions under our Church and Ministry Loan Policy as adopted by our Board of Managers. Our Church and Ministry Loan Policy sets forth minimum credit quality standards for the loans we make or purchase, and only our Board Credit Committee or Board of Managers can override these standards, depending on the circumstances described in our Church and Ministry Loan Policy.

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Because we invest only in specialized purpose mortgage loans, our loan portfolio is generally more risky than a diversified portfolio.

We are among a limited number of non-bank financial institutions specialized in providing loans to evangelical churches and church organizations. Specialized properties secure our loans and the secondary market for these loans remains regional and limited. Our mortgage loan agreements require that the borrower adequately insure the property. This requirement secures the loan against liability and casualty loss. However, certain types of losses, generally those of a catastrophic nature such as earthquakes, floods, storms, and losses due to civil disobedience, are either uninsurable or are not economically insurable. If an uninsured loss destroys a property, we could suffer loss of all or a substantial part of our mortgage loan investment.

Our loan portfolio is concentrated geographically and focused on loans to churches and religious organizations.

Specialized properties secure our loans and the secondary market for these loans remains regional and limited. As a result, if we must sell the properties securing such mortgages, there may be a limited number of buyers available for such properties. Nevertheless, we believe that there is a great deal of diversity in the types of not-for-profit organizations and entities that could be potential acquirers of properties of this nature, including, but not limited to, other churches, schools, clinics, community development agencies, universities, other educational institutions, day care, social services, assisted living facilities, and relief organizations. See “Part II, Item 7. Management Discussion and Analysis” for additional information on the loan portfolio concentrations.

The following table shows the two states with our highest concentration in loans.

	California
	(dollars in thousands)
	2019			2018
Unpaid Balance of Loans	$	19,431		$	22,231
Percent of Total Loans		14.83	%		15.09	%
Number of Loans		32			37
Percent of Total Loans		21.19	%		22.02	%
	Maryland
	(dollars in thousands)
	2019			2018
Unpaid Balance of Loans	$	27,999		$	32,015
Percent of Total Loans		21.37	%		21.73	%
Number of Loans		12			13
Percent of Total Loans		7.95	%		7.74	%

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We may need, from time to time, to sell or pledge as security our mortgage loan investments.

The market for church mortgage loans is specialized and therefore not as liquid as a residential or commercial loan portfolio. As a result, in the event we need additional liquidity we may have difficulty in disposing of our mortgage loan portfolio quickly or at all. The amount we would realize is dependent on several factors, including the quality and yield of similar mortgage loans and the prevailing financial market and economic conditions. It is possible that we could realize substantially less than the face amount of our mortgage loans, should we be required to sell or hypothecate them. Thus, the amount we could realize for the liquidation of our mortgage loan investments is uncertain and unpredictable.

We may not have all of the material information relating to a potential borrower at the time that we make a credit decision with respect to that potential borrower or at the time we advance funds to the borrower. As a result, we may suffer losses on loans or make advances that we would not have made if we had all of the material information.

There is generally no publicly available information about the churches and ministries to which we lend. Therefore, we must rely on our borrowers and the due diligence efforts of our staff to obtain the information that we consider when making our credit decisions. To some extent, our staff depends and relies upon the pastoral staff to provide full and accurate disclosure of material information concerning their operations and financial condition. We may not have access to all of the material information about a particular borrower’s operations, financial condition, and prospects. In addition, a borrower’s accounting records may become poorly maintained or organized. The financial condition and prospects of a church may also change rapidly in the current economic environment. In such instances, we may not make a fully informed credit decision, which may lead, ultimately, to a failure or inability to recover our loan in its entirety.

We may be unable to recognize or act upon an operational or financial problem with a church in a timely fashion to prevent a loss of our loan to that church.

Our borrowers may experience operational or financial problems that, if not timely addressed by us, could result in a substantial impairment or loss of the value of our loan to the church. We may fail to identify problems because our borrowers did not report them in a timely manner or, even if the borrower did report the problem, we may fail to address it quickly enough, or at all. We attempt to minimize our credit risk through prudent loan approval practices in all categories of our lending. However, we cannot assure you that

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such monitoring and approval procedures will reduce these lending risks. We also cannot assure you or that our credit administration personnel, policies, and procedures will adequately adapt to changes in economic or any other conditions affecting our borrowers and the quality of our loan portfolio. As a result, we could suffer loan losses that could have a material adverse effect on our revenues, net income, and results of operations.

Some of the loans in our investment portfolio are in the process of being restructured, have been restructured, or may otherwise be at risk, which could result in impairment charges and loan losses.

Some loans in our investment portfolio have been restructured, or may otherwise be at risk, or under credit watch. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. If we determine that it is probable that we will not be able to collect all amounts due to us under the terms of a particular loan agreement, we could be required to recognize an impairment charge or a loss on the loan unless the value of the collateral securing the loan exceeds the carrying value of the loan. If our assumptions regarding, among other things, the present value of expected future cash flows or the value of the collateral securing our loans are incorrect or general economic and financial conditions cause one or more borrowers to become unable to make payments under their loans, we could be required to recognize impairment charges. These charges could result in a material reduction in earnings in the period in which the loans are determined to be impaired. The impairment may adversely affect, perhaps materially, our financial condition, liquidity, and ability to make debt service payments and distributions to our equity owners.

Some of our mortgage loan investments currently are, and in the future may be, non-performing loans, which are subject to increased risks relative to performing loans.

Some of the loans in our mortgage loan portfolio currently are, or in the future may be, a non-performing loan. Such loans may become non-performing if the church falls upon financial distress, the community or congregation the church serves suffers financial hardship, or there is significant change in leadership of the church. These circumstances could result in the borrower being unable to meet its debt service obligations to us. Non-performing loans may require our management team to devote a substantial amount their resources to workout negotiations and restructuring efforts. These restructuring efforts may involve modifications to the interest rate, extension, or deferral of payments to be made under the loan or other concessions. For restructured loans, a risk still exists that the borrower may not be able or willing to maintain the restructured payments or refinance the restructured mortgage at maturity.

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In the event a borrower defaults on one of our mortgage loan investments, we will generally need to recover our investment through the sale of the property securing the loan.

In that event, the value of the real property security may prove insufficient to recover the amount of our investment. Even though we may obtain an appraisal of the property at the time we originate the loan, the property’s value could decline because of a number of subsequent events, including:

· uninsured casualty loss (such as an earthquake or flood);

· a decline in the local real estate market;

· undiscovered defects on the property;

· waste or neglect of the property;

· a downturn in demographic and residential trends

· epidemics or pandemics that may affect the local or global economy;

· a decline in growth in the area in which the property is located; and

· churches and church-related properties are generally not as marketable as more common commercial, retail, or residential properties.

The occurrence of any of these factors could severely impair the market value of the security for our mortgage loan investments. In the event of a default under a mortgage loan held directly by us, we will bear the risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan. Foreclosure of a church mortgage can be an expensive and lengthy process, which could have a significant effect on our anticipated return on the foreclosed mortgage loan. Such delays can cause the value of the mortgaged property to deteriorate further. The properties also incur operating expenses pending their sale, including property insurance, management fees, security, repairs, and maintenance. Any additional expenses incurred could adversely affect our ability to recover the full value of our collateral.

There is a possibility that we could incur foreclosures and losses in connection with our mortgage loan investments during recessionary or depressed economic periods.

Recessionary periods typically occur on a cyclic basis by an unpredictable time and with uncertain lengths. In addition, terrorist acts, war, large-scale economic dislocations, epidemics, pandemics, or widespread and large corporate bankruptcies can trigger such

36

events. Management cannot predict the effects of these events. We could incur losses because of borrower defaults and foreclosures on our mortgage loan investments. In addition, during times of recession, the demand for our mortgage loans is likely to decline. In connection with any sale or hypothecation of a mortgage loan, we would likely have to agree to be responsible in whole or in part for a limited period of time for any delinquencies or default. If we should experience significant delinquency rates, our revenues would materially decrease and, subject to our other available cash resources at the time, our ability to pay our debt securities obligations or our other indebtedness when due may be substantially impaired. We hold $301 thousand in real estate owned assets as ofDecember 31, 2019.

When we acquire properties through the foreclosure of one of our mortgage loan investments, we may recognize losses if the fair value of the real property initially determined upon acquisition is less than the previous carrying amount of the foreclosed loan.

When we acquire a property through foreclosure, we value the property and its related assets and liabilities. We determine fair value based primarily upon discounted cash flow or capitalization rate assumptions, the use of which requires assumptions including discount rates, capitalization rates, and other third party data. We may recognize a loss if the fair value of the property internally determined upon acquisition is less than the previous carrying amount of the foreclosed loan.

Real estate taxes resulting from a foreclosure could adversely affect the value of our collateral.

If we foreclose on a mortgage loan and take legal title to the real property, we could become responsible for real estate taxes levied and assessed against the foreclosed upon real property. While churches are normally exempt from real estate assessments on their worship and ministry related properties, once we acquire the real property after a foreclosure, any real estate taxes assessed would be our financial responsibility and could prevent us from recovering the full value of our investment.

Competition may limit our business opportunities and our ability to operate profitably.

We compete with church bond financing companies, banks, credit unions, savings and loan associations, denominational loan funds, certain real estate investment trusts, insurance companies, and other financial institutions. Many of these entities have greater marketing resources, more extensive networks of offices and locations, and lower costs in proportion to their size due to economies of scale.

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We are exposed to environmental liabilities with respect to properties to which we take title.

In the course of our business, we may take title to real estate through foreclosure on one of our mortgage loan investments or otherwise. If we do take title to a property, we could be subject to environmental liabilities with respect to these properties. In such a circumstance, we may be held liable to a governmental entity or to third parties for property damage, personal injury, and investigation and clean-up costs incurred by these parties in connection with environmental contamination. In addition, we may be required to investigate or clean up hazardous or toxic substances, or chemical releases, at a property. The costs associated with investigation or remediation activities could be substantial. If we ever become subject to significant environmental liabilities, our business, financial condition, liquidity, and results of operations could be materially and adversely affected.

Risks of cost overruns and non-completion of the construction or renovation of the mortgage properties securing construction loans we invest in may have a material and adverse effect our investment.

The renovations, refurbishment, or expansion by a borrower of a mortgage property involves risks of cost overruns and non-completion. Costs of construction or improvements to bring a mortgage property up to standards established for the market position intended for that property might exceed original estimates, possibly making a project uneconomical. Such delays and cost overruns are often the result of events outside both our and the borrower’s control such as material shortages, labor shortages and strikes, and unexpected delays caused by weather and other acts of nature. In addition, environmental risks and construction defects may cause cost overruns, and completion delays. If the borrower does not complete such construction or renovation in a timely manner, or if it costs more than expected, the borrower may experience a prolonged impairment of the borrower’s revenues making it unable to make payments on our loan. At December 31, 2019 and 2018, we held $5,277 thousand and $4,333 thousand, respectively in construction loans that we have disbursed.As of December 31, 2019, we have authorized a total of $7.9 million for construction loans, including previously disbursed funds.

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Item 1B.   UNRESOLVED STAFF COMMENTS

None.

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Item 2. PROPERTIES

Corporate Offices

As of December 31, 2019,  the Company conducts most of its operations from its main corporate office at 915 West Imperial Highway, Suite 120, Brea, California. In addition, the Company has one primary branch office located in Fresno, California. The Brea corporate office and Fresno branch locations have operating leases. Ministry Partners Securities LLC also maintains networking agreement office locations in Glendora, CA and Elgin, IL.

Investment Property

As of December 31, 2019, the Company had one investment in a joint venture that owns a property located in Santa Clarita, California. Additional information regarding the Company’s investment in the joint venture is included in Note 5 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Report.

Foreclosed Assets

As of December 31, 2019, we hold properties acquired through foreclosure with a net value of $301 thousand. Additional information on foreclosed assets is included in Note 8. Foreclosed Assets of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Report.

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Item 3. LEGAL PROCEEDINGS

Given the nature of our investments made in mortgage loans, we may from time to time have an interest in, or be involved in, litigation arising out of our loan portfolio. We consider litigation related to our loan portfolio to be routine to the conduct of our business. As of December 31, 2019 and subject to the matter described below, we are not involved in any litigation matters that could have a material adverse effect on our financial position, results of operations, or cash flows.

On November 11, 2017, Mr. Harold D. Woodall, former Senior Vice President and Chief Credit Officer, filed a suit against the Company and its Chief Executive Officer and President, Joseph Turner, Jr. in the Superior Court of Orange County, California. Mr. Woodall’s employment arrangement with the Company terminated effective as of September 5, 2017. Mr. Woodall’s suit alleges that the Company wrongfully terminated his employment and violated California’s Fair Employment and Housing Act of 1959, and the California Labor Code’s whistle blowing law. Mr. Woodall seeks compensatory damages, punitive damages, attorney’s fees and other relief as the court deems just. On January 1, 2019, Mr. Woodall passed away in Turlock, California. Plaintiff’s wrongful termination counsel filed a motion to withdraw from representing the Plaintiff in this matter and the matter is now being handled by counsel appointed for Mr. Woodall’s estate. The Company believes the allegations in Mr. Woodall’s suit are groundless and without merit and it has vigorously contested the allegations set forth in Mr. Woodall’s complaint. The Company has filed a Motion for Summary Judgment and the court has set a trial date of September 21, 2020. Because Mr. Woodall is deceased, the estate will be limited in the amount of recoverable damages that can be pursued.

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Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

Item 5. MARKET FOR OUR COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Units

There is no public market for our Class A Units and Series A Preferred Units. As of December 31, 2019, a total of 146,522 Class A Units were issued, with 11 holders of record, and a total of 117,100 Series A Preferred Units were issued, with 11 holders of record.

Sale of Equity Securities by Issuer

None.

Purchases of Equity Securities by Issuer

None.

Dividends and Distributions

The Series A Preferred Unit holders are entitle to receive two types of dividend distributions. First, they are entitled to receive a quarterly cash dividend at the rate of one-year LIBOR plus 25 basis points (the “Series A Dividend”). Payment of the Series A Dividend will have priority over all other distributions to equity owners. In addition, the Company must pay any accrued and undistributed Series A Dividend before we can distribute other dividends.

Our Series A Preferred Unit holders are also entitled to receive 10% of our net profits after subtracting the amount of quarterly Series A Dividends paid earned for any fiscal year. This payment will be made to holders of the Series A Preferred Units on a pro rata basis. We accrued $171 thousand and $11 thousand in net profits to distribute to our Series A Preferred Units holders for the years ended December 31, 2019 and 2018, respectively. This increased the amount of distributions declared on our Series A Preferred Units for the fourth quarters of 2019 and 2018 by $1.461 per unit and $0.096 per unit, respectively.

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The remaining balance of any profits will be allocated to all holders of our Class A Units based on their ownership percentage. For 2019, we made no distributions to the holders of our Class A Units.

During December 31, 2019 and 2018, we declared distributions on our Series A Preferred Units as follows:

SERIES A UNITS
	Distributions Declared per Unit
Quarter	2019		2018
First	$	0.730	$	0.718
Second		0.605		0.755
Third		0.575		0.799
Fourth		2.027		0.921
Total distributions per Unit	$	3.937	$	3.193

In the event of a loss, our operating agreement provides that losses will be allocated first to the holders of common units and then to the Series A Preferred Units holders until their respective capital accounts have been reduced to zero. If the capital accounts of the members cannot offset the entire loss, the balance will be allocated, pro rata, to the holders of common units in proportion to their respective ownership interest in our common equity units.

Equity Compensation Plans

None.

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Item 6. SELECTED FINANCIAL DATA

We are a “smaller reporting company” as defined by Regulation S-K promulgated by the SEC. As a result, we are not providing the information contained in this item pursuant to Regulation S-K.

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7
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion regarding our financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in this Annual Report beginning at page F-1.

OVERVIEW

We generate our revenue primarily through our church lending portfolio and secondarily through fees generated from our investment and insurance products and services. While we generate the majority of our revenue through interest income, our strategy is to increase the diversification of our revenue sources. A diversified revenue stream may reduce the risk to the Company if economic factors, such as changes in interest rates, decrease our interest income. We also focus on improving our operating efficiency and capital position by increasing the revenue generated for each dollar of expense incurred to run the business. Increased capital helps mitigate risk in economic down cycles. In addition, we are focusing on reducing risk to our lending revenue by improving the quality of our loan portfolio, assessing the financial strength of our borrowers, and working with our impaired loans to restructure, refinance, and/or liquidate these investments when necessary.

In order to continue to achieve our objectives and maximize the value of our equity holders’ investment, we will continue to focus on:

· working with credit unions and other CUSOs to serve the needs of their members and owners, expand our own client base, and increase our fee income from broker-dealer services as well as loan servicing and origination fees;

· increasing our revenue from broker-dealer related services by expanding our sales staff;

· increasing revenue through the sale of loan participation interests;

· managing the size and cost structure of our business to match our operating environment and capital funding efforts;

· managing costs through efforts to more efficiently originate and service loans,

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· increasing our capital through growth in earnings;

· optimizing our balance sheet size as we seek to improve the quality of our loan investments and originating profitable new loans;

· managing and strengthening our loan portfolio through aggressive and proactive efforts to resolve problems in our non-performing assets, and ultimately realizing the benefit of our investments;

· increasing the sale of our investor debt securities with the objective of maintaining a stable balance sheet by replacing pay downs on our credit facility borrowings;

· broadening the number of clients in our investor debt securities and effectively implementing strategies designed to ensure compliance with FINRA’s suitability and regulatory standards for investments made in our debt securities; and

· maintaining adequate liquidity levels.

Financial Performance Summary for the Two-Year Period ended December 31:

	2019		2018
Broker-dealer commissions and fees	$	1,415	$	523
Total income		11,724		10,652
Provision for loan losses		(544)		666
Total non-interest expenses		5,185		4,653
Net income		2,001		477
Cash and restricted cash		26,045		9,928
Loans receivable, net of allowance for loan losses of $1,393 and $2,480 as of December 31, 2019 and 2018, respectively		128,843		143,380
Total assets		158,021		155,439
Term-debt		71,427		76,515
Notes payable, net of debt issuance costs		73,046		68,300
Total equity		11,071		9,531

Summary of Financial Performance

For the year ended December 31, 2019, we recognized net income of $2,001 thousand and grew owners’ equity by $1,540 thousand. 2019 was the Company’s most profitable year since inception due to a significant increase in revenue generated by broker-dealer commissions and fees and recoveries from previous nonperforming loans that paid off. Total assets remained relatively flat with a slight increase of $2,582 thousand.

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For the year ended December 31, 2019, the primary items affecting our operating performance were the following:

· an increase in net interest income of $720 thousand due an increase in loan income of $700 thousand. $511 thousand of the increase was due to collection of interest income previously allocated to principal variance when two previously nonperforming loans paid off;

· a recapture on provision for loan losses of $544 thousand; and

· an increase in non-interest income of $125 thousand. This increase was due to an increase in broker dealer commission and fees of $892 thousand as offset by a decrease in other lending income of $ (767) thousand. The decrease in other lending income was due to a gain on the sale of a note related to a non-performing loan that occurred in 2018. Broker-dealer commissions and fees increased as the Company increased sales to institutional and faith based ministries and entities in 2019 compared to 2018.

Progress on Strategic Objectives

In 2019, we made continued progress towards our strategic objectives of diversifying our revenue streams, improving the quality of our loan portfolio, maintaining our balance sheet size, and improving operating efficiency. The following discussion focuses on each of these strategic objectives.

Diversified revenue streams

Like most finance companies and banks, our primary source of revenue has come from the net interest margin we earn on our mortgage loan investments. We continue to develop sources of revenue outside our net interest income to make us less dependent on a favorable net interest rate margin from our mortgage loan investments. We believe this will make the Company less susceptible to unfavorable changes in interest rates. The Company’s management team believes that it will be able to use its capabilities in lending, servicing, and investment advisory services to supplement its net interest income with fee income.

Our primary sources of recurring non-interest income are:

· Revenue from our broker-dealer operations: In 2019, we generated fee and commission revenue of $1,415 thousand compared to $523 thousand in 2018. The $892 thousand increase was an increase in revenue from sales to institutional and faith based ministries and entities in 2019 as compared to 2018. While we will occasionally close large transactions made by institutional investors, we do not plan for them in order to sustain our business. In 2020, we will look to continue to   48

increase our revenue from our broker-dealer operations by expanding our sales force with advisors who have already built a profitable book of business. In 2019, we added two advisors and their portfolios into our wholly-owned broker dealer and investment advisory subsidiary.

· Loan participation sales: We did not sell any loan participation interests in 2019 compared to $4,254 thousand in loan participation interests sold to credit unions and other investors during 2018. This was due to lower origination volume as we focused on improving loan portfolio quality.

· Loan servicing fee income: As of December 31, 2019, we serviced $26,964 thousand in loan participations for investors, decrease from December 31, 2018 of $36,706 thousand in loan participations for investors due to lower participation sales as described above. The participation portfolio generated $100 thousand in servicing income in 2019 versus $160 thousand in 2018. The decrease was mainly due to early payoffs on participated loans.

Loan portfolio quality

Historically, when the Company has reported a net loss for the year, the primary reason for the loss has been due to losses on our loan investments or from reserves taken on our allowance for loan losses. In subsequent years, the Company has benefited from recoveries when the loan paid off, the Company disposed of the collateral properties, or when the Company has sold the promissory note and loan. Therefore, the resolution of non-performing loans will contribute either positively or negatively to the Company’s performance. In 2018, we recorded $640 thousand in gains on sale of a note in 2018. In 2019, two previously non-performing loans paid off resulting in a collection of interest income of $511 thousand.  

We continue to monitor our loan portfolio very closely and work with borrowers to minimize losses on mortgage loan investments. The Company can often find a solution for borrowers who are in distress, but who are willing and able to work out a compatible solution. As we did in 2018, in 2019, we had several positive results due to our efforts to be more aggressive in resolving our non-performing loans. As mentioned above, we collected interest on two non-performing loans that paid off during the year. Additionally, another loan that was an impaired collateral dependent loan paid off. Three additional loans that were impaired collateral dependent loans became performing TDRs and taken off non-accrual status. Additionally, we transferred one loan into foreclosed assets. Through these efforts, we saw our classified loans decrease by $4,758 thousand to $8,843 thousand at the end of December 31, 2019.

As part of our strategic decision to reposition our loan portfolio, we have continued to focus on originating lower balance loans made to ministries where we can achieve yields

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that are more favorable and avoid deteriorating our margins while reducing overall risk exposure to any one borrower. However, we also have originated larger loans when we are able to find participants to purchase a participation interest in the loan. This generates servicing fee income while allowing us to minimize our risk exposure on the loan. We believe we have found a good mix in loan size that allows us to take advantage of quality lending opportunities. Our average net loan balance (recorded balance) was $921 thousand at December 31, 2019. In addition, over the past few years, we have substantially expanded our relationships with credit unions throughout the United States. We believe these relationships will enable us to increase the amount of loan participation interests we sell and service for others.

Maintaining balance sheet size

Our current strategy is to maintain our balance sheet size rather than increase it as we direct more resources into improving the quality of our existing loan portfolio. For the year ended December 31, 2019, we funded originations of $7,951 thousand in new loans compared to $15,486 thousand for the year ended December 31, 2018.  This resulted in a decrease in loans receivable of $14,537 thousand due to contractual payments and prepayments on loans receivable in excess of loan originations.

Since the credit crisis of 2008, we have been unable to find a replacement lender for our institutional credit facilities. The company was able to maintain the total size of the balance sheet by replacing the contractual payments on term debt of $5,088 thousand with an increase in investor notes payable of $4,746 thousand. In 2020, we expect that we will need $5,164 thousand to fund payment obligations that are maturing on our credit facility.

Improved operating efficiency

In the last several years, we have worked on improving our operating efficiency. In 2018, we decreased our loan origination staff and reduced the number of full –time employees from 19 to 15. This was down from our high watermark of 26 full-time employees in 2015. In 2019, we added 4 additional full-time employees bringing the number back up to 19. Two of the employees are financial advisors hired to help the Company achieve its objectives of diversifying revenue. We hired two employees to work on loan portfolios, with the objective of improving loan quality and increasing loan originations. In 2019, we had non-interest expense of $5,185 thousand, an increase of $532 thousand from $4,653 thousand in 2018. The increase in 2019 was variable expense directly related to the additional revenue earned in 2019.

Financial Condition

This discussion focuses on the overall performance of our balance sheet. As we are a financial institution, the balance sheet is the primary driver of our net income.

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The following discussion and analysis compares the results of operations for the twelve months ended December 31, 2019 and 2018 and should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

Comparison of Financial Condition at December 31:

					Comparison
	2019		2018		$ Difference		% Difference
	(dollars in thousands)
Assets:
Cash	$	25,993	$	9,877	$	16,116		163%
Restricted cash		52		51		1		2%
Loans receivable, net of allowance for loan losses of $1,393 and $2,480 as of December 31, 2019 and 2018, respectively		128,843		143,380		(14,537)		(10%)
Accrued interest receivable		635		711		(76)		(11%)
Investments in joint venture		891		887		4		—%
Property and equipment, net		216		87		129		148%
Foreclosed assets, net		301		—		301		—%
Servicing assets		100		212		(112)		(53%)
Other assets		990		234		756		323%
Total assets	$	158,021	$	155,439	$	2,582		2%
Liabilities and members’ equity
Liabilities:
Term-debt	$	71,427	$	76,515	$	(5,088)		(7%)
Notes payable, net of debt issuance costs of $55 and $92 as of December 31, 2019 and 2018, respectively		73,046		68,300		4,746		7%
Accrued interest payable		266		249		17		7%
Other liabilities		2,211		844		1,367		162%
Total liabilities		146,950		145,908		1,042		1%
Members' Equity:
Series A preferred units		11,715		11,715		—		—%
Class A common units		1,509		1,509		—		—%
Accumulated deficit		(2,153)		(3,693)		1,540		(42%)
Total members' equity		11,071		9,531		1,540		16%
Total liabilities and members' equity	$	158,021	$	155,439	$	2,582		2%

General

Total assets remained relatively stable with a slight increase of 2%. Loans receivable decreased 10% due to loan payoffs and low origination volumes. The decrease in loans receivable created an inverse increase in cash, which positions the company with strong levels of liquidity as it enters 2020. Cash increased $16,116 thousand ($16 million) to $25,993 thousand ($26 million).

Our loan funding comes from our members’ equity, our notes payable, and our term-debt. Since 2008, the Company has relied solely on the sale of investor notes to fund its

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mortgage loan investments and maintain the total size of its balance sheet assets. In 2019 our term-debt decreased by $5,088 thousand and net notes payable increased by $4,746 thousand.

Loan Portfolio

Our loan portfolioprovides the majority of our revenue, however, it also presents the most risk to future earnings through both interest rate risk and credit risk. Additional information regarding risk to our loans is included in “Part I, Item 1A, Risk Factors”.

Our portfolio consists entirely of loans made to evangelical churches and ministries with approximately 99% of these loans secured by real estate. The loans in our portfolio carried a weighted average interest rate of 6.59% at December 31, 2019 and 6.44% at December 31, 2018. The following discussion on our loan portfolio revolves around the credit risk to our loans and on how we account for and address that risk.

Our Loan Policies

Our managers establish our loan policies and review them periodically and, from time to time, have authorized designated loan officers and our President to make loans within certain limits established by our managers. Our managers adopted a Church and Ministry Loan Policy that supports our levels of acquisition and origination of loans. In addition, our managers appointed a Credit Review Committee to review and carry out our loan policy. The Credit Review Committee may approve loans up to 25% of our tangible net worth or 5% of our aggregate loan portfolio, whichever is less. For loans exceeding the threshold, our managers have established a Board Credit Committee that reviews loan requests that exceed certain prescribed limits under our loan policies. Upon approval, we issue a written loan commitment to the applicant that specifies the material terms of the loan. For any loan participation interest we acquire, with one borrower (or a group of financially related borrowers), the aggregate amount of such interest may not exceed 15% of our tangible net worth. The Company’s Church and Ministry Loan Policy defines “tangible net worth” as shareholder equity plus available operating lines of credit, calculated at the end of each month.

Loan Concentrations

A concentration of loans by category or geography can pose a risk if economic conditions or natural disasters affect that concentration of loans specifically.

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The table below shows the amounts we have invested in each loan category:

	Year Ended December 31, (dollars in thousands)
	2019				2018
Loans to evangelical churches and related organizations	Amount		% of Portfolio		Amount		% of Portfolio
Real estate secured	$	125,612	95.9	%	$	142,728	96.9	%
Construction		5,277	4.0	%		4,333	2.9	%
Unsecured		160	0.2	%		274	0.2	%
Total	$	131,049	100.0	%	$	147,335	100.0	%

We consider loans individually material if a loan is 10% of the Company’s net assets or greater. At December 31, 2019, we had no individually material loans.

The following table sets forth, as of December 31, 2019 and 2018, each state in which: (i) the unpaid balance of our mortgage loans was 10% or more of the total unpaid balance of our loan portfolio; and (ii) the number of our loans was 10% or more of our total loans:

	California
	(dollars in thousands)
	2019			2018
Unpaid Balance of Loans	$	19,431		$	22,231
Percent of Total Loans		14.83	%		15.09	%
Number of Loans		32			37
Percent of Total Loans		21.19	%		22.02	%
	Maryland
	(dollars in thousands)
	2019			2018
Unpaid Balance of Loans	$	27,999		$	32,015
Percent of Total Loans		21.37	%		21.73	%
Number of Loans		12			13
Percent of Total Loans		7.95	%		7.74	%

Loan Maturities

The following table sets forth the future maturities of our gross mortgage loan portfolio at December 31, 2019:

	Dollar Amount of Mortgage Loans Maturing During Year (in thousands)
As of	2020		2021		2022		2023		2024		After 2025		Total
December 31, 2019	$	9,390		8,983		12,528		14,504		14,659		70,985	$	131,049

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Included in the table above are 107 adjustable rate loans totaling $97,820 thousand, or 75% of the total balance. Adjustable rate loans reduce the interest rate risk compared to fixed rate loans with similar cash flow characteristics.

Non-performing Assets

Non-performing assets include:

· non-accrual loans;

· loans 90 days or more past due and still accruing;

· restructured loans, except for loans modified in a TDR that were subsequently classified as performing due to the borrowers demonstrated ability to perform on the restructured terms (typically a minimum of six months);

· foreclosed assets; and

· other impaired loans where the net present value of estimated future cash flows is lower than the outstanding principal balance.

Non-accrual loans are loans on which we have stopped accruing interest. Restructured loans are loans in which we have granted the borrower a concession on the interest rate or the original repayment terms due to financial distress. Foreclosed assets are real properties for which we have taken title and possession upon the completion of foreclosure proceedings.

We closely monitor these non-performing assets on an ongoing basis. Management evaluates the potential risk of loss on these loans and foreclosed assets by comparing the book balance to the fair value of any underlying collateral or the present value of projected future cash flows, as applicable.

From time to time, we determine that certain non-accrual loans are collateral-dependent. When a loan is deemed to be collateral-dependent, the repayment of principal will involve the sale or operation of collateral securing the loan. For these loans, we record any interest payment we receive in one of two methods. If the Company deems that the recorded investment of the loan is fully collectable, we will recognize income on the interest payment received on the cash basis. If we deem that the recorded investment is not fully collectable, we will record any interest payment we receive against principal. For non-collateral-dependent loans that are on non-accrual status, we recognize income on a cash basis.

We had 6 non-accrual loans as of December 31, 2019 and 11 as of December 31, 2018. Two of our non-performing loans paid off, one was on non-accrual status. Management transferred one non-accrual loan to foreclosed assets after judicial foreclosure proceedings

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were completed. Three of the non-accrual loans became performing TDRs and were moved to accrual status. One of the non-accrual loans as of December 31, 2018 was charged-off as part of an A/B restructure. We added one additional loan to non-accrual status for the year ended December 31, 2019. As detailed in the table below, these activities decreased the balance of our non-performing loans at December 31, 2019 as compared to December 31, 2018.

At December 31, 2019 and December 31, 2018, we had three and nine restructured loans, respectively, that were on non-accrual status. One of these loans was over 90 days delinquent at December 31, 2019. In addition, we have six performing restructured loans on accrual status as of December 31, 2019.

The following table presents our non-performing assets:

Non-performing Assets
($ in thousands)
	December 31,		December 31,
	2019		2018
Non-Performing Loans:1
Collateral-Dependent:
Delinquencies over 90-Days2	$	5,907	$	7,096
Troubled Debt Restructurings		1,451		2,706
Other Impaired Loans		1,485		3,799
Total Collateral-Dependent Loans		8,843		13,601
Non-Collateral-Dependent:
Delinquencies over 90-Days		—		—
Other Impaired loans		—		—
Troubled Debt Restructurings		—		—
Total Non-Collateral-Dependent Loans		—		—
Loans 90 Days past due and still accruing		—		—
Total Non-Performing Loans		8,843		13,601
Foreclosed Assets3		301		—
Total Non-performing Assets	$	9,144	$	13,601

1 These loans are presented at the balance of unpaid principal less interest payments recorded against principal.

2 Includes $290 thousand of restructured loans that were over 90 days delinquent as of December 31, 2019.

3 Foreclosed assets are presented net of any valuation allowances taken against the assets.

Allowance for Loan Losses

We maintain an allowance for loan losses that we consider adequate to cover both the inherent risk of loss associated with the loan portfolio as well as the risk associated with specific loans.

General reserves are allowances taken to address the inherent risk of loss in the loan portfolio. We include several factors in our analysis. We weigh these factors for the level of risk represented and for the potential loss in our portfolio. These factors include:

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· changes in lending policies and procedures, including changes in underwriting standards and collection;

· changes in national, regional, and local economic and industry conditions that affect the collectability of the portfolio;

· changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans;

· changes in the value of the collateral;

· the effect of credit concentrations; and

· the rate of defaults on loans modified as troubled debt restructurings within the previous twelve months.

In addition, we include additional general reserves for our loans if the collateral for the loan is a junior lien or if a loan is unsecured. We segregate our loans into class based on risk rating when we perform our analysis in order to increase the accuracy when determining the potential impact these factors have on our portfolio. We weigh the risk factors based upon the quality of the loans in the class. In general, we give risk factors a higher weight for lower quality loans, which results in greater general reserves related to these loans. We evaluate these factors on a quarterly basis to ensure that we have adequately addressed the risks inherent in our loan portfolio.

We also examine our entire loan portfolio regularly to identify individual loans that we believe have a greater risk of loss than is addressed by the general reserves. These are identified by examining delinquency reports, both current and historic, monitoring collateral value, and performing a periodic review of borrower financial statements. For loans that are collateral-dependent, management first determines the amount of the loan investment at risk, defined as the unpaid principal balance, net of discounts, less the collateral value net of estimated costs associated with selling a foreclosed property. The total amount of the loan investment at risk is reserved. For impaired loans that are not collateral-dependent, management will record an impairment based on the present value of expected future cash flows. At a minimum, we review loans that carry a specific reserve quarterly. However, we will adjust our reserves more frequently if we receive additional information regarding the loan’s status or its underlying collateral.

Finally, for non-collateral-dependent trouble debt restructurings we use a net present value method for the allowance calculation. Reserves for these loans are determined by calculating the net present value of payment streams we expect to receive from a restructured loan compared to what we would have received from the loan according to its original terms. We then discount these expected cash flows at the original interest rate on the loan. Management records these reserves at the time of the restructuring. We report the

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change in the present value of cash flows attributable to the passage of time as interest income.

The process of providing an adequate allowance for loan losses involves discretion on the part of management. We strive to maintain the allowance at a level that compensates for losses that may arise from unknown conditions. As a result, losses may differ from current estimates made by management.

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The following chart details our allowance for loan losses:

	Allowance for Loan Losses
	as of and for the
	Twelve months ended
	December 31,
	2019			2018
Balances:	($ in thousands)
Average total loans outstanding during period	$	135,222		$	145,617
Total loans outstanding at end of the period	$	131,049		$	147,335
Allowance for loan losses:
Balance at the beginning of period	$	2,480		$	2,097
Provision charged to expense		(544)			666
Charge-offs
Wholly-Owned First		(923)			(283)
Wholly-Owned Junior		—			—
Participation First		—			—
Participation Junior		—			—
Total		(923)			(283)
Recoveries
Wholly-Owned First		380			—
Wholly-Owned Junior		—			—
Participation First		—			—
Participation Junior		—			—
Total		380			—
Net loan charge-offs		(543)			(283)
Accretion of allowance related to restructured loans		—			—
Balance	$	1,393		$	2,480
Ratios:
Net loan charge-offs to average total loans		(0.40)	%		(0.19)	%
Provision for loan losses to average total loans		(0.40)	%		0.46	%
Allowance for loan losses to total loans at the end of the period		1.06	%		1.68	%
Allowance for loan losses to non-performing loans		15.75	%		18.23	%
Net loan charge-offs to allowance for loan losses at the end of the period		(38.98)	%		(11.41)	%
Net loan charge-offs to provision (credit) for loan losses		99.82	%		(42.49)	%

The following table shows the Company’s allocation of loan loss by loan categories as of December 31, 2019.

			Percent of loans
			in each category
Loan Categories	Amount		to total loans
Church loans:
Wholly-Owned First	$	1,262		94%
Wholly-Owned Junior		45		3%
Participation First		86		3%
Participation Junior		—		—
Total	$	1,393	$	100%

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Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash increased by $16,117 thousand during the year ended December 31, 2019. The increase in cash was primarily due to $25,324 thousand in proceeds received from contractual loan payments and loan prepayments offset by cash used for loan purchased and loan originations totaling $10,206 thousand.

Investments in Joint Venture

The investment in the joint venture is described in “Note 5: Investments in Joint Venture” in Part I “Financial Information” of this Report. The purpose of the joint venture is to develop and sell property we acquired as part of a Deed in Lieu of Foreclosure agreement reached with one of our borrowers in 2014.

Term-debt

Term-debt decreased by $5,088 thousand during the year ended December 31, 2019. This decrease is the result of scheduled contractual payments.

Investor Notes Payable

Our investor notes payable consist of debt securities sold under publicly registered security offerings as well as notes sold in private placement offerings. Over the last several years, we have expanded our investor note sale program by building relationships with other faith-based organizations whereby we can offer our various investor note products to these organization and the ministries they serve. Concurrently, MP Securities and its staff of financial advisors have increased our customer base through marketing efforts made to individual investors. These efforts helped increase our investor notes payable by $4,746 thousand during the year ended December 31, 2019. The balance sheet presents our investor notes payable net of debt issuance costs, which have decreased from $92 thousand at December 31, 2018 to $55 thousand at December 31, 2019.

Other liabilities

Our other liabilities include accounts payable to third parties and salaries, bonuses, and commissions payable to our employees. At December 31, 2019, our other liabilities increased by $1,367 thousand as compared to the year ended December 31, 2018 due to both an increase in funds the Company held on behalf of borrowers for future lending transactions and the addition of a lease liability. Due to the implementation of ASU No. 2016-02, we added a lease liability of $680 thousand at January 1, 2019, which has amortized to $545 thousand at December 31, 2019.

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Members’ Equity

During the year ended December 31, 2019, total members’ equity increased by $1,540 thousand due to net income of $2,001 thousand earned by the Company as offset by dividend expense of $461 thousand. We did not repurchase or sell any membership equity units during the year ended December 31, 2019.

Liquidity and Capital Resources

Maintenance of adequate liquidity requires that sufficient resources are always available to meet our cash flow needs. We need cash to obtain new mortgage loans, repay term-debt, make interest payments to our note investors, and pay general operating expenses. Our primary sources of liquidity are:

· cash;

· net income from operations;

· maturing loans;

· payments of principal and interest on loans;

· loan sales; and

· sales of investor notes.

Our management team regularly prepares cash flow forecasts that we rely upon to ensure that we have adequate liquidity to conduct our business. While we believe that these expected cash inflows and outflows are reasonable, we can give no assurances that our forecasts or assumptions will prove to be accurate. While our liquidity sources that include cash, reserves and net cash from operations are generally available on an immediate basis, our ability to sell mortgage loan assets and raise additional debt or equity capital is less certain and less immediate.

We are also susceptible to withdrawal requests made by our note holders that have made large investments in our notes that can adversely affect our liquidity. We believe that our available cash, cash flow from operations, net interest income, and other fee income will be sufficient to meet our cash needs. Should our liquidity needs exceed our available sources of liquidity, we believe we could sell a portion of our mortgage loan investments at par to raise additional cash; however, we also must maintain adequate collateral consisting of loans receivable and cash to secure our term-debt and secured notes.

Our Board of Managers approves our liquidity policy. The policy sets a minimum liquidity ratio and contains contingency protocol if our liquidity falls below the minimum. Our

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liquidity ratio was 32% at December 31, 2019, which is above the minimum set by our policy. This was an increase from 13% at December 31, 2018 primarily due to the increase in cash described above.

We review our liquidity position on a regular basis based upon our current position and expected trends of loan closings and sales of investor notes. Management believes that we maintain adequate sources of liquidity to meet our liquidity needs. Some of the material liquidity events that would adversely affect our business are:

· we become unable to continue offering our investor notes in public and private offerings for any reason;

· we incur sudden withdrawals by multiple investors in our investor notes;

· a substantial portion of our investor notes that mature during the next twelve months is not renewed; or

· we are unable to obtain capital from sales of our mortgage loan assets or other sources.

Debt Securities

The sale of our debt securities is a significant component in financing our mortgage loan investments. We continue to sell debt securities filed under a Registration Statement with the SEC to register $90 million of our Class 1A Notes. The SEC declared the Registration Statement effective on February 27, 2018 and it expires on December 31, 2020. We have also entered into a Loan and Standby Agent Agreement pursuant to a Rule 506 offering to sell $40.0 million of Series 1 Subordinated Capital Notes and we are offering $80 million in our Secured Notes under a private placement offering. Through sales of the Class 1A Notes and privately placed investor notes, we expect to fund new loans, which we can hold to either receive interest income or sell to participants to generate servicing income and gains on loan sales. We also use the cash we receive from investor note sales to fund general operating activities.

Historically, we have been successful in generating reinvestments by our debt security holders when the notes they hold mature. Our note renewal rate has been stable over the last several years. MP Securities has also hired additional financial advisors that have enabled us to increase our client base, which has in turn positioned us to increase notes sales.

The table below shows the renewal rates of our maturing notes over the last three years.

2019	75%
2018	62%
2017	64%

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Credit Facilities

We have funded a significant portion of our balance sheet through our term-debt. Because the term-debt has a fixed rate until the facilities mature in 2026, itprovides a stable cost of funds.

The table below is a summary of the Company’s credit facilities (dollars in thousands):

Nature of Borrowing

Interest Rate

Interest Rate Type

Monthly Payment

Maturity Date

Loan Collateral Pledged

Cash Pledged

Term-debt

2.53%

Fixed

579

11/1/2026

85,914

—

We cannot borrow additional funds on these facilities; therefore, we will need to replace any principal paid on the facilities through another source. If we cannot find an alternative source of funding, we will have to shrink our balance sheet, which may reduce our net interest income. As of the date of this Report, our only source of funds to pay down our term-debt are our earnings, the debt securities we sell, and net cash flow from our loans receivable portfolio.

The following table shows the maturity schedule on our credit facilities for the next five years and thereafter as of December 31, 2019 (dollars in thousands):

2020	$	5,164
2021		5,341
2022		5,477
2023		5,617
2024		5,757
Thereafter		44,071
	$	71,427

Debt Covenants

Under our credit facility agreements and our investor note documents, we are obligated to comply with certain affirmative and negative covenants. Failure to comply with our covenants could require all interest and principal to become due. As of December 31, 2019, we are in compliance with our covenants on our notes payable and term debt.

· For additional information regarding our investor notes payable, refer to “Note 11. Investor Notes Payable of Part II, Item 8. of this Report.

· For additional information on our credit facilities, refer to “Note 10. Credit Facilities”, to Part II, Item 8. of this Report.

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Results of Operations:

For the year ended December 31, 2019

Net Interest Income and Net Interest Margin

Historically, our earnings have primarily depended upon our net interest income.

Net interest income is the difference between the interest income we receive from our loans and cash on deposit (“interest-earning assets”) and the interest paid on our debt securities and term debt.

Net interest margin is net interest income expressed as a percentage of average total interest-earning assets.

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The following table provides information, for average outstanding balances for each major category of interest earnings assets and interest bearing liabilities, the interest income or interest expense, and the average yield or rate for the periods indicated:

	Average Balances and Rates/Yields
	For the Twelve Months Ended December 31,
	(Dollars in Thousands)
	2019							2018
	Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense			Average Yield/ Rate
Assets:
Interest-earning accounts with other financial institutions	$	20,200	$	343		1.70	%	$	12,956	$	96			0.74	%
Interest-earning loans [1]		135,202		9,812		7.28	%		136,814		9,112			6.66	%
Total interest-earning assets		155,402		10,155		6.55	%		149,770		9,208			6.15	%
Non-interest-earning assets		7,149		—		—	%		8,726		—			—	%
Total Assets		162,551		10,155		6.26	%		158,496		9,208			5.81	%
Liabilities:
Notes payable gross of debt issuance costs		75,485		3,110		4.13	%		68,879		2,760			4.01	%
Term-debt		74,131		1,867		2.52	%		79,199		2,000			2.52	%
Total interest-bearing liabilities	$	149,616		4,977		3.34	%	$	148,078		4,760			3.21	%
Debt issuance cost				86							76
Total interest-bearing liabilities net of debt issuance cost	$	149,616		5,063		3.39	%	$	148,078		4,836	—		3.27	%
Net interest income			$	5,092						$	4,372
Net interest margin						3.29	%							2.92	%

[1] Loans are net of deferred fees and before the allowance for loan losses. Non accrual loans are considered non-interest earning assets for this analysis.

Rate/Volume Analysis of Net Interest Income
		Twelve Months Ended
	December 31, 2019 vs. 2018
	Increase (Decrease) Due to Change in:
	Volume		Rate		Total
	(Dollars in Thousands)
Increase (Decrease) in Interest Income:
Interest-earning accounts with other financial institutions	$	74	$	173	$	247
Interest-earning loans		(139)		839		700
Total interest-earning assets		(65)		1,012		947
Increase (Decrease) in Interest Expense:
Notes payable gross of debt issuance costs		320		30		350
Term-debt		(133)		—		(133)
Debt issuance cost		—		10		10
Total interest-bearing liabilities		187		40		227
Change in net interest income	$	(252)	$	972	$	720

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Net interest income increased 16% during the year ended December 31, 2019.  Net interest margin increased 36 basis points to 3.29% for the year ended December 31, 2019. These improvements were mainly due to an increase in income on interest-earning assets.

The increase on total interest-earning assets was due to mainly to an increase in yield on interest-earning loans. The majority of this increase was due to the payoff of two previously non-performing loans. On payoff, the Company was able to collect $511 thousand of interest income previously allocated to principal when the loans were on non-accrual basis. The weighted average rate on the loan portfolio increased from 6.43% to 6.59% during the year ended December 31, 2019. The rate variance increase on interest-earning accounts with other financial was due to an increase in average yield on these accounts of 96 basis points. The increase was due to two factors. First, overall market interest rates have increased over the last twelve months. Second, we have allocated a higher percentage of our funds to higher interest-earning accounts.

Offsetting the increase in interest income somewhat, total interest expense increased by $227 thousand for the year ended December 31, 2019. This was mostly due to an increase in average balance on investor notes payable offset slightly by a decrease in average balance on term-debt. The average balance of our investor notes payable increased by $6,606 thousand due to the expanded efforts to market our investor notes to faith-based organizations, institutions, and ministries. The decrease in average balance on term-debt was due to contractual monthly principal payments made on the term-debt.

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Provision and non-interest income and expense

	Twelve months ended
	December 31,				Comparison
	(dollars in thousands)
	2019		2018		$ Change		% Change
Net interest income	$	5,092	$	4,372	$	720		16%
Provision for loan losses		(544)		666		(1,210)		100%
Net interest income after provision for loan losses		5,636		3,706		1,930		52%
Non-interest income
Broker-dealer commissions and fees		1,415		523		892		171%
Other lending income		154		921		(767)		(83%)
Total non-interest income		1,569		1,444		125		9%
Non-interest expenses:
Salaries and benefits		2,810		2,695		115		4%
Marketing and promotion		275		140		135		96%
Office occupancy		177		153		24		16%
Office operations and other expenses		1,483		1,224		259		21%
Foreclosed assets, net		97		—		97		N/A
Legal and accounting		343		441		(98)		(22%)
Total non-interest expenses		5,185		4,653		532		11%
Income before provision for income taxes		2,020		497		1,523		306%
Provision for income taxes and state LLC fees		19		20		(1)		(5%)
Net income	$	2,001	$	477	$	1,524		319%

Provision

Net interest income after provision for loan losses increased by $1,929 thousand for the year ended December 31, 2019. This increase was primarily due to a credit in provision expense related to loan loss recoveries on loan payoffs.

Non-interest income

The increase in non-interest income shown above was the result of a robust increase in broker-dealer commissions and fees offset by a decrease in other lending income. Revenue from broker-dealer commissions and fees increase by $892 thousand during the year ended December 31, 2019 compared to the year ended December 31, 2018. This increase was the result of an increase in institutional business during the year ended December 31, 2019 compared to the year ended December 31, 2018. Offsetting the increase in broker-dealer commissions and fees, other lending income decreased by $767 thousand during the year ended December 31, 2019 This was mostly due to recording a gain on loan sale the year ended December 31, 2018 while we did not record any gains on loan sales during 2019.

Non-interest expenses

The increase in non-interest expenses of $532 thousand was due primarily to an increase in variable expenses directly related to the increase in non-interest income described above.

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Additionally, office operations expenses increased as we outsourced some credit management functions to outside contractors.

Results of Operations:

For the year ended December 31, 2018

Net Interest Income and Net Interest Margin

Historically, our earnings have primarily depended upon our net interest income.

· Net interest income is the difference between the income we receive from interest-earning assets (loans and cash on deposit) and the interest paid on our debt securities and credit facility borrowings.

· Net interest margin is net interest income expressed as a percentage of average total interest-earning assets.

The following table provides information, for average outstanding balances for each major category of interest earnings assets and interest bearing liabilities, the interest income or interest expense and the average yield or rate for the periods indicated:

	Average Balances and Rates/Yields
	For the Twelve Months Ended December 31,
	(Dollars in Thousands)
	2018							2017
	Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate
Assets:
Interest-earning accounts with other financial institutions	$	12,956	$	96		0.74	%	$	14,502	$	48		0.33	%
Interest-earning loans [1]		136,814		9,112		6.66	%		134,802		9,424		6.99	%
Total interest-earning assets		149,770		9,208		6.15	%		149,304		9,472		6.34	%
Non-interest-earning assets		8,726		—		—	%		10,257		—		—	%
Total Assets		158,496		9,208		5.81	%		159,561		9,472		5.94	%
Liabilities:
Notes payable gross of debt issuance costs		68,879		2,760		4.01	%		66,728		2,465		3.69	%
NCUA borrowings		79,199		2,000		2.52	%		84,093		2,123		2.52	%
Total interest-bearing liabilities	$	148,078		4,760		3.21	%	$	150,821		4,588		3.04	%
Debt issuance cost				76							—
Total interest-bearing liabilities net of debt issuance cost	$	148,078		4,836		3.27	%	$	150,821		4,588		3.04	%
Net interest income			$	4,372						$	4,884
Net interest margin						2.92	%						3.27	%

[1] Loans are net of deferred fees and before the allowance for loan losses. This analysis considers non-accrual loans a non-interest earning asset.

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Rate/Volume Analysis of Net Interest Income
	Twelve Months Ended December 31, 2018 vs. 2017
	Increase (Decrease) Due to Change in
	Volume		Rate		Total
	(Dollars in Thousands)
Increase (Decrease) in Interest Income:
Interest-earning accounts with other financial institutions	$	(6)	$	54	$	48
Interest-earning loans		138		(450)		(312)
		132		(396)		(264)
Increase (Decrease) in Interest Expense:
Notes payable gross of debt issuance costs		247		48		295
NCUA borrowings		(123)		—		(123)
Debt issuance cost		—		76		76
Total interest-bearing liabilities		124		124		248
Change in net interest income	$	8	$	(520)	$	(512)

Net interest income decreased 10%, or $512 thousand, to $4.4 million for the year ended December 31, 2018. Net interest margin decreased 35 basis points to 2.92% for the year ended December 31, 2018, compared to 3.27% for the year ended December 31, 2017. These decreases were due to the following factors.

Interest income on interest-earning assets decreased by $264 thousand for the year ended December 31, 2018 compared to the year ended December 31, 2017. A rate variance accounted for $396 thousand of this decrease due to a decrease in average yield on interest-earning loans of 33 basis points. The decrease in yield is primarily due to additional net deferred fees recorded for the year ended December 31, 2017 compared to the year ended December 31, 2018. However, the actual weighted average rate on the loan portfolio increased from 6.31% to 6.43% from December 31, 2017 to December 31, 2018. A positive volume variance of $132 thousand, which was due to an increase in average interest-earning loans of $2.0 million, partially offset the rate variance. Slightly higher rates on interest-earning accounts with other financial institutions partially offset the decrease in interest income.

Average interest-bearing liabilities, consisting of notes payable and borrowings from financial institutions, decreased $2.7 million to $148.1 million during the year ended December 31, 2018, as compared to $150.8 million during the same period in 2017. The decrease is attributable to a $4.9 million decrease in average term-debt offset by an increase in average notes payable of $2.2 million. The average rate paid on these liabilities, including debt issuance cost amortization, increased 23 basis points from 3.04% for the year ended December 31, 2017 to 3.27% for the year ended December 31, 2018 as the

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underlying base index rates on notes payable have increased over the previous twelve months.

Provision and non-interest income and expense

Twelve months ended December 31, 2018 vs. twelve months ended December 31, 2017

	Twelve months ended				Comparison
	December 31,
	(dollars in thousands)
	2018		2017		$ Difference		% Difference
Net interest income	$	4,372	$	4,884	$	(512)		(10%)
Provision for loan losses		666		262		404		100%
Net interest income after provision for loan losses		3,706		4,622		(916)		(20%)
Total non-interest income		1,444		1,183		261		22%
Total non-interest expenses		4,653		4,844		(191)		(4%)
Income before provision for income taxes		497		961		(464)		(48%)
Provision for income taxes and state LLC fees		20		24		(4)		(17%)
Net income	$	477	$	937	$	(460)		(49%)

Provision

Net interest income after provision for loan losses decreased by $916 thousand for year ended December 31, 2018 over the year ended December 31, 2017 due to an increase in provision for loan losses of $404 thousand and a decrease in net interest income as discussed above. Provision for loan losses increased due to specific reserves taken for impaired loans that we expect to restructure or dispose of through foreclosure or sale.

Non-interest income

Non-interest income increased by 22% for year ended December 31, 2018 over the year ended December 31, 2017 due to several factors. Other lending income increased by $592 thousand related to the gain recognized on the sale of a note. This gain was offset by a $331 thousand decrease in broker-dealer commissions and fees due to fewer large institutional investment transactions consummated during the year ended December 31, 2018, as compared to the year ended December 31, 2017. The results for the year ended December 31, 2018 are typical for us in periods without large institutional investment transactions.

Non-interest expenses

Non-interest expenses for the year ended December 31, 2018 decreased by 4%, or $191 thousand, over the year ended December 31, 2017. This decrease is partially due to lower office operations and other expenses of $63 thousand due to lower referral fees paid

69

to strategic partners in conjunction with a decrease in security transactions referred to our broker-dealer. In addition, salaries and benefits decreased by $59 thousand primarily due to a reduction in accrued bonuses. Legal and accounting expense decreased by $44 thousand due to a decrease in legal fees expensed related to our note sales.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not providing the information contained in this item pursuant to Regulation S-K

70

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Included herewith are the following financial statements:

Table of Contents
	Page
Report of Independent Registered Public Accounting Firm	F-1
Financial Statements
Consolidated Balance Sheets	F-2
Consolidated Statements of Income	F-3
Consolidated Statements of Equity	F-4
Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-8 – F-52

71

Report of Independent Registered Public Accounting Firm

To the Members

Ministry Partners Investment Company, LLC

Brea, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ministry Partners Investment Company, LLC and its subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of income, member’s equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

F-1

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the allowance for loan losses related to the loan portfolio that is collectively evaluated for impairment

As discussed in Notes 1 and 4 to the consolidated financial statements, the Company’s allowance for loan losses related to loans collectively evaluated for impairment (ALL) was based on quantitative historical loss rates. The Company also adjusted the quantitative historical loss rates by considering qualitative factors that cause the estimated losses to differ from quantitatively calculated amounts. The Company recorded a total allowance for loan losses of $1.4 million as of December 31, 2019.

We identified the assessment of the ALL as a critical audit matter because it required a significant degree of subjective auditor judgment and specialized industry knowledge and experience. There was subjectivity in performing procedures over key factors and assumptions used by the Company. There were also subjective judgments and specialized knowledge needed to assess loan characteristics, such as loan risk ratings, and to evaluate the development and application of the ALL methodology and the use of qualitative factors.

F-2

The primary procedures we performed to address this critical audit matter included the following. We evaluated the relevance of the historical data used to develop loss rates. We assessed how the underlying assumptions used by the Company were applied in accordance with the qualitative framework. In addition, we tested the Company’s process, including:

· evaluating the Company’s ALL methodology to determine if it is sufficiently structured, transparent, and repeatable to produce an estimate that is compliant with U.S. generally accepted accounting principles,

· performing credit file reviews on a selection of loans to assess loan characteristics, such as loan risk ratings, and

· evaluating the conceptual soundness of the qualitative framework to determine if it identified the relevant incremental risks not captured by the quantitative estimate.

/s/ Hutchinson and Bloodgood LLP

We have served as the Company's auditor since 2005.

Glendale, California

March 27, 2020

F-3

Ministry Partners Investment Company, LLC and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2019 and 2018

(Dollars in thousands Except Unit Data)

	2019		2018
Assets:
Cash	$	25,993	$	9,877
Restricted cash		52		51
Loans receivable, net of allowance for loan losses of $1,393 and $2,480 as of December 31, 2019 and 2018, respectively		128,843		143,380
Accrued interest receivable		635		711
Investments in joint venture		891		887
Property and equipment, net		216		87
Foreclosed assets, net		301		—
Servicing assets		100		212
Other assets		990		234
Total assets	$	158,021	$	155,439
Liabilities and members’ equity
Liabilities:
Term-debt	$	71,427	$	76,515
Notes payable, net of debt issuance costs of $55 and $92 as of December 31, 2019 and 2018, respectively		73,046		68,300
Accrued interest payable		266		249
Other liabilities		2,211		844
Total liabilities		146,950		145,908
Members' Equity:
Series A preferred units, 1,000,000 units authorized, 117,100 units issued and outstanding at December 31, 2019 and 2018 (liquidation preference of $100 per unit); See Note 14		11,715		11,715
Class A common units, 1,000,000 units authorized, 146,522 units issued and outstanding at December 31, 2019 and 2018; See Note 14		1,509		1,509
Accumulated deficit		(2,153)		(3,693)
Total members' equity		11,071		9,531
Total liabilities and members' equity	$	158,021	$	155,439

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Ministry Partners Investment Company, LLC and Subsidiaries

Consolidated Statements of Income

For the December 31, 2019 and 2018

(Dollars in thousands)

	2019		2018
Interest income:
Interest on loans	$	9,812	$	9,112
Interest on interest-bearing accounts		343		96
Total interest income		10,155		9,208
Interest expense:
Term-debt		1,867		2,000
Notes payable		3,196		2,836
Total interest expense		5,063		4,836
Net interest income		5,092		4,372
Provision (credit) for loan losses		(544)		666
Net interest income after provision for loan losses		5,636		3,706
Non-interest income:
Broker-dealer commissions and fees		1,415		523
Other income		154		921
Total non-interest income		1,569		1,444
Non-interest expenses:
Salaries and benefits		2,810		2,695
Marketing and promotion		275		140
Office occupancy		177		153
Office operations and other expenses		1,483		1,224
Foreclosed assets, net		97		—
Legal and accounting		343		441
Total non-interest expenses		5,185		4,653
Income before provision for income taxes		2,020		497
Provision for income taxes and state LLC fees		19		20
Net income	$	2,001	$	477

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Ministry Partners Investment Company, LLC and Subsidiaries

Consolidated Statements of Equity

For the years ended December 31, 2019 and 2018

(Dollars in thousands)

	Series A Preferred Units				Class A Common Units
	Number of Units		Amount		Number of Units		Amount		Accumulated Deficit		Total
Balance, December 31, 2017		117,100	$	11,715		146,522	$	1,509	$	(3,795)	$	9,429
Net income		—		—		—		—		477		477
Dividends on preferred units		—		—		—		—		(375)		(375)
Balance, December 31, 2018		117,100	$	11,715		146,522	$	1,509	$	(3,693)	$	9,531
Net income		—		—		—		—		2,001		2,001
Dividends on preferred units		—		—		—		—		(461)		(461)
Balance, December 31, 2019		117,100	$	11,715		146,522	$	1,509	$	(2,153)	$	11,071

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Ministry Partners Investment Company, LLC and Subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(Dollars in thousands)

	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,001	$	477
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation		43		30
Amortization of deferred loan fees		(269)		(258)
Amortization of debt issuance costs		86		85
Provision (credit) for loan losses		(544)		666
Accretion of loan discount		(247)		(24)
Gain on sale of loans		—		(13)
Changes in:
Accrued interest receivable		76		31
Other assets		(469)		103
Accrued interest payable		17		41
Other liabilities		1,236		(15)
Net cash provided by operating activities		1,930		1,123
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases		(2,255)		(2,721)
Loan originations		(7,951)		(15,486)
Loan sales		—		5,414
Loan principal collections		25,324		17,817
Purchase of property and equipment		(176)		(14)
Sale of property and equipment		4		—
Net cash provided by investing activities		14,946		5,010
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of term debt		(5,088)		(4,977)
Net change in notes payable		4,709		(696)
Debt issuance costs		(49)		(92)
Dividends paid on preferred units		(331)		(405)
Net cash (used) by financing activities		(759)		(6,170)
Net increase (decrease) in cash and restricted cash		16,117		(37)
Cash, cash equivalents, and restricted cash at beginning of period		9,928		9,965
Cash, cash equivalents, and restricted cash at end of period	$	26,045	$	9,928
Supplemental disclosures of cash flow information
Interest paid	$	5,046	$	4,795
Income taxes paid	$	20	$	23
Leased assets obtained in exchange of new operating lease liabilities	$	680	$	—
Lease liabilities recorded	$	680	$	—
Transfer of loans to foreclosed assets	$	479	$	—
Transfer of foreclosed assets to other assets	$	178	$	—
Dividends declared to preferred unit holders	$	237	$	107

The accompanying notes are an integral part of these consolidated financial statements.

F-7

MINISTRY PARTNERS INVESTMENT COMPANY, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business

Throughout these notes to consolidated financial statements, we refer to Ministry Partners Investment Company, LLC and its subsidiaries as “the Company.” The Company was formed in California in 1991. The Company’s primary operations are financing commercial real property secured loans and providing investment services for the benefit of evangelical churches, ministries, and individuals. The Company funds its operations primarily through the sale of debt securities.

The Company’s wholly owned subsidiaries are:

· Ministry Partners Funding, LLC (“MPF”);

· MP Realty Services, Inc., a California corporation (“MP Realty”);

· Ministry Partners Securities, LLC, a Delaware limited liability company (“MP Securities”); and

· Ministry Partners for Christ, Inc., a not-for-profit Delaware corporation (“MPC”).

The Company formed MPF in 2007 and then deactivated the subsidiary on November 30, 2009. In December 2014, the Company reactivated MPF to enable it to serve as collateral agent for loans held as collateral for its Secured Investment Certificates. The Company formed MP Realty in November 2009, and obtained a license to operate as a corporate real estate broker through the California Department of Real Estate on February 23, 2010. MP Realty has conducted limited operations to date. The Company formed MP Securities on April 26, 2010 to provide investment and financing solutions for individuals, churches, charitable institutions, and faith-based organizations. MP Securities acts as the selling agent for the Company’s public and private placement notes investor notes.

The Company formed MPC on December 28, 2018 to be used exclusively for religious and charitable purposes within the meaning of Section 501(c)(3) of the U.S. Internal Revenue Code of 1986. MPC is a not-for-profit corporation formed and organized as a private foundation under Delaware law that will make charitable grants to Christian education, and provide accounting, consulting, and financial expertise to aid evangelical Christian ministries. Although the Company has made an initial cash contribution to launch the private foundation, MPC had not yet begun activities as of December 31, 2019. On August 23, 2019, the Internal Revenue Service granted MPC tax-exempt status as a private foundation under Section 501(c)(3) of the Internal Revenue Code.

F-8

Principles of Consolidation

The consolidated financial statements include the accounts of Ministry Partners Investment Company, LLC and its wholly owned subsidiaries. Management eliminates all significant inter‑company balances and transactions in consolidation.

Conversion to LLC

Effective as of December 31, 2008, the Company converted its form of organization from a corporation organized under California law to a limited liability company organized under the laws of the State of California. With the filing of Articles of Organization-Conversion with the California Secretary of State, the separate existence of Ministry Partners Investment Corporation ceased and the entity continued by operation of law under the name Ministry Partners Investment Company, LLC.

Since the conversion became effective, a group of managers provides oversight of the Company’s affairs. The managers have full, exclusive, and complete discretion, power, and authority to oversee the management of Company affairs. As an LLC, the Company’s managers and members have entered into an Operating Agreement that governs the Company’s management structure and governance procedures.

Cash and Cash Equivalents

Cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. The Company had demand deposits and money market deposit accounts as of December 31, 2019. The Company had no cash positions other than demand deposits as of December 31, 2019 and December 31, 2018.  

The National Credit Union Insurance Fund insures a portion of the Company’s cash held at credit unions and the Federal Deposit Insurance Corporation insures a portion of cash held by the Company at other financial institutions. The Company keeps cash that may exceed insured limits. Management does not expect to incur losses in these cash accounts.

The Company maintains cash accounts with RBC Dain as part of its clearing agreement, and with the Central Registration Depository for regulatory purposes. The cash in these accounts is considered restricted cash and is classified as such on our balance sheet.

Reclassifications

The Company has made certain reclassifications to the 2018 financial statements to conform to the 2019 presentation. These reclassifications do not affect member’s equity or net income for the year ended December 31, 2018

F-9

Use of Estimates

The Company’s creation of consolidated financial statements that conform to United States Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates govern areas such as the allowance for credit losses and the fair value of financial instruments. Actual results could differ from these estimates.

Investments in Joint Venture

On a periodic basis, management analyzes the Company’s investment in a joint venture for impairment by comparing the carrying value of the investment to the estimated value of the underlying real property. Management records any impairment charges as a valuation allowance against the value of the asset. The Company’s share of income and expenses of the joint venture will increase or decrease the Company’s investment and will be recorded on the income statement as realized gains or losses on investment.

Loans Receivable

The Company reports loans that management has the intent and ability to hold for the foreseeable future at their outstanding unpaid principal balance adjusted for an allowance for loan losses, deferred loan fees and costs, and loan discounts.

Interest Accrual on Loans Receivable

The Company accrues loan interest income daily. Management defers loan origination fees and costs generated in making a loan. The Company amortizes these fees and costs as an adjustment to the related loan yield using the interest method.

Loan discounts are interest accrued and unpaid which the Company added to loan principal balances when it restructured the loan. The Company does not accrete discounts to income on impaired loans. However, when management determines that a previously impaired loan is no longer impaired, the Company begins accreting loan discounts to interest income over the term of the restructured loan. For loans purchased from third parties, loan discounts also are the differences between the purchase price and the recorded principal balance of the loan. The Company accretes these discounts to interest income over the term of the loan using the interest method.

Management considers a loan impaired if it concludes the collection of principal or interest according to the terms of the loan agreement doubtful. The Company stops the accrual of interest when management determines the loan is impaired.

For loans that the Company places on nonaccrual status, management reverses all uncollected accrued interest against interest income. Management accounts for the interest

F-10

on these loans on the cash basis or cost-recovery method until the loan qualifies for return to accrual status. It is not until all the principal and interest amounts contractually due are brought current and future payments are reasonably assured that the Company returns a loan to accrual status.

Allowance for Loan Losses

The Company sets aside an allowance for loan losses by charging the provision for loan losses account on the Company’s consolidated statements of income. This charge decreases the Company’s earnings. Management charges off the part of loan balances it believes it will not collect against the allowance. The Company credits subsequent recoveries, if any, to the allowance.

Loan Portfolio Segments and Classes

Management separates the loan portfolio into portfolio segments for purposes of evaluating the allowance for loan losses. A portfolio segment is defined as the level at which the Company develops and documents a systematic method for determining its allowance for loan losses. The Company segments the loan portfolio based on loan types and the underlying risk factors present in each loan type. Management periodically reviews and revises such risk factors, as it considers appropriate.

The Company’s loan portfolio consists of one segment – church loans. Management has segregated the loan portfolio into the following portfolio classes:

Loan Class	Class Description
Wholly-Owned First Collateral Position	Wholly-owned loans and the retained portion of loans originated by the Company and sold for which the Company possesses a senior lien on the collateral underlying the loan.
Wholly-Owned Junior Collateral Position	Wholly-owned loans and the retained portion of loans originated by the Company and sold for which the Company possesses a lien on the underlying collateral that is superseded by another lien on the same collateral.  This class also contains any loans that are not secured.  These loans present higher credit risk than loans for which the Company possesses a senior lien due to the increased risk of loss should the loan default.
Participations First Collateral Position	Participated loans purchased from another financial entity for which the Company possesses a senior lien on the collateral underlying the loan. Loan participations purchased may present higher credit risk than wholly owned loans because disposition and direction of actions regarding the management and collection of the loans must be coordinated and negotiated with the other participants, whose best interests regarding the loan may not align with those of the Company.
Participations Junior Collateral Position	Participated loans purchased from another financial entity for which the Company possesses a lien on the underlying collateral that is superseded by another lien on the same collateral.  Loan participations in the junior collateral position loans have higher credit risk than wholly owned loans and participated loans purchased where the Company possesses a senior lien on the collateral.  The increased risk is the result of the factors presented above relating to both junior lien positions and participations.

F-11

Allowance for Loan Loss Evaluation

Management evaluates the allowance for loan losses on a regular basis. The Company establishes the allowance for loan losses based upon its periodic review of several factors management believes influences the collectability of the loans, including:

· the Company’s loss history;

· the characteristics and volume of the loan portfolio;

· adverse conditions that may affect the borrower’s ability to repay;

· the estimated value of any secured collateral; and

· the current economic conditions.

This evaluation is subjective, as it requires estimates that are subject to significant revision as more information becomes available.

The allowance consists of general and specific components. The general component covers non-classified loans. Management bases the general reserve on the Company’s loss history adjusted for qualitative factors. These qualitative factors are significant factors management considers likely to cause estimated credit losses associated with the Company’s existing portfolio to differ from its historical loss experience. Management adjusts these factors on an on-going basis, some of which include:

· changes in lending policies and procedures, including changes in underwriting standards and collection;

· changes in national, regional, and local economic and industry conditions that affect the collectability of the portfolio;

· changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans;

· changes in the value of the collateral for collateral-dependent loans; and

· the effect of credit concentrations.

Loans that management has classified as impaired receive a specific reserve. For such loans, an allowance is established when the carrying value of that loan is higher than the amount management expects to receive. Management uses multiple approaches to determine the amount the Company expects to receive. These include the discounted cash flow method, using the loan’s underlying collateral value, or using the observable market price of the impaired loan.

F-12

Impairment Analysis

All loans in the loan portfolio are subject to impairment analysis. The Company reviews its loan portfolio monthly by examining several data points. These include reviewing delinquency reports, any new information related to the financial condition of its borrowers, and any new appraisal or other collateral valuation. Through this process, the Company identifies potential impaired loans. Management generally deems a loan is impaired when current facts and circumstances indicate that it is probable that a borrower will be unable to make payments according to the loan agreement. If management has not already deemed a loan impaired, it will classify the loan as non-accrual when it becomes 90 days or more past due.

Management considers several factors when determining impairment status. These factors include the loan’s payment status, the value of any secured collateral, and the probability of collecting scheduled payments when due. Management generally does not classify loans that experience minor payment delays or shortfalls as impaired. Management determines the significance of payment delays or shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower. These circumstances include the length and reasons for the delay, the borrower's payment history, and the amount of the shortfall in relation to the principal and interest owed.

Management measures impairment on a loan-by-loan basis using one of three methods:

· the present value of expected future cash flows discounted at the loan's effective interest rate;

· the obtainable market price; or

· the fair value of the collateral if the loan is collateral-dependent.

Troubled Debt Restructurings

A troubled debt restructuring is a loan for which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to a borrower that the Company would not otherwise consider. A restructuring of a loan usually involves an interest rate modification, extension of the maturity date, payment reduction, or reduction of accrued interest owed on the loan on a contingent or absolute basis.

Management considers loans that it renews at below-market terms to be troubled debt restructurings if the below-market terms represent a concession due to the borrower’s troubled financial condition. The Company classifies troubled debt restructurings as impaired loans. For the loans that are not considered to be collateral-dependent, management measures troubled debt restructurings at the present value of estimated future cash flows using the loan's effective rate at start of the loan. The Company reports the change in the present value of cash flows related to the passage of time as interest income.

F-13

If the loan is considered to be collateral-dependent, impairment is measured based on the fair value of the collateral.

Loan Charge-offs

Management charges off loans or portions thereof when it determines the loans or portions of the loans are uncollectible. The Company evaluates collectability periodically on all loans classified as “Loans of Lesser Quality.” Key factors management uses in assessing a loan’s collectability are the financial condition of the borrower, the value of any secured collateral, and the terms of any workout agreement between the Company and the borrower. In workout situations, the Company charges off the amount deemed uncollectible due to the terms of the workout, the inability of the borrower to make agreed upon payments, and the value of the collateral securing the loan.

Credit Quality Indicators

The Company has established a loan grading system to assist its management in analyzing and monitoring the loan portfolio. The Company classifies loans it considers lesser quality (“classified loans”) as watch, special mention, substandard, doubtful, or loss assets. The loan grading system is as follows:

Pass:

The borrower has sufficient cash to fund debt services. The borrower may be able to obtain similar financing from other lenders with comparable terms. The risk of default is considered low.

Watch:

These loans exhibit potential or developing weaknesses that deserve extra attention from credit management personnel. If the developing weakness is not corrected or mitigated, there may be deterioration in the ability of the borrower to repay the debt in the future. Loans graded Watch must be reported to executive management and the Board of Managers. Potential for loss under adverse circumstances is elevated, but not foreseeable. Watch loans are considered pass loans.

Special mention:

These credit facilities exhibit potential or actual weaknesses that present a higher potential for loss under adverse circumstances, and deserve management’s close attention. If uncorrected, these weaknesses may result in deterioration of the repayment prospects for the loan at some future date.

Substandard:

Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any

F-14

pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, ministry, or environmental conditions which have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that some future loss will be sustained if such weaknesses are not corrected.

Doubtful:

This classification consists of loans that display the properties of substandard loans with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. The probability of some loss is very high, but because of certain important and reasonably specific factors, the amount of loss cannot be exactly determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral.

Loss:

Loans in this classification are considered uncollectible and cannot be justified as a viable asset. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future.

Revenue Recognition

The Company recognizes two primary types of revenue: interest income and non-interest income.

Interest Income

The Company’s principal source of revenue is interest income from loans, which is not within the scope of ASU 2014-09, Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, "ASC 606"). Refer to the discussion in “Loans Receivable” above to understand the Company’s recognition of interest income.

Non-interest Income

Non-interest income includes revenue from various types of transactions and services provided to customers. Contracts with customers can include multiple services, which are accounted for as separate “performance obligations” if they are determined to be distinct. Our performance obligations to our customers are generally satisfied when we transfer the promised good or service to our customer, either at a point in time or over time. Revenue from a performance obligation transferred at a point in time is recognized at the time that the customer obtains control over the promised good or service. Revenue from our performance obligations satisfied over time are recognized in a manner that depicts our performance in transferring control of the good or service, which is generally measured

F-15

based on time elapsed, as our customers simultaneously receive and consume the benefit of our services as they are provided.

Payment for the majority of our services is considered to be variable consideration, as the amount of revenues we expect to receive is subject to factors outside of our control, including market conditions. Variable consideration is only included in revenue when amounts are not subject to significant reversal, which is generally when uncertainty around the amount of revenue to be received is resolved.

Wealth advisory fees

Generally, management recognizes wealth advisory fees over time as the Company renders services to its clients. The Company receives these fees either based on a percentage of the market value of the assets under management, or as a fixed fee based on the services the Company provides to the client. The Company’s delivery of these services represents its related performance obligations. The Company typically collects the wealth advisory fees at the beginning of each quarter from the client’s account. Management recognizes these fees ratably over the related billing period as the Company fulfills its performance obligation. In addition, management recognizes any commissions or referral fees paid related to this revenue ratably over the related billing period as the Company fulfills its performance obligation.

Investment brokerage fees

Investment brokerage fees arise from the selling, distribution, and trade execution services. The Company’s execution of these services fulfills its related performance obligations.

The Company also offers sales and distribution services, and earns commissions through the sale of annuity and mutual fund products. The Company acts as an agent in these transactions and recognizes revenue at a point in time when the customer executes a contract with a product carrier. The Company may also receive trailing commissions and 12b-1 fees related to mutual fund and annuity products. Management recognizes this revenue in the period when it is earned, estimating the revenue if necessary based on the balance of the investment and the commission rate on the product.

The Company earns and recognizes trade execution commissions on the trade date, which is when the Company fulfills its performance obligation. Payment for the trade execution is due on the settlement date.

Lending Fees

Lending fees represent charges earned for services we provide as part of the lending process, such as late charges, servicing fees, and documentation fees. The Company recognizes late charges as earned when they are paid. The Company recognizes revenue on other lending fees in the period in which the Company has performed the service.

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Other non-interest income

Other non-interest income includes fees earned based on service contracts the Company has entered into with credit unions. The Company recognizes the revenue monthly based on the terms of the contracts, which require monthly payments for services the Company performs.

Gains/losses on sales of foreclosed assets

The Company records a gain or loss from the sale of foreclosed assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed asset to the buyer, the Company assesses whether the buyer is committed to perform their obligation under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

Foreclosed Assets

Management records assets acquired through foreclosure or other proceedings at fair market value less estimated costs of disposal. Management determines the fair value at the date of foreclosure, which establishes a new cost for the asset. After foreclosure, the Company carries the asset at the lower of cost or fair value, less estimated costs of disposal. Management evaluates these real estate assets regularly to ensure that the recorded amount is supported by the current fair value and, if necessary, ensuring that valuation allowances reduce the carrying amount to fair value less estimated costs of disposal. Revenue and expense from the operation of the Company’s foreclosed assets and changes in the valuation allowance are included in net expenses from foreclosed assets. When the Company sells the foreclosed property, it recognizes a gain or loss on the sale equal to the difference between the sales proceeds received and the carrying amount of the property.

Transfers of Financial Assets

Management accounts for transfers of financial assets as sales when the Company has surrendered control over the asset. Management deems the Company has surrendered control over transferred assets when:

· the assets have been isolated from the Company;

· the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred asset; and

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· the Company does not maintain effective control over the transferred asset through an agreement to repurchase it before its maturity.

The Company, from time to time, sells participation interests in mortgage loans it has originated or acquired. In order to recognize the transfer of a portion of a financial asset as a sale, the transferred portion, and any portion that continues to be held by the transferor must represent a participating interest, and the transfer of the participating interest must meet the conditions for surrender of control. To qualify as a participating interest:

· each portion of a financial asset must represent a proportionate ownership interest in an entire financial asset;

· from the date of transfer, all cash flows received from the entire financial asset must be divided proportionately among the participating interest holders in an amount equal to their respective share of ownership;

· the transfer must be made on a non-recourse basis (other than standard representations and warranties made under the loan participation sale agreement);

· the transfer may not be subordinate to any other participating interest holder; and

· no party has the right to pledge or exchange the entire financial asset.

If the transaction does not meet either the participating interest or surrender of control criteria, management accounts for it as a secured borrowing arrangement.

Under some circumstances, when the Company sells a participation in a wholly-owned loan receivable that it services, it retains loan-servicing rights, and records a servicing asset that is initially measured at fair value. As quoted market prices are generally not available for these assets, the Company estimates fair value based on the present value of future expected cash flows associated with the loan receivable. The Company amortizes servicing assets over the life of the associated receivable using the interest method. Any gain or loss recognized on the sale of a loan receivable depends in part on both the previous carrying amount of the financial asset involved in the sale, allocated between the asset sold and the interest that continues to be held by the Company based on its relative fair value at the date of transfer, and the proceeds received.

Property and Equipment

The Company states its furniture, fixtures, and equipment at cost, less accumulated depreciation. Management computes depreciation on a straight-line basis over the estimated useful lives of the assets. The useful lives of the Company’s assets range from three to seven years.

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Debt Issuance Costs

The Company’s debt consists of borrowings from financial institutions and obligations to investors incurred through the sale of investor notes. Management amortizes these costs into interest expense over the contractual terms of the debt using the straight-line method.

Employee Benefit Plan

Contributions to the qualified employee retirement plan are recorded as compensation cost in the period incurred.

Income Taxes

The Company has elected to be treated as a partnership for income tax purposes. Therefore, the Company passes through its income and expenses to its members for tax reporting purposes.

Tesoro Hills, LLC, is a joint venture in which the Company has an investment. Tesoro Hills, according to its operating agreement, has elected to be treated as a partnership for income tax purposes.

The Company and MP Securities are subject to a California LLC fee.

The Company uses a recognition threshold and a measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken in a tax return. The Company recognizes benefits from tax positions in the consolidated financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Management derecognizes previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold in the first subsequent financial reporting period in which that threshold is no longer met.

New accounting guidance

Adoption of New Accounting Standards:

On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02 “Leases (Topic 842)” and subsequent amendments thereto, which requires the Company to recognize most leases on the balance sheet. The Company adopted the standard under a modified retrospective approach as of the date of adoption and elected to apply several of the available practice expedients, including:

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· Carry over of historical lease determination and lease classification conclusions

· Carry over of historical initial direct cost balances for existing leases

· Accounting for lease and non-lease components in contracts in which the Company is a lessee as a single lease component

Adoption of leasing standard resulted in the recognition of operating right-of-use assets of $680 thousand, and operating lease liabilities of $680 thousand as of January 1, 2019. These amounts were determined based on the present value of remaining minimum lease payments, discounted using the Company’s incremental borrowing rate as of the date of adoption. There was no material impact to the timing of expense or income recognition in the Company’s Consolidated Income Statements. Prior periods were not restated and continue to be presented under legacy GAAP. Disclosures about the Company’s leasing activities are presented in Note 12. Commitments and Contingencies.

Accounting Standards Pending Adoption

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The guidance requires companies to apply the requirements in the year of adoption through cumulative adjustment with some aspects of the update requiring a prospective transition approach. The Company’s preliminary evaluation indicates the provisions of ASU No. 2016-13 are expected to affect the level of the allowance for loan losses on the Company’s consolidated financial statements. Management has gathered all necessary data and reviewed potential methods to calculate the expected credit losses. The Company will use a third-party software solution to assist with the adoption of the standard. Management is currently calculating sample expected loss computations and developing the allowance methodology and assumptions that the Company will use under the new standard.

In October 2019, the FASB adopted a two-bucket approach to stagger the effective date for the credit losses standard for the fiscal years beginning after December 31, 2022 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Company is eligible for the delay. Management is currently evaluating the impact of the delay on its implementation project plan.

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In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The ASU removes, modifies, and adds certain disclosure requirements for fair value measurements. For example, the ASU will no longer require public entities to disclose the valuation processes for Level 3 fair value measurements. However, they will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019. In addition, entities may early adopt the modified or eliminated disclosure requirements and delay adoption of the additional disclosure requirements until the effective date. The Company does not believe the adoption of ASU No. 2018-13 will have a material impact on its consolidated financial statements, as the update only revises disclosure requirements.

Note 2. Pledge of Cash and Restricted Cash

Under the terms of its debt agreements, the Company has the ability to pledge cash as collateral for its borrowings. This cash is restricted cash. At December 31, 2019 and December 31, 2018, the Company held no pledged cash.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows (dollars in thousands):

	December 31,
	2019		2018
Cash and cash equivalents	$	25,993	$	9,877
Restricted cash		52		51
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	26,045	$	9,928

Amounts included in restricted cash represent those required to be set aside with the Central Registration Depository ("CRD") account with FINRA, as well as funds the Company has deposited with RBC Dain as clearing deposits. The CRD funds may only be used for fees charged by FINRA to maintain the membership status of the Company or for fees related to registered and associated persons of the Company.

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Note 3. Related Party Transactions

Transactions with Equity Owners

Transactions with Evangelical Christian Credit Union (“ECCU”)

The tables below summarize transactions the Company conducts with ECCU, the Company’s largest equity owner.

ECCU related parties who serve on the Company’s Board of Managers:

ECCU Role	MPIC Role
Chairman of the Board	Board of Managers

Related party balances pertaining to the assets of the Company (in thousands):

	December 31,		December 31,
	2019		2018
Total funds held on deposit at ECCU	$	365	$	457
Loan participations purchased from and serviced by ECCU		1,495		5,109

Related party transactions of the Company (dollars in thousands):

	Year ended
	December 31,
	2019		2018
Interest earned on funds held with ECCU	$	—	$	3
Interest income earned on loans purchased from ECCU		161		278
Fees paid to ECCU from MP Securities Networking Agreement		9		25
Income from Master Services Agreement with ECCU		14		54
Income from Successor Servicing Agreement with ECCU		9		9
Rent expense on lease agreement with ECCU		138		116

Loan participation interests purchased:

In the past, the Company purchased loan participation interests from ECCU. Management negotiated the pass-through interest rates on these loans on a loan-by-loan basis. Management believes these negotiated terms were equivalent to those that would prevail in an arm's length transaction. The Company did not purchase any loans from ECCU during the years ended December 31, 2019 and 2018.

Lease and Services Agreement:

The Company leases its corporate offices and purchases other facility-related services from ECCU pursuant to a written lease and services agreement. Management believes these terms are equivalent to those that prevail in arm's length transactions.

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MP Securities Networking Agreement with ECCU:

MP Securities, the Company’s wholly-owned subsidiary, has entered into a Networking Agreement with ECCU pursuant to which MP Securities agreed to offer investment and insurance products and services to ECCU’s members that:

(1) ECCU or its Board of Directors has approved;

(2) comply with applicable investor suitability standards required by federal and state securities laws and regulations;

(3) are offered in accordance with National Credit Union Administration (“NCUA”) rules and regulations; and

(4) comply with its membership agreement with Financial Industry Regulation Authority (“FINRA”).

Master Services Agreement (the “Services Agreement”) with ECCU:

The Company and ECCU had entered into the Services Agreement, pursuant to which the Company was to provide relationship management services to ECCU’s members and business development services to new leads in the southeast region of the United States. On March 1, 2018, the Company and ECCU amended the agreement to include referral fees to be paid by either party on the successful closing of a referred loan. The terms of the agreement allowed either party to terminate the Services Agreement for any reason by providing thirty days written notice. On April 4, 2019, the Company received written notice from ECCU requesting termination of the agreement. The agreement terminated on May 4, 2019.

Successor Servicing Agreement with ECCU:

On October 5, 2016, the Company entered into a Successor Servicing Agreement with ECCU. This agreement obligates the Company to serve as the successor loan servicing agent for certain mortgage loans designated by ECCU. The Company will service these loans in the event ECCU requests that the Company assume its obligation to act as the servicing agent for those loans. The Agreement terminated in October 2019 and has converted to a month-to-month agreement.

Transactions with America’s Christian Credit Union (“ACCU”)

The Company has several related party agreements with ACCU, one of the Company’s equity owners. The following describes the nature and dollar amounts of the material related party transactions with ACCU.

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Ownership transfer:

On May 4, 2017, ACCU acquired 12,000 Class A Units and 12,000 Series A Preferred Units of the Company’s Class A Common Units and Series A Preferred Units, respectively, which represents 8.19% of the Company’s issued and outstanding Class A Units and 10.25% of the Company’s issued and outstanding Series A Preferred Units from Financial Partners Credit Union, a California state chartered credit union (“FPCU”). The Company’s Board of Managers approved ACCU’s purchase of the Class A and Series A Preferred Units from FPCU and consented to ACCU’s request to be admitted as a new member of the Company. ACCU’s purchase of the Class A Units and Series A Preferred Units was consummated pursuant to a privately negotiated transaction.

On June 29, 2018, ACCU acquired 2,000 of the Company’s Series A Preferred Units, which represents 1.71% of the Company’s issued and outstanding Series A Preferred Units from The National Credit Union Administration Board as Liquidating Agent of Telesis Community Credit Union, a federally chartered credit union (“NCUAB”). The Company’s Board of Managers has approved ACCU’s purchase of the Membership Units from NCUAB and has consented to ACCU’s acquisition of additional membership interests of the Company.

ACCU related parties who serve on the Company’s Board of Managers:

ACCU Role	MPIC Role
President, Chief Executive Officer	Board of Managers

Related party balances pertaining to the assets of the Company (dollars in thousands):

	December 31,		December 31,
	2019		2018
Total funds held on deposit at ACCU	$	10,343	$	5,675
Dollar outstanding loan participations sold to ACCU and serviced by the Company		—		3,184
Loan participations purchased from and serviced by ACCU		1,603		1,662

Related party transactions of the Company (dollars in thousands):

	Year ended
	December 31,
	2019		2018
Dollar amount of loans purchased from ACCU	$	1,435	$	—
Dollar amount of loans sold to ACCU		—		554
Interest earned on funds held with ACCU		159		69
Interest income earned on loans purchased from ACCU		84		86
Income from Master Services Agreement with ACCU		—		20
Fees paid based on MP Securities Networking Agreement with ACCU		45		56

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Loan participation interests purchased:

Occasionally, the Company sells or purchases loan participation interests from ACCU. The Company negotiates pass-through interest rates on loan participation interests purchased or sold from and to ACCU on a loan-by-loan basis. Management believes these terms are equivalent to those that prevail in arm's length transactions.

From time to time, the Company may purchase a loan participation interest from a related party. The Company and its related party will negotiate in good faith the terms and conditions of such a purchase and in accordance with the Company’s related party procedures and governance practices. Each party must approve such a purchase after full disclosure of the related party transaction and must include terms and conditions that would normally be included in arm’s length transactions conducted by independent parties.

MP Securities networking agreement with ACCU:

MP Securities has entered into a Networking Agreement with ACCU pursuant to which MP Securities has agreed to offer investment and insurance products and services to ACCU’s members that:

(1) ACCU or its Board of Directors has approved;

(2) comply with applicable investor suitability standards required by federal and state securities laws and regulations;

(3) are offered in accordance with NCUA rules and regulations; and

(4) comply with its membership agreement with FINRA.

The agreement entitles MP Securities to pay ACCU a percentage of total revenue received by MP Securities from transactions conducted for or on behalf of ACCU members. Either ACCU or MP Securities may terminate the Networking Agreement without cause upon thirty days prior written notice.

Transactions with Other Equity Owners

The Company has a Loan Participation Agreement with UNIFY Financial Credit Union (“UFCU”), an owner of both the Company’s Class A Common Units and Series A Preferred Units. Under this agreement, the Company sold UFCU a $5.0 million loan participation interest in one of its mortgage loan interests on August 14, 2013. As part of this agreement, the Company retained the right to service the loan, and it charges UFCU a fee for servicing the loan. Management believes the terms of the agreement are equivalent to those that prevail in arm's length transactions.

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Transactions with Subsidiaries

The Company has entered into several agreements with its subsidiary, MP Securities. The Company eliminates the income and expense related to these agreements in the consolidated financial statements. MP Securities serves as the managing broker for the Company’s public and private placement note offerings. MP Securities receives compensation related to these broker dealer services ranging from 0.25% to 5.50% over the life of a note. The amount of the compensation depends on the length of the note and the terms of the offering under which MP Securities sold the note.

The Company also has entered into an Administrative Services Agreement with MP Securities. The Administrative Services Agreement provides services such as the use of office space, use of equipment, including computers and phones, and payroll and personnel services. The agreement stipulates that MP Securities will provide ministerial, compliance, marketing, operational, and investor relations-related services in relation to the Company’s investor note program. As stated above, the Company eliminates all intercompany transactions related to this agreement in its consolidated financial statements.

The Company’s subsidiary, MPF, serves as the collateral agent for the Company’s Secured Notes. The Company’s Prospectus for its Class 1A Notes and the private placement memorandum for the Company’s Secured Notes Offering describe the terms of these agreements.

Related Party Transaction Policy

The Board has adopted a Related Party Transaction Policy to assist in evaluating related transactions the Company may enter into with a related party. Under this policy, a majority of the members of the Company’s Board and majority of its independent Board members must approve a material transaction that it enters into with a related party. As a result, all transactions that the Company undertakes with an affiliate or a related party are entered into on terms believed by management to be no less favorable than are available from unaffiliated third parties. In addition, a majority of the Company’s independent Board members must approve these transactions.

From time to time, the Company’s Board and members of its executive management team have purchased investor notes from the Company or have purchased investment products through MP Securities. Investor notes payable owned by related parties totaled $368 thousand and $394 thousand at December 31, 2019 and December 31, 2018.

Note 4. Loans Receivable and Allowance for Loan Losses

The Company’s loan portfolio is comprised of one segment – church loans. See “Note 1 – Loan Portfolio Segments and Classes” to the Financial Statements. The loans fall into four classes:

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· wholly-owned loans for which the Company possesses the first collateral position;

· wholly-owned loans that are either unsecured or for which the Company possesses a junior collateral position;

· participated loans purchased for which the Company possesses the first collateral position; and

· participated loans purchased for which the Company possesses a junior collateral position.

The Company makes all of its loans to various evangelical churches and related organizations, primarily to purchase, construct, or improve facilities. Loan maturities extend through 2033. The loan portfolio had a weighted average rate of 0.07% and 6.31% as of December 31, 2019 and December 31, 2018, respectively.

The table below is a summary of the Company’s mortgage loans owned (dollars in thousands):

	December 31,		December 31,
	2019		2018
Loans to evangelical churches and related organizations:
Real estate secured	$	130,889	$	147,061
Unsecured		160		274
Total loans		131,049		147,335
Deferred loan fees, net		(631)		(848)
Loan discount		(182)		(627)
Allowance for loan losses		(1,393)		(2,480)
Loans, net	$	128,843	$	143,380

Allowance for Loan Losses

Management believes it has properly calculated the allowance for loan losses as of December 31, 2018 and December 31, 2018. The following table shows the changes in the allowance for loan losses for the years ended December 31, 2019 and 2018 (dollars in thousands):

	December 31,		December 31,
	2019		2018
Balance, beginning of period	$	2,480	$	2,097
Provision for loan loss		(544)		666
Chargeoffs		(923)		(283)
Recoveries		380		—
Balance, end of period	$	1,393	$	2,480

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The table below presents loans by portfolio segment (church loans) and the related allowance for loan losses. In addition, the table segregates loans and the allowance for loan losses by impairment methodology (dollars in thousands).

	Loans and Allowance for Loan Losses (by segment)
	As of
	December 31,		December 31,
	2019		2018
Loans:
Individually evaluated for impairment	$	8,843	$	13,601
Collectively evaluated for impairment		122,206		133,734
Balance	$	131,049	$	147,335
Allowance for loan losses:
Individually evaluated for impairment	$	175	$	1,463
Collectively evaluated for impairment		1,218		1,017
Balance	$	1,393	$	2,480

The Company has established a loan grading system to assist management in their analysis and supervision of the loan portfolio. The following tables summarize the credit quality indicators by loan class (dollars in thousands):

Credit Quality Indicators (by class)
As of December 31, 2019
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	96,674	$	3,557	$	1,882	$	—	$	102,113
Watch		19,870		32		191		—		20,093
Special mention		—		—		—		—		—
Substandard		7,103		—		1,230		—		8,333
Doubtful		510		—		—		—		510
Loss		—		—		—		—		—
Total	$	124,157	$	3,589	$	3,303	$	—	$	131,049

Credit Quality Indicators (by class)
As of  December 31, 2018
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	100,140	$	4,067	$	2,004	$	—	$	106,211
Watch		27,321		—		202		—		27,523
Special mention		1,208		—		—		—		1,208
Substandard		6,497		187		3,586		—		10,270
Doubtful		2,123		—		—		—		2,123
Loss		—		—		—		—		—
Total	$	137,289	$	4,254	$	5,792	$	—	$	147,335

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The following table sets forth certain information with respect to the Company’s loan portfolio delinquencies by loan class and amount (dollars in thousands):

Age Analysis of Past Due Loans (by class)
As of December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment 90 Days or more and Accruing
Church loans:
Wholly-Owned First	$	—	$	—	$	5,907	$	5,907	$	118,250	$	124,157	$	—
Wholly-Owned Junior		—		—		—		—		3,589		3,589		—
Participation First		—		—		—		—		3,303		3,303		—
Participation Junior		—		—		—		—		—		—		—
Total	$	—	$	—	$	5,907	$	5,907	$	125,142	$	131,049	$	—

Age Analysis of Past Due Loans (by class)
As of  December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment 90 Days or more and Accruing
Church loans:
Wholly-Owned First	$	3,259	$	—	$	5,804	$	9,063	$	128,226	$	137,289	$	—
Wholly-Owned Junior		187		—		—		187		4,067		4,254		—
Participation First		2,293		—		1,292		3,585		2,207		5,792		—
Participation Junior		—		—		—		—		—		—		—
Total	$	5,739	$	—	$	7,096	$	12,835	$	134,500	$	147,335	$	—

Impaired Loans

Impaired loans include non-accrual loans, loans 90 days or more past due and still accruing, and restructured loans. Non-accrual loans are loans on which management has discontinued interest accruals. Restructured loans are loans in which the Company has granted the borrower a concession due to financial distress. Concessions are usually a reduction of the interest rate or a change in the original repayment terms.

The Company monitors impaired loans on an ongoing basis as part of management’s loan review and work out process. Management evaluates the potential risk of loss on these loans by comparing the loan balance to the fair value of any secured collateral or the present value of projected future cash flows.

In accordance with industry standards, loans that the Company has modified as part of a troubled debt restructuring are considered impaired. However, troubled debt restructures, upon meeting certain performance conditions, are eligible to receive non-classified loan ratings and to be moved out of non-accrual status. These loans continue to be included in total impaired loans but not necessarily in non-accrual or collateral-dependent loans.

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The following tables are summaries of impaired loans by loan class as of and for the years ended December 31, 2019 and 2018, respectively. The unpaid principal balance reflects the contractual principal outstanding on the loan. The recorded balance reflects the unpaid principal balance less any interest payments that have been recorded against principal. The recorded investment reflects the recorded balance less discounts taken. The related allowance reflects specific reserves taken on the impaired loans (dollars in thousands):

Impaired Loans (by class) As of December 31, 2019									For the year ended December 31, 2019
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	12,497	$	12,404	$	12,304	$	—	$	12,343	$	1,202
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		—		—		—		—		—		—
Participation Junior		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		290		290		290		110		973		—
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		1,294		1,230		1,230		65		1,263		—
Participation Junior		—		—		—		—		—		—
Total:
Church loans	$	14,081	$	13,924	$	13,824	$	175	$	14,579	$	1,202

Impaired Loans (by class) As of December 31, 2018									For the year ended December 31, 2018
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	5,734	$	5,687	$	5,694	$	—	$	5,915	$	123
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		2,293		2,293		2,316		—		2,312		—
Participation Junior		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		4,818		4,142		3,632		1,165		3,714		—
Wholly-Owned Junior		215		187		176		176		181		—
Participation First		1,302		1,292		1,292		122		1,299		10
Participation Junior		—		—		—		—		—		—
Total:
Church loans	$	14,362	$	13,601	$	13,110	$	1,463	$	13,421	$	133

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A summary of nonaccrual loans by loan class is as follows (dollars in thousands):

Loans on Nonaccrual Status (by class)
	December 31, 2019		December 31, 2018
Church loans:
Wholly-Owned First	$	6,405	$	8,619
Wholly-Owned Junior		—		187
Participation First		1,230		1,292
Participation Junior		—		—
Total	$	7,635	$	10,098

The Company restructured six and four loans during theyears ended December 31, 2019 and 2018. A summary of troubled debt restructures by loan class during the years ended December 31, 2019 and 2018 is as follows (dollars in thousands):

Troubled Debt Restructurings (by class)
For the year ended December 31, 2019
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		5	$	6,270	$	6,458	$	6,167
Wholly-Owned Junior		—		—		—		—
Participation First		1		166		—		—
Participation Junior		—		—		—		—
Total		6	$	6,436	$	6,458	$	6,167

Troubled Debt Restructurings (by class)
For the year ended December 31, 2018
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		2	$	1,748	$	1,668	$	1,668
Wholly-Owned Junior		—		—		—		—
Participation First		2		3,595		3,595		3,586
Participation Junior		—		—		—		—
Total		4	$	5,343	$	5,264	$	5,254

The Company had one previously restructured loan that was past maturity as of December 31, 2019. The Company has entered into a forbearance agreement with the borrowers and is evaluating what actions it should undertake to protect its investment on this loan.

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The Company closely monitors delinquency in loans modified in a troubled debt restructuring as an early indicator for future default. Management regularly evaluates loans modified in a troubled debt restructuring for potential further impairment andwill make adjustments to the risk ratings and specific reserves associated with troubled debt restructurings as deemed necessary.

No loans that were restructured during the years ended December 31, 2019 and 2018 subsequently defaulted during those respective years.

As of December 31, 2019,  no additional funds were committed to be advanced in connection with loans modified as troubled debt restructurings.

Note 5. Investments in Joint Venture

In December 2015, the Company finalized an agreement with Intertex Property Management, Inc., a California corporation, to enter into a joint venture to form Tesoro Hills, LLC (the “Valencia Hills Project”). The Valencia Hills Project is a joint venture that will develop and market property formerly classified by the Company as a foreclosed asset. In January 2016, the Company transferred ownership in the foreclosed asset to the Valencia Hills Project as part of the agreement. In addition, the Company reclassified the carrying value of the property from foreclosed assets to an investment in a joint venture. The Company’s initial investment in the joint venture was $900 thousand. This amount was the carrying value in the foreclosed asset at December 31, 2015.

The value of the Company’s investment in the joint venture was $891 thousand and $887 thousand, as of December 31, 2019 and 2018respectively. Management’s impairment analysis of the investment as of December 31, 2019 has determined that the investment is not impaired.

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Note 6. Revenue Recognition

The Company recognizes two primary types of revenue: interest income and non-interest income. The following tables reflect the Company’s non-interest income disaggregated by financial statement line item. Items outside of scope of ASC 606 are noted as such (dollars in thousands):

	December 31,
	2019		2018
Non-interest income
Wealth advisory fees	$	338	$	231
Investment brokerage fees		1,077		292
Lending fees (1)		124		838
Lease income		8		—
Other non-interest income		22		83
Total non-interest income	$	1,569	$	1,444
(1) Not within scope of ASC 606

Note 7. Loan Sales

The Company did not sell any loans during the year endedDecember 31, 2019The following table shows the amount of loan participation sales and the resulting changes in servicing assets recorded during the years ended December 31, 2019 and 2018. Management amortizes servicing assets using the interest method as an adjustment to servicing fee income.

A summary of loan participation sales and servicing assets are as follows (dollars in thousands):

	For the years ended
	December 31,		December 31,
	2019		2018
Participation loans interests sold by the Company during the year	$	—	$	4,254
Total participation interests sold and serviced by the company		26,964		36,706
Servicing income		100		160
Servicing Assets
Balance, beginning of period	$	212	$	270
Additions:
Servicing obligations from sale of loan participations		—		21
Subtractions:
Amortization		(112)		(79)
Balance, end of period	$	100	$	212

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Note 8: Foreclosed Assets

The Company’s investment in foreclosed assets was $301 thousand at December 31, 2019. The Company did not have any investment in foreclosed assets at December 31, 2018. On its balance sheet, the Company presents foreclosed assets net of an allowance for losses. There was no allowance for losses on foreclosed assets at December 31, 2019. The Company did not record any loss provisions on foreclosed assets during the year ended December 31, 2019.

Expenses and income applicable to foreclosed assets include the following (dollars in thousands):

	Foreclosed Asset Expenses (Income) for the years ended December 31,
	2019		2018
Net loss (gain) on sale of real estate	$	—	$	—
Provision for losses		—		—
Operating expenses, net of rental income		97		—
Net expense (income)	$	97	$	—

Note 9. Premises and Equipment

The table below summarizes our premises and equipment (dollars in thousands):

	As of
	December 31,		December 31,
	2019		2018
Furniture and office equipment	$	503	$	491
Computer system		214		231
Leasehold improvements		43		25
Total premises and equipment		760		747
Less accumulated depreciation and amortization		(544)		(660)
Premises and equipment, net	$	216	$	87

(dollars in thousands)	2019		2018
Depreciation and amortization expense for the years ended December 31,	$	43	$	30

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Note 10. Credit Facilities

The Company has two secured credit facilities. The facilities are non-revolving and do not have an option to renew or extend additional credit. Additionally, the facilities do not contain a prepayment penalty. Under the terms of the credit facilities, the Company must maintain a minimum collateralization ratio of at least 110% for each of the individual facilities (120% for the combined facilities). If at any time the Company fails to maintain its required minimum collateralization ratio, it will be required to deliver cash or qualifying mortgage loans in an amount sufficient to enable us to meet its obligation to maintain a minimum collateralization ratio. In total, the collateral securing both facilities at December 31, 2019 and 2018 satisfied the 120% minimum. In addition, the collateral securing both facilities at December 31, 2019 and 2018 separately satisfied the 110% minimum. As of December 31, 2019 and 2018, the Company has only pledged qualifying mortgage loans as collateral on the credit facilities.

In addition, the credit facilities include a number of borrower covenants. The Company is following these covenants as of December 31, 2019 and December 31, 2018, respectively.

The following table summarizes the principal terms the Company’s credit facilities as of December 31, 2019 (dollars in millions):

Nature of Borrowing

Interest Rate

Interest Rate Type

Monthly Payment

Maturity Date

Loan Collateral Pledged

Cash Pledged

Term-debt

2.53%

Fixed

579

11/1/2026

85,914

—

Future principal contractual payments of the Company’s borrowings from financial institutions during the twelve-month periods ending December 31, are as follows (dollars in thousands):

2020	$	5,164
2021		5,341
2022		5,477
2023		5,617
2024		5,757
Thereafter		44,071
	$	71,427

Note 11. Investor Notes Payable

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The table below provides information on the Company’s investor notes payable (dollars in thousands):

		As of				As of
		December 31, 2019				December 31, 2018
SEC Registered Public Offerings	Offering Type	Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Class A Offering	Unsecured	$	487	4.20	%	$	8,758	4.14	%
Class 1 Offering	Unsecured		22,098	4.02	%		29,114	3.88	%
Class 1A Offering	Unsecured		32,732	3.85	%		13,817	3.71	%
Public Offering Total		$	55,317	3.92	%	$	51,689	3.88	%
Private Offerings
Special Subordinated Notes	Unsecured		11,317	5.21	%		7,533	4.68	%
Secured Notes	Secured		6,467	3.92	%		9,170	3.83	%
Private Offering Total		$	17,784	4.74	%	$	16,703	4.21	%
Total Notes Payable		$	73,101	4.12	%	$	68,392	3.96	%
Notes Payable Totals by Security
Unsecured Total	Unsecured	$	66,634	4.14	%	$	59,222	3.98	%
Secured Total	Secured	$	6,467	3.92	%	$	9,170	3.83	%

Future maturities for the Company’s investor notes during the twelve month periods ending December 31, are as follows (dollars in thousands):

2020	$	21,562
2021		18,953
2022		10,761
2023		10,543
2024		11,282
	$	73,101

Debt issuance costs related to the Company’s notes payable were $55 thousand and $92 thousand at December 31, 2019 and December 31, 2018, respectively.

The notes are payable to investors who have purchased the securities. Notes pay interest at stated spreads over an index rate. The investor may reinvest the interest or have the interest paid to them at their option. The Company may repurchase all or a portion of notes at any time at its sole discretion. In addition, the Company may allow investors to redeem their notes prior to maturity at its sole discretion.

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SEC Registered Public Offerings 

Class A Offering.

In April 2008, the Company registered its Class A Notes with the SEC. The Company discontinued the sale of its Class A Note Offering when the offering expired on December 31, 2015. The offering included three categories of notes, including a fixed interest note, a variable interest note, and a flex note that allows borrowers to increase their interest rate once a year with certain limitations. The Class A Notes contained restrictive covenants pertaining to paying dividends, making redemptions, acquiring, purchasing or making certain payments, requiring the maintenance of minimum tangible net worth, limitations on the issuance of additional notes, and incurring of indebtedness. The Company is in compliance with these covenants as of December 31, 2019 and December 31, 2018. The Company issued the Class A Notes under a Trust Indenture entered into between the Company and U.S. Bank National Association (“US Bank”).

Class 1 Offering.

In January 2015, the Company registered its Class 1 Notes with the SEC. The Company discontinued the sale of its Class 1 Note Offering when it expired on December 31, 2017. The offering included two categories of notes, including a fixed interest note and a variable interest note. The Class 1 Notes contain restrictive covenants pertaining to paying dividends, making redemptions, acquiring, purchasing, or making certain payments, requiring the maintenance of minimum tangible net worth, limitations on the issuance of additional notes, and incurring of indebtedness. The Company is in compliance with these covenants as of December 31, 2019 and December 31, 2018. The Company issued The Class 1 Notes under a Trust Indenture between the Company and U.S. Bank.

Class 1A Offering.

In February 2018, the Company launched its Class 1A Notes Offering. Pursuant to a Registration Statement declared effective on February 27, 2018, the Company registered $90 million of its Class 1A Notes in two series – fixed and variable notes. The Class 1A Notes are unsecured. The interest rate paid on the Fixed Series Notes is determined in reference to a Constant Maturity Treasury Index published by the U.S. Department of Treasury (“CMT Index”) in effect on the date that the note is issued plus a rate spread as described in the Company’s Class 1A Prospectus. The variable index in effect on the date the interest rate is set determines the interest rate paid on a Variable Series Note. The CMT Index refers to the Constant Maturity Treasury rates published by the U.S. Department of Treasury for actively traded Treasury securities. The variable index is equal to the 3-month LIBOR rate. The Company issued the Class 1A Notes under a Trust Indenture entered into between the Company and U.S. Bank.

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Private Offerings

Series 1 Subordinated Capital Notes (“Subordinated Notes”).

In June 2018, the Company renewed the offer and sale of its Subordinated Notes initially launched in February 2013. The Company offers the notes pursuant to a limited private offering to qualified investors that meet the requirements of Rule 506 of Regulation D. The Company offers the Subordinated Notes with maturity terms from 12 to 60 months at an interest rate fixed on the date of issuance, as determined by the then current seven-day average rate reported by the U.S. Federal Reserve Board for interest rate swaps.

Under the Subordinated Notes offering, the Company is subject to certain covenants, including limitations on restricted payments, limitations on the amount of notes that it can sell, restrictions on mergers and acquisitions, and proper maintenance of books and records. The Company was in compliance with these covenants at December 31, 2019 and December 31, 2018.

Secured Investment Certificates (“Secured Notes”).

In January 2015, the Company began offering Secured Notes under a private placement memorandum pursuant to the requirements of Rule 506 of Regulation D. Under this offering, the Company may sell up to $80.0 million in Secured Notes to qualified investors.

The Company secures these notes by pledging either cash or loans receivable as collateral. The collateralization ratio is 100% on the pledged cash and 105% on the pledged loans receivable. Said another way, every dollar of cash collateralizes one dollar of secured notes and every $1.05 of loans receivable collateralizes one dollar of secured notes. At December 31, 2019 and December 31, 2018, the loans receivable collateral securing the Secured Notes had an outstanding balance of $13.02 million and $10.9 million, respectively. The December 31, 2019 and December 31, 2018 collateral balance was sufficient to satisfy the minimum collateral requirement of the Secured Notes offering. As of December 31, 2019 and December 31, 2018, the Company did not have cash pledged for the benefit of the Secured Notes. On December 31, 2017, the Company terminated its 2015 Secured Note offering.

Effective as of April 30, 2018, the Company launched a new $80 million secured note offering. The Company issued the 2018 Secured Note offering pursuant to a Loan and Security Agreement. This agreement includes the same terms and conditions previously set forth in its 2015 Secured Note offering. The offering will continue through April 30, 2020.

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Note 12. Commitments and Contingencies

Unfunded Commitments

The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include un-advanced lines of credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.

The contractual amount of these commitments represents the Company’s exposure to credit loss. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

The table below shows the outstanding financial instruments whose contract amounts represent credit risk (dollars in thousands):

	Contract Amount at:
	December 31, 2019		December 31, 2018
Undisbursed loans	$	1,999	$	1,919

Undisbursed loans are commitments for possible future extensions of credit to existing customers. These loans are sometimes unsecured and the borrower may not necessarily draw upon the line the total amount of the commitment. Commitments to extend credit are generally at variable rates.

Contingencies

In the normal course of business, the Company may become involved in various legal proceedings. As of December 31, 2019, the Company is a defendant in a wrongful termination of employment lawsuit. The Company is contesting the claim and at December 31, 2019, the Company’s liabilities include an accrual of $30 thousand for litigation-related expenses incurred in connection with this claim. Although the Company believes that it will prevail on the merits, the litigation could have a lengthy process, and the ultimate outcome cannot be predicted.

Operating Leases

The Company has lease agreements for its offices in Brea and Fresno, California. The Company renewed its Brea office lease in January 2019 for an additional five-year term. The lease does not contain any additional options to renew. The Fresno office lease expires in 2020. There are no options to renew in the lease agreement; however, the Company has entered into discussions with the lessor on a new lease agreement. The Company has determined that both leases are operating leases.

F-39

Beginning on January 1, 2019, the Company has recorded right-of-use assets and lease liabilities in accordance with ASU 2016-02. The Company has elected not to reassess expired or existing leases for changes in classification. The Company has elected not to use hindsight to determine the term of existing leases and is using the term of the current lease agreements in its right-of-use asset calculations. As the interest rates implicit in the leases were not readily available, the Company used its incremental borrowing rates to determine the discount rates used in the asset calculations.

The table below presents information regarding our existing operating leases (dollars in thousands):

	For the Year Ended
	2019			2018
Lease cost
Operating lease cost	$	174		$	143
Other information
Cash paid for operating leases		164			149
Right-of-use assets obtained in exchange for operating lease liabilities		680			—
Weighted average remaining lease term (in years)		3.96			1.25
Weighted-average discount rate		4.77	%		—	%

Future minimum lease payments and lease costs for the twelve months ending December 31 are as follows (dollars in thousands):

	Lease Payments		Lease Costs
2020	$	149	$	153
2021		146		146
2022		150		146
2023		155		146
2024		—		—
Total	$	600	$	591

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Note 13. Office Operations and Other Expenses

Office operations and other expenses comprise the following (dollars in thousands):

	December 31, 2019		December 31, 2018
Technology and communication expenses	$	428	$	439
Insurance		282		275
Lease and occupancy expense		206		166
Outsourced operations		190		34
Staff and travel expense		140		117
Loan Expenses		110		71
Clearing firm Fees		60		60
Other		67		62
Total	$	1,483	$	1,224

Note 14. Preferred and Common Units Under LLC Structure

Holders of the Series A Preferred Units are entitled to receive a quarterly cash dividend that is 25 basis points higher than the one-year LIBOR rate in effect on the last day of the calendar month for which the preferred return is approved. The Company has also agreed to set aside an annual amount equal to 10% of its net profits earned for any year, after subtracting from profits the quarterly Series A Preferred Unit dividends paid, for distribution to its Series A Preferred Unit holders.

The Series A Preferred Units have a liquidation preference of $100 per unit and have novoting rights. They are also subject to redemption in whole or in part at the Company’s election on December 31 of any year for an amount equal to the liquidation preference of each unit, plus any accrued and declared but unpaid quarterly dividends and preferred distributions on such units. The Series A Preferred Units have priority as to earnings and distributions over the Common Units. The resale of the Company’s Series A Preferred Units and Common Units are subject to the Company’s first right of refusal to purchase units proposed to be transferred. Upon the Company’s failure to pay quarterly dividends for four consecutive quarters, the holders of the Series A Preferred Units have the right to appoint two managers to its Board of Managers.

The Class A Common Units have voting rights, but have no liquidation preference or rights to dividends, unless declared.

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Note 15. Retirement Plans

401(k)

All of the Company’s employees are eligible to participate in the Automated Data Processing, Inc. (“ADP”) 401(k) plan effective as of the date their employment commences. No minimum service is required and the minimum age is 21. Each employee may elect voluntary contributions not to exceed 86% of salary, subject to certain limits based on U.S. tax law. The plan has a matching program, which qualifies as a Safe Harbor 401(k) plan. As a Safe Harbor Section 401(k) plan, the Company matches each eligible employee’s contribution, dollar for dollar, up to 3% of the employee’s compensation, and 50% of the employee’s contribution that exceeds 3% of their compensation, up to a maximum contribution of 5% of the employee’s compensation. Company matching contributions for the years ended December 31, 2019 and 2018 were $66 thousand and $76 thousand, respectively.

Profit Sharing

The profit sharing plan is for all employees who, at the end of the calendar year, are at least 21 years old, still employed, and have at least 900 hours of service during the plan year. The Company’s Board of Managers determines the amount annually contributed on behalf of each qualified employee. The Company determines the amount by calculating it as a percentage of the eligible employee's annual earnings. Plan forfeitures are used to reduce the Company’s annual contribution. The Company did not make or approve a profit sharing contribution to the plan during the years ended year ended December 31, 2019

Note 16. Fair Value Measurements

Fair Value Measurements Using Fair Value Hierarchy

The Company classifies measurements of fair value within a hierarchy based upon inputs that give the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

· Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2 inputs include:

o quoted prices for similar assets and liabilities in active markets,

o quoted prices for identical assets and liabilities in inactive markets,

F-42

o inputs that are observable for the asset or liability (such as interest rates, prepayment speeds, credit risks, etc.);

o or inputs that are derived principally from or corroborated by observable market data by correlation or by other means.

· Level 3 inputs are unobservable and reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Fair Value of Financial Instruments

The following tables show the carrying amounts and estimated fair values of the Company’s financial instruments (dollars in thousands):`

			Fair Value Measurements at December 31, 2019 using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
FINANCIAL ASSETS:
Cash	$	25,993	$	25,993	$	—	$	—	$	25,993
Loans, net		128,843		—		—		126,438		126,438
Investments in joint venture		891		—		—		891		891
Accrued interest receivable		635		—		—		635		635
FINANCIAL LIABILITIES:
Term-debt	$	71,427	$	—	$	—	$	55,072	$	55,072
Notes payable		73,046		—		—		74,592		74,592
Other financial liabilities		503		—		—		503		503

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			Fair Value Measurements at December 31, 2018 using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
FINANCIAL ASSETS:
Cash	$	9,877	$	9,877	$	—	$	—	$	9,877
Loans, net		143,380		—		—		140,989		140,989
Investments in joint venture		887		—		—		887		887
Accrued interest receivable		711		—		—		711		711
FINANCIAL LIABILITIES:
Term-debt	$	76,515	$	—	$	—	$	57,386	$	57,386
Notes payable		68,300		—		—		68,865		68,865
Other financial liabilities		356		—		—		356		356

Management uses judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 2019 and December 31, 2018.  

The Company used the following methods and assumptions to estimate the fair value of financial instruments:

Cash – The carrying amounts reported in the balance sheets approximate fair value for cash.

Loans – Management estimates fair value by discounting the future cash flows of the loans. The discount rate the Company uses is the current average rates at which it would make loans to borrowers with similar credit ratings and for the same remaining maturities.

Investments – Management estimates fair value by analyzing the operations and marketability of the underlying investment to determine if the investment is other-than-temporarily impaired.

Investor Notes Payable – Management estimates the fair value of fixed maturity notes by discounting the future cash flows of the notes. The discount rate the Company uses is the rates currently offered for investor notes payable of similar remaining maturities. Company management estimates the discount rate by using market rates that reflect the interest rate risk inherent in the notes.

Term-debt – Management estimates the fair value of borrowings from financial institutions discounting the future cash flows of the borrowings. The discount rate the Company uses is the current incremental borrowing rates for similar types of borrowing arrangements.

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Company management estimates the discount rate by using market rates that reflect the interest rate risk inherent in the notes.

Off-Balance Sheet Instruments – Management determines the fair value of loan commitments on fees currently charged to enter into similar agreements, taking into account the remaining term of the agreements and the counterparties' credit standing. The fair value of loan commitments is insignificant at December 31, 2019 and December 31, 2018.

Fair Value Measured on a Nonrecurring Basis

The Company measures certain assets at fair value on a nonrecurring basis. On these assets, the Company only makes fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the fair value of assets measured on a nonrecurring basis (dollars in thousands):

	Fair Value Measurements Using:
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets at December 31, 2019:
Collateral-dependent loans (net of allowance and discount)		$	—	$	—	$	8,640	$	8,640
Investments in joint venture			—		—		891		891
Foreclosed assets (net of allowance)			—		—		301		301
Total		$	—	$	—	$	9,531	$	9,531
Assets at December 31, 2018:
Collateral-dependent loans (net of allowance and discount)		$	—	$	—	$	11,616	$	11,616
Investments in joint venture			—		—		887		887
Total		$	—	$	—	$	12,503	$	12,503

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Activity in Level 3 assets is as follows for the year ended years ended December 31, 2019 and 2018(dollars in thousands):

	Impaired loans (net of allowance and discount)
Balance, December 31, 2018	$	11,616
Changes in allowance and discount		1,764
Transfer of loans into foreclosed assets		(479)
Loans no longer considered collateral dependent		(1,232)
Loans that became collateral dependent		1,936
Loan payments, payoffs, sales, and charge-offs		(4,965)
Balance, December 31, 2019	$	8,640

	Investments in joint venture (net of allowance and discount)
Balance, December 31, 2018	$	887
Pro rata share of joint venture income		4
Balance, December 31, 2019	$	891

	Foreclosed assets
	(net of allowance and discount)
Balance, December 31, 2018	$	--
Transfer of loans into foreclosed assets		479
Transfer of foreclosed assets to other assets		(178)
Balance, December 31, 2019	$	301

	Impaired loans (net of allowance and discount)
Balance, December 31, 2017	$	6,135
Re-classifications of assets from Level 3 into Level 2		—
Changes in allowance and discount		(306)
Loans no longer considered impaired		—
Loans that became impaired		7,620
Loan payments, payoffs, sales, and charge-offs		(1,833)
Balance, December 31, 2018	$	11,616

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	Investments in joint venture (net of allowance and discount)
Balance, December 31, 2017	$	896
Pro rata share of joint venture income		(9)
Balance, December 31, 2018	$	887

Impaired Loans

Collateral-dependent impaired loans are carried at the fair value of the collateral less estimated costs to sell, incorporating assumptions that experienced parties might use in estimating the value of such collateral. The fair value of collateral is determined based on appraisals. In some cases, the Company has adjusted the appraised values for various factors including age of the appraisal, age of comparable properties included in the appraisal, and known changes in the market and in the collateral. When the Company has made significant adjustments based on unobservable inputs, management categorizes the resulting fair value measurement as a Level 3 measurement. Otherwise, the Company categorizes collateral-dependent impaired loans under Level 2.

Foreclosed Assets

The Company initially records real estate acquired through foreclosure or other proceedings (foreclosed assets) at fair value at the date of foreclosure less estimated costs of disposal, which establishes a new cost. After foreclosure, management periodically performs valuations on foreclosed assets. The company carries foreclosed assets held for sale at the lower of cost or fair value, less estimated costs of disposal. The fair values of real properties initially are determined based on appraisals. In some cases, management adjusts the appraised values for various factors including age of the appraisal, age of comparable properties included in the appraisal, and known changes in the market or in the collateral. The Company makes subsequent valuations of the real properties based either on management estimates or on updated appraisals. If management makes significant adjustments to appraised values based on unobservable inputs, the Company categorizes foreclosed assets under Level 3. Otherwise, if management bases the foreclosed assets’ value on recent appraisals and the only adjustments made are for known contractual selling costs, the Company will categorize the foreclosed assets under Level 2.

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The table below summarizes the valuation methodologies used to measure the fair value adjustments for Level 3 assets recorded at fair value on a nonrecurring basis (dollars in thousands):

December 31, 2019
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans	$	8,640	Discounted appraised value	Selling cost / Estimated market decrease	21% - 81% (23%)
Investments in joint venture	$	891	Internal evaluations	Estimated future market value	0% (0%)
Foreclosed assets	$	301	Internal evaluations	Selling cost	6%  (6%)

December 31, 2018
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans	$	11,616	Discounted appraised value	Selling cost / Estimated market decrease	15% - 72% (33%)
Investment in joint venture	$	887	Internal evaluations	Estimated future market value	0% (0%)

Note 17. Income Taxes and State LLC Fees

MPIC is subject to a California gross receipts LLC fee of approximately $12,000 per year, and the state minimum franchise tax of $800 per year. MP Securities is subject to a California gross receipts LLC fee of approximately $6,000 and the state minimum franchise tax of $800 per year.  

MP Realty incurred a tax loss for the year ended December 31, 20182018, and recorded a provision of $800 per year for the state minimum franchise tax. For the years ended December 31, 2019 and 2018, MP Realty has federal and state net operating loss carryforwards of approximately $430 thousand and $40710 thousand, respectively, which begin to expire in 2030. Management assessed the realizability of the deferred tax asset and determined that a 100% valuation against the deferred tax asset was appropriate at December 31, 2019 and 2018.

Tax years ended December 31, 2016 through December 31, 2019 remain subject to examination by the Internal Revenue Service and the tax years ended December 31, 2015 through December 31, 2019 remain subject to examination by the California Franchise Tax Board.

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Note 18. Segment Information

The Company's reportable segments are strategic business units that offer different products and services. The Company manages the segments separately because each business requires different management, personnel proficiencies, and marketing strategies.

The Company hastworeportable segments that represent the primary businesses reported in the consolidated financial statements: the finance company (the parent company), and the investment advisor and insurance firm (MP Securities). The finance company segment uses funds from the sale of debt securities, income from operations, and the sale of loan participations to originate or purchase mortgage loans. The finance company also services loans. MP Securities generates fee income by selling debt securities and other investment and insurance products, as well as providing investment advisory and financial planning services.

The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies. Management accounts for intersegment revenues and expenses at amounts that assume the Company entered into the transaction with unrelated third parties at the current market prices at the time of the transaction. Management evaluates the performance of each segment based on net income or loss before provision for income taxes and LLC fees.

Financial information with respect to the reportable segments for the year ended December 31, 2019 is as follows (dollars in thousands):

	Finance Company		Broker Dealer		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	10,289	$	2,304	$	316	$	(1,194)	$	11,715
Total non interest expense and prov. for tax		4,020		1,177		(2)		—		5,195
Net profit (loss)		811		1,126		318		(254)		2,001
Total assets		155,180		2,506		371		(36)		158,021

Financial information with respect to the reportable segments for the year ended December 31, 2018 is as follows (dollars in thousands):

	Finance Company		Broker Dealer		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	10,126	$	1,189	$	—	$	(663)	$	10,652
Total non interest expense and prov. for tax		3,655		995		23		—		4,673
Net profit (loss)		157		194		(23)		149		477
Total assets		154,072		1,307		55		5		155,439

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Note 19. Condensed Financial Statements of Parent Company

Financial information pertaining only to the parent company, Ministry Partners Investment Company, LLC, is as follows (dollars in thousands):

Ministry Partners Investment Company, LLC Balance Sheet

	As of December 31,
	2019		2018
Assets:
Cash	$	23,297	$	8,612
Loans receivable, net of allowance for loan losses		128,843		143,380
Accrued interest receivable		635		711
Investments in joint venture		891		887
Property and equipment, net		211		85
Foreclosed assets, net		301		—
Investment in subsidiaries		1,926		796
Due from subsidiaries		536		488
Servicing assets		100		212
Other assets		926		209
Total assets	$	157,666	$	155,380
Liabilities and members’ equity
Liabilities:
Term-debt	$	71,427	$	76,515
Notes payable, net of debt issuance costs		73,046		68,300
Accrued interest payable		266		249
Other liabilities		1,855		785
Total liabilities		146,594		145,849
Equity		11,072		9,531
Total liabilities and members' equity	$	157,666	$	155,380

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Ministry Partners Investment Company, LLC Statement of Income

	For the years ended
	December 31,
	2019		2018
Income:
Interest Income	$	10,144	$	9,207
Other income		154		920
Total income		10,298		10,127
Interest expense:
Term-debt		1,867		2,000
Notes payable		4,135		3,649
Total interest expense		6,002		5,649
Provision for loan losses		(544)		666
Other operating expenses		4,017		3,647
Income before provision for income taxes		823		165
Provision for income taxes and state LLC fees		12		8
Income before equity in undistributed net income of subsidiaries		811		157
Equity in undistributed net income of subsidiaries		1,190		320
Net income	$	2,001	$	477

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Ministry Partners Investment Company, LLC Statement of Cash Flows

	For the years ended
	December 31,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,001	$	477
Adjustments to reconcile net income to net cash used by operating activities:
Equity in undistributed net income of subsidiaries		(1,190)		(320)
Depreciation		40		27
Amortization of deferred loan fees		(269)		(258)
Amortization of debt issuance costs		86		85
Provision (credit) for loan losses		(544)		666
Accretion of loan discount		(247)		(24)
Gain on sale of loans		—		(13)
Changes in:
Accrued interest receivable		76		31
Other assets		(418)		179
Accrued interest payable		17		41
Other liabilities		940		97
Net cash provided by operating activities		492		988
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases		(2,255)		(2,721)
Loan originations		(7,951)		(15,486)
Loan sales		—		5,414
Loan principal collections		25,324		17,817
Sale of property and equipment		4		—
Purchase of property and equipment		(170)		(13)
Net cash provided by investing activities		14,952		5,011
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in term-debt		(5,088)		(4,977)
Net change in notes payable		4,709		(696)
Debt issuance costs		(49)		(92)
Dividends paid on preferred units		(331)		(405)
Net cash (used) by financing activities		(759)		(6,170)
Net increase (decrease) in cash and restricted cash		14,685		(171)
Cash, cash equivalents, and restricted cash at beginning of period		8,612		8,783
Cash, cash equivalents, and restricted cash at end of period	$	23,297	$	8,612
Supplemental disclosures of cash flow information
Interest paid	$	5,046	$	4,795
Income taxes paid	$	20	$	23
Transfer of loans to foreclosed assets	$	479	$	—
Loans made to facilitate the sale of foreclosed assets	$	—	$	—
Dividends declared to preferred unit holders	$	—	$	107

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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the fiscal period ending December 31, 2019 covered by this Annual Report on Form 10-K. The officers performed this evaluation as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. From this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were effective as of and for the year ended December 31, 2019. This conclusion by our Principal Executive Officer and Principal Financial Officer does not relate to reporting periods after December 31, 2019.  

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over our financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal controls over financial reporting include those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of management and the Board; and

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provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of and for the year ended December 31, 2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control‑Integrated Framework. Based on this assessment, management believes that, as of and for the year ended December 31, 2019, our internal control over financial reporting is effective.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.

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Item 9B. OTHER INFORMATION

None.

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PART III

Item 10. MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below are the members of our Board of Managers and executive officers as of December 31, 2019:

Name	Age	Managers/Executive Officers
R. Michael Lee	61	Chairman of the Board, Chairman of Ministry Partners Securities, Manager
Van C. Elliott	82	Corporate Secretary, Manager
Joseph W. Turner, Jr.	52	Chief Executive Officer and President
William M. Crammer III	60	Senior Vice President, Chief Lending Officer
Brian S. Barbre	46	Senior Vice President, Chief Financial Officer and Principal Accounting Officer
Edward J. Ramirez	52	Vice President, Credit Administration
Mendell Thompson	65	Board Credit Committee Chairman, Manager
Juli Anne Lawrence	67	ALCO Committee Chairperson, Manager
Jerrod Foresman	51	Manager
Jeffrey T. Lauridsen	70	Audit Committee Chairman, Manager

Summary of the business experience of our executive officers and managers

With our conversion from a corporation to a limited liability company on December 31, 2008, we are governed by a Board of Managers that supervises our affairs (hereinafter referred to as the “Board”).

In an 8K filing on January3, 2020, the Company announced that it had reorganized its senior management team effective as of January 3, 2020. Joseph W. Turner, Jr. will continue to serve as the Company’s Chief Executive Officer and President and Brian Barbre will serve as the Company’s Senior Vice President and Chief Finance Officer. As part of the management team reorganization, Mr. William M. Crammer, III and Mr. Edward Ramirez have been appointed to serve as Assistant Vice-President, Relationship Manager and Assistant Vice President, Credit Administration, respectively. Mr. Crammer previously served as the Company’s Senior Vice President and Chief Lending Officer.

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Set forth below are the members of our Board of Managers and executive officers as of the date of the filing of this 10K:

Name	Age	Managers/Executive Officers
R. Michael Lee	61	Chairman of the Board, Chairman of Ministry Partners Securities, Manager
Van C. Elliott	82	Corporate Secretary, Manager
Joseph W. Turner, Jr.	52	Chief Executive Officer and President
Brian S. Barbre	46	Senior Vice President, Chief Financial Officer and Principal Accounting Officer
Michael R. Boblit	62	Vice President, Corporate Lending Services
Mendell Thompson	65	Board Credit Committee Chairman, Manager
Juli Anne Lawrence	67	ALCO Committee Chairperson, Manager
Jerrod Foresman	51	Manager
Jeffrey T. Lauridsen	70	Audit Committee Chairman, Manager

R. MICHAEL LEE

Mr. Lee has served as a member of our Board since January 2009. He was appointed Chairman of the Board in May 2015.  Mr. Lee currently serves as Chief Executive Officer and President for KCT Credit Union. Previously, Mr. Lee served as Vice President Member Relations for Alloya Corporate Federal Credit Union, President of Midwest Region for Members United Federal Credit Union, Chief Membership Officer for Mid-States Corporate Federal Credit Union, Senior Vice President US Central Federal Credit Union, SVP Corporate Network eCom, SVP Corporate One Federal Credit Union and Vice President of Sales for a national insurance agency.  In the insurance industry, Mr. Lee spent 15 years in different positions that lead him to managing a national sales force that served the needs of business owners. Mr. Lee currently serves on the boards of the Illinois Credit Union Foundation, Elgin Community College Foundation, Gail Borden Library Foundation. He attended Southern Illinois University; CUNA’s Financial Management School and completed numerous industries training sessions throughout his career. Mr. Lee adds special expertise to our Board with his years of experience as an executive of a number of large financial institutions and with his deep knowledge of the financial industry. Mr. Lee currently serves as Chairman of the Board, member of our Executive Committee, Governance Committee, Asset-Liability Management Committee and serves as the Chairman of the Board for MP Securities.

VAN C. ELLIOTT

Mr. Elliott has served as a member of our Board since 1991. He has served as a director for ECCU from April 1988 until the present (except for the periods from March 1997 to March 1998 and March 2004 to March 2005). Mr. Elliott served as associate director of the Conservative Baptist Association of Southern California from 1980 to 1994, where he was responsible for the general administrative oversight of the association’s activities. Since that time, he has been self-employed as a consultant providing organizational, financial,

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and fund-raising consultation services to church and church-related organizations. He received his bachelor’s and Master’s degrees in mathematics and speech from Purdue University and spent seven years in the computer industry. Mr. Elliott holds a Master of Divinity from Denver Seminary and has spent fourteen years in local church ministries serving in the area of Christian education and administration. He has completed post-graduate instruction at the College for Financial Planning. Mr. Elliott is a member of the Financial Planning Association and holds the professional designation of Certified Financial Planner.® Mr. Elliott brings to our Board his extensive experience as a credit union board member and intimate knowledge of church and ministry financial operations. In addition to being the Company’s Corporate Secretary, Mr. Elliott serves on our Executive Committee and Audit Committee. Mr. Elliott also serves on the Board of Directors of Ministry Partners for Christ, Inc., a non-profit subsidiary of MPIC.

JOSEPH W. TURNER, JR.

Mr. Turner has served as Chief Executive Officer and President since December 3, 2015.  Mr. Turner is also the Chief Executive Officer and President for Ministry Partners Securities LLC, the wholly-owned subsidiary of Ministry Partners Investment Company.  Mr. Turner also held the position as Chief Compliance Officer of Ministry Partners Securities LLC until December 14, 2015.  During his tenure with the Company, Mr. Turner has led the Company’s efforts in transitioning its wholly-owned broker dealer to a more robust and diverse financial services firm, launching its investment advisory and insurance company activities in addition to overseeing the capital raising efforts related to the Company’s proprietary products.  Mr. Turner was also instrumental in formalizing strategic partnerships with Evangelical Christian Credit Union (the Company’s largest equity owner) and America’s Christian Credit Union (2nd largest Shareholder) to provide complimentary financial products and services to their collective members.  Prior to joining the Company in 2011, Mr. Turner served in various roles; including Regional Vice President, Chief Operating Officer, Chief Executive Officer and President for Strongtower Financial, Inc., a Fresno, California based broker dealer and advisory firm which specialized in providing investment banking services, mortgage financing for churches and ministries, and investment and insurance products and services.  Prior to joining Strongtower in 2007, Mr. Turner served as Managing Director of Principal Financial Group where he led a financial advisory and insurance group.  Mr. Turner began his career with Prudential Preferred as an investment advisor in 1990.  Mr. Turner received his Bachelor of Science in Business Administration – Finance degree from California State University, Fresno.  Mr. Turner has completed industry leadership training both at Drake University and the Wharton School of Business.  Mr. Turner holds the FINRA Series 6, 7, 24, 63, 65, and 51 as well as life, health and disability licenses in over 23 states.  Mr. Turner also serves as Chairman of the Board for Christian Care Ministries, Inc., a Melbourne, Florida based public charity (“CCM”), a ministry that encourages and enables Christians to connect with, share their lives, faith, talents, and financial resources with one another through its Medi-Share health care sharing ministry.  CCM has current investments

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in the Company’s publicly and privately offered debt securities as well as other products offered by the Company’s wholly-owned subsidiary, MP Securities.  For further information regarding Mr. Turner’s appointment to the CCM Board of Directors, see Part III, Item 10, “Code of Ethics” in this Report.

WILLIAM M. CRAMMER, III

Mr. Crammer has served as the Company’s Senior Vice President and Chief Lending Officer since September 21, 2017.  Prior to that, Mr. Crammer served as the Company’s Vice President of Administration and Manager of Loan Participations.  Mr. Crammer received a Bachelor of Science degree in accounting from California State University, Fullerton and has over thirty years of management experience in overseeing the financial, administrative, and operational functions of both small and large organizations.  In his previous role as the Company’s Manager of Loan Participations, Mr. Crammer was instrumental in launching the Company’s loan participation sales program, which significantly increased the Company’s ability to secure additional funding resources when needed. Mr. Crammer was an officer of the company as of December 31, 2019, but as noted above, was not an officer of the Company as of the date of the filing of this 10K.

BRIAN S. BARBRE

Mr Barbre has served as the Company’s Senior Vice President, Chief Financial Officer and Principal Accounting Officer and as the Chief Financial Officer for Ministry Partners Securities, LLC since September 25, 2017. Mr. Barbre has previously served as Vice President Finance and Treasurer of ECCU, the Company’s largest equity owner.  Over the course of Mr. Barbre’s seventeen years working with ECCU, he has served as Vice President Finance / Treasurer, Director of Finance, Finance Manager and Sr. Financial Analyst.  Mr. Barbre is a Certified Public Accountant and has served as an Adjunct professor at Biola University where he has taught cost accounting and accounting information systems courses.  Mr. Barbre holds a Bachelor of Science in Business Administration, Magna Cum Laude, from Biola University and a Master of Business Administration degree from California State University Fullerton.

EDWARD J. RAMIREZ

Mr. Ramirez joined the Company in September 2017 after seven years of service as the Assistant Vice President, Ministry Development Group, Portfolio and Risk Management/Loan Portfolio Manager at Christian Community Credit Union, a San Dimas, California based credit union. Prior to that, Mr. Ramirez was a product manager and loan underwriter for ECCU from 2002 to 2010. Mr. Ramirez earned his Bachelor of Arts in Business Administration from California State University Fullerton and his Master of Business Administration from Azusa Pacific University. Mr. Ramirez was an officer of the company as of December 31, 2019, but as noted above, was not an officer of the Company as of the date of the filing of this 10K.

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MENDELL THOMPSON

Mr. Thompson joined the Board when Arthur Black, whom served on the Board from 1997 through April 2016, retired from the Board.  In May of 2017, Mr. Thompson was re-elected for a three term ending May of 2020.  Mr. Thompson serves as President/CEO of America’s Christian Credit Union in Glendora, California, a position he has held since 1986.  Prior to his promotion to President/CEO at age 32 in 1986, Mr. Thompson held a variety of other positions at ACCU between 1977 and 1986.  Among his many accomplishments, Mr. Thompson was influential in taking ACCU through a charter change in 1993 that opened the door to making church loans.  Currently, America's Christian Credit Union serves more than 135,000 members, has over $460 million in assets, and manages assets of over $505 million.  Mr. Thompson was elected to the Glendora City Council in 2015 and served one term as Mayor from April 2018-2019. He now serves as Councilman having just been re-elected to another 4-year term.  He is a trustee on the Point Loma Nazarene University (PLNU) Board and a director on the PLNU Foundation Board.  Mr. Thompson has served as a director of the National Association of State Credit Union Supervisors (NASCUS) Executive Council, as a director on the Board of WesCorp FCU, Chairman of WesCorp’s Supervisory Committee, and on the Glendora Church of the Nazarene Board.  He has been a director of the CU Deposit Network, the Financial Marketing Association, and the Southern California CU Executives Society Council.  Mr. Thompson graduated cum laude in 1976 with a bachelor’s degree in History/Business from Point Loma Nazarene University, and is also a graduate of the Western CUNA Management School and Stanford University’s Executive Development Program.  Mr. Thompson is the Chairman of the Company’s Board Credit Committee.

JULI ANNE LAWRENCE

Ms. Lawrence has served as a member of our Board since 2007.  She is currently the Chief Strategy Officer of Raoust + Partners, a Hampton, Virginia based strategic planning and marketing firm for credit unions.  Prior to her current engagement, Ms. Lawrence served as Senior Vice President of Research and Development for Western Bancorp in San Jose, California.  Prior to that engagement, she served as President and Chief Executive Officer of the National Institute of Health Federal Credit Union. Prior to that, she was Executive Vice President and Chief Operating Officer of KeyPoint Credit Union and the President of its subsidiary, KeyPoint Financial Services.  Before joining KeyPoint Credit Union, Mrs. Lawrence served as Vice President for Business Development, Marketing and Legislative Affairs from 1988-1995 at Langley Federal Credit Union. Prior to joining the credit union industry, Ms. Lawrence served as the Director of Sales for the US Navy Mid-Atlantic Region, which included the direct responsibility for public relations and sales for all Navy Exchange and Commissary Operations in the Mid-Atlantic States, Europe, Iceland, and Bermuda.  Mrs. Lawrence received her Bachelor of Science degree in Community Health and Education from East Carolina University and received a Master’s degree in Organizational Development from the University of San Francisco, where she is pursuing a Ph.D.  Mrs. Lawrence currently serves on the Board of Directors for the George

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Washington Institute of Health and Women in BIO. She also previously served as Chair for the Executive Committee of the Open Solutions, Inc. Client Association and serves currently as a Trustee of the International Mission Board of the Southern Baptist Convention. Mrs. Lawrence provides our Board with the benefit of her extensive experience in financial institution operations and technology and especially, her asset-liability management expertise.  Mrs. Lawrence serves on the Company’s Executive Committee, as our Chair of the Asset-Liability Management Committee, and as a member of the MP Securities Board of Managers.

JERROD FORESMAN

Mr. Foresman has served as a Board Member of Ministry Partners Investment Company since May 2012 and MP Securities since November 2018.  He is Co-Owner and President of Virtue Financial Advisors, LLC and the Office of Supervisory Jurisdiction (OSJ) Principal for Infinex Investments, Inc., managing bank and credit union investment programs for over 70 branch locations in the mid-west.  Formerly President, Chief Compliance Officer and FINOP of Bankers & Investors Company Inc., a Registered Broker/Dealer, Investment Advisor and Insurance Agency in Kansas City, Mr. Foresman ran the compliance and operations for 11 years.  Bankers & Investors Co. provided investment services for seven banks and four credit unions in Missouri and Kansas.  Mr. Foresman had been serving as a financial advisor since 1990 and has managed and owned financial advisory/marketing firms specializing in working with credit unions and community banks since 1993.  Mr. Foresman attended Missouri State University and is currently studying for additional financial designations from the American College in Bryn Mawr, PA.  He also serves as a board member for Angel Flight Air Support, OASIS Refuge and is a contributing member of the Wealth Management RIA Board of Advisors, Advisor Confidence Index (ACI) from Rydex. Mr. Foresman holds the FINRA Series 7, 24, 27, 63, 65 and 66 as well as life, health, property & casualty insurance licenses.

JEFFREY T. LAURIDSEN

Mr. Lauridsen has served as a member of our Board since October 2007. He practiced as an attorney serving at the Law Offices of Jeffrey T. Lauridsen in Garden Grove, California. Before retiring, Mr. Lauridsen served with several other law firms in the Orange County area, as partner and senior associate. Mr. Lauridsen’s 29 years of law practice focused on corporate law and encompassed both trial and appellate work in diverse areas of law, including business litigation, construction defects, general liability, premises liability, products, medical malpractice, ERISA, insurance coverage, automobile liability, insurance bad faith, employment and labor law, sexual harassment, sexual molestation and others. Prior to entering into the practice of law, Mr. Lauridsen worked as a claim representative in the insurance industry for 19 years. Mr. Lauridsen received his Associate of Arts degree in Political Science from Fullerton College. He received his Bachelor of Science in Law and Juris Doctorate degrees from California Southern Law School. He has served as Elder at Grace Church in Orange, California for 18 years. Mr. Lauridsen brings to our Board the

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perspective of an experienced attorney, as well as intimate knowledge of ministry governance. In addition to being MPIC’s Board’s Vice Chairman, Mr. Lauridsen is also a member of the Executive Committee, Credit Committee and serves as Chairman of the Audit Committee.

MICHAEL R. BOBLIT

Mr. Boblit has previously served as an independent consultant for the Company since September 14, 2018, working with the Company’s Executive and lending services team. Mr. Boblit served as a commercial loan officer, asset manager, and director for business development at Evangelical Christian Credit Union, a Brea, California credit union (“ECCU”), from August 2000 to July 2018. Prior to joining ECCU, Mr. Boblit had a successful career in managing sales operations for both public and private business consulting firms, high technology companies, enterprise software services, document management solutions and optical storage products. Given Mr. Boblit’s extensive experience in developing sales teams, marketing strategies, and his eighteen years of service with ECCU in its commercial lending operations while working with Christian organizations and churches, Mr. Boblit will be tasked with the responsibility of enhancing the Company’s loan origination and commercial lending operation. Mr. Boblit holds a Bachelor of Science in Business Administration, from University of San Diego. Mr. Boblit was not an officer of the Company as of December 31, 2019, but as noted above, is an officer of the Company as of the date of the filing of this 10K.

Our Board of Managers

The Operating Agreement, charges our Board and officers with governing and conducting our business and affairs. The Operating Agreement charges our Board with essentially the same duties, obligations, and responsibilities as a board of directors of a corporation. The Board establishes our policies and periodically reviews them and has authorized designated officers and our President the authority to carry out those policies. As of the date of this Report, our Board consists of seven managers, a majority of which are independent managers.

The Board has established the following committees to help oversee various aspects of our business:

Executive Committee

Our Executive Committee is charged with responsibility for determining the Chief Executive Officer and President’s compensation and undertaking other matters of an executive and strategic oversight nature;

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Audit Committee

Our Audit Committee is chartered to oversee the annual audit of our financial reports, oversee the establishment and maintenance of internal controls and oversee compliance with our Ethics Policy;

Board Credit Committee

Our Board Credit Committee is authorized to oversee compliance with our Loan Policy, to review the performance and management of our loan portfolio, and to approve loan originations over a certain dollar amount or loans that have fallen outside of the parameters of the Loan Policy;

Credit Review Committee

Our Credit Review Committee is appointed by the Board to review and implement our Loan Policy and to review most of the loan applications we receive;

Asset Liability Committee

Our Asset Liability Committee is chartered to oversee the maintenance of our asset liability strategy and process, as well as our asset liability, liquidity and other policies relating to the mitigation of risks to our earnings and capital; and

The Board has charged our Governance Committee with responsibility for the board governance policies, including our Related Parties Transaction Policy, and with the periodic task of nominating persons for election to the Board.

The Board is actively involved in and regularly meets with members of our senior management to discuss capital adequacy, use of leverage, asset liability management, strategic planning and liquidity issues we face. Our Asset Liability Committee regularly meets with the objective of performing oversight of interest rate risk, future net interest income and expense, capital and liquidity forecasts and review of trends affecting our balance sheet.

Our Board Chairman

On May 14, 2015, the Company held a regular board meeting of its Board of Managers, during which it appointedR. Michael Lee, to serve as Chairman of the Board of Managers. Prior to Mr. Lee’s appointment, Mark Holbrook served as our Board Chairman since the Company’s inception. Mr. Holbrook also served as our Chief Executive Officer from inception of the Company until February 17, 2011.

Code of Ethics

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On November 6, 2009, our Board adopted a Code of Ethics for our principal officers and members of the Board. On February 26, 2018, the Company’s President and Chief Executive Officer, Joseph Turner, was appointed to the Board of Directors for Christian Care Ministry, Inc., headquartered in Melbourne, Florida (“CCM”). CCM currently maintains a business relationship with MP Securities and the Company, holds investments in the Company’s debt securities, and has purchased other investment products made available through MP Securities.

The Company’s Board of Managers were advised of the potential CCM Board appointment of Mr. Turner during its February 2018 meeting, and after significant discussion, concluded that Mr. Turner’s appointment to the CCM Board of Directors fully complied with the Company’s Code of Ethics and Related Party Policy. In addition, the Company has taken precautions to formally mitigate any potential conflicts of risk between the Company, CCM, and Mr. Turner, including, but not limited to the following:

Mr. Turner has declared the CCM Board Appointment as an outside business activity under MP Securities’ policies and procedures, which the MP Securities’ Chief Compliance Officer subsequently approved.

Mr. Turner has agreed to waive and refrain from receiving any compensation related to his role as a Board Member of CCM.

MP Securities has assigned another Investment Advisor to manage the Company’s business relationship with CCM.

When undertaking his duties as a CCM Board Member, Mr. Turner will recuse himself from all matters involving the investment by CCM in an investment product or debt security offered by the Company.

The Company, CCM and Mr. Turner will comply with applicable disclosure obligations required for the Company’s securities and regulatory filings and monitor the business relationships by and among the Company, MP Securities, Mr. Turner and CCM to ensure that such relationships and any agreements related thereto comply with the Company’s Code of Ethics and Related Parties Transaction Policy.

Audit Committee

As authorized within the operating agreement for Ministry Partners Investment Company LLC, the Board of Managers established the Audit Committee in 2005 with the adoption of its formal charter. The primary purpose of the Audit Committee, as designated in its formal charter, is to oversee the Company’s accounting policies and practice, financial reporting procedures and audits of the Company’s financial statements. For the year ended December 31, 2019, the Audit Committee is comprised of three members, including Jeffrey T. Lauridsen, Van Elliott, and Jerrod Foresman. Mr. Lauridsen, a corporate attorney in Southern California for over 30 years, is Chairman of the Audit Committee and

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Vice Chairman of the overall Board of Managers. Mr. Van Elliott, a Certified Financial Planner and church leadership consultant, brings extensive experience as a credit union board member and has intimate knowledge of the Company’s financial operations as he has served as the Company’s Interim Chief Executive Officer on several occasions over the last 29 years since the Company’s inception. Mr. Elliott also serves as the Company’s Corporate Secretary. The Company also added Jerrod Foresman to the Audit Committee in 2017. Mr. Foresman has nearly 29 years of experience in the financial services industry as an Executive, Compliance Officer, and Operations Principal. His knowledge of the financial operations of broker-dealers, advisory firms, and insurance agencies has been a significant addition to the Audit Committee in overseeing the operations of both the Company and MP Securities, the Company’s wholly owned subsidiary.

84

Item 11. EXECUTIVE COMPENSATION

The following table sets forth certain information regarding compensation we paid for services rendered to us during the years ended December 31, 2019 and 2018 by our senior executive officers.

Summary Annual Compensation Table

		2019							2018
Name	Principal Position	Salary		Bonus		All Other Compensation (1) (2)		Salary		Bonus		All Other Compensation (1) (2)
Michael Lee	Chairman of the Board of Managers	$	—	$	—	$	14,100	$	—	$	—	$	14,200
Joseph Turner	President and Chief Executive Officer		270,985		1,000		52,199		254,590		89,800		51,337
Van Elliott	Secretary and Manager		—		—		9,100		—		—		9,250
Juli Anne Lawrence	Manager		—		—		11,200		—		—		11,300
Jeffrey Lauridsen	Manager		—		—		11,200		—		—		11,550
Jerrod Foresman	Manager		—		—		8,850		—		—		8,350
Abel Pomar	Former Manager		—		—		—		—		—		4,600
Mendell Thompson	Manager		—		—		8,200		—		—		8,300
William M. Crammer, III,	Senior Vice President and Chief Lending Officer		172,028		16,000		48,891		156,544		12,550		44,151
Brian S. Barbre	Sr. Vice President, Chief Financial Officer and Principal Accounting Officer		176,209		51,000		53,709		158,000		16,025		44,788
Edward J. Ramirez	Vice President, Credit Administration		110,177		12,000		31,049		110,000		4,550		33,390

(1) During each year, we accrued amounts for each Manager’s service on the Board.

(2) This includes the aggregate amount we contributed to the Company’s 401(k) retirement plan, for medical benefits and life and disability insurance for the Company’s officers in each year.

In February 2014, the Board approved the payment of compensation grants to Managers of the Board for rendering services to the Company. Under the grants approved by the Board, each Manager will receive a cash grant for serving on the Board, and will receive additional amounts for attendance at each Board meeting and for serving as a Chairperson of one of our Board Committees. In addition, reimburse each Manager for expenses incurred in performing duties on our behalf. Compensation awards for our Managers for the years ended December 31, 2019 and 2018, were $63 thousand and $68 thousand, respectively.

85

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS

The following table sets forth information available to us, as of December 31, 2019, with respect to our Class A Units owned by each of our executive officers and our managers, and by our managers and executive officers as a group, and by each person who is known to us to be the beneficial owner of more than 5.0% of our Class A Units.

Name	Address	Beneficial Ownership		Percentage Owned(1)
R. Michael Lee	915 W. Imperial Hwy., Suite 120 Brea, CA 92821	$	—	—	%
Van C. Elliott	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
Mendell Thompson	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
Juli Anne  Lawrence	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
Jeffrey T. Lauridsen	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
Jerrod L. Foresman	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
Joseph W. Turner, Jr.	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
Brian S. Barbre	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
William Crammer	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
Edward J. Ramirez	915 W. Imperial Hwy., Suite 120 Brea, CA 92821		—	—	%
All officers and members of the Board as a group		$	—	—	%

Other 5% or greater beneficial owners (seven):
Name	Beneficial Ownership	Percentage Owned(1)
Evangelical Christian Credit Union	62,000	42.31%
America’s Christian Credit Union	12,000	8.19%
Navy Federal Credit Union (2)	11,905	8.13%
UNIFY Financial Credit Union (3)	11,905	8.13%
Wescom Credit Union	11,905	8.13%
Credit Union of Southern California	11,900	8.12%
Keypoint Credit Union	8,000	5.46%

(1) Based on 146,522 Class A Units outstanding.

(2) Navy Federal Credit Union is a non-voting equity member in the Company, but holds a beneficial interest in 11,905 Class A Common Units, which were acquired pursuant to a merger completed with USA Federal Credit Union.  As the holder of an economic interest in the Company, Navy Federal Credit Union holds a beneficial interest in the Company.

(3) UNIFY Financial Credit Union was formerly Western Federal Credit Union.

86

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The following table lists our transaction with related persons that exceed $120,000, and in which any related person had or will have a direct material interest. For additional information including the Company’s policies and procedures relating to related parties, see “Part II, Item 8 Note 3. Related Party Transactions.”

Transactions by related parties in the amount that exceeds $120,000
				Amount of transaction (dollars in thousands)
Related Party Name	Basis of related party	Transaction description	2019		2018
Joseph Turner	Officer of the Company	Purchase of the company's notes	$	263	$	300
ECCU	5% or greater owner	Interest income earned on loans purchased from ECCU		161		278
ECCU	5% or greater owner	Total funds held on deposit at ECCU		365		457
ACCU	5% or greater owner	Dollar amount of loans sold to ACCU		—		554
ACCU	5% or greater owner	Fees paid based on MP Securities Networking Agreement with ACCU		45		56
ACCU	5% or greater owner	Total funds held on deposit at ACCU		10,343		5,675
ACCU	5% or greater owner	Loan participations sold to ACCU and serviced by the Company		—		3,184
ACCU	5% or greater owner	Loan participations purchased from and serviced by ACCU		1,603		1,662

87

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Before we engage our principal accountant to render audit or non-audit services, our Audit Committee approves the engagement if SEC rules and regulations require it.

The aggregate fees billed by our accounting firm, Hutchinson and Bloodgood LLP, for the years ended December 31 were as follows:

	2019		2018
Audit and audit-related fees	$	97,000	$	129,000
Tax Fees		12,500		12,500
All other fees		4,000		9,000
Total	$	113,500	$	150,500

Our Audit Committee has considered whether the provision of the non-audit services described above is compatible with maintaining our auditors’ independence and determined that such services are appropriate.

88

Item 15. EXHIBITS

Exhibit No.	Description
3.1	Articles of Organization - Conversion of Ministry Partners Investment Company, LLC, dated as of December 31, 2008 (1)
3.2	Operating Agreement of Ministry Partners Investment Company, LLC, dated as of December 31, 2008 (1)
3.3	Plan of Conversion of Ministry Partners Investment Corporation, dated September 18, 2008 (1)
3.4	Series A Preferred Unit Certificate of Ministry Partners Investment Company, LLC, dated as of December 31, 2008 (1)
3.5	First Amendment to the Operating Agreement of Ministry Partners Investment Company, LLC, effective as of February 11, 2010 (2)
3.6	Amended and Restated Certificate of Designation of the Powers, Designations, Preferences and Rights of Series A Preferred Units, effective as of May 23, 2013 (3)
10.1	$10 Million Committed Line of Credit Facility and Security Agreement, dated October 8, 2007 (4)
10.2	$50 Million CUSO Committed Line of Credit Facility and Security Agreement, dated October 8, 2007 (4)
10.3	Loan and Security Agreement dated November 4, 2011, by and between Ministry Partners Investment Company, LLC and The National Credit Union Administration Board as Liquidating Agent of Western Corporate Federal Credit Union (5)
10.4	Loan and Security Agreement dated November 4, 2011, by and between Ministry Partners Investment Company, LLC and The National Credit Union Administration Board as Liquidating Agent of Members United Corporate Federal Credit Union (5)
10.5	CUSO Line of Credit Facility Note and Security Agreement, dated May 14, 2008, executed by Ministry Partners Investment Corporation in favor of Members United Corporate Federal Credit Union (6)
10.6	Office Lease, dated November 4, 2008, by and between Ministry Partners Investment Corporation and Evangelical Christian Credit Union (7)
10.7	Equipment Lease, dated as of January 1, 2009, by and between Ministry Partners Investment Company, LLC and Evangelical Christian Credit Union (7)
10.8	Professional Services Agreement, dated as of January 1, 2009, by and between Ministry Partners Investment Company, LLC and Evangelical Christian Credit Union (7)
10.9	Form of Individual Manager Indemnification Agreement (8)
10.10	Confidential Severance and Release Agreement by and between Ministry Partners Investment Company LLC and Billy M. Dodson, effective November 8, 2013 (9)
10.11	Interim CEO Employment Agreement by and between Ministry Partners Investment Company LLC and James. H. Overholt, effective November 12, 2013 (10)
10.12	Employment Agreement by and between Ministry Partners Investment Company, LLC and James H. Overholt, effective May 13, 2014 (11)
10.13	Loan and Security Agreement by and between Ministry Partners Investment Company, LLC and Ministry Partners Funding, LLC dated December 15, 2014 (12)
10.14	Managing Broker Dealer Agreement by and between Ministry Partners Investment Company, LLC and Ministry Partners Securities, LLC, dated ______________, 2018 (19)
10.15	Amendment to Loan and Security Agreement by and between The National Credit Union Administration Board As Liquidating Agent of Members United Corporate Federal Credit Union and Ministry Partners Investment Company, LLC dated March 30, 2015. (13)
10.16	Amendment to Loan and Security Agreement by and between The National Credit Union Administration Board As Liquidating Agent of Western Corporate Federal Credit Union and Ministry Partners Investment Company, LLC dated March 30, 2015. (13)
10.17	Employment Agreement by and between Ministry Partners Securities, LLC and Joseph Turner dated May 27, 2015. (14)
10.18	Severance and Release Agreement dated January 7, 2016. (15)
10.19	Employment Agreement by and between Ministry Partners Securities, LLC and Joseph Turner dated May 5, 2016. (16)

89

10.20	Separation and Release Agreement dated September 7, 2016. (17)
10.21	Amendment and Modification of Promissory Note by and between The National Credit Union Administration Board As Liquidating Agent of Members United Corporate Federal Credit Union and Ministry Partners Investment Company, LLC dated November 30, 2016. (18)
10.22	Amendment and Modification of Promissory Note by and between The National Credit Union Administration Board As Liquidating Agent of Western Corporate Federal Credit Union and Ministry Partners Investment Company, LLC dated November 30, 2016. (18)
10.23	Networking Agreement by and between Ministry Partners Securities, LLC and America’s Christian Credit Union dated July 30, 2014 and Addendum related thereto dated December 1, 2016. (20)
10.24	Trust Indenture by and between Ministry Partners Investment Company, LLC and U.S. Bank National Association, as Trustee dated December 20, 2017 (21)
10.29	Administrative Services Agreement by and between Ministry Partners Investment Company, LLC and Ministry Partners Securities, LLC dated January 30, 2018 (19)
10.30	Managing Broker Dealer Agreement by and between Ministry Partners Investment Company, LLC and Ministry Partners Securities, LLC, dated January 6, 2015. (12)
10.31	(Amended) Master Services Agreement by and between Ministry Partners Investment Company, LLC and Evangelical Christian Credit Union, dated March 1, 2018. (22)
10.32	Master Services Agreement by and between Ministry Partners Investment Company, LLC and America’s Christian Credit Union, dated August 17, 2017. (22)
14.1	Code of Ethics for Ministry Partners Investment Company, LLC, effective as of February 11, 2010 (2)
21.1	List of Subsidiaries (*)
23.1	Consent of Hutchinson and Bloodgood LLP (*)
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) (*)
31.2	Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) (*)
32.1	Certification of Principal Executive Officer and Principal Accounting Officer pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*)
101.ins	XBRL Taxonomy Extension Definition Linkbase Document **
101.sch	XBRL Taxonomy Extension Schema Document **
101.def	XBRL Taxonomy Extension Definition Linkbase Document **
101.cal	XBRL Taxonomy Extension Calculation Linkbase Document **
101.lab	XBRL Taxonomy Extension Label Linkbase Document **
101.pre	XBRL Taxonomy Extension Presentation Linkbase Document **

90

 _____________________________

(1)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on December 22, 2008.
(2)	Incorporated by reference to the Report on Form 10-K filed by the Company on March 31, 2010.
(3)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on May 23, 2013.
(4)	Incorporated by reference to the Report on Form 8-K filed by the Company on October 15, 2007, as amended.
(5)	Incorporated by reference to the Report on Form 8-K filed by the Company on November 11, 2011.
(6)	Incorporated by reference to the Report on Form 8-K filed by the Company on May 20, 2008.
(7)	Incorporated by reference to the Report on Form 10-K filed by the Company on April 14, 2009.
(8)	Incorporated by reference to Exhibit 10.20 to the Registration Statement on Form S-1 filed by the Company on June 24, 2011.
(9)	Incorporated by reference to Exhibit 10.1 of the Report on Form 10-Q filed by the Company on November 14, 2013.
(10)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on January 7, 2014.
(11)	Incorporated by reference to the Report on Form 10-Q filed by the Company on May 15, 2014.
(12)	Incorporated by reference to the Report on Form 10-K filed by the Company on March 31, 2015
(13)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on April 9, 2015.
(14)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on June 3, 2015.
(15)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on January 12, 2016.
(16)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on May 11, 2016.
(17)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on September 13 2016.
(18)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on December 5, 2016.
(19)	Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-1 filed by the Company on January 30, 2018.
(20)	Incorporated by reference to Exhibit 10.23 on Form S-1 filed by the Company on December 8, 2017.
(21)	Incorporated by reference to Exhibit A on Form S-1 filed by the Company on December 8, 2017.
(22)	Incorporated by reference to the Report on Form 10-K filed by the Company on March 29, 2018
*	Filed herewith.
**	Furnished, not filed, herewith.

91

Item 16. FORM 10-K SUMMARY

Not applicable.

92

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		MINISTRY PARTNERS INVESTMENT
		COMPANY, LLC
Dated: March 27, 2020	By:	/s/ Joseph W. Turner
		Joseph W. Turner,
		Chief Executive Officer
		(Principal Executive Officer)

		MINISTRY PARTNERS INVESTMENT
		COMPANY, LLC
Dated: March 27, 2020	By:	/s/ Brian. S. Barbre
		Brian S. Barbre,
		Senior Vice President and Chief Financial Officer
		Chief Executive Officer
		(Principal Accounting Officer)

93

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Company and in the capacities and on the dates indicated.

/s/ Joseph W. Turner

Chief Executive Officer (Principal Executive Officer)

Date: March 27, 2020

/s/ Brian S. Barbre

Senior Vice President and Chief Financial Officer (Principal Accounting Officer)

Date: March 27, 2020

/s/ R. Michael Lee

Chairman, Board of Managers

Date: March 27, 2020

/s/ Van C. Elliott

Secretary, Manager

Date: March 27, 2020

/s/ Mendell Thompson

Manager

Date: March 27, 2020

/s/ Juli Anne S. Lawrence

Manager

Date: March 27, 2020

/s/ Jeffrey T. Lauridsen

Manager

Date: March 27, 2020

/s/ Jerrod L.Foresman

Manager

Date: March 27, 2020

94

EX-21.1

EXHIBIT 21.1

LIST OF SUBSIDIARIES

1.Ministry Partners Funding, LLC

2.MP Realty Services, Inc.

3.Ministry Partners Securities, LLC

4.Ministry Partners for Christ, Inc.

EX-23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers

Ministry Partners Investment Company, LLC

Brea, California

We hereby consent to the use, in the Form 10-K for Ministry Partners Investment Company, LLC and Subsidiaries for 2019, of our issued report dated March 27, 2020 relating to the consolidated financial statements of Ministry Partners Investment Company, LLC and Subsidiaries as of December 31, 2019 and 2018 and for the years then ended.

/s/Hutchinson and Bloodgood LLP

Glendale, California

March 27, 2020

EX-31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph W. Turner, certify that:

1. I have reviewed this Annual Report on Form 10-K of Ministry Partners Investment Company, LLC (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the Company and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the Audit Committee of the Company's managers (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: March 27, 2020	By:	/s/ Joseph W. Turner
		Joseph W. Turner,
		Chief Executive Officer

EX-31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Brian S. Barbre, certify that:

1. I have reviewed this Annual Report on Form 10-K of Ministry Partners Investment Company, LLC (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the Company and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the Audit Committee of the Company's managers (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: March 27, 2020	By:	/s/ Brian S. Barbre
		Brian S. Barbre,
		Principal Accounting Officer

EX-32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, in his or her capacity as an officer of Ministry Partners Investment Company, LLC, (the "Company") that, to his or her knowledge, this Annual Report on Form 10-K for the period ended December 31, 2019 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.

Date: March 27, 2020	By:	/s/ Joseph W. Turner
		Joseph W. Turner,
		Chief Executive Officer

Date: March 27, 2020	By:	/s/ Brian S. Barbre
		Brian S. Barbre,
		Principal Accounting Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Jun. 29, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	MINISTRY PARTNERS INVESTMENT COMPANY, LLC
Entity Central Index Key	0000944130
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	146,522
Entity Public Float		$ 7,904,250

XML

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Measurements [Abstract]

Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments

			Fair Value Measurements at December 31, 2019 using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
FINANCIAL ASSETS:
Cash	$	25,993	$	25,993	$	—	$	—	$	25,993
Loans, net		128,843		—		—		126,438		126,438
Investments in joint venture		891		—		—		891		891
Accrued interest receivable		635		—		—		635		635
FINANCIAL LIABILITIES:
Term-debt	$	71,427	$	—	$	—	$	55,072	$	55,072
Notes payable		73,046		—		—		74,592		74,592
Other financial liabilities		503		—		—		503		503

			Fair Value Measurements at December 31, 2018 using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
FINANCIAL ASSETS:
Cash	$	9,877	$	9,877	$	—	$	—	$	9,877
Loans, net		143,380		—		—		140,989		140,989
Investments in joint venture		887		—		—		887		887
Accrued interest receivable		711		—		—		711		711
FINANCIAL LIABILITIES:
Term-debt	$	76,515	$	—	$	—	$	57,386	$	57,386
Notes payable		68,300		—		—		68,865		68,865
Other financial liabilities		356		—		—		356		356

Schedule of Fair Value Measured on a Nonrecurring Basis

	Fair Value Measurements Using:
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets at December 31, 2019:
Collateral-dependent loans (net of allowance and discount)		$	—	$	—	$	8,640	$	8,640
Investments in joint venture			—		—		891		891
Foreclosed assets (net of allowance)			—		—		301		301
Total		$	—	$	—	$	9,531	$	9,531
Assets at December 31, 2018:
Collateral-dependent loans (net of allowance and discount)		$	—	$	—	$	11,616	$	11,616
Investments in joint venture			—		—		887		887
Total		$	—	$	—	$	12,503	$	12,503

Schedule of Activity in Level 3 Assets

	Impaired loans (net of allowance and discount)
Balance, December 31, 2018	$	11,616
Changes in allowance and discount		1,764
Transfer of loans into foreclosed assets		(479)
Loans no longer considered collateral dependent		(1,232)
Loans that became collateral dependent		1,936
Loan payments, payoffs, sales, and charge-offs		(4,965)
Balance, December 31, 2019	$	8,640

	Investments in joint venture (net of allowance and discount)
Balance, December 31, 2018	$	887
Pro rata share of joint venture income		4
Balance, December 31, 2019	$	891

	Foreclosed assets
	(net of allowance and discount)
Balance, December 31, 2018	$	--
Transfer of loans into foreclosed assets		479
Transfer of foreclosed assets to other assets		(178)
Balance, December 31, 2019	$	301

	Impaired loans (net of allowance and discount)
Balance, December 31, 2017	$	6,135
Re-classifications of assets from Level 3 into Level 2		—
Changes in allowance and discount		(306)
Loans no longer considered impaired		—
Loans that became impaired		7,620
Loan payments, payoffs, sales, and charge-offs		(1,833)
Balance, December 31, 2018	$	11,616

	Investments in joint venture (net of allowance and discount)
Balance, December 31, 2017	$	896
Pro rata share of joint venture income		(9)
Balance, December 31, 2018	$	887

Schedule of Valuation Methodologies Used to Measure the Fair Value Adjustments for Level 3 Assets Recorded at Fair Value on a Nonrecurring Basis

December 31, 2019
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans	$	8,640	Discounted appraised value	Selling cost / Estimated market decrease	21% - 81%  (23%)
Investments in joint venture	$	891	Internal evaluations	Estimated future market value	0%  (0%)
Foreclosed assets	$	301	Internal evaluations	Selling cost	6%  (6%)

December 31, 2018
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans	$	11,616	Discounted appraised value	Selling cost / Estimated market decrease	15% - 72%  (33%)
Investment in joint venture	$	887	Internal evaluations	Estimated future market value	0%  (0%)

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Consolidated Statements of Equity - USD ($) $ in Thousands	Series A Preferred Units [Member]	Class A Common Units [Member]	Accumulated Deficit [Member]	Total
Beginning balance at Dec. 31, 2017	$ 11,715	$ 1,509	$ (3,795)	$ 9,429
Beginning balance, shares at Dec. 31, 2017	117,100	146,522
Net income			477	477
Dividends on preferred units			(375)	(375)
Ending balance at Dec. 31, 2018	$ 11,715	$ 1,509	(3,693)	9,531
Ending balance, shares at Dec. 31, 2018	117,100	146,522
Net income			2,001	2,001
Dividends on preferred units			(461)	(461)
Ending balance at Dec. 31, 2019	$ 11,715	$ 1,509	$ (2,153)	$ 11,071
Ending balance, shares at Dec. 31, 2019	117,100	146,522

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Credit Facilities (Tables)

12 Months Ended

Dec. 31, 2019

Line of Credit Facility [Line Items]

Summary of Credit Facilities

Nature of Borrowing

Interest Rate

Interest Rate Type

Monthly Payment

Maturity Date

Loan Collateral Pledged

Cash Pledged

Term-debt

2.53%

Fixed

579

11/1/2026

85,914

—

Credit Facilities [Member]

Line of Credit Facility [Line Items]

Schedule of Maturities of Credit Facilities

2020	$	5,164
2021		5,341
2022		5,477
2023		5,617
2024		5,757
Thereafter		44,071
	$	71,427

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Related Party Transactions

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Note 3. Related Party Transactions

Transactions with Equity Owners

Transactions with Evangelical Christian Credit Union (“ECCU”)

The tables below summarize transactions the Company conducts with ECCU, the Company’s largest equity owner.

ECCU related parties who serve on the Company’s Board of Managers:

ECCU Role	MPIC Role
Chairman of the Board	Board of Managers

Related party balances pertaining to the assets of the Company (in thousands):

	December 31,		December 31,
	2019		2018
Total funds held on deposit at ECCU	$	365	$	457
Loan participations purchased from and serviced by ECCU		1,495		5,109

Related party transactions of the Company (dollars in thousands):

	Year ended
	December 31,
	2019		2018
Interest earned on funds held with ECCU	$	—	$	3
Interest income earned on loans purchased from ECCU		161		278
Fees paid to ECCU from MP Securities Networking Agreement		9		25
Income from Master Services Agreement with ECCU		14		54
Income from Successor Servicing Agreement with ECCU		9		9
Rent expense on lease agreement with ECCU		138		116

Loan participation interests purchased:

In the past, the Company purchased loan participation interests from ECCU. Management negotiated the pass-through interest rates on these loans on a loan-by-loan basis. Management believes these negotiated terms were equivalent to those that would prevail in an arm's length transaction. The Company did not purchase any loans from ECCU during the years ended December 31, 2019 and 2018.

Lease and Services Agreement:

The Company leases its corporate offices and purchases other facility-related services from ECCU pursuant to a written lease and services agreement. Management believes these terms are equivalent to those that prevail in arm's length transactions.

MP Securities Networking Agreement with ECCU:

MP Securities, the Company’s wholly-owned subsidiary, has entered into a Networking Agreement with ECCU pursuant to which MP Securities agreed to offer investment and insurance products and services to ECCU’s members that:

(1) ECCU or its Board of Directors has approved;

(2) comply with applicable investor suitability standards required by federal and state securities laws and regulations;

(3) are offered in accordance with National Credit Union Administration (“NCUA”) rules and regulations; and

(4) comply with its membership agreement with Financial Industry Regulation Authority (“FINRA”).

Master Services Agreement (the “Services Agreement”) with ECCU:

The Company and ECCU had entered into the Services Agreement, pursuant to which the Company was to provide relationship management services to ECCU’s members and business development services to new leads in the southeast region of the United States. On March 1, 2018, the Company and ECCU amended the agreement to include referral fees to be paid by either party on the successful closing of a referred loan. The terms of the agreement allowed either party to terminate the Services Agreement for any reason by providing thirty days written notice. On April 4, 2019, the Company received written notice from ECCU requesting termination of the agreement. The agreement terminated on May 4, 2019.

Successor Servicing Agreement with ECCU:

On October 5, 2016, the Company entered into a Successor Servicing Agreement with ECCU. This agreement obligates the Company to serve as the successor loan servicing agent for certain mortgage loans designated by ECCU. The Company will service these loans in the event ECCU requests that the Company assume its obligation to act as the servicing agent for those loans. The Agreement terminated in October 2019 and has converted to a month-to-month agreement.

Transactions with America’s Christian Credit Union (“ACCU”)

The Company has several related party agreements with ACCU, one of the Company’s equity owners. The following describes the nature and dollar amounts of the material related party transactions with ACCU.

Ownership transfer:

On May 4, 2017, ACCU acquired 12,000 Class A Units and 12,000 Series A Preferred Units of the Company’s Class A Common Units and Series A Preferred Units, respectively, which represents 8.19% of the Company’s issued and outstanding Class A Units and 10.25% of the Company’s issued and outstanding Series A Preferred Units from Financial Partners Credit Union, a California state chartered credit union (“FPCU”). The Company’s Board of Managers approved ACCU’s purchase of the Class A and Series A Preferred Units from FPCU and consented to ACCU’s request to be admitted as a new member of the Company. ACCU’s purchase of the Class A Units and Series A Preferred Units was consummated pursuant to a privately negotiated transaction.

On June 29, 2018, ACCU acquired 2,000 of the Company’s Series A Preferred Units, which represents 1.71% of the Company’s issued and outstanding Series A Preferred Units from The National Credit Union Administration Board as Liquidating Agent of Telesis Community Credit Union, a federally chartered credit union (“NCUAB”). The Company’s Board of Managers has approved ACCU’s purchase of the Membership Units from NCUAB and has consented to ACCU’s acquisition of additional membership interests of the Company.

ACCU related parties who serve on the Company’s Board of Managers:

ACCU Role	MPIC Role
President, Chief Executive Officer	Board of Managers

Related party balances pertaining to the assets of the Company (dollars in thousands):

	December 31,		December 31,
	2019		2018
Total funds held on deposit at ACCU	$	10,343	$	5,675
Dollar outstanding loan participations sold to ACCU and serviced by the Company		—		3,184
Loan participations purchased from and serviced by ACCU		1,603		1,662

Related party transactions of the Company (dollars in thousands):

	Year ended
	December 31,
	2019		2018
Dollar amount of loans purchased from ACCU	$	1,435	$	—
Dollar amount of loans sold to ACCU		—		554
Interest earned on funds held with ACCU		159		69
Interest income earned on loans purchased from ACCU		84		86
Income from Master Services Agreement with ACCU		—		20
Fees paid based on MP Securities Networking Agreement with ACCU		45		56

Loan participation interests purchased:

Occasionally, the Company sells or purchases loan participation interests from ACCU. The Company negotiates pass-through interest rates on loan participation interests purchased or sold from and to ACCU on a loan-by-loan basis. Management believes these terms are equivalent to those that prevail in arm's length transactions.

From time to time, the Company may purchase a loan participation interest from a related party. The Company and its related party will negotiate in good faith the terms and conditions of such a purchase and in accordance with the Company’s related party procedures and governance practices. Each party must approve such a purchase after full disclosure of the related party transaction and must include terms and conditions that would normally be included in arm’s length transactions conducted by independent parties.

MP Securities networking agreement with ACCU:

MP Securities has entered into a Networking Agreement with ACCU pursuant to which MP Securities has agreed to offer investment and insurance products and services to ACCU’s members that:

(1) ACCU or its Board of Directors has approved;

(2) comply with applicable investor suitability standards required by federal and state securities laws and regulations;

(3) are offered in accordance with NCUA rules and regulations; and

(4) comply with its membership agreement with FINRA.

The agreement entitles MP Securities to pay ACCU a percentage of total revenue received by MP Securities from transactions conducted for or on behalf of ACCU members. Either ACCU or MP Securities may terminate the Networking Agreement without cause upon thirty days prior written notice.

Transactions with Other Equity Owners

The Company has a Loan Participation Agreement with UNIFY Financial Credit Union (“UFCU”), an owner of both the Company’s Class A Common Units and Series A Preferred Units. Under this agreement, the Company sold UFCU a $5.0 million loan participation interest in one of its mortgage loan interests on August 14, 2013. As part of this agreement, the Company retained the right to service the loan, and it charges UFCU a fee for servicing the loan. Management believes the terms of the agreement are equivalent to those that prevail in arm's length transactions.

Transactions with Subsidiaries

The Company has entered into several agreements with its subsidiary, MP Securities. The Company eliminates the income and expense related to these agreements in the consolidated financial statements. MP Securities serves as the managing broker for the Company’s public and private placement note offerings. MP Securities receives compensation related to these broker dealer services ranging from 0.25% to 5.50% over the life of a note. The amount of the compensation depends on the length of the note and the terms of the offering under which MP Securities sold the note.

The Company also has entered into an Administrative Services Agreement with MP Securities. The Administrative Services Agreement provides services such as the use of office space, use of equipment, including computers and phones, and payroll and personnel services. The agreement stipulates that MP Securities will provide ministerial, compliance, marketing, operational, and investor relations-related services in relation to the Company’s investor note program. As stated above, the Company eliminates all intercompany transactions related to this agreement in its consolidated financial statements.

The Company’s subsidiary, MPF, serves as the collateral agent for the Company’s Secured Notes. The Company’s Prospectus for its Class 1A Notes and the private placement memorandum for the Company’s Secured Notes Offering describe the terms of these agreements.

Related Party Transaction Policy

The Board has adopted a Related Party Transaction Policy to assist in evaluating related transactions the Company may enter into with a related party. Under this policy, a majority of the members of the Company’s Board and majority of its independent Board members must approve a material transaction that it enters into with a related party. As a result, all transactions that the Company undertakes with an affiliate or a related party are entered into on terms believed by management to be no less favorable than are available from unaffiliated third parties. In addition, a majority of the Company’s independent Board members must approve these transactions.

From time to time, the Company’s Board and members of its executive management team have purchased investor notes from the Company or have purchased investment products through MP Securities. Investor notes payable owned by related parties totaled $368 thousand and $394 thousand at December 31, 2019 and December 31, 2018.

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Revenue Recognition (Tables)

12 Months Ended

Dec. 31, 2019

Revenue Recognition [Abstract]

Schedule of Disaggregated Revenue

	December 31,
	2019		2018
Non-interest income
Wealth advisory fees	$	338	$	231
Investment brokerage fees		1,077		292
Lending fees (1)		124		838
Lease income		8		—
Other non-interest income		22		83
Total non-interest income	$	1,569	$	1,444
(1) Not within scope of ASC 606

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Loan Sales

12 Months Ended

Dec. 31, 2019

Loan Sales [Abstract]

Loan Sales

Note 7. Loan Sales

The Company did not sell any loans during the year endedDecember 31, 2019The following table shows the amount of loan participation sales and the resulting changes in servicing assets recorded during the years ended December 31, 2019 and 2018. Management amortizes servicing assets using the interest method as an adjustment to servicing fee income.

A summary of loan participation sales and servicing assets are as follows (dollars in thousands):

	For the years ended
	December 31,		December 31,
	2019		2018
Participation loans interests sold by the Company during the year	$	—	$	4,254
Total participation interests sold and serviced by the company		26,964		36,706
Servicing income		100		160
Servicing Assets
Balance, beginning of period	$	212	$	270
Additions:
Servicing obligations from sale of loan participations		—		21
Subtractions:
Amortization		(112)		(79)
Balance, end of period	$	100	$	212

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Investor Notes Payable

12 Months Ended

Dec. 31, 2019

Credit Facilities and Investor Notes Payable [Abstract]

Investor Notes Payable

Note 11. Investor Notes Payable

The table below provides information on the Company’s investor notes payable (dollars in thousands):

		As of				As of
		December 31, 2019				December 31, 2018
SEC Registered Public Offerings	Offering Type	Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Class A Offering	Unsecured	$	487	4.20	%	$	8,758	4.14	%
Class 1 Offering	Unsecured		22,098	4.02	%		29,114	3.88	%
Class 1A Offering	Unsecured		32,732	3.85	%		13,817	3.71	%
Public Offering Total		$	55,317	3.92	%	$	51,689	3.88	%
Private Offerings
Special Subordinated Notes	Unsecured		11,317	5.21	%		7,533	4.68	%
Secured Notes	Secured		6,467	3.92	%		9,170	3.83	%
Private Offering Total		$	17,784	4.74	%	$	16,703	4.21	%
Total Notes Payable		$	73,101	4.12	%	$	68,392	3.96	%
Notes Payable Totals by Security
Unsecured Total	Unsecured	$	66,634	4.14	%	$	59,222	3.98	%
Secured Total	Secured	$	6,467	3.92	%	$	9,170	3.83	%

Future maturities for the Company’s investor notes during the twelve month periods ending December 31, are as follows (dollars in thousands):

2020	$	21,562
2021		18,953
2022		10,761
2023		10,543
2024		11,282
	$	73,101

Debt issuance costs related to the Company’s notes payable were $55 thousand and $92 thousand at December 31, 2019 and December 31, 2018, respectively.

The notes are payable to investors who have purchased the securities. Notes pay interest at stated spreads over an index rate. The investor may reinvest the interest or have the interest paid to them at their option. The Company may repurchase all or a portion of notes at any time at its sole discretion. In addition, the Company may allow investors to redeem their notes prior to maturity at its sole discretion.

SEC Registered Public Offerings 

Class A Offering.

In April 2008, the Company registered its Class A Notes with the SEC. The Company discontinued the sale of its Class A Note Offering when the offering expired on December 31, 2015. The offering included three categories of notes, including a fixed interest note, a variable interest note, and a flex note that allows borrowers to increase their interest rate once a year with certain limitations. The Class A Notes contained restrictive covenants pertaining to paying dividends, making redemptions, acquiring, purchasing or making certain payments, requiring the maintenance of minimum tangible net worth, limitations on the issuance of additional notes, and incurring of indebtedness. The Company is in compliance with these covenants as of December 31, 2019 and December 31, 2018. The Company issued the Class A Notes under a Trust Indenture entered into between the Company and U.S. Bank National Association (“US Bank”).

Class 1 Offering.

In January 2015, the Company registered its Class 1 Notes with the SEC. The Company discontinued the sale of its Class 1 Note Offering when it expired on December 31, 2017. The offering included two categories of notes, including a fixed interest note and a variable interest note. The Class 1 Notes contain restrictive covenants pertaining to paying dividends, making redemptions, acquiring, purchasing, or making certain payments, requiring the maintenance of minimum tangible net worth, limitations on the issuance of additional notes, and incurring of indebtedness. The Company is in compliance with these covenants as of December 31, 2019 and December 31, 2018. The Company issued The Class 1 Notes under a Trust Indenture between the Company and U.S. Bank.

Class 1A Offering.

In February 2018, the Company launched its Class 1A Notes Offering. Pursuant to a Registration Statement declared effective on February 27, 2018, the Company registered $90 million of its Class 1A Notes in two series – fixed and variable notes. The Class 1A Notes are unsecured. The interest rate paid on the Fixed Series Notes is determined in reference to a Constant Maturity Treasury Index published by the U.S. Department of Treasury (“CMT Index”) in effect on the date that the note is issued plus a rate spread as described in the Company’s Class 1A Prospectus. The variable index in effect on the date the interest rate is set determines the interest rate paid on a Variable Series Note. The CMT Index refers to the Constant Maturity Treasury rates published by the U.S. Department of Treasury for actively traded Treasury securities. The variable index is equal to the 3-month LIBOR rate. The Company issued the Class 1A Notes under a Trust Indenture entered into between the Company and U.S. Bank.

Private Offerings

Series 1 Subordinated Capital Notes (“Subordinated Notes”).

In June 2018, the Company renewed the offer and sale of its Subordinated Notes initially launched in February 2013. The Company offers the notes pursuant to a limited private offering to qualified investors that meet the requirements of Rule 506 of Regulation D. The Company offers the Subordinated Notes with maturity terms from 12 to 60 months at an interest rate fixed on the date of issuance, as determined by the then current seven-day average rate reported by the U.S. Federal Reserve Board for interest rate swaps.

Under the Subordinated Notes offering, the Company is subject to certain covenants, including limitations on restricted payments, limitations on the amount of notes that it can sell, restrictions on mergers and acquisitions, and proper maintenance of books and records. The Company was in compliance with these covenants atDecember 31, 2019 and December 31, 2018.

Secured Investment Certificates (“Secured Notes”).

In January 2015, the Company began offering Secured Notes under a private placement memorandum pursuant to the requirements of Rule 506 of Regulation D. Under this offering, the Company may sell up to $80.0 million in Secured Notes to qualified investors.

The Company secures these notes by pledging either cash or loans receivable as collateral. The collateralization ratio is 100% on the pledged cash and 105% on the pledged loans receivable. Said another way, every dollar of cash collateralizes one dollar of secured notes and every $1.05 of loans receivable collateralizes one dollar of secured notes. At December 31, 2019 and December 31, 2018, the loans receivable collateral securing the Secured Notes had an outstanding balance of $13.02million and $10.9million, respectively. The December 31, 2019 and December 31, 2018 collateral balance was sufficient to satisfy the minimum collateral requirement of the Secured Notes offering. As of December 31, 2019 and December 31, 2018, the Company did not have cash pledged for the benefit of the Secured Notes. On December 31, 2017, the Company terminated its 2015 Secured Note offering.

Effective as of April 30, 2018, the Company launched a new $80 million secured note offering. The Company issued the 2018 Secured Note offering pursuant to a Loan and Security Agreement. This agreement includes the same terms and conditions previously set forth in its 2015 Secured Note offering. The offering will continue through April 30, 2020.

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Fair Value Measurements (Schedule of Fair Value Measured on a Nonrecurring Basis) (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Foreclosed assets (net of allowance and discount)	$ 301,000	$ 0
Fair Value Measured On A Nonrecurring Basis [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral-dependent loans (net of allowance and discount)	8,640,000	11,616,000
Investments in joint venture	891,000	887,000
Foreclosed assets (net of allowance and discount)	301,000
Total	9,531,000	12,503,000
Fair Value Measured On A Nonrecurring Basis [Member] | Significant Unobservable Inputs Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral-dependent loans (net of allowance and discount)	8,640,000	11,616,000
Investments in joint venture	891,000	887,000
Foreclosed assets (net of allowance and discount)	301,000
Total	$ 9,531,000	$ 12,503,000

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Office Operations and Other Expenses (Schedule of Office Operations and Other Expenses) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Office Operations and Other Expenses [Abstract]
Technology and communication expenses	$ 428	$ 439
Insurance	282	275
Lease and occupancy expense	206	166
Outsourced operations	190	34
Staff and travel expense	140	117
Loan expenses	110	71
Clearing firm fees	60	60
Other	67	62
Total	$ 1,483	$ 1,224

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Condensed Financial Statements of Parent Company (Schedule of Parent Company Balance Sheets) (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2015
Assets:
Cash	$ 25,993,000	$ 9,877,000
Loans receivable, net of allowance for loan losses	128,843,000	143,380,000
Accrued interest receivable	635,000	711,000
Investments in joint venture	891,000	887,000		$ 900,000
Property and equipment, net	216,000	87,000
Foreclosed assets, net	301,000	0
Servicing assets	100,000	212,000
Other assets	990,000	234,000
Total assets	158,021,000	155,439,000
Liabilities:
Term-debt	71,427,000	76,515,000
Notes payable, net of debt issuance costs	73,046,000	68,300,000
Accrued interest payable	266,000	249,000
Other liabilities	2,211,000	844,000
Total liabilities	146,950,000	145,908,000
Equity	11,071,000	9,531,000	$ 9,429,000
Total liabilities and members' equity	158,021,000	155,439,000
Ministry [Member]
Assets:
Cash	23,297,000	8,612,000
Loans receivable, net of allowance for loan losses	128,843,000	143,380,000
Accrued interest receivable	635,000	711,000
Investments in joint venture	891,000	887,000
Property and equipment, net	211,000	85,000
Foreclosed assets, net	301,000
Investments in subsidiaries	1,926,000	796,000
Due from subsidiaries	536,000	488,000
Servicing assets	100,000	212,000
Other assets	926,000	209,000
Total assets	157,666,000	155,380,000
Liabilities:
Term-debt	71,427,000	76,515,000
Notes payable, net of debt issuance costs	73,046,000	68,300,000
Accrued interest payable	266,000	249,000
Other liabilities	1,855,000	785,000
Total liabilities	146,594,000	145,849,000
Equity	11,072,000	9,531,000
Total liabilities and members' equity	$ 157,666,000	$ 155,380,000

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Loans Receivable and Allowance for Loan Losses (Schedule of Loan Portfolio Credit Quality Indicators by Class) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 131,049	$ 147,335
Wholly-Owned First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	124,157	137,289
Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,589	4,254
Participation First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,303	5,792
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	102,113	106,211
Pass [Member] | Wholly-Owned First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	96,674	100,140
Pass [Member] | Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,557	4,067
Pass [Member] | Participation First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,882	2,004
Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	20,093	27,523
Watch [Member] | Wholly-Owned First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	19,870	27,321
Watch [Member] | Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	32
Watch [Member] | Participation First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	191	202
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1,208
Special Mention [Member] | Wholly-Owned First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1,208
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	8,333	10,270
Substandard [Member] | Wholly-Owned First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	7,103	6,497
Substandard [Member] | Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		187
Substandard [Member] | Participation First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,230	3,586
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	510	2,123
Doubtful [Member] | Wholly-Owned First [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 510	$ 2,123

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Loans Receivable and Allowance for Loan Losses (Schedule of Troubled Debt Restructurings by Class) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) loan	Dec. 31, 2018 USD ($) item
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans | loan	6
Recorded Investment At Period End		$ 5,254
Wholly-Owned First [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded Investment At Period End		1,668
Participation First [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Recorded Investment At Period End		$ 3,586
Church Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans	6	4
Pre-Modification Outstanding Recorded Investment	$ 6,436	$ 5,343
Post-Modification Outstanding Recorded Investment	6,458	$ 5,264
Recorded Investment At Period End	$ 6,167
Church Loans [Member] | Wholly-Owned First [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans	5	2
Pre-Modification Outstanding Recorded Investment	$ 6,270	$ 1,748
Post-Modification Outstanding Recorded Investment	6,458	$ 1,668
Recorded Investment At Period End	$ 6,167
Church Loans [Member] | Participation First [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans	1	2
Pre-Modification Outstanding Recorded Investment	$ 166	$ 3,595
Post-Modification Outstanding Recorded Investment		$ 3,595

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Foreclosed Assets (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Foreclosed Assets [Abstract]
Foreclosed assets	$ 301,000	$ 0
Provision for losses	0
Allowance for losses on foreclosed assets	0
Provision for losses on foreclosed assets	$ 0

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Credit Facilities (Summary of Credit Facilities) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Line of Credit Facility [Line Items]
Interest Rate	0.0253%
Monthly Payment	$ 579
Maturity Date	Nov. 01, 2026
Loans Receivable [Member]
Line of Credit Facility [Line Items]
Amount of Collateral Pledged	$ 85,914

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Investor Notes Payable (Schedule of Maturities of Notes Payable) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total	$ 73,101	$ 68,392
Notes Payable [Member]
Debt Instrument [Line Items]
2020	21,562
2021	18,953
2022	10,761
2023	10,543
2024	11,282
Total	$ 73,101

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Loans Receivable and Allowance for Loan Losses (Summary of Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 131,049	$ 147,335
Deferred loan fees, net	(631)	(848)
Loan discount	(182)	(627)
Allowance for loan losses	(1,393)	(2,480)	$ (2,097)
Loans, net	128,843	143,380
Real Estate Secured [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	130,889	147,061
Unsecured [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 160	$ 274

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Related Party Transactions (Narrative) (Details) $ in Thousands				12 Months Ended
	Jun. 29, 2018 shares	May 04, 2017 shares	Aug. 14, 2013 USD ($) loan	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
ACCU [Member]
Related Party Transaction [Line Items]
Dollar amount of loans sold to related party					$ 554
UFCU [Member]
Related Party Transaction [Line Items]
Number of loans sold to related party | loan			1
Dollar amount of loans sold to related party			$ 5,000
Board and Executive Management [Member]
Related Party Transaction [Line Items]
Notes held by related parties				$ 368	$ 394
Minimum [Member] | MP Securities [Member]
Related Party Transaction [Line Items]
Related party servicing fee				0.25%
Maximum [Member] | MP Securities [Member]
Related Party Transaction [Line Items]
Related party servicing fee				5.50%
Class A Common Units [Member] | ACCU [Member]
Related Party Transaction [Line Items]
Shares purchased by related party | shares		12,000
Interest acquired		8.19%
Series A Preferred Stock [Member] | ACCU [Member]
Related Party Transaction [Line Items]
Shares purchased by related party | shares	2,000	12,000
Interest acquired	1.71%	10.25%
MP Securities [Member] | ACCU [Member] | Networking Agreement [Member]
Related Party Transaction [Line Items]
Notice period for termination of agreement				30 days

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Condensed Financial Statements of Parent Company (Tables)

12 Months Ended

Dec. 31, 2019

Condensed Financial Statements of Parent Company [Abstract]

Schedule of Parent Company Balance Sheets

	As of December 31,
	2019		2018
Assets:
Cash	$	23,297	$	8,612
Loans receivable, net of allowance for loan losses		128,843		143,380
Accrued interest receivable		635		711
Investments in joint venture		891		887
Property and equipment, net		211		85
Foreclosed assets, net		301		—
Investment in subsidiaries		1,926		796
Due from subsidiaries		536		488
Servicing assets		100		212
Other assets		926		209
Total assets	$	157,666	$	155,380
Liabilities and members’ equity
Liabilities:
Term-debt	$	71,427	$	76,515
Notes payable, net of debt issuance costs		73,046		68,300
Accrued interest payable		266		249
Other liabilities		1,855		785
Total liabilities		146,594		145,849
Equity		11,072		9,531
Total liabilities and members' equity	$	157,666	$	155,380

Schedule of Parent Company Statements of Income

	For the years ended
	December 31,
	2019		2018
Income:
Interest Income	$	10,144	$	9,207
Other income		154		920
Total income		10,298		10,127
Interest expense:
Term-debt		1,867		2,000
Notes payable		4,135		3,649
Total interest expense		6,002		5,649
Provision for loan losses		(544)		666
Other operating expenses		4,017		3,647
Income before provision for income taxes		823		165
Provision for income taxes and state LLC fees		12		8
Income before equity in undistributed net income of subsidiaries		811		157
Equity in undistributed net income of subsidiaries		1,190		320
Net income	$	2,001	$	477

Schedule of Parent Company Statements of Cash Flows

	For the years ended
	December 31,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,001	$	477
Adjustments to reconcile net income to net cash used by operating activities:
Equity in undistributed net income of subsidiaries		(1,190)		(320)
Depreciation		40		27
Amortization of deferred loan fees		(269)		(258)
Amortization of debt issuance costs		86		85
Provision (credit) for loan losses		(544)		666
Accretion of loan discount		(247)		(24)
Gain on sale of loans		—		(13)
Changes in:
Accrued interest receivable		76		31
Other assets		(418)		179
Accrued interest payable		17		41
Other liabilities		940		97
Net cash provided by operating activities		492		988
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases		(2,255)		(2,721)
Loan originations		(7,951)		(15,486)
Loan sales		—		5,414
Loan principal collections		25,324		17,817
Sale of property and equipment		4		—
Purchase of property and equipment		(170)		(13)
Net cash provided by investing activities		14,952		5,011
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in term-debt		(5,088)		(4,977)
Net change in notes payable		4,709		(696)
Debt issuance costs		(49)		(92)
Dividends paid on preferred units		(331)		(405)
Net cash (used) by financing activities		(759)		(6,170)
Net increase (decrease) in cash and restricted cash		14,685		(171)
Cash, cash equivalents, and restricted cash at beginning of period		8,612		8,783
Cash, cash equivalents, and restricted cash at end of period	$	23,297	$	8,612
Supplemental disclosures of cash flow information
Interest paid	$	5,046	$	4,795
Income taxes paid	$	20	$	23
Transfer of loans to foreclosed assets	$	479	$	—
Loans made to facilitate the sale of foreclosed assets	$	—	$	—
Dividends declared to preferred unit holders	$	—	$	107

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Retirement Plans

12 Months Ended

Dec. 31, 2019

Retirement Plans [Abstract]

Retirement Plans

Note 15. Retirement Plans

401(k)

All of the Company’s employees are eligible to participate in the Automated Data Processing, Inc. (“ADP”) 401(k) plan effective as of the date their employment commences. No minimum service is required and the minimum age is 21. Each employee may elect voluntary contributions not to exceed 86% of salary, subject to certain limits based on U.S. tax law. The plan has a matching program, which qualifies as a Safe Harbor 401(k) plan. As a Safe Harbor Section 401(k) plan, the Company matches each eligible employee’s contribution, dollar for dollar, up to 3% of the employee’s compensation, and 50% of the employee’s contribution that exceeds 3% of their compensation, up to a maximum contribution of 5% of the employee’s compensation. Company matching contributions for the years ended December 31, 2019 and 2018 were $66 thousand and $76 thousand, respectively.

Profit Sharing

The profit sharing plan is for all employees who, at the end of the calendar year, are at least 21 years old, still employed, and have at least 900 hours of service during the plan year. The Company’s Board of Managers determines the amount annually contributed on behalf of each qualified employee. The Company determines the amount by calculating it as a percentage of the eligible employee's annual earnings. Plan forfeitures are used to reduce the Company’s annual contribution. The Company did not make or approve a profit sharing contribution to the plan during the years ended year ended December 31, 2019

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Condensed Financial Statements of Parent Company

12 Months Ended

Dec. 31, 2019

Condensed Financial Statements of Parent Company [Abstract]

Condensed Financial Statements of Parent Company

Note 19. Condensed Financial Statements of Parent Company

Financial information pertaining only to the parent company, Ministry Partners Investment Company, LLC, is as follows (dollars in thousands):

Ministry Partners Investment Company, LLC Balance Sheet

	As of December 31,
	2019		2018
Assets:
Cash	$	23,297	$	8,612
Loans receivable, net of allowance for loan losses		128,843		143,380
Accrued interest receivable		635		711
Investments in joint venture		891		887
Property and equipment, net		211		85
Foreclosed assets, net		301		—
Investment in subsidiaries		1,926		796
Due from subsidiaries		536		488
Servicing assets		100		212
Other assets		926		209
Total assets	$	157,666	$	155,380
Liabilities and members’ equity
Liabilities:
Term-debt	$	71,427	$	76,515
Notes payable, net of debt issuance costs		73,046		68,300
Accrued interest payable		266		249
Other liabilities		1,855		785
Total liabilities		146,594		145,849
Equity		11,072		9,531
Total liabilities and members' equity	$	157,666	$	155,380

Ministry Partners Investment Company, LLC Statement of Income

	For the years ended
	December 31,
	2019		2018
Income:
Interest Income	$	10,144	$	9,207
Other income		154		920
Total income		10,298		10,127
Interest expense:
Term-debt		1,867		2,000
Notes payable		4,135		3,649
Total interest expense		6,002		5,649
Provision for loan losses		(544)		666
Other operating expenses		4,017		3,647
Income before provision for income taxes		823		165
Provision for income taxes and state LLC fees		12		8
Income before equity in undistributed net income of subsidiaries		811		157
Equity in undistributed net income of subsidiaries		1,190		320
Net income	$	2,001	$	477

Ministry Partners Investment Company, LLC Statement of Cash Flows

	For the years ended
	December 31,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,001	$	477
Adjustments to reconcile net income to net cash used by operating activities:
Equity in undistributed net income of subsidiaries		(1,190)		(320)
Depreciation		40		27
Amortization of deferred loan fees		(269)		(258)
Amortization of debt issuance costs		86		85
Provision (credit) for loan losses		(544)		666
Accretion of loan discount		(247)		(24)
Gain on sale of loans		—		(13)
Changes in:
Accrued interest receivable		76		31
Other assets		(418)		179
Accrued interest payable		17		41
Other liabilities		940		97
Net cash provided by operating activities		492		988
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases		(2,255)		(2,721)
Loan originations		(7,951)		(15,486)
Loan sales		—		5,414
Loan principal collections		25,324		17,817
Sale of property and equipment		4		—
Purchase of property and equipment		(170)		(13)
Net cash provided by investing activities		14,952		5,011
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in term-debt		(5,088)		(4,977)
Net change in notes payable		4,709		(696)
Debt issuance costs		(49)		(92)
Dividends paid on preferred units		(331)		(405)
Net cash (used) by financing activities		(759)		(6,170)
Net increase (decrease) in cash and restricted cash		14,685		(171)
Cash, cash equivalents, and restricted cash at beginning of period		8,612		8,783
Cash, cash equivalents, and restricted cash at end of period	$	23,297	$	8,612
Supplemental disclosures of cash flow information
Interest paid	$	5,046	$	4,795
Income taxes paid	$	20	$	23
Transfer of loans to foreclosed assets	$	479	$	—
Loans made to facilitate the sale of foreclosed assets	$	—	$	—
Dividends declared to preferred unit holders	$	—	$	107

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Loans Receivable and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2019

Loans Receivable and Allowance for Loan Losses [Abstract]

Summary of Loans

	December 31,		December 31,
	2019		2018
Loans to evangelical churches and related organizations:
Real estate secured	$	130,889	$	147,061
Unsecured		160		274
Total loans		131,049		147,335
Deferred loan fees, net		(631)		(848)
Loan discount		(182)		(627)
Allowance for loan losses		(1,393)		(2,480)
Loans, net	$	128,843	$	143,380

Schedule of Changes in Allowance for Loan Losses

	December 31,		December 31,
	2019		2018
Balance, beginning of period	$	2,480	$	2,097
Provision for loan loss		(544)		666
Chargeoffs		(923)		(283)
Recoveries		380		—
Balance, end of period	$	1,393	$	2,480

Schedule of Loans and Allowance for Loan Losses by Impairment Methodology

	Loans and Allowance for Loan Losses (by segment)
	As of
	December 31,		December 31,
	2019		2018
Loans:
Individually evaluated for impairment	$	8,843	$	13,601
Collectively evaluated for impairment		122,206		133,734
Balance	$	131,049	$	147,335
Allowance for loan losses:
Individually evaluated for impairment	$	175	$	1,463
Collectively evaluated for impairment		1,218		1,017
Balance	$	1,393	$	2,480

Schedule of Loan Portfolio Credit Quality Indicators by Class

Credit Quality Indicators (by class)
As of December 31, 2019
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	96,674	$	3,557	$	1,882	$	—	$	102,113
Watch		19,870		32		191		—		20,093
Special mention		—		—		—		—		—
Substandard		7,103		—		1,230		—		8,333
Doubtful		510		—		—		—		510
Loss		—		—		—		—		—
Total	$	124,157	$	3,589	$	3,303	$	—	$	131,049

Credit Quality Indicators (by class)
As of  December 31, 2018
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	100,140	$	4,067	$	2,004	$	—	$	106,211
Watch		27,321		—		202		—		27,523
Special mention		1,208		—		—		—		1,208
Substandard		6,497		187		3,586		—		10,270
Doubtful		2,123		—		—		—		2,123
Loss		—		—		—		—		—
Total	$	137,289	$	4,254	$	5,792	$	—	$	147,335

Schedule of Age Analysis of Past Due Loans by Class

Age Analysis of Past Due Loans (by class)
As of December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment 90 Days or more and Accruing
Church loans:
Wholly-Owned First	$	—	$	—	$	5,907	$	5,907	$	118,250	$	124,157	$	—
Wholly-Owned Junior		—		—		—		—		3,589		3,589		—
Participation First		—		—		—		—		3,303		3,303		—
Participation Junior		—		—		—		—		—		—		—
Total	$	—	$	—	$	5,907	$	5,907	$	125,142	$	131,049	$	—

Age Analysis of Past Due Loans (by class)
As of  December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment 90 Days or more and Accruing
Church loans:
Wholly-Owned First	$	3,259	$	—	$	5,804	$	9,063	$	128,226	$	137,289	$	—
Wholly-Owned Junior		187		—		—		187		4,067		4,254		—
Participation First		2,293		—		1,292		3,585		2,207		5,792		—
Participation Junior		—		—		—		—		—		—		—
Total	$	5,739	$	—	$	7,096	$	12,835	$	134,500	$	147,335	$	—

Schedule of Impaired Loans by Class

Impaired Loans (by class) As of December 31, 2019									For the year ended December 31, 2019
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	12,497	$	12,404	$	12,304	$	—	$	12,343	$	1,202
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		—		—		—		—		—		—
Participation Junior		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		290		290		290		110		973		—
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		1,294		1,230		1,230		65		1,263		—
Participation Junior		—		—		—		—		—		—
Total:
Church loans	$	14,081	$	13,924	$	13,824	$	175	$	14,579	$	1,202

Impaired Loans (by class) As of December 31, 2018									For the year ended December 31, 2018
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	5,734	$	5,687	$	5,694	$	—	$	5,915	$	123
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		2,293		2,293		2,316		—		2,312		—
Participation Junior		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		4,818		4,142		3,632		1,165		3,714		—
Wholly-Owned Junior		215		187		176		176		181		—
Participation First		1,302		1,292		1,292		122		1,299		10
Participation Junior		—		—		—		—		—		—
Total:
Church loans	$	14,362	$	13,601	$	13,110	$	1,463	$	13,421	$	133

Schedule of Loans on Nonaccrual Status by Class

Loans on Nonaccrual Status (by class)
	December 31, 2019		December 31, 2018
Church loans:
Wholly-Owned First	$	6,405	$	8,619
Wholly-Owned Junior		—		187
Participation First		1,230		1,292
Participation Junior		—		—
Total	$	7,635	$	10,098

Schedule of Troubled Debt Restructurings by Class

Troubled Debt Restructurings (by class)
For the year ended December 31, 2019
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		5	$	6,270	$	6,458	$	6,167
Wholly-Owned Junior		—		—		—		—
Participation First		1		166		—		—
Participation Junior		—		—		—		—
Total		6	$	6,436	$	6,458	$	6,167

Troubled Debt Restructurings (by class)
For the year ended December 31, 2018
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		2	$	1,748	$	1,668	$	1,668
Wholly-Owned Junior		—		—		—		—
Participation First		2		3,595		3,595		3,586
Participation Junior		—		—		—		—
Total		4	$	5,343	$	5,264	$	5,254

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Credit Facilities (Narrative) (Details)	Dec. 31, 2019 item
Line of Credit Facility [Line Items]
Number of credit facilities	2
Credit Facility One [Member]
Line of Credit Facility [Line Items]
Minimum collateralization ratio	110.00%
Credit Facility Two [Member]
Line of Credit Facility [Line Items]
Minimum collateralization ratio	110.00%
Credit Facilities One And Two [Member]
Line of Credit Facility [Line Items]
Minimum collateralization ratio	120.00%

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Investor Notes Payable (Schedule of Investor Notes Payable) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Amount	$ 73,101	$ 68,392
Weighted Average Interest Rate	4.12%	3.96%
Public Offerings [Member]
Debt Instrument [Line Items]
Amount	$ 55,317	$ 51,689
Weighted Average Interest Rate	3.92%	3.88%
Public Offerings [Member] | Class A [Member]
Debt Instrument [Line Items]
Amount	$ 487	$ 8,758
Weighted Average Interest Rate	4.20%	4.14%
Public Offerings [Member] | Class 1 [Member]
Debt Instrument [Line Items]
Amount	$ 22,098	$ 29,114
Weighted Average Interest Rate	4.02%	3.88%
Public Offerings [Member] | Class 1A [Member]
Debt Instrument [Line Items]
Amount	$ 32,732	$ 13,817
Weighted Average Interest Rate	3.85%	3.71%
Private Offerings [Member]
Debt Instrument [Line Items]
Amount	$ 17,784	$ 16,703
Weighted Average Interest Rate	4.74%	4.21%
Private Offerings [Member] | Subordinated Notes [Member]
Debt Instrument [Line Items]
Amount	$ 11,317	$ 7,533
Weighted Average Interest Rate	5.21%	4.68%
Private Offerings [Member] | Secured Notes [Member]
Debt Instrument [Line Items]
Amount	$ 6,467	$ 9,170
Weighted Average Interest Rate	3.92%	3.83%
Unsecured [Member]
Debt Instrument [Line Items]
Amount	$ 66,634	$ 59,222
Weighted Average Interest Rate	4.14%	3.98%
Secured [Member]
Debt Instrument [Line Items]
Amount	$ 6,467	$ 9,170
Weighted Average Interest Rate	3.92%	3.83%

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Related Party Transactions (Summary of Related Party Balances) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ECCU [Member]
Related Party Transaction [Line Items]
Total funds held on deposit	$ 365	$ 457
Loan participations purchased from and serviced by related party	1,495	5,109
ACCU [Member]
Related Party Transaction [Line Items]
Total funds held on deposit	10,343	5,675
Dollar amount of outstanding loan participations sold to related party and serviced by the Company		3,184
Loan participations purchased from and serviced by related party	$ 1,603	$ 1,662

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Nature of Business and Summary of Significant Accounting Policies (Narrative) (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) segment	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)
Significant Accounting Policies [Line Items]
Cash, net of demand deposits	$ 0		$ 0
Number of loan portfolio segments | segment	1
Accounting Standards Update 2016-02 [Member]
Significant Accounting Policies [Line Items]
Right-of-use assets		$ 680,000
Lease liabilities		$ 680,000
Minimum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives of property and equipment	3 years
Maximum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives of property and equipment	7 years

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Loans Receivable and Allowance for Loan Losses (Schedule of Changes in Allowance for Loan Losses) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Loans Receivable and Allowance for Loan Losses [Abstract]
Balance, beginning of period	$ 2,480	$ 2,097
Provision for loan loss	(544)	666
Chargeoffs	(923)	(283)
Recoveries	380
Balance, end of period	$ 1,393	$ 2,480

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2019

ECCU [Member]

Related Party Transaction [Line Items]

Summary of Related Party Balances

	December 31,		December 31,
	2019		2018
Total funds held on deposit at ECCU	$	365	$	457
Loan participations purchased from and serviced by ECCU		1,495		5,109

Schedule of Related Party Transactions

	Year ended
	December 31,
	2019		2018
Interest earned on funds held with ECCU	$	—	$	3
Interest income earned on loans purchased from ECCU		161		278
Fees paid to ECCU from MP Securities Networking Agreement		9		25
Income from Master Services Agreement with ECCU		14		54
Income from Successor Servicing Agreement with ECCU		9		9
Rent expense on lease agreement with ECCU		138		116

ACCU [Member]

Related Party Transaction [Line Items]

Summary of Related Party Balances

	December 31,		December 31,
	2019		2018
Total funds held on deposit at ACCU	$	10,343	$	5,675
Dollar outstanding loan participations sold to ACCU and serviced by the Company		—		3,184
Loan participations purchased from and serviced by ACCU		1,603		1,662

Schedule of Related Party Transactions

	Year ended
	December 31,
	2019		2018
Dollar amount of loans purchased from ACCU	$	1,435	$	—
Dollar amount of loans sold to ACCU		—		554
Interest earned on funds held with ACCU		159		69
Interest income earned on loans purchased from ACCU		84		86
Income from Master Services Agreement with ACCU		—		20
Fees paid based on MP Securities Networking Agreement with ACCU		45		56

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Preferred and Common Units Under LLC Structure

12 Months Ended

Dec. 31, 2019

Preferred and Common Units Under LLC Structure [Abstract]

Preferred And Common Units Under LLC Structure

Note 14. Preferred and Common Units Under LLC Structure

Holders of the Series A Preferred Units are entitled to receive a quarterly cash dividend that is 25 basis points higher than the one-year LIBOR rate in effect on the last day of the calendar month for which the preferred return is approved. The Company has also agreed to set aside an annual amount equal to 10% of its net profits earned for any year, after subtracting from profits the quarterly Series A Preferred Unit dividends paid, for distribution to its Series A Preferred Unit holders.

The Series A Preferred Units have a liquidation preference of $100 per unit and have novoting rights. They are also subject to redemption in whole or in part at the Company’s election on December 31 of any year for an amount equal to the liquidation preference of each unit, plus any accrued and declared but unpaid quarterly dividends and preferred distributions on such units. The Series A Preferred Units have priority as to earnings and distributions over the Common Units. The resale of the Company’s Series A Preferred Units and Common Units are subject to the Company’s first right of refusal to purchase units proposed to be transferred. Upon the Company’s failure to pay quarterly dividends for four consecutive quarters, the holders of the Series A Preferred Units have the right to appoint two managers to its Board of Managers.

The Class A Common Units have voting rights, but have no liquidation preference or rights to dividends, unless declared.

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Segment Information

12 Months Ended

Dec. 31, 2019

Segment Information [Abstract]

Segment Information

Note 18. Segment Information

The Company's reportable segments are strategic business units that offer different products and services. The Company manages the segments separately because each business requires different management, personnel proficiencies, and marketing strategies.

The Company hastworeportable segments that represent the primary businesses reported in the consolidated financial statements: the finance company (the parent company), and the investment advisor and insurance firm (MP Securities). The finance company segment uses funds from the sale of debt securities, income from operations, and the sale of loan participations to originate or purchase mortgage loans. The finance company also services loans. MP Securities generates fee income by selling debt securities and other investment and insurance products, as well as providing investment advisory and financial planning services.

The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies. Management accounts for intersegment revenues and expenses at amounts that assume the Company entered into the transaction with unrelated third parties at the current market prices at the time of the transaction. Management evaluates the performance of each segment based on net income or loss before provision for income taxes and LLC fees.

Financial information with respect to the reportable segments for the year ended December 31, 2019 is as follows (dollars in thousands):

	Finance Company		Broker Dealer		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	10,289	$	2,304	$	316	$	(1,194)	$	11,715
Total non interest expense and prov. for tax		4,020		1,177		(2)		—		5,195
Net profit (loss)		811		1,126		318		(254)		2,001
Total assets		155,180		2,506		371		(36)		158,021

Financial information with respect to the reportable segments for the year ended December 31, 2018 is as follows (dollars in thousands):

	Finance Company		Broker Dealer		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	10,126	$	1,189	$	—	$	(663)	$	10,652
Total non interest expense and prov. for tax		3,655		995		23		—		4,673
Net profit (loss)		157		194		(23)		149		477
Total assets		154,072		1,307		55		5		155,439

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Investor Notes Payable (Tables)

12 Months Ended

Dec. 31, 2019

Debt Instrument [Line Items]

Schedule of Investor Notes Payable

		As of				As of
		December 31, 2019				December 31, 2018
SEC Registered Public Offerings	Offering Type	Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Class A Offering	Unsecured	$	487	4.20	%	$	8,758	4.14	%
Class 1 Offering	Unsecured		22,098	4.02	%		29,114	3.88	%
Class 1A Offering	Unsecured		32,732	3.85	%		13,817	3.71	%
Public Offering Total		$	55,317	3.92	%	$	51,689	3.88	%
Private Offerings
Special Subordinated Notes	Unsecured		11,317	5.21	%		7,533	4.68	%
Secured Notes	Secured		6,467	3.92	%		9,170	3.83	%
Private Offering Total		$	17,784	4.74	%	$	16,703	4.21	%
Total Notes Payable		$	73,101	4.12	%	$	68,392	3.96	%
Notes Payable Totals by Security
Unsecured Total	Unsecured	$	66,634	4.14	%	$	59,222	3.98	%
Secured Total	Secured	$	6,467	3.92	%	$	9,170	3.83	%

Notes Payable [Member]

Debt Instrument [Line Items]

Schedule of Maturities of Notes Payable

2020	$	21,562
2021		18,953
2022		10,761
2023		10,543
2024		11,282
	$	73,101

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Pledge of Cash and Restricted Cash

12 Months Ended

Dec. 31, 2019

Pledge of Cash and Restricted Cash [Abstract]

Pledge of Cash and Restricted Cash

Note 2. Pledge of Cash and Restricted Cash

Under the terms of its debt agreements, the Company has the ability to pledge cash as collateral for its borrowings. This cash is restricted cash. At December 31, 2019 and December 31, 2018, the Company held no pledged cash.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows (dollars in thousands):

	December 31,
	2019		2018
Cash and cash equivalents	$	25,993	$	9,877
Restricted cash		52		51
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	26,045	$	9,928

Amounts included in restricted cash represent those required to be set aside with the Central Registration Depository ("CRD") account with FINRA, as well as funds the Company has deposited with RBC Dain as clearing deposits. The CRD funds may only be used for fees charged by FINRA to maintain the membership status of the Company or for fees related to registered and associated persons of the Company.

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Loan Sales (Tables)

12 Months Ended

Dec. 31, 2019

Loan Sales [Abstract]

Schedule of Servicing Assets

	For the years ended
	December 31,		December 31,
	2019		2018
Participation loans interests sold by the Company during the year	$	—	$	4,254
Total participation interests sold and serviced by the company		26,964		36,706
Servicing income		100		160
Servicing Assets
Balance, beginning of period	$	212	$	270
Additions:
Servicing obligations from sale of loan participations		—		21
Subtractions:
Amortization		(112)		(79)
Balance, end of period	$	100	$	212

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2019

Segment Information [Abstract]

Schedule of Financial Information by Reportable Segments

	Finance Company		Broker Dealer		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	10,289	$	2,304	$	316	$	(1,194)	$	11,715
Total non interest expense and prov. for tax		4,020		1,177		(2)		—		5,195
Net profit (loss)		811		1,126		318		(254)		2,001
Total assets		155,180		2,506		371		(36)		158,021

Financial information with respect to the reportable segments for the year ended December 31, 2018 is as follows (dollars in thousands):

	Finance Company		Broker Dealer		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	10,126	$	1,189	$	—	$	(663)	$	10,652
Total non interest expense and prov. for tax		3,655		995		23		—		4,673
Net profit (loss)		157		194		(23)		149		477
Total assets		154,072		1,307		55		5		155,439

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Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Interest income:
Interest on loans	$ 9,812	$ 9,112
Interest on interest-bearing accounts	343	96
Total interest income	10,155	9,208
Interest expense:
Term-debt	1,867	2,000
Notes payable	3,196	2,836
Total interest expense	5,063	4,836
Net interest income	5,092	4,372
Provision (credit) for loan losses	(544)	666
Net interest income after provision for loan losses	5,636	3,706
Non-interest income:
Broker-dealer commissions and fees	1,415	523
Other income	154	921
Total non-interest income	1,569	1,444
Non-interest expenses:
Salaries and benefits	2,810	2,695
Marketing and promotion	275	140
Office occupancy	177	153
Office operations and other expenses	1,483	1,224
Foreclosed assets, net	97
Legal and accounting	343	441
Total non-interest expenses	5,185	4,653
Income before provision for income taxes	2,020	497
Provision for income taxes and state LLC fees	19	20
Net income	$ 2,001	$ 477

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Revenue Recognition

12 Months Ended

Dec. 31, 2019

Revenue Recognition [Abstract]

Revenue Recognition

Note 6. Revenue Recognition

The Company recognizes two primary types of revenue: interest income and non-interest income. The following tables reflect the Company’s non-interest income disaggregated by financial statement line item. Items outside of scope of ASC 606 are noted as such (dollars in thousands):

	December 31,
	2019		2018
Non-interest income
Wealth advisory fees	$	338	$	231
Investment brokerage fees		1,077		292
Lending fees (1)		124		838
Lease income		8		—
Other non-interest income		22		83
Total non-interest income	$	1,569	$	1,444
(1) Not within scope of ASC 606

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Credit Facilities

12 Months Ended

Dec. 31, 2019

Credit Facilities and Investor Notes Payable [Abstract]

Credit Facilities

Note 10. Credit Facilities

The Company has two secured credit facilities. The facilities are non-revolving and do not have an option to renew or extend additional credit. Additionally, the facilities do not contain a prepayment penalty. Under the terms of the credit facilities, the Company must maintain a minimum collateralization ratio of at least 110% for each of the individual facilities (120% for the combined facilities). If at any time the Company fails to maintain its required minimum collateralization ratio, it will be required to deliver cash or qualifying mortgage loans in an amount sufficient to enable us to meet its obligation to maintain a minimum collateralization ratio. In total, the collateral securing both facilities at December 31, 2019 and 2018 satisfied the 120% minimum. In addition, the collateral securing both facilities at December 31, 2019 and 2018 separately satisfied the 110% minimum. As of December 31, 2019 and 2018, the Company has only pledged qualifying mortgage loans as collateral on the credit facilities.

In addition, the credit facilities include a number of borrower covenants. The Company is following these covenants as of December 31, 2019 and December 31, 2018, respectively.

The following table summarizes the principal terms the Company’s credit facilities as of December 31, 2019 (dollars in millions):

Nature of Borrowing

Interest Rate

Interest Rate Type

Monthly Payment

Maturity Date

Loan Collateral Pledged

Cash Pledged

Term-debt

2.53%

Fixed

579

11/1/2026

85,914

—

Future principal contractual payments of the Company’s borrowings from financial institutions during the twelve-month periods ending December 31, are as follows (dollars in thousands):

2020	$	5,164
2021		5,341
2022		5,477
2023		5,617
2024		5,757
Thereafter		44,071
	$	71,427

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Fair Value Measurements (Schedule of Activity in Level 3 Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Impaired Loans [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 11,616	$ 6,135
Changes in allowance and discount	1,764	(306)
Loans that became impaired		7,620
Transfer of loans into foreclosed assets	(479)
Loans no longer considered collateral dependent	(1,232)
Loans that became collateral dependent	1,936
Loan payments, payoffs, sales, and charge-offs	(4,965)	(1,833)
Ending Balance	8,640	11,616
Joint Venture [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	887	896
Pro rata share of joint venture income	4	(9)
Ending Balance	891	$ 887
Foreclosed Assets [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Transfer of loans into foreclosed assets	479
Transfer of foreclosed assets to other assets	(178)
Ending Balance	$ 301

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Preferred and Common Units Under LLC Structure (Narrative) (Details)	12 Months Ended
	Dec. 31, 2019 item / shares item $ / shares	Dec. 31, 2018 $ / shares
Class of Stock [Line Items]
Liquidation preference, per share | $ / shares	$ 100	$ 100
Series A Preferred Units [Member]
Class of Stock [Line Items]
Spread over LIBOR	0.25%
Interest rate measurement period	1 year
Preferred stock, dividend payment rate	10%
Liquidation preference, per share | $ / shares	$ 100
Number of voting rights | item / shares	0
Threshold of number of consecutive quarters without paid preferred return for appointment of managers | item	4
Number of managers that can be appointed after threshold for period of unpaid preferred returns reached | item	2

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Condensed Financial Statements of Parent Company (Schedule of Parent Company Statements of Income) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income:
Interest Income	$ 10,155	$ 9,208
Other income	1,569	1,444
Total income	11,715	10,652
Interest expense:
Term-debt	1,867	2,000
Notes payable	3,196	2,836
Total interest expense	5,063	4,836
Provision for loan losses	(544)	666
Other operating expenses	67	62
Income before provision for income taxes	2,020	497
Provision for income taxes and state LLC fees	19	20
Net income	2,001	477
Ministry [Member]
Income:
Interest Income	10,144	9,207
Other income	154	920
Total income	10,298	10,127
Interest expense:
Term-debt	1,867	2,000
Notes payable	4,135	3,649
Total interest expense	6,002	5,649
Provision for loan losses	(544)	666
Other operating expenses	4,017	3,647
Income before provision for income taxes	823	165
Provision for income taxes and state LLC fees	12	8
Income before equity in undistributed net income of subsidiaries	811	157
Equity in undistributed net income of subsidiaries	1,190	320
Net income	$ 2,001	$ 477

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Loan Sales (Schedule of Servicing Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Loan participation interests sold by the Company		$ 4,254
Total participation interests sold and serviced by the company	$ 26,964	36,706
Total non-interest income	1,569	1,444
Balance, beginning of period	212	270
Additions: Servicing obligations from sale of loan participations		21
Subtractions: Amortization	(112)	(79)
Balance, end of period	100	212
Servicing [Member]
Total non-interest income	$ 100	$ 160

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Loans Receivable and Allowance for Loan Losses (Schedule of Loans and Allowance for Loan Losses by Impairment Methodology) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Loans Receivable and Allowance for Loan Losses [Abstract]
Loans: Individually evaluated for impairment	$ 8,843	$ 13,601
Loans: Collectively evaluated for impairment	122,206	133,734
Loans: Balance	131,049	147,335
Allowance for loan losses: Individually evaluated for impairment	175	1,463
Allowance for loan losses: Collectively evaluated for impairment	1,218	1,017
Allowance for loan losses: Balance	$ 1,393	$ 2,480	$ 2,097

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Loans Receivable and Allowance for Loan Losses (Schedule of Loans on Nonaccrual Status by Class) (Details) - Church Loans [Member] - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	$ 7,635	$ 10,098
Wholly-Owned First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	6,405	8,619
Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans		187
Participation First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	$ 1,230	$ 1,292

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Loans Receivable and Allowance for Loan Losses (Narrative) (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) segment loan item	Dec. 31, 2018
Loans Receivable and Allowance for Loan Losses [Abstract]
Number of loan categories | item	4
Loan interest rate	0.07%	6.31%
Number of loan portfolio segments | segment	1
Number of restructured loans	6
Troubled debt restructurings that subsequently defaulted, number of loans	0
Number of defaulted restructured loans being considered for forbearance	1
Funds committed to be advanced in connection with impaired loans | $	$ 0

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Pledge of Cash and Restricted Cash (Reconciliation of Cash, Cash Equivalents, and Restricted Cash) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Pledge of Cash and Restricted Cash [Abstract]
Cash and cash equivalents	$ 25,993	$ 9,877
Restricted Cash	52	51
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$ 26,045	$ 9,928	$ 9,965

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Foreclosed Assets (Foreclosed Asset Expenses) (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)
Foreclosed Assets [Abstract]
Provision for losses	$ 0
Operating expenses, net of rental income	97,000
Net expense (income)	$ 97,000

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Credit Facilities (Schedule of Maturities of Credit Facilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Line of Credit Facility [Line Items]
Total	$ 73,101	$ 68,392
Credit Facilities [Member]
Line of Credit Facility [Line Items]
2020	5,164
2021	5,341
2022	5,477
2023	5,617
2024	5,757
Thereafter	44,071
Total	$ 71,427

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Commitments and Contingencies (Narrative) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) item
Commitments And Contingencies [Line Items]
Loss contingency accrual | $	$ 30
Brea [Member]
Commitments And Contingencies [Line Items]
Lease renewal term	5 years
Number of lease extension options remaining	0
Fresno [Member]
Commitments And Contingencies [Line Items]
Lease expiration year	2020
Number of lease extension options remaining	0

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Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 16. Fair Value Measurements

Fair Value Measurements Using Fair Value Hierarchy

The Company classifies measurements of fair value within a hierarchy based upon inputs that give the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

· Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2 inputs include:

o quoted prices for similar assets and liabilities in active markets,

o quoted prices for identical assets and liabilities in inactive markets,

o inputs that are observable for the asset or liability (such as interest rates, prepayment speeds, credit risks, etc.);

o or inputs that are derived principally from or corroborated by observable market data by correlation or by other means.

· Level 3 inputs are unobservable and reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Fair Value of Financial Instruments

The following tables show the carrying amounts and estimated fair values of the Company’s financial instruments (dollars in thousands):`

			Fair Value Measurements at December 31, 2019 using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
FINANCIAL ASSETS:
Cash	$	25,993	$	25,993	$	—	$	—	$	25,993
Loans, net		128,843		—		—		126,438		126,438
Investments in joint venture		891		—		—		891		891
Accrued interest receivable		635		—		—		635		635
FINANCIAL LIABILITIES:
Term-debt	$	71,427	$	—	$	—	$	55,072	$	55,072
Notes payable		73,046		—		—		74,592		74,592
Other financial liabilities		503		—		—		503		503

			Fair Value Measurements at December 31, 2018 using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
FINANCIAL ASSETS:
Cash	$	9,877	$	9,877	$	—	$	—	$	9,877
Loans, net		143,380		—		—		140,989		140,989
Investments in joint venture		887		—		—		887		887
Accrued interest receivable		711		—		—		711		711
FINANCIAL LIABILITIES:
Term-debt	$	76,515	$	—	$	—	$	57,386	$	57,386
Notes payable		68,300		—		—		68,865		68,865
Other financial liabilities		356		—		—		356		356

Management uses judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 2019 and December 31, 2018.  

The Company used the following methods and assumptions to estimate the fair value of financial instruments:

Cash – The carrying amounts reported in the balance sheets approximate fair value for cash.

Loans – Management estimates fair value by discounting the future cash flows of the loans. The discount rate the Company uses is the current average rates at which it would make loans to borrowers with similar credit ratings and for the same remaining maturities.

Investments – Management estimates fair value by analyzing the operations and marketability of the underlying investment to determine if the investment is other-than-temporarily impaired.

Investor Notes Payable – Management estimates the fair value of fixed maturity notes by discounting the future cash flows of the notes. The discount rate the Company uses is the rates currently offered for investor notes payable of similar remaining maturities. Company management estimates the discount rate by using market rates that reflect the interest rate risk inherent in the notes.

Term-debt – Management estimates the fair value of borrowings from financial institutions discounting the future cash flows of the borrowings. The discount rate the Company uses is the current incremental borrowing rates for similar types of borrowing arrangements. Company management estimates the discount rate by using market rates that reflect the interest rate risk inherent in the notes.

Off-Balance Sheet Instruments – Management determines the fair value of loan commitments on fees currently charged to enter into similar agreements, taking into account the remaining term of the agreements and the counterparties' credit standing. The fair value of loan commitments is insignificant at December 31, 2019 and December 31, 2018.

Fair Value Measured on a Nonrecurring Basis

The Company measures certain assets at fair value on a nonrecurring basis. On these assets, the Company only makes fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the fair value of assets measured on a nonrecurring basis (dollars in thousands):

	Fair Value Measurements Using:
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets at December 31, 2019:
Collateral-dependent loans (net of allowance and discount)		$	—	$	—	$	8,640	$	8,640
Investments in joint venture			—		—		891		891
Foreclosed assets (net of allowance)			—		—		301		301
Total		$	—	$	—	$	9,531	$	9,531
Assets at December 31, 2018:
Collateral-dependent loans (net of allowance and discount)		$	—	$	—	$	11,616	$	11,616
Investments in joint venture			—		—		887		887
Total		$	—	$	—	$	12,503	$	12,503

Activity in Level 3 assets is as follows for the year ended years ended December 31, 2019 and 2018(dollars in thousands):

	Impaired loans (net of allowance and discount)
Balance, December 31, 2018	$	11,616
Changes in allowance and discount		1,764
Transfer of loans into foreclosed assets		(479)
Loans no longer considered collateral dependent		(1,232)
Loans that became collateral dependent		1,936
Loan payments, payoffs, sales, and charge-offs		(4,965)
Balance, December 31, 2019	$	8,640

	Investments in joint venture (net of allowance and discount)
Balance, December 31, 2018	$	887
Pro rata share of joint venture income		4
Balance, December 31, 2019	$	891

	Foreclosed assets
	(net of allowance and discount)
Balance, December 31, 2018	$	--
Transfer of loans into foreclosed assets		479
Transfer of foreclosed assets to other assets		(178)
Balance, December 31, 2019	$	301

	Impaired loans (net of allowance and discount)
Balance, December 31, 2017	$	6,135
Re-classifications of assets from Level 3 into Level 2		—
Changes in allowance and discount		(306)
Loans no longer considered impaired		—
Loans that became impaired		7,620
Loan payments, payoffs, sales, and charge-offs		(1,833)
Balance, December 31, 2018	$	11,616

	Investments in joint venture (net of allowance and discount)
Balance, December 31, 2017	$	896
Pro rata share of joint venture income		(9)
Balance, December 31, 2018	$	887

Impaired Loans

Collateral-dependent impaired loans are carried at the fair value of the collateral less estimated costs to sell, incorporating assumptions that experienced parties might use in estimating the value of such collateral. The fair value of collateral is determined based on appraisals. In some cases, the Company has adjusted the appraised values for various factors including age of the appraisal, age of comparable properties included in the appraisal, and known changes in the market and in the collateral. When the Company has made significant adjustments based on unobservable inputs, management categorizes the resulting fair value measurement as a Level 3 measurement. Otherwise, the Company categorizes collateral-dependent impaired loans under Level 2.

Foreclosed Assets

The Company initially records real estate acquired through foreclosure or other proceedings (foreclosed assets) at fair value at the date of foreclosure less estimated costs of disposal, which establishes a new cost. After foreclosure, management periodically performs valuations on foreclosed assets. The company carries foreclosed assets held for sale at the lower of cost or fair value, less estimated costs of disposal. The fair values of real properties initially are determined based on appraisals. In some cases, management adjusts the appraised values for various factors including age of the appraisal, age of comparable properties included in the appraisal, and known changes in the market or in the collateral. The Company makes subsequent valuations of the real properties based either on management estimates or on updated appraisals. If management makes significant adjustments to appraised values based on unobservable inputs, the Company categorizes foreclosed assets under Level 3. Otherwise, if management bases the foreclosed assets’ value on recent appraisals and the only adjustments made are for known contractual selling costs, the Company will categorize the foreclosed assets under Level 2.

The table below summarizes the valuation methodologies used to measure the fair value adjustments for Level 3 assets recorded at fair value on a nonrecurring basis (dollars in thousands):

December 31, 2019
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans	$	8,640	Discounted appraised value	Selling cost / Estimated market decrease	21% - 81%  (23%)
Investments in joint venture	$	891	Internal evaluations	Estimated future market value	0%  (0%)
Foreclosed assets	$	301	Internal evaluations	Selling cost	6%  (6%)

December 31, 2018
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans	$	11,616	Discounted appraised value	Selling cost / Estimated market decrease	15% - 72%  (33%)
Investment in joint venture	$	887	Internal evaluations	Estimated future market value	0%  (0%)

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Nature of Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Nature of Business and Summary of Significant Accounting Policies [Abstract]

Nature of Business

Nature of Business

Throughout these notes to consolidated financial statements, we refer to Ministry Partners Investment Company, LLC and its subsidiaries as “the Company.” The Company was formed in California in 1991. The Company’s primary operations are financing commercial real property secured loans and providing investment services for the benefit of evangelical churches, ministries, and individuals. The Company funds its operations primarily through the sale of debt securities.

The Company’s wholly owned subsidiaries are:

· Ministry Partners Funding, LLC (“MPF”);

· MP Realty Services, Inc., a California corporation (“MP Realty”);

· Ministry Partners Securities, LLC, a Delaware limited liability company (“MP Securities”); and

· Ministry Partners for Christ, Inc., a not-for-profit Delaware corporation (“MPC”).

The Company formed MPF in 2007 and then deactivated the subsidiary on November 30, 2009. In December 2014, the Company reactivated MPF to enable it to serve as collateral agent for loans held as collateral for its Secured Investment Certificates. The Company formed MP Realty in November 2009, and obtained a license to operate as a corporate real estate broker through the California Department of Real Estate on February 23, 2010. MP Realty has conducted limited operations to date. The Company formed MP Securities on April 26, 2010 to provide investment and financing solutions for individuals, churches, charitable institutions, and faith-based organizations. MP Securities acts as the selling agent for the Company’s public and private placement notes investor notes.

The Company formed MPC on December 28, 2018 to be used exclusively for religious and charitable purposes within the meaning of Section 501(c)(3) of the U.S. Internal Revenue Code of 1986. MPC is a not-for-profit corporation formed and organized as a private foundation under Delaware law that will make charitable grants to Christian education, and provide accounting, consulting, and financial expertise to aid evangelical Christian ministries. Although the Company has made an initial cash contribution to launch the private foundation, MPC had not yet begun activities as of December 31, 2019. On August 23, 2019, the Internal Revenue Service granted MPC tax-exempt status as a private foundation under Section 501(c)(3) of the Internal Revenue Code.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Ministry Partners Investment Company, LLC and its wholly owned subsidiaries. Management eliminates all significant inter‑company balances and transactions in consolidation.

Conversion to LLC

Conversion to LLC

Effective as of December 31, 2008, the Company converted its form of organization from a corporation organized under California law to a limited liability company organized under the laws of the State of California. With the filing of Articles of Organization-Conversion with the California Secretary of State, the separate existence of Ministry Partners Investment Corporation ceased and the entity continued by operation of law under the name Ministry Partners Investment Company, LLC.

Since the conversion became effective, a group of managers provides oversight of the Company’s affairs. The managers have full, exclusive, and complete discretion, power, and authority to oversee the management of Company affairs. As an LLC, the Company’s managers and members have entered into an Operating Agreement that governs the Company’s management structure and governance procedures.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. The Company had demand deposits and money market deposit accounts as of December 31, 2019. The Company had no cash positions other than demand deposits as of December 31, 2019 and December 31, 2018.  

The National Credit Union Insurance Fund insures a portion of the Company’s cash held at credit unions and the Federal Deposit Insurance Corporation insures a portion of cash held by the Company at other financial institutions. The Company keeps cash that may exceed insured limits. Management does not expect to incur losses in these cash accounts.

The Company maintains cash accounts with RBC Dain as part of its clearing agreement, and with the Central Registration Depository for regulatory purposes. The cash in these accounts is considered restricted cash and is classified as such on our balance sheet.

Reclassifications

Reclassifications

The Company has made certain reclassifications to the 2018 financial statements to conform to the 2019 presentation. These reclassifications do not affect member’s equity or net income for the year ended December 31, 2018

Use of Estimates

Use of Estimates

The Company’s creation of consolidated financial statements that conform to United States Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates govern areas such as the allowance for credit losses and the fair value of financial instruments. Actual results could differ from these estimates.

Investments in Joint Venture

Investments in Joint Venture

On a periodic basis, management analyzes the Company’s investment in a joint venture for impairment by comparing the carrying value of the investment to the estimated value of the underlying real property. Management records any impairment charges as a valuation allowance against the value of the asset. The Company’s share of income and expenses of the joint venture will increase or decrease the Company’s investment and will be recorded on the income statement as realized gains or losses on investment.

Loans Receivable

Loans Receivable

The Company reports loans that management has the intent and ability to hold for the foreseeable future at their outstanding unpaid principal balance adjusted for an allowance for loan losses, deferred loan fees and costs, and loan discounts.

Interest Accrual on Loans Receivable

The Company accrues loan interest income daily. Management defers loan origination fees and costs generated in making a loan. The Company amortizes these fees and costs as an adjustment to the related loan yield using the interest method.

Loan discounts are interest accrued and unpaid which the Company added to loan principal balances when it restructured the loan. The Company does not accrete discounts to income on impaired loans. However, when management determines that a previously impaired loan is no longer impaired, the Company begins accreting loan discounts to interest income over the term of the restructured loan. For loans purchased from third parties, loan discounts also are the differences between the purchase price and the recorded principal balance of the loan. The Company accretes these discounts to interest income over the term of the loan using the interest method.

Management considers a loan impaired if it concludes the collection of principal or interest according to the terms of the loan agreement doubtful. The Company stops the accrual of interest when management determines the loan is impaired.

For loans that the Company places on nonaccrual status, management reverses all uncollected accrued interest against interest income. Management accounts for the interest on these loans on the cash basis or cost-recovery method until the loan qualifies for return to accrual status. It is not until all the principal and interest amounts contractually due are brought current and future payments are reasonably assured that the Company returns a loan to accrual status.

Allowance for Loan Losses

Allowance for Loan Losses

The Company sets aside an allowance for loan losses by charging the provision for loan losses account on the Company’s consolidated statements of income. This charge decreases the Company’s earnings. Management charges off the part of loan balances it believes it will not collect against the allowance. The Company credits subsequent recoveries, if any, to the allowance.

Loan Portfolio Segments and Classes

Management separates the loan portfolio into portfolio segments for purposes of evaluating the allowance for loan losses. A portfolio segment is defined as the level at which the Company develops and documents a systematic method for determining its allowance for loan losses. The Company segments the loan portfolio based on loan types and the underlying risk factors present in each loan type. Management periodically reviews and revises such risk factors, as it considers appropriate.

The Company’s loan portfolio consists of one segment – church loans. Management has segregated the loan portfolio into the following portfolio classes:

Loan Class	Class Description
Wholly-Owned First Collateral Position	Wholly-owned loans and the retained portion of loans originated by the Company and sold for which the Company possesses a senior lien on the collateral underlying the loan.
Wholly-Owned Junior Collateral Position	Wholly-owned loans and the retained portion of loans originated by the Company and sold for which the Company possesses a lien on the underlying collateral that is superseded by another lien on the same collateral.  This class also contains any loans that are not secured.  These loans present higher credit risk than loans for which the Company possesses a senior lien due to the increased risk of loss should the loan default.
Participations First Collateral Position	Participated loans purchased from another financial entity for which the Company possesses a senior lien on the collateral underlying the loan. Loan participations purchased may present higher credit risk than wholly owned loans because disposition and direction of actions regarding the management and collection of the loans must be coordinated and negotiated with the other participants, whose best interests regarding the loan may not align with those of the Company.
Participations Junior Collateral Position	Participated loans purchased from another financial entity for which the Company possesses a lien on the underlying collateral that is superseded by another lien on the same collateral.  Loan participations in the junior collateral position loans have higher credit risk than wholly owned loans and participated loans purchased where the Company possesses a senior lien on the collateral.  The increased risk is the result of the factors presented above relating to both junior lien positions and participations.

Allowance for Loan Loss Evaluation

Management evaluates the allowance for loan losses on a regular basis. The Company establishes the allowance for loan losses based upon its periodic review of several factors management believes influences the collectability of the loans, including:

· the Company’s loss history;

· the characteristics and volume of the loan portfolio;

· adverse conditions that may affect the borrower’s ability to repay;

· the estimated value of any secured collateral; and

· the current economic conditions.

This evaluation is subjective, as it requires estimates that are subject to significant revision as more information becomes available.

The allowance consists of general and specific components. The general component covers non-classified loans. Management bases the general reserve on the Company’s loss history adjusted for qualitative factors. These qualitative factors are significant factors management considers likely to cause estimated credit losses associated with the Company’s existing portfolio to differ from its historical loss experience. Management adjusts these factors on an on-going basis, some of which include:

· changes in lending policies and procedures, including changes in underwriting standards and collection;

· changes in national, regional, and local economic and industry conditions that affect the collectability of the portfolio;

· changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans;

· changes in the value of the collateral for collateral-dependent loans; and

· the effect of credit concentrations.

Loans that management has classified as impaired receive a specific reserve. For such loans, an allowance is established when the carrying value of that loan is higher than the amount management expects to receive. Management uses multiple approaches to determine the amount the Company expects to receive. These include the discounted cash flow method, using the loan’s underlying collateral value, or using the observable market price of the impaired loan.

Impairment Analysis

All loans in the loan portfolio are subject to impairment analysis. The Company reviews its loan portfolio monthly by examining several data points. These include reviewing delinquency reports, any new information related to the financial condition of its borrowers, and any new appraisal or other collateral valuation. Through this process, the Company identifies potential impaired loans. Management generally deems a loan is impaired when current facts and circumstances indicate that it is probable that a borrower will be unable to make payments according to the loan agreement. If management has not already deemed a loan impaired, it will classify the loan as non-accrual when it becomes 90 days or more past due.

Management considers several factors when determining impairment status. These factors include the loan’s payment status, the value of any secured collateral, and the probability of collecting scheduled payments when due. Management generally does not classify loans that experience minor payment delays or shortfalls as impaired. Management determines the significance of payment delays or shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower. These circumstances include the length and reasons for the delay, the borrower's payment history, and the amount of the shortfall in relation to the principal and interest owed.

Management measures impairment on a loan-by-loan basis using one of three methods:

· the present value of expected future cash flows discounted at the loan's effective interest rate;

· the obtainable market price; or

· the fair value of the collateral if the loan is collateral-dependent.

Troubled Debt Restructurings

A troubled debt restructuring is a loan for which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to a borrower that the Company would not otherwise consider. A restructuring of a loan usually involves an interest rate modification, extension of the maturity date, payment reduction, or reduction of accrued interest owed on the loan on a contingent or absolute basis.

Management considers loans that it renews at below-market terms to be troubled debt restructurings if the below-market terms represent a concession due to the borrower’s troubled financial condition. The Company classifies troubled debt restructurings as impaired loans. For the loans that are not considered to be collateral-dependent, management measures troubled debt restructurings at the present value of estimated future cash flows using the loan's effective rate at start of the loan. The Company reports the change in the present value of cash flows related to the passage of time as interest income. If the loan is considered to be collateral-dependent, impairment is measured based on the fair value of the collateral.

Loan Charge-offs

Management charges off loans or portions thereof when it determines the loans or portions of the loans are uncollectible. The Company evaluates collectability periodically on all loans classified as “Loans of Lesser Quality.” Key factors management uses in assessing a loan’s collectability are the financial condition of the borrower, the value of any secured collateral, and the terms of any workout agreement between the Company and the borrower. In workout situations, the Company charges off the amount deemed uncollectible due to the terms of the workout, the inability of the borrower to make agreed upon payments, and the value of the collateral securing the loan.

Credit Quality Indicators

Credit Quality Indicators

The Company has established a loan grading system to assist its management in analyzing and monitoring the loan portfolio. The Company classifies loans it considers lesser quality (“classified loans”) as watch, special mention, substandard, doubtful, or loss assets. The loan grading system is as follows:

Pass:

The borrower has sufficient cash to fund debt services. The borrower may be able to obtain similar financing from other lenders with comparable terms. The risk of default is considered low.

Watch:

These loans exhibit potential or developing weaknesses that deserve extra attention from credit management personnel. If the developing weakness is not corrected or mitigated, there may be deterioration in the ability of the borrower to repay the debt in the future. Loans graded Watch must be reported to executive management and the Board of Managers. Potential for loss under adverse circumstances is elevated, but not foreseeable. Watch loans are considered pass loans.

Special mention:

These credit facilities exhibit potential or actual weaknesses that present a higher potential for loss under adverse circumstances, and deserve management’s close attention. If uncorrected, these weaknesses may result in deterioration of the repayment prospects for the loan at some future date.

Substandard:

Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, ministry, or environmental conditions which have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that some future loss will be sustained if such weaknesses are not corrected.

Doubtful:

This classification consists of loans that display the properties of substandard loans with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. The probability of some loss is very high, but because of certain important and reasonably specific factors, the amount of loss cannot be exactly determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral.

Loss:

Loans in this classification are considered uncollectible and cannot be justified as a viable asset. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future.

Revenue Recognition

Revenue Recognition

The Company recognizes two primary types of revenue: interest income and non-interest income.

Interest Income

The Company’s principal source of revenue is interest income from loans, which is not within the scope of ASU 2014-09, Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, "ASC 606"). Refer to the discussion in “Loans Receivable” above to understand the Company’s recognition of interest income.

Non-interest Income

Non-interest income includes revenue from various types of transactions and services provided to customers. Contracts with customers can include multiple services, which are accounted for as separate “performance obligations” if they are determined to be distinct. Our performance obligations to our customers are generally satisfied when we transfer the promised good or service to our customer, either at a point in time or over time. Revenue from a performance obligation transferred at a point in time is recognized at the time that the customer obtains control over the promised good or service. Revenue from our performance obligations satisfied over time are recognized in a manner that depicts our performance in transferring control of the good or service, which is generally measured based on time elapsed, as our customers simultaneously receive and consume the benefit of our services as they are provided.

Payment for the majority of our services is considered to be variable consideration, as the amount of revenues we expect to receive is subject to factors outside of our control, including market conditions. Variable consideration is only included in revenue when amounts are not subject to significant reversal, which is generally when uncertainty around the amount of revenue to be received is resolved.

Wealth advisory fees

Generally, management recognizes wealth advisory fees over time as the Company renders services to its clients. The Company receives these fees either based on a percentage of the market value of the assets under management, or as a fixed fee based on the services the Company provides to the client. The Company’s delivery of these services represents its related performance obligations. The Company typically collects the wealth advisory fees at the beginning of each quarter from the client’s account. Management recognizes these fees ratably over the related billing period as the Company fulfills its performance obligation. In addition, management recognizes any commissions or referral fees paid related to this revenue ratably over the related billing period as the Company fulfills its performance obligation.

Investment brokerage fees

Investment brokerage fees arise from the selling, distribution, and trade execution services. The Company’s execution of these services fulfills its related performance obligations.

The Company also offers sales and distribution services, and earns commissions through the sale of annuity and mutual fund products. The Company acts as an agent in these transactions and recognizes revenue at a point in time when the customer executes a contract with a product carrier. The Company may also receive trailing commissions and 12b-1 fees related to mutual fund and annuity products. Management recognizes this revenue in the period when it is earned, estimating the revenue if necessary based on the balance of the investment and the commission rate on the product.

The Company earns and recognizes trade execution commissions on the trade date, which is when the Company fulfills its performance obligation. Payment for the trade execution is due on the settlement date.

Lending Fees

Lending fees represent charges earned for services we provide as part of the lending process, such as late charges, servicing fees, and documentation fees. The Company recognizes late charges as earned when they are paid. The Company recognizes revenue on other lending fees in the period in which the Company has performed the service.

Other non-interest income

Other non-interest income includes fees earned based on service contracts the Company has entered into with credit unions. The Company recognizes the revenue monthly based on the terms of the contracts, which require monthly payments for services the Company performs.

Gains/losses on sales of foreclosed assets

The Company records a gain or loss from the sale of foreclosed assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed asset to the buyer, the Company assesses whether the buyer is committed to perform their obligation under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

Foreclosed Assets

Foreclosed Assets

Management records assets acquired through foreclosure or other proceedings at fair market value less estimated costs of disposal. Management determines the fair value at the date of foreclosure, which establishes a new cost for the asset. After foreclosure, the Company carries the asset at the lower of cost or fair value, less estimated costs of disposal. Management evaluates these real estate assets regularly to ensure that the recorded amount is supported by the current fair value and, if necessary, ensuring that valuation allowances reduce the carrying amount to fair value less estimated costs of disposal. Revenue and expense from the operation of the Company’s foreclosed assets and changes in the valuation allowance are included in net expenses from foreclosed assets. When the Company sells the foreclosed property, it recognizes a gain or loss on the sale equal to the difference between the sales proceeds received and the carrying amount of the property.

Transfers of Financial Assets

Transfers of Financial Assets

Management accounts for transfers of financial assets as sales when the Company has surrendered control over the asset. Management deems the Company has surrendered control over transferred assets when:

· the assets have been isolated from the Company;

· the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred asset; and

· the Company does not maintain effective control over the transferred asset through an agreement to repurchase it before its maturity.

The Company, from time to time, sells participation interests in mortgage loans it has originated or acquired. In order to recognize the transfer of a portion of a financial asset as a sale, the transferred portion, and any portion that continues to be held by the transferor must represent a participating interest, and the transfer of the participating interest must meet the conditions for surrender of control. To qualify as a participating interest:

· each portion of a financial asset must represent a proportionate ownership interest in an entire financial asset;

· from the date of transfer, all cash flows received from the entire financial asset must be divided proportionately among the participating interest holders in an amount equal to their respective share of ownership;

· the transfer must be made on a non-recourse basis (other than standard representations and warranties made under the loan participation sale agreement);

· the transfer may not be subordinate to any other participating interest holder; and

· no party has the right to pledge or exchange the entire financial asset.

If the transaction does not meet either the participating interest or surrender of control criteria, management accounts for it as a secured borrowing arrangement.

Under some circumstances, when the Company sells a participation in a wholly-owned loan receivable that it services, it retains loan-servicing rights, and records a servicing asset that is initially measured at fair value. As quoted market prices are generally not available for these assets, the Company estimates fair value based on the present value of future expected cash flows associated with the loan receivable. The Company amortizes servicing assets over the life of the associated receivable using the interest method. Any gain or loss recognized on the sale of a loan receivable depends in part on both the previous carrying amount of the financial asset involved in the sale, allocated between the asset sold and the interest that continues to be held by the Company based on its relative fair value at the date of transfer, and the proceeds received.

Property and Equipment

Property and Equipment

The Company states its furniture, fixtures, and equipment at cost, less accumulated depreciation. Management computes depreciation on a straight-line basis over the estimated useful lives of the assets. The useful lives of the Company’s assets range from three to seven years.

Debt Issuance Costs

Debt Issuance Costs

The Company’s debt consists of borrowings from financial institutions and obligations to investors incurred through the sale of investor notes. Management amortizes these costs into interest expense over the contractual terms of the debt using the straight-line method.

Employee Benefit Plan

Employee Benefit Plan

Contributions to the qualified employee retirement plan are recorded as compensation cost in the period incurred.

Income Taxes

Income Taxes

The Company has elected to be treated as a partnership for income tax purposes. Therefore, the Company passes through its income and expenses to its members for tax reporting purposes.

Tesoro Hills, LLC, is a joint venture in which the Company has an investment. Tesoro Hills, according to its operating agreement, has elected to be treated as a partnership for income tax purposes.

The Company and MP Securities are subject to a California LLC fee.

The Company uses a recognition threshold and a measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken in a tax return. The Company recognizes benefits from tax positions in the consolidated financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Management derecognizes previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold in the first subsequent financial reporting period in which that threshold is no longer met.

New Accounting Guidance

New accounting guidance

Adoption of New Accounting Standards:

On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02 “Leases (Topic 842)” and subsequent amendments thereto, which requires the Company to recognize most leases on the balance sheet. The Company adopted the standard under a modified retrospective approach as of the date of adoption and elected to apply several of the available practice expedients, including:

· Carry over of historical lease determination and lease classification conclusions

· Carry over of historical initial direct cost balances for existing leases

· Accounting for lease and non-lease components in contracts in which the Company is a lessee as a single lease component

Adoption of leasing standard resulted in the recognition of operating right-of-use assets of $680 thousand, and operating lease liabilities of $680 thousand as of January 1, 2019. These amounts were determined based on the present value of remaining minimum lease payments, discounted using the Company’s incremental borrowing rate as of the date of adoption. There was no material impact to the timing of expense or income recognition in the Company’s Consolidated Income Statements. Prior periods were not restated and continue to be presented under legacy GAAP. Disclosures about the Company’s leasing activities are presented in Note 12. Commitments and Contingencies.

Accounting Standards Pending Adoption

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The guidance requires companies to apply the requirements in the year of adoption through cumulative adjustment with some aspects of the update requiring a prospective transition approach. The Company’s preliminary evaluation indicates the provisions of ASU No. 2016-13 are expected to affect the level of the allowance for loan losses on the Company’s consolidated financial statements. Management has gathered all necessary data and reviewed potential methods to calculate the expected credit losses. The Company will use a third-party software solution to assist with the adoption of the standard. Management is currently calculating sample expected loss computations and developing the allowance methodology and assumptions that the Company will use under the new standard.

In October 2019, the FASB adopted a two-bucket approach to stagger the effective date for the credit losses standard for the fiscal years beginning after December 31, 2022 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Company is eligible for the delay. Management is currently evaluating the impact of the delay on its implementation project plan.

In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The ASU removes, modifies, and adds certain disclosure requirements for fair value measurements. For example, the ASU will no longer require public entities to disclose the valuation processes for Level 3 fair value measurements. However, they will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019. In addition, entities may early adopt the modified or eliminated disclosure requirements and delay adoption of the additional disclosure requirements until the effective date. The Company does not believe the adoption of ASU No. 2018-13 will have a material impact on its consolidated financial statements, as the update only revises disclosure requirements.

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Loans Receivable and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2019

Loans Receivable and Allowance for Loan Losses [Abstract]

Loans Receivable and Allowance for Loan Losses

Note 4. Loans Receivable and Allowance for Loan Losses

The Company’s loan portfolio is comprised of one segment – church loans. See “Note 1 – Loan Portfolio Segments and Classes” to the Financial Statements. The loans fall into four classes:

· wholly-owned loans for which the Company possesses the first collateral position;

· wholly-owned loans that are either unsecured or for which the Company possesses a junior collateral position;

· participated loans purchased for which the Company possesses the first collateral position; and

· participated loans purchased for which the Company possesses a junior collateral position.

The Company makes all of its loans to various evangelical churches and related organizations, primarily to purchase, construct, or improve facilities. Loan maturities extend through 2033. The loan portfolio had a weighted average rate of 0.07%and 6.31% as of December 31, 2019 and December 31, 2018, respectively.

The table below is a summary of the Company’s mortgage loans owned (dollars in thousands):

	December 31,		December 31,
	2019		2018
Loans to evangelical churches and related organizations:
Real estate secured	$	130,889	$	147,061
Unsecured		160		274
Total loans		131,049		147,335
Deferred loan fees, net		(631)		(848)
Loan discount		(182)		(627)
Allowance for loan losses		(1,393)		(2,480)
Loans, net	$	128,843	$	143,380

Allowance for Loan Losses

Management believes it has properly calculated the allowance for loan losses as of December 31, 2018 and December 31, 2018. The following table shows the changes in the allowance for loan losses for the years ended December 31, 2019 and 2018 (dollars in thousands):

	December 31,		December 31,
	2019		2018
Balance, beginning of period	$	2,480	$	2,097
Provision for loan loss		(544)		666
Chargeoffs		(923)		(283)
Recoveries		380		—
Balance, end of period	$	1,393	$	2,480

The table below presents loans by portfolio segment (church loans) and the related allowance for loan losses. In addition, the table segregates loans and the allowance for loan losses by impairment methodology (dollars in thousands).

	Loans and Allowance for Loan Losses (by segment)
	As of
	December 31,		December 31,
	2019		2018
Loans:
Individually evaluated for impairment	$	8,843	$	13,601
Collectively evaluated for impairment		122,206		133,734
Balance	$	131,049	$	147,335
Allowance for loan losses:
Individually evaluated for impairment	$	175	$	1,463
Collectively evaluated for impairment		1,218		1,017
Balance	$	1,393	$	2,480

The Company has established a loan grading system to assist management in their analysis and supervision of the loan portfolio. The following tables summarize the credit quality indicators by loan class (dollars in thousands):

Credit Quality Indicators (by class)
As of December 31, 2019
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	96,674	$	3,557	$	1,882	$	—	$	102,113
Watch		19,870		32		191		—		20,093
Special mention		—		—		—		—		—
Substandard		7,103		—		1,230		—		8,333
Doubtful		510		—		—		—		510
Loss		—		—		—		—		—
Total	$	124,157	$	3,589	$	3,303	$	—	$	131,049

Credit Quality Indicators (by class)
As of  December 31, 2018
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	100,140	$	4,067	$	2,004	$	—	$	106,211
Watch		27,321		—		202		—		27,523
Special mention		1,208		—		—		—		1,208
Substandard		6,497		187		3,586		—		10,270
Doubtful		2,123		—		—		—		2,123
Loss		—		—		—		—		—
Total	$	137,289	$	4,254	$	5,792	$	—	$	147,335

The following table sets forth certain information with respect to the Company’s loan portfolio delinquencies by loan class and amount (dollars in thousands):

Age Analysis of Past Due Loans (by class)
As of December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment 90 Days or more and Accruing
Church loans:
Wholly-Owned First	$	—	$	—	$	5,907	$	5,907	$	118,250	$	124,157	$	—
Wholly-Owned Junior		—		—		—		—		3,589		3,589		—
Participation First		—		—		—		—		3,303		3,303		—
Participation Junior		—		—		—		—		—		—		—
Total	$	—	$	—	$	5,907	$	5,907	$	125,142	$	131,049	$	—

Age Analysis of Past Due Loans (by class)
As of  December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment 90 Days or more and Accruing
Church loans:
Wholly-Owned First	$	3,259	$	—	$	5,804	$	9,063	$	128,226	$	137,289	$	—
Wholly-Owned Junior		187		—		—		187		4,067		4,254		—
Participation First		2,293		—		1,292		3,585		2,207		5,792		—
Participation Junior		—		—		—		—		—		—		—
Total	$	5,739	$	—	$	7,096	$	12,835	$	134,500	$	147,335	$	—

Impaired Loans

Impaired loans include non-accrual loans, loans 90 days or more past due and still accruing, and restructured loans. Non-accrual loans are loans on which management has discontinued interest accruals. Restructured loans are loans in which the Company has granted the borrower a concession due to financial distress. Concessions are usually a reduction of the interest rate or a change in the original repayment terms.

The Company monitors impaired loans on an ongoing basis as part of management’s loan review and work out process. Management evaluates the potential risk of loss on these loans by comparing the loan balance to the fair value of any secured collateral or the present value of projected future cash flows.

In accordance with industry standards, loans that the Company has modified as part of a troubled debt restructuring are considered impaired. However, troubled debt restructures, upon meeting certain performance conditions, are eligible to receive non-classified loan ratings and to be moved out of non-accrual status. These loans continue to be included in total impaired loans but not necessarily in non-accrual or collateral-dependent loans.

The following tables are summaries of impaired loans by loan class as of and for the years ended December 31, 2019 and 2018, respectively. The unpaid principal balance reflects the contractual principal outstanding on the loan. The recorded balance reflects the unpaid principal balance less any interest payments that have been recorded against principal. The recorded investment reflects the recorded balance less discounts taken. The related allowance reflects specific reserves taken on the impaired loans (dollars in thousands):

Impaired Loans (by class) As of December 31, 2019									For the year ended December 31, 2019
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	12,497	$	12,404	$	12,304	$	—	$	12,343	$	1,202
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		—		—		—		—		—		—
Participation Junior		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		290		290		290		110		973		—
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		1,294		1,230		1,230		65		1,263		—
Participation Junior		—		—		—		—		—		—
Total:
Church loans	$	14,081	$	13,924	$	13,824	$	175	$	14,579	$	1,202

Impaired Loans (by class) As of December 31, 2018									For the year ended December 31, 2018
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	5,734	$	5,687	$	5,694	$	—	$	5,915	$	123
Wholly-Owned Junior		—		—		—		—		—		—
Participation First		2,293		2,293		2,316		—		2,312		—
Participation Junior		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		4,818		4,142		3,632		1,165		3,714		—
Wholly-Owned Junior		215		187		176		176		181		—
Participation First		1,302		1,292		1,292		122		1,299		10
Participation Junior		—		—		—		—		—		—
Total:
Church loans	$	14,362	$	13,601	$	13,110	$	1,463	$	13,421	$	133

A summary of nonaccrual loans by loan class is as follows (dollars in thousands):

Loans on Nonaccrual Status (by class)
	December 31, 2019		December 31, 2018
Church loans:
Wholly-Owned First	$	6,405	$	8,619
Wholly-Owned Junior		—		187
Participation First		1,230		1,292
Participation Junior		—		—
Total	$	7,635	$	10,098

The Company restructured six and four loans during theyears ended December 31, 2019 and 2018. A summary of troubled debt restructures by loan class during the years ended December 31, 2019 and 2018 is as follows (dollars in thousands):

Troubled Debt Restructurings (by class)
For the year ended December 31, 2019
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		5	$	6,270	$	6,458	$	6,167
Wholly-Owned Junior		—		—		—		—
Participation First		1		166		—		—
Participation Junior		—		—		—		—
Total		6	$	6,436	$	6,458	$	6,167

Troubled Debt Restructurings (by class)
For the year ended December 31, 2018
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		2	$	1,748	$	1,668	$	1,668
Wholly-Owned Junior		—		—		—		—
Participation First		2		3,595		3,595		3,586
Participation Junior		—		—		—		—
Total		4	$	5,343	$	5,264	$	5,254

The Company had one previously restructured loan that was past maturity as of December 31, 2019. The Company has entered into a forbearance agreement with the borrowers and is evaluating what actions it should undertake to protect its investment on this loan.

The Company closely monitors delinquency in loans modified in a troubled debt restructuring as an early indicator for future default. Management regularly evaluates loans modified in a troubled debt restructuring for potential further impairment andwill make adjustments to the risk ratings and specific reserves associated with troubled debt restructurings as deemed necessary.

No loans that were restructured during the years ended December 31, 2019 and 2018 subsequently defaulted during those respective years.

As of December 31, 2019,  no additional funds were committed to be advanced in connection with loans modified as troubled debt restructurings.

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Foreclosed Assets

12 Months Ended

Dec. 31, 2019

Foreclosed Assets [Abstract]

Foreclosed Assets

Note 8: Foreclosed Assets

The Company’s investment in foreclosed assets was $301 thousand at December 31, 2019. The Company did not have any investment in foreclosed assets at December 31, 2018. On its balance sheet, the Company presents foreclosed assets net of an allowance for losses. There was no allowance for losses on foreclosed assets at December 31, 2019. The Company did not record any loss provisions on foreclosed assets during the year ended December 31, 2019.

Expenses and income applicable to foreclosed assets include the following (dollars in thousands):

	Foreclosed Asset Expenses (Income) for the years ended December 31,
	2019		2018
Net loss (gain) on sale of real estate	$	—	$	—
Provision for losses		—		—
Operating expenses, net of rental income		97		—
Net expense (income)	$	97	$	—

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 12. Commitments and Contingencies

Unfunded Commitments

The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include un-advanced lines of credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.

The contractual amount of these commitments represents the Company’s exposure to credit loss. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

The table below shows the outstanding financial instruments whose contract amounts represent credit risk (dollars in thousands):

	Contract Amount at:
	December 31, 2019		December 31, 2018
Undisbursed loans	$	1,999	$	1,919

Undisbursed loans are commitments for possible future extensions of credit to existing customers. These loans are sometimes unsecured and the borrower may not necessarily draw upon the line the total amount of the commitment. Commitments to extend credit are generally at variable rates.

Contingencies

In the normal course of business, the Company may become involved in various legal proceedings. As of December 31, 2019, the Company is a defendant in a wrongful termination of employment lawsuit. The Company is contesting the claim and at December 31, 2019, the Company’s liabilities include an accrual of $30 thousand for litigation-related expenses incurred in connection with this claim. Although the Company believes that it will prevail on the merits, the litigation could have a lengthy process, and the ultimate outcome cannot be predicted.

Operating Leases

The Company has lease agreements for its offices in Brea and Fresno, California. The Company renewed its Brea office lease in January 2019 for an additional five-year term. The lease does not contain any additional options to renew. The Fresno office lease expires in 2020. There are no options to renew in the lease agreement; however, the Company has entered into discussions with the lessor on a new lease agreement. The Company has determined that both leases are operating leases.

Beginning on January 1, 2019, the Company has recorded right-of-use assets and lease liabilities in accordance with ASU 2016-02. The Company has elected not to reassess expired or existing leases for changes in classification. The Company has elected not to use hindsight to determine the term of existing leases and is using the term of the current lease agreements in its right-of-use asset calculations. As the interest rates implicit in the leases were not readily available, the Company used its incremental borrowing rates to determine the discount rates used in the asset calculations.

The table below presents information regarding our existing operating leases (dollars in thousands):

	For the Year Ended
	2019			2018
Lease cost
Operating lease cost	$	174		$	143
Other information
Cash paid for operating leases		164			149
Right-of-use assets obtained in exchange for operating lease liabilities		680			—
Weighted average remaining lease term (in years)		3.96			1.25
Weighted-average discount rate		4.77	%		—	%

Future minimum lease payments and lease costs for the twelve months ending December 31 are as follows (dollars in thousands):

	Lease Payments		Lease Costs
2020	$	149	$	153
2021		146		146
2022		150		146
2023		155		146
2024		—		—
Total	$	600	$	591

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Office Operations and Other Expenses (Tables)

12 Months Ended

Dec. 31, 2019

Office Operations and Other Expenses [Abstract]

Schedule of Office Operations and Other Expenses

	December 31, 2019		December 31, 2018
Technology and communication expenses	$	428	$	439
Insurance		282		275
Lease and occupancy expense		206		166
Outsourced operations		190		34
Staff and travel expense		140		117
Loan Expenses		110		71
Clearing firm Fees		60		60
Other		67		62
Total	$	1,483	$	1,224

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Premises and Equipment [Abstract]

Summary of Premises and Equipment

	As of
	December 31,		December 31,
	2019		2018
Furniture and office equipment	$	503	$	491
Computer system		214		231
Leasehold improvements		43		25
Total premises and equipment		760		747
Less accumulated depreciation and amortization		(544)		(660)
Premises and equipment, net	$	216	$	87

(dollars in thousands)	2019		2018
Depreciation and amortization expense for the years ended December 31,	$	43	$	30

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Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Assets:
Cash	$ 25,993,000	$ 9,877,000
Restricted cash	52,000	51,000
Loans receivable, net of allowance for loan losses of $1,393 and $2,480 as of December 31, 2019 and 2018, respectively	128,843,000	143,380,000
Accrued interest receivable	635,000	711,000
Investments in joint venture	891,000	887,000
Property and equipment, net	216,000	87,000
Foreclosed assets, net	301,000	0
Servicing assets	100,000	212,000
Other assets	990,000	234,000
Total assets	158,021,000	155,439,000
Liabilities:
Term-debt	71,427,000	76,515,000
Notes payable, net of debt issuance costs of $55 and $92 as of December 31, 2019 and 2018, respectively	73,046,000	68,300,000
Accrued interest payable	266,000	249,000
Other liabilities	2,211,000	844,000
Total liabilities	146,950,000	145,908,000
Members' Equity:
Series A preferred units, 1,000,000 units authorized, 117,100 units issued and outstanding at December 31, 2019 and 2018 (liquidation preference of $100 per unit); See Note 14	11,715,000	11,715,000
Class A common units, 1,000,000 units authorized, 146,522 units issued and outstanding at December 31, 2019 and 2018; See Note 14	1,509,000	1,509,000
Accumulated deficit	(2,153,000)	(3,693,000)
Total members' equity	11,071,000	9,531,000
Total liabilities and members' equity	$ 158,021,000	$ 155,439,000

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Consolidated Statements of Cash Flows $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 2,001
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation	43
Amortization of deferred loan fees	(269)
Amortization of debt issuance costs	86
Provision for loan losses	(544)
Accretion of loan discount	(247)
Changes in:
Accrued interest receivable	76
Other assets	(469)
Accrued interest payable	17
Other liabilities	1,236
Net cash provided by operating activities	1,930
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases	(2,255)
Loan originations	(7,951)
Loan principal collections	25,324
Purchase of property and equipment	(176)
Sale of property and equipment	4
Net cash provided by investing activities	14,946
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of term debt	(5,088)
Net change in notes payable	4,709
Debt issuance costs	(49)
Dividends paid on preferred units	(331)
Net cash (used) by financing activities	(759)
Net increase (decrease) in cash and restricted cash	16,117
Cash, cash equivalents, and restricted cash at beginning of period	9,928
Cash, cash equivalents, and restricted cash at end of period	26,045
Supplemental disclosures of cash flow information
Interest paid	5,046
Income taxes paid	20
Leased assets obtained in exchange of new operating lease liabilities	680
Lease liabilities recorded	680
Transfer of loans to foreclosed assets	479
Transfer of foreclosed assets to other assets	178
Dividends declared to preferred unit holders	$ 237

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Loans Receivable and Allowance for Loan Losses (Schedule of Age Analysis of Past Due Loans by Class) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans: Balance	$ 131,049	$ 147,335
Wholly-Owned First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans: Balance	124,157	137,289
Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans: Balance	3,589	4,254
Participation First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans: Balance	3,303	5,792
Church Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5,907	12,835
Current	125,142	134,500
Loans: Balance	131,049	147,335
Church Loans [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		5,739
Church Loans [Member] | Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5,907	7,096
Church Loans [Member] | Wholly-Owned First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5,907	9,063
Current	118,250	128,226
Loans: Balance	124,157	137,289
Church Loans [Member] | Wholly-Owned First [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		3,259
Church Loans [Member] | Wholly-Owned First [Member] | Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5,907	5,804
Church Loans [Member] | Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		187
Current	3,589	4,067
Loans: Balance	3,589	4,254
Church Loans [Member] | Wholly-Owned Junior [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		187
Church Loans [Member] | Participation First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		3,585
Current	3,303	2,207
Loans: Balance	$ 3,303	5,792
Church Loans [Member] | Participation First [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2,293
Church Loans [Member] | Participation First [Member] | Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		$ 1,292

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Investments in Joint Venture (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2015
Investments in Joint Venture [Abstract]
Investments in joint venture	$ 891	$ 887	$ 900

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Income Taxes and State LLC Fees (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Line Items]
Operating loss carryforward expiration	Dec. 31, 2030
California Franchise Tax Board [Member]
Income Tax Disclosure [Line Items]
Gross receipt fee based on turnover	$ 12,000
MP Securities [Member] | California Franchise Tax Board [Member]
Income Tax Disclosure [Line Items]
Gross receipt fee based on turnover	6,000
MP Realty [Member]
Income Tax Disclosure [Line Items]
Operating loss carryforwards	$ 430,000	$ 407,000
Valuation allowance, percentage	100.00%	100.00%
MP Realty [Member] | California Franchise Tax Board [Member]
Income Tax Disclosure [Line Items]
Gross receipt fee based on turnover	$ 800	$ 800

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Fair Value Measurements (Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Value, Cash	$ 26,045	$ 9,928	$ 9,965
Carrying Value, Loans, net	128,843	143,380
Carrying Value, Investments in joint venture	891	887		$ 900
Carrying Value, Term-debt	71,427	76,515
Carrying Value, Notes payable	73,046	68,300
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Value, Cash	25,993	9,877
Carrying Value, Loans, net	128,843	143,380
Carrying Value, Investments in joint venture	891	887
Carrying Value, Accrued interest receivable	635	711
Carrying Value, Term-debt	71,427	76,515
Carrying Value, Notes payable	73,046	68,300
Carrying Value, Other financial liabilities	503	356
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value, Cash	25,993	9,877
Fair Value, Loans, net	126,438	140,989
Fair Value, Investments in joint venture	891	887
Fair Value, Accrued interest receivable	635	711
Fair Value, Term-debt	55,072	57,386
Fair Value, Notes payable	74,592	68,865
Fair Value, Other financial liabilities	503	356
Quoted Prices In Active Markets For Identical Assets Level 1 [Member] | Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value, Cash	25,993	9,877
Significant Unobservable Inputs Level 3 [Member] | Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value, Loans, net	126,438	140,989
Fair Value, Investments in joint venture	891	887
Fair Value, Accrued interest receivable	635	711
Fair Value, Term-debt	55,072	57,386
Fair Value, Notes payable	74,592	68,865
Fair Value, Other financial liabilities	$ 503	$ 356

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Commitments and Contingencies (Operating Lease Commitments) (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Commitments and Contingencies [Abstract]
Lease Payments, 2020	$ 149
Lease Payments, 2021	146
Lease Payments, 2022	150
Lease Payments, 2023	155
Lease Payments, Total	600
Lease Costs, 2020	153
Lease costs, 2021	146
Lease costs, 2022	146
Lease Costs, 2023	146
Lease Costs, Total	$ 591

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Segment Information (Schedule of Financial Information by Reportable Segments) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Segment Reporting Information [Line Items]
Revenue	$ 11,715	$ 10,652
Non-interest expense and provision for tax	5,195	4,673
Net profit (loss)	2,001	477
Total assets	158,021	155,439
Adjustments/Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	(1,194)	(663)
Net profit (loss)	(254)	149
Total assets	(36)	5
Finance Company [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue	10,289	10,126
Non-interest expense and provision for tax	4,020	3,655
Net profit (loss)	811	157
Total assets	155,180	154,072
Broker Dealer [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue	2,304	1,189
Non-interest expense and provision for tax	1,177	995
Net profit (loss)	1,126	194
Total assets	2,506	1,307
Other Segments [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue	316
Non-interest expense and provision for tax	(2)	23
Net profit (loss)	318	(23)
Total assets	$ 371	$ 55

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Office Operations and Other Expenses

12 Months Ended

Dec. 31, 2019

Office Operations and Other Expenses [Abstract]

Office Operations and Other Expenses

Note 13. Office Operations and Other Expenses

Office operations and other expenses comprise the following (dollars in thousands):

	December 31, 2019		December 31, 2018
Technology and communication expenses	$	428	$	439
Insurance		282		275
Lease and occupancy expense		206		166
Outsourced operations		190		34
Staff and travel expense		140		117
Loan Expenses		110		71
Clearing firm Fees		60		60
Other		67		62
Total	$	1,483	$	1,224

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Investments in Joint Venture

12 Months Ended

Dec. 31, 2019

Investments in Joint Venture [Abstract]

Investments in Joint Venture

Note 5. Investments in Joint Venture

In December 2015, the Company finalized an agreement with Intertex Property Management, Inc., a California corporation, to enter into a joint venture to form Tesoro Hills, LLC (the “Valencia Hills Project”). The Valencia Hills Project is a joint venture that will develop and market property formerly classified by the Company as a foreclosed asset. In January 2016, the Company transferred ownership in the foreclosed asset to the Valencia Hills Project as part of the agreement. In addition, the Company reclassified the carrying value of the property from foreclosed assets to an investment in a joint venture. The Company’s initial investment in the joint venture was $900 thousand. This amount was the carrying value in the foreclosed asset at December 31, 2015.

The value of the Company’s investment in the joint venture was $891 thousand and $887thousand, as of December 31, 2019 and 2018respectively. Management’s impairment analysis of the investment as of December 31, 2019 has determined that the investment is not impaired.

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Premises and Equipment

12 Months Ended

Dec. 31, 2019

Premises and Equipment [Abstract]

Premises and Equipment

Note 9. Premises and Equipment

The table below summarizes our premises and equipment (dollars in thousands):

	As of
	December 31,		December 31,
	2019		2018
Furniture and office equipment	$	503	$	491
Computer system		214		231
Leasehold improvements		43		25
Total premises and equipment		760		747
Less accumulated depreciation and amortization		(544)		(660)
Premises and equipment, net	$	216	$	87

(dollars in thousands)	2019		2018
Depreciation and amortization expense for the years ended December 31,	$	43	$	30

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Consolidated Balance Sheets [Abstract]
Loans receivable, allowance for loan losses	$ 1,393	$ 2,480
Investor notes payable, debt issuance costs	$ 55	$ 92
Preferred units - Series A, units authorized	1,000,000	1,000,000
Preferred units - Series A, units issued	117,100	117,100
Preferred units - Series A, units outstanding	117,100	117,100
Preferred units - Series A, liquidation preference per unit	$ 100	$ 100
Common units - Class A, units authorized	1,000,000	1,000,000
Common units - Class A, units issued	146,522	146,522
Common units - Class A, units outstanding	146,522	146,522

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Nature of Business and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Nature of Business and Summary of Significant Accounting Policies [Abstract]

Nature of Business and Summary of Significant Accounting Policies

MINISTRY PARTNERS INVESTMENT COMPANY, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business

Throughout these notes to consolidated financial statements, we refer to Ministry Partners Investment Company, LLC and its subsidiaries as “the Company.” The Company was formed in California in 1991. The Company’s primary operations are financing commercial real property secured loans and providing investment services for the benefit of evangelical churches, ministries, and individuals. The Company funds its operations primarily through the sale of debt securities.

The Company’s wholly owned subsidiaries are:

· Ministry Partners Funding, LLC (“MPF”);

· MP Realty Services, Inc., a California corporation (“MP Realty”);

· Ministry Partners Securities, LLC, a Delaware limited liability company (“MP Securities”); and

· Ministry Partners for Christ, Inc., a not-for-profit Delaware corporation (“MPC”).

The Company formed MPF in 2007 and then deactivated the subsidiary on November 30, 2009. In December 2014, the Company reactivated MPF to enable it to serve as collateral agent for loans held as collateral for its Secured Investment Certificates. The Company formed MP Realty in November 2009, and obtained a license to operate as a corporate real estate broker through the California Department of Real Estate on February 23, 2010. MP Realty has conducted limited operations to date. The Company formed MP Securities on April 26, 2010 to provide investment and financing solutions for individuals, churches, charitable institutions, and faith-based organizations. MP Securities acts as the selling agent for the Company’s public and private placement notes investor notes.

The Company formed MPC on December 28, 2018 to be used exclusively for religious and charitable purposes within the meaning of Section 501(c)(3) of the U.S. Internal Revenue Code of 1986. MPC is a not-for-profit corporation formed and organized as a private foundation under Delaware law that will make charitable grants to Christian education, and provide accounting, consulting, and financial expertise to aid evangelical Christian ministries. Although the Company has made an initial cash contribution to launch the private foundation, MPC had not yet begun activities as of December 31, 2019. On August 23, 2019, the Internal Revenue Service granted MPC tax-exempt status as a private foundation under Section 501(c)(3) of the Internal Revenue Code.

Principles of Consolidation

The consolidated financial statements include the accounts of Ministry Partners Investment Company, LLC and its wholly owned subsidiaries. Management eliminates all significant inter‑company balances and transactions in consolidation.

Conversion to LLC

Effective as of December 31, 2008, the Company converted its form of organization from a corporation organized under California law to a limited liability company organized under the laws of the State of California. With the filing of Articles of Organization-Conversion with the California Secretary of State, the separate existence of Ministry Partners Investment Corporation ceased and the entity continued by operation of law under the name Ministry Partners Investment Company, LLC.

Since the conversion became effective, a group of managers provides oversight of the Company’s affairs. The managers have full, exclusive, and complete discretion, power, and authority to oversee the management of Company affairs. As an LLC, the Company’s managers and members have entered into an Operating Agreement that governs the Company’s management structure and governance procedures.

Cash and Cash Equivalents

Cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. The Company had demand deposits and money market deposit accounts as of December 31, 2019. The Company had no cash positions other than demand deposits as of December 31, 2019 and December 31, 2018.  

The National Credit Union Insurance Fund insures a portion of the Company’s cash held at credit unions and the Federal Deposit Insurance Corporation insures a portion of cash held by the Company at other financial institutions. The Company keeps cash that may exceed insured limits. Management does not expect to incur losses in these cash accounts.

The Company maintains cash accounts with RBC Dain as part of its clearing agreement, and with the Central Registration Depository for regulatory purposes. The cash in these accounts is considered restricted cash and is classified as such on our balance sheet.

Reclassifications

The Company has made certain reclassifications to the 2018 financial statements to conform to the 2019 presentation. These reclassifications do not affect member’s equity or net income for the year ended December 31, 2018

Use of Estimates

The Company’s creation of consolidated financial statements that conform to United States Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates govern areas such as the allowance for credit losses and the fair value of financial instruments. Actual results could differ from these estimates.

Investments in Joint Venture

On a periodic basis, management analyzes the Company’s investment in a joint venture for impairment by comparing the carrying value of the investment to the estimated value of the underlying real property. Management records any impairment charges as a valuation allowance against the value of the asset. The Company’s share of income and expenses of the joint venture will increase or decrease the Company’s investment and will be recorded on the income statement as realized gains or losses on investment.

Loans Receivable

The Company reports loans that management has the intent and ability to hold for the foreseeable future at their outstanding unpaid principal balance adjusted for an allowance for loan losses, deferred loan fees and costs, and loan discounts.

Interest Accrual on Loans Receivable

The Company accrues loan interest income daily. Management defers loan origination fees and costs generated in making a loan. The Company amortizes these fees and costs as an adjustment to the related loan yield using the interest method.

Loan discounts are interest accrued and unpaid which the Company added to loan principal balances when it restructured the loan. The Company does not accrete discounts to income on impaired loans. However, when management determines that a previously impaired loan is no longer impaired, the Company begins accreting loan discounts to interest income over the term of the restructured loan. For loans purchased from third parties, loan discounts also are the differences between the purchase price and the recorded principal balance of the loan. The Company accretes these discounts to interest income over the term of the loan using the interest method.

Management considers a loan impaired if it concludes the collection of principal or interest according to the terms of the loan agreement doubtful. The Company stops the accrual of interest when management determines the loan is impaired.

For loans that the Company places on nonaccrual status, management reverses all uncollected accrued interest against interest income. Management accounts for the interest on these loans on the cash basis or cost-recovery method until the loan qualifies for return to accrual status. It is not until all the principal and interest amounts contractually due are brought current and future payments are reasonably assured that the Company returns a loan to accrual status.

Allowance for Loan Losses

The Company sets aside an allowance for loan losses by charging the provision for loan losses account on the Company’s consolidated statements of income. This charge decreases the Company’s earnings. Management charges off the part of loan balances it believes it will not collect against the allowance. The Company credits subsequent recoveries, if any, to the allowance.

Loan Portfolio Segments and Classes

Management separates the loan portfolio into portfolio segments for purposes of evaluating the allowance for loan losses. A portfolio segment is defined as the level at which the Company develops and documents a systematic method for determining its allowance for loan losses. The Company segments the loan portfolio based on loan types and the underlying risk factors present in each loan type. Management periodically reviews and revises such risk factors, as it considers appropriate.

The Company’s loan portfolio consists of one segment – church loans. Management has segregated the loan portfolio into the following portfolio classes:

Loan Class	Class Description
Wholly-Owned First Collateral Position	Wholly-owned loans and the retained portion of loans originated by the Company and sold for which the Company possesses a senior lien on the collateral underlying the loan.
Wholly-Owned Junior Collateral Position	Wholly-owned loans and the retained portion of loans originated by the Company and sold for which the Company possesses a lien on the underlying collateral that is superseded by another lien on the same collateral.  This class also contains any loans that are not secured.  These loans present higher credit risk than loans for which the Company possesses a senior lien due to the increased risk of loss should the loan default.
Participations First Collateral Position	Participated loans purchased from another financial entity for which the Company possesses a senior lien on the collateral underlying the loan. Loan participations purchased may present higher credit risk than wholly owned loans because disposition and direction of actions regarding the management and collection of the loans must be coordinated and negotiated with the other participants, whose best interests regarding the loan may not align with those of the Company.
Participations Junior Collateral Position	Participated loans purchased from another financial entity for which the Company possesses a lien on the underlying collateral that is superseded by another lien on the same collateral.  Loan participations in the junior collateral position loans have higher credit risk than wholly owned loans and participated loans purchased where the Company possesses a senior lien on the collateral.  The increased risk is the result of the factors presented above relating to both junior lien positions and participations.

Allowance for Loan Loss Evaluation

Management evaluates the allowance for loan losses on a regular basis. The Company establishes the allowance for loan losses based upon its periodic review of several factors management believes influences the collectability of the loans, including:

· the Company’s loss history;

· the characteristics and volume of the loan portfolio;

· adverse conditions that may affect the borrower’s ability to repay;

· the estimated value of any secured collateral; and

· the current economic conditions.

This evaluation is subjective, as it requires estimates that are subject to significant revision as more information becomes available.

The allowance consists of general and specific components. The general component covers non-classified loans. Management bases the general reserve on the Company’s loss history adjusted for qualitative factors. These qualitative factors are significant factors management considers likely to cause estimated credit losses associated with the Company’s existing portfolio to differ from its historical loss experience. Management adjusts these factors on an on-going basis, some of which include:

· changes in lending policies and procedures, including changes in underwriting standards and collection;

· changes in national, regional, and local economic and industry conditions that affect the collectability of the portfolio;

· changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans;

· changes in the value of the collateral for collateral-dependent loans; and

· the effect of credit concentrations.

Loans that management has classified as impaired receive a specific reserve. For such loans, an allowance is established when the carrying value of that loan is higher than the amount management expects to receive. Management uses multiple approaches to determine the amount the Company expects to receive. These include the discounted cash flow method, using the loan’s underlying collateral value, or using the observable market price of the impaired loan.

Impairment Analysis

All loans in the loan portfolio are subject to impairment analysis. The Company reviews its loan portfolio monthly by examining several data points. These include reviewing delinquency reports, any new information related to the financial condition of its borrowers, and any new appraisal or other collateral valuation. Through this process, the Company identifies potential impaired loans. Management generally deems a loan is impaired when current facts and circumstances indicate that it is probable that a borrower will be unable to make payments according to the loan agreement. If management has not already deemed a loan impaired, it will classify the loan as non-accrual when it becomes 90 days or more past due.

Management considers several factors when determining impairment status. These factors include the loan’s payment status, the value of any secured collateral, and the probability of collecting scheduled payments when due. Management generally does not classify loans that experience minor payment delays or shortfalls as impaired. Management determines the significance of payment delays or shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower. These circumstances include the length and reasons for the delay, the borrower's payment history, and the amount of the shortfall in relation to the principal and interest owed.

Management measures impairment on a loan-by-loan basis using one of three methods:

· the present value of expected future cash flows discounted at the loan's effective interest rate;

· the obtainable market price; or

· the fair value of the collateral if the loan is collateral-dependent.

Troubled Debt Restructurings

A troubled debt restructuring is a loan for which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to a borrower that the Company would not otherwise consider. A restructuring of a loan usually involves an interest rate modification, extension of the maturity date, payment reduction, or reduction of accrued interest owed on the loan on a contingent or absolute basis.

Management considers loans that it renews at below-market terms to be troubled debt restructurings if the below-market terms represent a concession due to the borrower’s troubled financial condition. The Company classifies troubled debt restructurings as impaired loans. For the loans that are not considered to be collateral-dependent, management measures troubled debt restructurings at the present value of estimated future cash flows using the loan's effective rate at start of the loan. The Company reports the change in the present value of cash flows related to the passage of time as interest income. If the loan is considered to be collateral-dependent, impairment is measured based on the fair value of the collateral.

Loan Charge-offs

Management charges off loans or portions thereof when it determines the loans or portions of the loans are uncollectible. The Company evaluates collectability periodically on all loans classified as “Loans of Lesser Quality.” Key factors management uses in assessing a loan’s collectability are the financial condition of the borrower, the value of any secured collateral, and the terms of any workout agreement between the Company and the borrower. In workout situations, the Company charges off the amount deemed uncollectible due to the terms of the workout, the inability of the borrower to make agreed upon payments, and the value of the collateral securing the loan.

Credit Quality Indicators

The Company has established a loan grading system to assist its management in analyzing and monitoring the loan portfolio. The Company classifies loans it considers lesser quality (“classified loans”) as watch, special mention, substandard, doubtful, or loss assets. The loan grading system is as follows:

Pass:

The borrower has sufficient cash to fund debt services. The borrower may be able to obtain similar financing from other lenders with comparable terms. The risk of default is considered low.

Watch:

These loans exhibit potential or developing weaknesses that deserve extra attention from credit management personnel. If the developing weakness is not corrected or mitigated, there may be deterioration in the ability of the borrower to repay the debt in the future. Loans graded Watch must be reported to executive management and the Board of Managers. Potential for loss under adverse circumstances is elevated, but not foreseeable. Watch loans are considered pass loans.

Special mention:

These credit facilities exhibit potential or actual weaknesses that present a higher potential for loss under adverse circumstances, and deserve management’s close attention. If uncorrected, these weaknesses may result in deterioration of the repayment prospects for the loan at some future date.

Substandard:

Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, ministry, or environmental conditions which have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that some future loss will be sustained if such weaknesses are not corrected.

Doubtful:

This classification consists of loans that display the properties of substandard loans with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. The probability of some loss is very high, but because of certain important and reasonably specific factors, the amount of loss cannot be exactly determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral.

Loss:

Loans in this classification are considered uncollectible and cannot be justified as a viable asset. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future.

Revenue Recognition

The Company recognizes two primary types of revenue: interest income and non-interest income.

Interest Income

The Company’s principal source of revenue is interest income from loans, which is not within the scope of ASU 2014-09, Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, "ASC 606"). Refer to the discussion in “Loans Receivable” above to understand the Company’s recognition of interest income.

Non-interest Income

Non-interest income includes revenue from various types of transactions and services provided to customers. Contracts with customers can include multiple services, which are accounted for as separate “performance obligations” if they are determined to be distinct. Our performance obligations to our customers are generally satisfied when we transfer the promised good or service to our customer, either at a point in time or over time. Revenue from a performance obligation transferred at a point in time is recognized at the time that the customer obtains control over the promised good or service. Revenue from our performance obligations satisfied over time are recognized in a manner that depicts our performance in transferring control of the good or service, which is generally measured based on time elapsed, as our customers simultaneously receive and consume the benefit of our services as they are provided.

Payment for the majority of our services is considered to be variable consideration, as the amount of revenues we expect to receive is subject to factors outside of our control, including market conditions. Variable consideration is only included in revenue when amounts are not subject to significant reversal, which is generally when uncertainty around the amount of revenue to be received is resolved.

Wealth advisory fees

Generally, management recognizes wealth advisory fees over time as the Company renders services to its clients. The Company receives these fees either based on a percentage of the market value of the assets under management, or as a fixed fee based on the services the Company provides to the client. The Company’s delivery of these services represents its related performance obligations. The Company typically collects the wealth advisory fees at the beginning of each quarter from the client’s account. Management recognizes these fees ratably over the related billing period as the Company fulfills its performance obligation. In addition, management recognizes any commissions or referral fees paid related to this revenue ratably over the related billing period as the Company fulfills its performance obligation.

Investment brokerage fees

Investment brokerage fees arise from the selling, distribution, and trade execution services. The Company’s execution of these services fulfills its related performance obligations.

The Company also offers sales and distribution services, and earns commissions through the sale of annuity and mutual fund products. The Company acts as an agent in these transactions and recognizes revenue at a point in time when the customer executes a contract with a product carrier. The Company may also receive trailing commissions and 12b-1 fees related to mutual fund and annuity products. Management recognizes this revenue in the period when it is earned, estimating the revenue if necessary based on the balance of the investment and the commission rate on the product.

The Company earns and recognizes trade execution commissions on the trade date, which is when the Company fulfills its performance obligation. Payment for the trade execution is due on the settlement date.

Lending Fees

Lending fees represent charges earned for services we provide as part of the lending process, such as late charges, servicing fees, and documentation fees. The Company recognizes late charges as earned when they are paid. The Company recognizes revenue on other lending fees in the period in which the Company has performed the service.

Other non-interest income

Other non-interest income includes fees earned based on service contracts the Company has entered into with credit unions. The Company recognizes the revenue monthly based on the terms of the contracts, which require monthly payments for services the Company performs.

Gains/losses on sales of foreclosed assets

The Company records a gain or loss from the sale of foreclosed assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed asset to the buyer, the Company assesses whether the buyer is committed to perform their obligation under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

Foreclosed Assets

Management records assets acquired through foreclosure or other proceedings at fair market value less estimated costs of disposal. Management determines the fair value at the date of foreclosure, which establishes a new cost for the asset. After foreclosure, the Company carries the asset at the lower of cost or fair value, less estimated costs of disposal. Management evaluates these real estate assets regularly to ensure that the recorded amount is supported by the current fair value and, if necessary, ensuring that valuation allowances reduce the carrying amount to fair value less estimated costs of disposal. Revenue and expense from the operation of the Company’s foreclosed assets and changes in the valuation allowance are included in net expenses from foreclosed assets. When the Company sells the foreclosed property, it recognizes a gain or loss on the sale equal to the difference between the sales proceeds received and the carrying amount of the property.

Transfers of Financial Assets

Management accounts for transfers of financial assets as sales when the Company has surrendered control over the asset. Management deems the Company has surrendered control over transferred assets when:

· the assets have been isolated from the Company;

· the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred asset; and

· the Company does not maintain effective control over the transferred asset through an agreement to repurchase it before its maturity.

The Company, from time to time, sells participation interests in mortgage loans it has originated or acquired. In order to recognize the transfer of a portion of a financial asset as a sale, the transferred portion, and any portion that continues to be held by the transferor must represent a participating interest, and the transfer of the participating interest must meet the conditions for surrender of control. To qualify as a participating interest:

· each portion of a financial asset must represent a proportionate ownership interest in an entire financial asset;

· from the date of transfer, all cash flows received from the entire financial asset must be divided proportionately among the participating interest holders in an amount equal to their respective share of ownership;

· the transfer must be made on a non-recourse basis (other than standard representations and warranties made under the loan participation sale agreement);

· the transfer may not be subordinate to any other participating interest holder; and

· no party has the right to pledge or exchange the entire financial asset.

If the transaction does not meet either the participating interest or surrender of control criteria, management accounts for it as a secured borrowing arrangement.

Under some circumstances, when the Company sells a participation in a wholly-owned loan receivable that it services, it retains loan-servicing rights, and records a servicing asset that is initially measured at fair value. As quoted market prices are generally not available for these assets, the Company estimates fair value based on the present value of future expected cash flows associated with the loan receivable. The Company amortizes servicing assets over the life of the associated receivable using the interest method. Any gain or loss recognized on the sale of a loan receivable depends in part on both the previous carrying amount of the financial asset involved in the sale, allocated between the asset sold and the interest that continues to be held by the Company based on its relative fair value at the date of transfer, and the proceeds received.

Property and Equipment

The Company states its furniture, fixtures, and equipment at cost, less accumulated depreciation. Management computes depreciation on a straight-line basis over the estimated useful lives of the assets. The useful lives of the Company’s assets range from three to seven years.

Debt Issuance Costs

The Company’s debt consists of borrowings from financial institutions and obligations to investors incurred through the sale of investor notes. Management amortizes these costs into interest expense over the contractual terms of the debt using the straight-line method.

Employee Benefit Plan

Contributions to the qualified employee retirement plan are recorded as compensation cost in the period incurred.

Income Taxes

The Company has elected to be treated as a partnership for income tax purposes. Therefore, the Company passes through its income and expenses to its members for tax reporting purposes.

Tesoro Hills, LLC, is a joint venture in which the Company has an investment. Tesoro Hills, according to its operating agreement, has elected to be treated as a partnership for income tax purposes.

The Company and MP Securities are subject to a California LLC fee.

The Company uses a recognition threshold and a measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken in a tax return. The Company recognizes benefits from tax positions in the consolidated financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Management derecognizes previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold in the first subsequent financial reporting period in which that threshold is no longer met.

New accounting guidance

Adoption of New Accounting Standards:

On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02 “Leases (Topic 842)” and subsequent amendments thereto, which requires the Company to recognize most leases on the balance sheet. The Company adopted the standard under a modified retrospective approach as of the date of adoption and elected to apply several of the available practice expedients, including:

· Carry over of historical lease determination and lease classification conclusions

· Carry over of historical initial direct cost balances for existing leases

· Accounting for lease and non-lease components in contracts in which the Company is a lessee as a single lease component

Adoption of leasing standard resulted in the recognition of operating right-of-use assets of $680 thousand, and operating lease liabilities of $680 thousand as of January 1, 2019. These amounts were determined based on the present value of remaining minimum lease payments, discounted using the Company’s incremental borrowing rate as of the date of adoption. There was no material impact to the timing of expense or income recognition in the Company’s Consolidated Income Statements. Prior periods were not restated and continue to be presented under legacy GAAP. Disclosures about the Company’s leasing activities are presented in Note 12. Commitments and Contingencies.

Accounting Standards Pending Adoption

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The guidance requires companies to apply the requirements in the year of adoption through cumulative adjustment with some aspects of the update requiring a prospective transition approach. The Company’s preliminary evaluation indicates the provisions of ASU No. 2016-13 are expected to affect the level of the allowance for loan losses on the Company’s consolidated financial statements. Management has gathered all necessary data and reviewed potential methods to calculate the expected credit losses. The Company will use a third-party software solution to assist with the adoption of the standard. Management is currently calculating sample expected loss computations and developing the allowance methodology and assumptions that the Company will use under the new standard.

In October 2019, the FASB adopted a two-bucket approach to stagger the effective date for the credit losses standard for the fiscal years beginning after December 31, 2022 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Company is eligible for the delay. Management is currently evaluating the impact of the delay on its implementation project plan.

In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The ASU removes, modifies, and adds certain disclosure requirements for fair value measurements. For example, the ASU will no longer require public entities to disclose the valuation processes for Level 3 fair value measurements. However, they will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019. In addition, entities may early adopt the modified or eliminated disclosure requirements and delay adoption of the additional disclosure requirements until the effective date. The Company does not believe the adoption of ASU No. 2018-13 will have a material impact on its consolidated financial statements, as the update only revises disclosure requirements.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies [Abstract]

Unfunded Commitments

	Contract Amount at:
	December 31, 2019		December 31, 2018
Undisbursed loans	$	1,999	$	1,919

Information About Existing Operating Leases

	For the Year Ended
	2019			2018
Lease cost
Operating lease cost	$	174		$	143
Other information
Cash paid for operating leases		164			149
Right-of-use assets obtained in exchange for operating lease liabilities		680			—
Weighted average remaining lease term (in years)		3.96			1.25
Weighted-average discount rate		4.77	%		—	%

Operating Lease Commitments

	Lease Payments		Lease Costs
2020	$	149	$	153
2021		146		146
2022		150		146
2023		155		146
2024		—		—
Total	$	600	$	591

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Foreclosed Assets (Tables)

12 Months Ended

Dec. 31, 2019

Foreclosed Assets [Abstract]

Foreclosed Asset Expenses

	Foreclosed Asset Expenses (Income) for the years ended December 31,
	2019		2018
Net loss (gain) on sale of real estate	$	—	$	—
Provision for losses		—		—
Operating expenses, net of rental income		97		—
Net expense (income)	$	97	$	—

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Loans Receivable and Allowance for Loan Losses (Schedule of Impaired Loans by Class) (Details) - Church Loans [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unpaid Principal Balance, Total	$ 14,081	$ 14,362
Recorded Balance, Total	13,924	13,601
Recorded Investment, Total	13,824	13,110
Related Allowance	175	1,463
Average Recorded Investment, Total	14,579	13,421
Interest Income Recognized, Total	1,202	133
Wholly-Owned First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unpaid Principal Balance, With no allowance recorded	12,497	5,734
Unpaid Principal Balance, With an allowance recorded	290	4,818
Recorded Balance, With no allowance recorded	12,404	5,687
Recorded Balance, With an allowance recorded	290	4,142
Recorded Investment, With no allowance recorded	12,304	5,694
Recorded Investment, With an allowance recorded	290	3,632
Related Allowance	110	1,165
Average Recorded Investment, With no allowance recorded	12,343	5,915
Average Recorded Investment, With an allowance recorded	973	3,714
Interest Income Recognized, With no allowance recorded	1,202	123
Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unpaid Principal Balance, With an allowance recorded		215
Recorded Balance, With an allowance recorded		187
Recorded Investment, With an allowance recorded		176
Related Allowance		176
Average Recorded Investment, With an allowance recorded		181
Participation First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unpaid Principal Balance, With no allowance recorded		2,293
Unpaid Principal Balance, With an allowance recorded	1,294	1,302
Recorded Balance, With no allowance recorded		2,293
Recorded Balance, With an allowance recorded	1,230	1,292
Recorded Investment, With no allowance recorded		2,316
Recorded Investment, With an allowance recorded	1,230	1,292
Related Allowance	65	122
Average Recorded Investment, With no allowance recorded		2,312
Average Recorded Investment, With an allowance recorded	$ 1,263	1,299
Interest Income Recognized, With an allowance recorded		$ 10

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Revenue Recognition (Schedule of Disaggregated Revenue) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Disaggregation of Revenue [Line Items]
Total non-interest income	$ 1,569	$ 1,444
Wealth Advisory Fees [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	338	231
Investment Brokerage Fees [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	1,077	292
Lending Fees [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	124	838
Lease Income [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	8
Other Non-Interest Income [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	$ 22	$ 83

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Condensed Financial Statements of Parent Company (Schedule of Parent Company Statements of Cash Flows) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 2,001	$ 477
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation	43	30
Amortization of deferred loan fees	(269)	(258)
Amortization of debt issuance costs	86	85
Provision (credit) for loan losses	(544)	666
Accretion of loan discount	(247)	(24)
Gain on sale of loans		(13)
Changes in:
Accrued interest receivable	76	31
Other assets	(469)	103
Accrued interest payable	17	41
Other liabilities	1,236	(15)
Net cash provided by operating activities	1,930	1,123
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases	(2,255)	(2,721)
Loan originations	(7,951)	(15,486)
Loan sales		5,414
Loan principal collections	25,324	17,817
Sale of property and equipment	4
Purchase of property and equipment	(176)	(14)
Net cash provided by investing activities	14,946	5,010
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in term-debt	(5,088)	(4,977)
Net change in notes payable	4,709	(696)
Debt issuance costs	(49)	(92)
Dividends paid on preferred units	(331)	(405)
Net cash (used) by financing activities	(759)	(6,170)
Net increase (decrease) in cash and restricted cash	16,117	(37)
Cash, cash equivalents, and restricted cash at beginning of period	9,928	9,965
Cash, cash equivalents, and restricted cash at end of period	26,045	9,928
Supplemental disclosures of cash flow information
Interest paid	5,046	4,795
Income taxes paid	20	23
Transfer of loans to foreclosed assets	479
Dividends declared to preferred unit holders	237	107
Ministry [Member]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	2,001	477
Adjustments to reconcile net income to net cash used by operating activities:
Equity in undistributed net income of subsidiaries	(1,190)	(320)
Depreciation	40	27
Amortization of deferred loan fees	(269)	(258)
Amortization of debt issuance costs	86	85
Provision (credit) for loan losses	(544)	666
Accretion of loan discount	(247)	(24)
Gain on sale of loans		(13)
Changes in:
Accrued interest receivable	76	31
Other assets	(418)	179
Accrued interest payable	17	41
Other liabilities	940	97
Net cash provided by operating activities	492	988
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases	(2,255)	(2,721)
Loan originations	(7,951)	(15,486)
Loan sales		5,414
Loan principal collections	25,324	17,817
Sale of property and equipment	4
Purchase of property and equipment	(170)	(13)
Net cash provided by investing activities	14,952	5,011
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in term-debt	(5,088)	(4,977)
Net change in notes payable	4,709	(696)
Debt issuance costs	(49)	(92)
Dividends paid on preferred units	(331)	(405)
Net cash (used) by financing activities	(759)	(6,170)
Net increase (decrease) in cash and restricted cash	14,685	(171)
Cash, cash equivalents, and restricted cash at beginning of period	8,612	8,783
Cash, cash equivalents, and restricted cash at end of period	23,297	8,612
Supplemental disclosures of cash flow information
Interest paid	5,046	4,795
Income taxes paid	20	23
Transfer of loans to foreclosed assets	$ 479
Dividends declared to preferred unit holders		$ 107

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Retirement Plans (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
401(k) plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Minimum service period	0 years
Minimum age restriction for participation	21 years
Maximum voluntary percentage contributions of salary (as a percent)	86.00%
Contribution percentage, company match as percent of employee contribution	3.00%
Contribution percentage, percent of company match after initial threshold	50.00%
Contribution percentage, initial threshold for change in company matching contribution	3.00%
Matching contributions by employer	$ 66,000	$ 76,000
401(k) plan [Member] | Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Contribution percentage, company match as percent of employee contribution	5.00%
Profit Sharing [Member]
Defined Benefit Plan Disclosure [Line Items]
Minimum age restriction for participation	21 years
Matching contributions by employer	$ 0
Minimum number of service hours required in plan year to be eligible under plan	900 hours

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Commitments and Contingencies (Information About Existing Operating Leases) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Commitments and Contingencies [Abstract]
Operating lease cost	$ 174	$ 143
Cash paid for operating leases	164	$ 149
Right-of-use assets obtained in exchange for operating lease liabilities	$ 680
Weighted average remaining lease term (in years)	3 years 11 months 16 days	1 year 3 months
Weighted-average discount rate	4.77%

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Segment Information (Narrative) (Details)	12 Months Ended
	Dec. 31, 2019 segment
Segment Information [Abstract]
Number of segments	2

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Fair Value Measurements (Schedule of Valuation Methodologies Used to Measure the Fair Value Adjustments for Level 3 Assets Recorded at Fair Value on a Nonrecurring Basis) (Details)	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item	Dec. 31, 2015 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Investments in joint venture | $	$ 891,000	$ 887,000	$ 900,000
Foreclosed assets | $	301,000	0
Significant Unobservable Inputs Level 3 [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Impaired Loans | $	8,640,000	11,616,000
Significant Unobservable Inputs Level 3 [Member] | Joint Venture [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Investments in joint venture | $	$ 891,000	$ 887,000
Investment in joint venture, measurement input	0	0
Significant Unobservable Inputs Level 3 [Member] | Foreclosed Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Foreclosed assets | $	$ 301,000
Foreclosed assets. measurement input	0.06
Minimum [Member] | Significant Unobservable Inputs Level 3 [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Impaired Loans Unobservable Input	0.21	0.15
Maximum [Member] | Significant Unobservable Inputs Level 3 [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Impaired Loans Unobservable Input	0.81	0.72
Weighted Average [Member] | Significant Unobservable Inputs Level 3 [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Impaired Loans Unobservable Input	0.23	0.33
Weighted Average [Member] | Significant Unobservable Inputs Level 3 [Member] | Joint Venture [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Investment in joint venture, measurement input	0	0
Weighted Average [Member] | Significant Unobservable Inputs Level 3 [Member] | Foreclosed Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Foreclosed assets. measurement input	0.06

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Related Party Transactions (Schedule of Related Party Transactions) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Income from related parties	$ 1,569	$ 1,444
ECCU [Member] | Funds Held With Related Party [Member]
Related Party Transaction [Line Items]
Interest earned on funds held with related party		3
ECCU [Member] | Loans Purchased [Member]
Related Party Transaction [Line Items]
Income from related parties	161	278
ECCU [Member] | Networking Agreement [Member]
Related Party Transaction [Line Items]
Related party expenses/fees paid	9	25
ECCU [Member] | Master Services Agreement [Member]
Related Party Transaction [Line Items]
Income from related parties	14	54
ECCU [Member] | Successor Servicing Agreement [Member]
Related Party Transaction [Line Items]
Income from related parties	9	9
ECCU [Member] | Rent Expense [Member]
Related Party Transaction [Line Items]
Related party expenses/fees paid	138	116
ACCU [Member]
Related Party Transaction [Line Items]
Dollar amount of loans purchased	1,435
Dollar amount of loans sold to related party		554
Income from related parties		20
ACCU [Member] | Funds Held With Related Party [Member]
Related Party Transaction [Line Items]
Interest earned on funds held with related party	159	69
ACCU [Member] | Loans Purchased [Member]
Related Party Transaction [Line Items]
Income from related parties	84	86
ACCU [Member] | Networking Agreement [Member]
Related Party Transaction [Line Items]
Related party expenses/fees paid	$ 45	$ 56

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Pledge of Cash and Restricted Cash (Narrative) (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Pledge of Cash and Restricted Cash [Abstract]
Pledged cash	$ 0	$ 0

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Commitments and Contingencies (Unfunded Commitments) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Undisbursed Loans [Member]
Commitments And Contingencies [Line Items]
Unfunded Commitments	$ 1,999	$ 1,919

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Premises and Equipment (Summary of Premises and Equipment) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Total premises and equipment	$ 760	$ 747
Less accumulated depreciation and amortization	(544)	(660)
Premises and equipment, net	216	87
Depreciation and amortization expense	43	30
Furniture And Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment	503	491
Computer System [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment	214	231
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment	$ 43	$ 25

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Investor Notes Payable (Narrative) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Feb. 28, 2018 USD ($)	Jan. 31, 2015 USD ($)
Debt Instrument [Line Items]
Debt issuance costs	$ 55	$ 92
Class A [Member]
Debt Instrument [Line Items]
Number of series in class of notes | item	3
Class 1 [Member]
Debt Instrument [Line Items]
Number of series in class of notes | item	2
Class 1A [Member]
Debt Instrument [Line Items]
Number of series in class of notes | item	2
Notes authorized, maximum			$ 90,000
Secured Notes [Member]
Debt Instrument [Line Items]
Notes authorized, maximum	$ 80,000			$ 80,000
Collateral pledged		$ 10,900
Secured Notes [Member] | Cash [Member]
Debt Instrument [Line Items]
Minimum collateralization ratio	100.00%
Secured Notes [Member] | Loans Receivable [Member]
Debt Instrument [Line Items]
Minimum collateralization ratio	105.00%
Collateral pledged	$ 13,020
Subordinated Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Maturity period	12 months
Subordinated Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Maturity period	60 months
Subordinated Notes [Member] | Swap Index Rate [Member]
Debt Instrument [Line Items]
Interest rate measurement period	7 days

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Income Taxes and State LLC Fees

12 Months Ended

Dec. 31, 2019

Income Taxes and State LLC Fees [Abstract]

Income Taxes and State LLC Fees

Note 17. Income Taxes and State LLC Fees

MPIC is subject to a California gross receipts LLC fee of approximately $12,000 per year, and the state minimum franchise tax of $800 per year. MP Securities is subject to a California gross receipts LLC fee of approximately $6,000 and the state minimum franchise tax of $800 per year.  

MP Realty incurred a tax loss for the year ended December 31, 20182018, and recorded a provision of $800 per year for the state minimum franchise tax. For the years ended December 31, 2019 and 2018, MP Realty has federal and state net operating loss carryforwards of approximately $430 thousand and $40710 thousand, respectively, which begin to expire in 2030. Management assessed the realizability of the deferred tax asset and determined that a 100% valuation against the deferred tax asset was appropriate at December 31, 2019 and 2018.

Tax years ended December 31, 2016 through December 31, 2019 remain subject to examination by the Internal Revenue Service and the tax years ended December 31, 2015 through December 31, 2019 remain subject to examination by the California Franchise Tax Board.

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Pledge of Cash and Restricted Cash (Tables)

12 Months Ended

Dec. 31, 2019

Pledge of Cash and Restricted Cash [Abstract]

Reconciliation of Cash, Cash Equivalents, and Restricted Cash

	December 31,
	2019		2018
Cash and cash equivalents	$	25,993	$	9,877
Restricted cash		52		51
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	26,045	$	9,928