10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2020

OR

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

For the period from _____ to _____

333-4028la

(Commission file No.)

MINISTRY PARTNERS INVESTMENT COMPANY, LLC

(Exact name of registrant as specified in its charter)

CALIFORNIA (State or other jurisdiction of incorporation or organization 26-3959348 (I.R.S. employer identification no.)

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

(Address of principal executive offices)

(714) 671-5720

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑  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 such files). Yes☑  No ☐

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

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

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 revised financial 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 ☑.

At September 30, 2020, registrant had issued and outstanding 146,522 units of its Class A common units. The information contained in this Form 10-Q should be read in conjunction with the registrant’s Annual Report on Form 10-K for the year ended December 31, 2019.

MINISTRY PARTNERS INVESTMENT COMPANY, LLC

FORM 10-Q

TABLE OF CONTENTS

9
	PART I — FINANCIAL INFORMATION
Item 1:	Consolidated Financial Statements	F - 1
	Consolidated Balance Sheets	F - 2
	Consolidated Statements of Income	F - 3
	Consolidated Statements of Cash Flows	F - 4
	Notes to Consolidated Financial Statements	F - 5
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4:	Controls and Procedures	18
	PART II —OTHER INFORMATION
Item 1:	Legal Proceedings	19
Item 1A:	Risk Factors	19
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3:	Defaults Upon Senior Securities	21
Item 4:	Mine Safety Disclosures	22
Item 5:	Other Information	23
Item 6:	Exhibits	24
	SIGNATURES	25
Exhibit 31.1:	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)
Exhibit 31.2:	Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)
Exhibit 32.1:	Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2:	Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

2

PART I - FINANCIAL INFORMATION

Item 1: Financial Statements

F-1

Ministry Partners Investment Company, LLC and Subsidiaries

Consolidated Balance Sheets

September 30, 2020 and December 31, 2019

(Dollars in thousands Except Unit Data)

	September 30,		December 31,
	2020		2019
	(Unaudited)		(Audited)
Assets:
Cash and cash equivalents	$	17,926	$	25,993
Restricted cash		50		52
Certificates of deposit		1,757		—
Loans receivable, net of allowance for loan losses of $1,523 and $1,393 as of September 30, 2020 and December 31, 2019, respectively		119,833		128,843
Accrued interest receivable		835		635
Investment in joint venture		889		891
Property and equipment, net		232		216
Foreclosed assets, net		301		301
Servicing assets		148		100
Other assets		997		990
Total assets	$	142,968	$	158,021
Liabilities and members’ equity
Liabilities:
Term-debt	$	52,544	$	71,427
Investor notes payable, net of debt issuance costs of $25 and $55 as of September 30, 2020 and December 31, 2019, respectively		75,292		73,046
Accrued interest payable		301		266
Other liabilities		1,999		2,211
Total liabilities		130,136		146,950
Members' Equity:
Series A preferred units, 1,000,000 units authorized, 117,100 units issued and outstanding at September 30, 2020 and December 31, 2019 (liquidation preference of $100 per unit); See Note 13		11,715		11,715
Class A common units, 1,000,000 units authorized, 146,522 units issued and outstanding at September 30, 2020 and December 31, 2019; See Note 13		1,509		1,509
Accumulated deficit		(392)		(2,153)
Total members' equity		12,832		11,071
Total liabilities and members' equity	$	142,968	$	158,021

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

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Ministry Partners Investment Company, LLC and Subsidiaries

Consolidated Statements ofIncome (Unaudited)

For the three and nine month periods ended September 30, 2020 and 2019

(Dollars in thousands)

	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Interest income:
Interest on loans	$	2,004	$	2,340	$	6,238	$	7,618
Interest on interest-bearing accounts		26		88		142		250
Total interest income		2,030		2,428		6,380		7,868
Interest expense:
Term-debt		427		468		1,310		1,412
Investor notes payable		670		803		2,119		2,416
Total interest expense		1,097		1,271		3,429		3,828
Net interest income		933		1,157		2,951		4,040
Provision (credit) for loan losses		132		(83)		195		(421)
Net interest income after provision (credit) for loan losses		801		1,240		2,756		4,461
Non-interest income:
Broker-dealer commissions and fees		183		407		470		1,219
Other income		83		38		228		106
Gain on debt extinguishment		2,400		—		2,400		—
Total non-interest income		2,666		445		3,098		1,325
Non-interest expenses:
Salaries and benefits		811		693		2,191		2,078
Marketing and promotion		206		58		224		259
Office occupancy		46		44		134		132
Office operations and other expenses		343		392		994		1,113
Foreclosed assets, net		—		11		8		11
Legal and accounting		65		83		253		261
Total non-interest expenses		1,471		1,281		3,804		3,854
Income before provision for income taxes		1,996		404		2,050		1,932
Provision for income taxes and state LLC fees		4		5		15		14
Net income	$	1,992	$	399	$	2,035	$	1,918

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

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Ministry Partners Investment Company, LLC and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

For the nine months ended September 30, 2020 and 2019

(Dollars in thousands)

	Nine months ended
	September 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,035	$	1,918
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		39		30
Amortization of deferred loan fees		(194)		(196)
Amortization of debt issuance costs		72		65
Provision (credit) for loan losses		195		(421)
Accretion of loan discount		(22)		(79)
Gain on sale of loans		(61)		—
Loss (gain) on sale of fixed assets		8		(1)
Gain on extinguishment of debt		(2,400)		—
Changes in:
Accrued interest receivable		(201)		(6)
Other assets		32		(566)
Accrued interest payable		34		9
Other liabilities		(188)		1,797
Net cash provided (used) by operating activities		(651)		2,550
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases		—		(2,255)
Loan originations		(16,152)		(4,634)
Loan sales		16,533		—
Loan principal collections		8,626		15,222
Purchase of certificates of deposit		(1,757)		—
Purchase of property and equipment		(87)		(163)
Sale of property and equipment		24		4
Net cash provided by investing activities		7,187		8,174
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on term debt		(16,483)		(3,785)
Net change in investor notes payable		2,216		5,967
Debt issuance costs		(42)		(49)
Dividends paid on preferred units		(296)		(264)
Net cash provided (used) by financing activities		(14,605)		1,869
Net increase (decrease) in cash and restricted cash		(8,069)		12,593
Cash, cash equivalents, and restricted cash at beginning of period		26,045		9,928
Cash, cash equivalents, and restricted cash at end of period	$	17,976	$	22,521
Supplemental disclosures of cash flow information
Interest paid	$	3,395	$	3,820
Income taxes paid		20		20
Supplemental disclosures of non-cash transactions
Servicing assets recorded		85		—
Leased assets obtained in exchange of new operating lease liabilities		53		680
Lease liabilities recorded		53		680
Dividends declared to preferred unit holders		214		237

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

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Ministry Partners Investment Company, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The accounting and financial reporting policies of MINISTRY PARTNERS INVESTMENT COMPANY, LLC (the “Company”) and its wholly-owned subsidiaries, Ministry Partners Funding, LLC, MP Realty Services, Inc., Ministry Partners Securities, LLC, and Ministry Partners for Christ, Inc. conform to accounting principles generally accepted in the United States and general financial industry practices. The accompanying interim consolidated financial statements have not been audited. A more detailed description of the Company’s accounting policies is included in its 2019 annual report filed on Form 10-K. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2020 and for the nine months ended September 30, 2020 and 2019 have been made.

Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The results of operations for the periods ended September 30, 2020 and 2019 are not necessarily indicative of the results for the full year.

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

Nature of Business

The Company was formed in California in 1991. The Company’s primary operations are financing commercial real property secured loans and providing investment advisoryand insurance services and products for the benefit of evangelical churches, ministries, and individuals.

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 Delaware not-for-profit 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

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formed MP Realty in November2009 and obtained a license to operate as a corporate real estate broker through the California Department of Real Estate on February23, 2010. MP Realty has conducted limited operations to date. The Company formed MP Securities on April26, 2010 to provide investment and insurance 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 investor notes.

The Company formed MPC on December28, 2018 to be used exclusively for religious and charitable purposes within the meaning of Section501(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. On August23, 2019, the Internal Revenue Service granted MPC tax-exempt status as a private foundation under Section501(c)(3) of the Internal Revenue Code. The MPC Board of Directors approved its first charitable grant during the nine months ended September30, 2020.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company 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 California corporation to a California limited liability company by filing the Articles of Organization-Conversion with the California Secretary of State. At that time, 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.

Risks and Uncertainties

Some of the Company’s borrowers have been adversely impacted by the outbreak of COVID-19 and it could impair their ability to fulfill their financial obligations to the Company. On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the U.S. a national emergency. At that time, due to the pandemic’s spread, state and local governments ordered non-essential businesses to close, banned public gatherings, and required residents to shelter at home. These initial orders required churches, faith-based ministries, private schools, daycare centers, and Christian colleges to discontinue

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public gatherings, worship services, classes, and conference events. Churches that had typically received weekly offerings of tithes and cash contributions became dependent on online giving options and contributions sent by mail. Since that time, state and local governments lifted the initial restrictions. However, spikes in the pandemic’s spread have caused some states to reinstate restrictions to some degree. Church revenues are also dependent on general economic conditions, including unemployment rates and economic disruption to businesses, schools, and financial markets. Federal banking institutions have encouraged lenders to work with borrowers to provide loan payment relief.Furthermore,  Congress enacted legislation that provided relief from reporting loan classifications that would have otherwise required adverse financial reporting obligations due to modifications granted to borrowers as a troubled debt restructuring (“TDR”) because of the COVID-19 pandemic. In addition, in response to COVID-19, the Federal Reserve reduced the Federal Funds rate to zero on March 16, 2020. The reduction in interest rates and other effects of the COVID-19 pandemic raise uncertainties that could negatively affect the Company’s net interest income and non-interest income. While there has been no material impact to the Company’s employees to date, COVID-19 could also potentially create widespread business continuity issues for the Company.

Congress, the President, and the Federal Reserve have taken several actions designed to cushion the economic fallout. Most notably, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law at the end of March 2020 as a $2 trillion legislative package. The goal of the CARES Act is to prevent a severe economic downturn through various measures, including direct financial aid to American families and economic stimulus to significantly impacted industry sectors. The package also includes extensive emergency funding for hospitals and providers.

On June 5, 2020, the Paycheck Protection Flexibility Act (“Flexibility Act”) was enacted and signed into law. The Flexibility Act amended the CARES Act to extend the covered period that measures eligibility for the loan forgiveness and required use of funds from June 30, 2020 to December 31, 2020. The Flexibility Act also extends the period within which to measure whether the loan will qualify for forgiveness to a twenty four (24) week period beginning on the date the loan is disbursed. Finally, the Flexibility Act provides that a borrower must use at least 60% of the proceeds of the PPP loan for payroll costs to be eligible for loan forgiveness. In addition to the general impact of COVID-19, certain provisions of the CARES Act, as well as other recent legislative and regulatory relief efforts, could have material direct and indirect effect on the Company’s operations.

The Company’s operations are dependent upon the willingness and ability of its employees, borrowers, noteholders, and investment clients to conduct financial transactions. If the global response to contain COVID-19 results in reinstatement of lock-down or curtailment of activities orders, the Company could experience a material adverse effect on its business, financial condition, results of operations, and cash flows. While it is not possible to know the full extent of the impact that COVID-19 and resulting measures to

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curtail its spread will have on the Company’s operations, the Company is disclosing potentially material items of which it is aware.

Cash, Cash Equivalents, and Restricted Cash

Cash equivalents include time deposits and highly liquid debt instruments with original maturities of three months or less. The Company had demand deposits and money market deposit accounts as of September 30, 2020 and December 31, 2019.

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 restricted cash and management classifies it as such on our balance sheet.

Certificates of Deposit

Certificates of deposit include investments in certificates of deposit held at financial institutions that carry original maturities of greater than three months. The Company had $1,757 thousand in certificates of various terms greater than three months as of September 30, 2020. The Company had no certificates of deposit with original maturities of greater than three months at December 31, 2019.

Details of certificates owned by the Company are as follows (dollars in thousands):

Certificate	Open Date	Certificate Amount		Interest Rate	Maturity Date
CD 1	1/13/2020	$	1,000	2.25%	10/13/2021
CD 2	4/1/2020	$	757	1.95%	1/1/2021

Reclassifications

The Company has made certain reclassifications to the 2019 financial statements to conform to the 2020 presentation. These reclassifications do not affect members’ equity or consolidated balance sheets for the nine months ended September 30, 2019.

Use of Estimates

The Company’s creation of consolidated financial statements that conform to United States Generally Accepted Accounting Principles (“U.S. 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. The estimates and assumptions made by the Company’s management also affect the reported amounts of

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revenues and expenses during the reporting period. These estimates govern areas such as the allowance for credit losses and the fair value of our financial instruments. Actual results could differ from these estimates.

Investment in Joint Venture

In 2016, the Company entered into a joint venture agreement to develop and sell property we acquired as part of a Deed in Lieu of Foreclosure agreement reached with one of our borrowers. The joint venture owns a property located in Santa Clarita, California.

On a periodic basis, management analyzes the Company’s investment in the joint venture for impairment. In this analysis, management compares the carrying value of the investment to the estimated value of the underlying real property. The Company 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 in the joint venture. Management records these valuation changes as realized gains or losses on investment on the Company’s consolidated statements of operations.

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 related to restructured loans and represent interest accrued and unpaid which the Company added to the restructured loan’s principal balance. 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

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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 its 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:

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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:

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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 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

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. 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

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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. Under Accounting Standards Codification (“ASC”) 340-10, the concessions granted must last longer than an insignificant period of time for the loan to be considered a troubled debt restructuring. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal then due and payable, management measures any impairment on the restructured loan in the same manner as for impaired loans as noted above.

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.

In accordance with industry standards, the Company classifies a loan as impaired if management has modified it as part of a troubled debt restructuring. However, troubled debt restructures, upon meeting certain performance conditions, are eligible to receive non-classified loan ratings (pass or watch) 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.

Section 403 of the CARES Act provides that a qualifying loan modification or extension is exempt by law from classification as a troubled debt restructuring pursuant to FASB ASC 340-10. On April 7, 2020, the Office of the Comptroller of the Currency and related financial agencies issued OCC Bulletin 2020-35, which provides further guidance

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regarding when a loan modification or extension is not subject to classification as a TDR pursuant to FASB ASC 340-10.

Under section 4013 of the CARES Act, financial institutions may elect not to categorize a loan modification as a troubled debt restructuring if it is

(1) related to COVID-19;

(2) executed on a loan that was not more than thirty (30) days past due as of December 31, 2019; and

(3) executed between March 31, 2020, and the earlier of (A) sixty (60) days after the date of the National Emergency or (B) December 31, 2020.

For all other loan modifications, federal agencies that regulate financial institutions have confirmed with FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to relief being extended, would not be classified as a troubled debt restructuring. This treatment includes short-term modifications including payment deferrals, fee waivers, and extension of repayment terms. Management of the Company has elected to pursue taking these measures with some of its qualifying borrowers during the three months ended September 30, 2020.

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 its debt obligations and should be able to obtain similar financing from other lenders with comparable terms. The risk of default is considered low.

F-14

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 Company’s Board of Managers. Potential for loss under adverse circumstances is elevated for loans in this category, but is 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 prospects for repayment of the loan under the terms of the loan agreement 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 the estimated market value of the collateral, 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 value of the collateral. 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, the possibility of the borrower obtaining additional capital, the borrower’s ability to refinance the loan, or the ability of the borrower to pledge 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.

F-15

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, at a point either in time or over time. The Company recognizes revenue from a performance obligation that is transferred at a point in time 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 in advance 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.

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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.

Gains on sales of loans receivable

From time to time, the Company sells participation interests in loans receivable that it services. Upon completion of the loan sale, the Company recognizes a gain based on certain factors including the maturity date of the loan, the percentage of the loan sold and retained, and the servicing rate charged to the participant on the sold portion.

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

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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 financial statements are carrying the recorded amount at management’s estimate of 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 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;

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· 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

Debt issuance costs consist of costs related to the acquisition of debt. 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, which approximates the interest method.

Employee Benefit Plan

The Company records contributions to the qualified employee retirement plan 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.

F-19

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

Recently adopted accounting standards

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements by requiring that Level 3 fair value disclosures include the range and weighted average of significant unobservable inputs used to develop those fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 was effective for the Company on January 1, 2020 and did not have a material impact on the Company’s financial statement disclosures.

In March 2020, various regulatory agencies issued an interagency statement on loan modifications and reporting for financial institutions working with borrowers affected by the Coronavirus. The interagency statement was effective immediately and impacted accounting for loan modifications. Under Accounting Standards Codification 310-40, “Receivables – Troubled Debt Restructurings by Creditors,” (“ASC 310-40”), a restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-

F-20

19 to borrowers who were current prior to any relief, are not to be considered TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. This interagency guidance is expected to have a material impact on the Company’s financial statements; however, this impact cannot be quantified at this time.

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 of the new standard.

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, which will be classified as restricted cash. At September 30, 2020 and December 31, 2019, the Company held no pledged cash.

F-21

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):

	September 30,				December 31,
	2020		2019		2019
Cash and cash equivalents	$	17,926	$	22,470	$	25,993
Restricted cash		50		51		52
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	17,976	$	22,521	$	26,045

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

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.

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

	September 30,		December 31,
	2020		2019
Total funds held on deposit at ECCU	$	3,482	$	365
Loan participations purchased from and serviced by ECCU		259		1,495

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

	Three months ended
	September 30,
	2020		2019
Interest earned on funds held with ECCU	$	8	$	—
Interest income earned on loans purchased from ECCU		4		38
Fees paid to ECCU from MP Securities Networking Agreement		5		5
Income from Successor Servicing Agreement with ECCU		2		2
Rent expense on lease agreement with ECCU		37		37

Nine months ended

F-22

	September 30,
	2020		2019
Interest earned on funds held with ECCU	$	13	$	—
Interest income earned on loans purchased from ECCU		11		113
Loans sold to ECCU		1,164		—
Fees paid to ECCU from MP Securities Networking Agreement		7		9
Income from Master Services Agreement with ECCU		—		14
Income from Successor Servicing Agreement with ECCU		7		8
Rent expense on lease agreement with ECCU		110		73

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 nine months ended September 30, 2020 and 2019.  

Loans sold:

From time to time, the Company will sell loans to ECCU. On January 23, 2020, the Company sold an impaired loan to ECCU in order to recoup its recorded investment in the loan. The Company had previously purchased this loan from ECCU and ECCU was servicing the loan. The Company did not sell any loans to ECCU during the nine months ended September 30, 2019.

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, entered into a Networking Agreement with ECCU in October 2014 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”).

F-23

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

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 mortgage loans that ECCU has designated. 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. In October 2019,the agreement was 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.

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

	September 30,		December 31,
	2020		2019
Total funds held on deposit at ACCU	$	6,720	$	10,343
Loan participations purchased from and serviced by ACCU		1,126		1,603

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

	Three months ended
	September 30,
	2020		2019
Interest earned on funds held with ACCU	$	12	$	43
Loans sold to ACCU		441		—
Interest income earned on loans purchased from ACCU		14		21
Fees paid based on MP Securities Networking Agreement with ACCU		23		7

	Nine months ended
	September 30,
	2020		2019
Dollar amount of loan participation interests purchased from ACCU	$	—	$	1,435
Interest earned on funds held with ACCU		69		115
Loans sold to ACCU		441		—
Interest income earned on loans purchased from ACCU		42		63
Fees paid based on MP Securities Networking Agreement with ACCU		50		31

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Loan participation interests:

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.

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. On April 29, 2020, the Company sold back to ACCU a $441 thousand loan participation interest that it had previously purchased from ACCU.

MP Securities Networking Agreement with ACCU:

MP Securities entered into a Networking Agreement with ACCU in July 2014 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 entered into 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.

F-25

The Company has also entered into a Loan Participation Agreement with Navy Federal Credit Union (“NFCU”), an owner of both the Company’s Class A Common Units and Series A Preferred Units. Under this agreement, the Company sold NFCU a $5.0 million loan participation interest in one of its construction loans on March 20, 2020. As of September 30, 2020, NFCU’s outstanding balance of the drawn portion of the loan was $1.9 million. As part of this agreement, the Company retained the right to service the loan, and it charges NFCU 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. See, “Note 11. Investor Notes Payable” to Part I, Item I “Financial Information” of this Report.

Line of Credit with KCT Credit Union

On September30, 2020, the Company entered into a Loan and Security Agreement with KCT Credit Union, an Illinois state chartered financial institution (“KCT”). The KCT line of credit is a $7.0million short-term demand facility with a maturity date ending September30, 2021. The line of credit will automatically renew for a one-year term unless either party furnishes written notice at least thirty(30) days prior to the maturity date that it does not intend to renew the agreement. The KCT line of credit is secured by certain mortgage loans held as collateral and the Company is required to maintain a minimum collateralization ratio of 120% measured by the outstanding balance of mortgage notes pledged as compared to the total amount owed on the line of credit. As of September30, 2020, the Company did not have an outstanding balance on the line. The KCT line of

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credit is evidenced by a promissory note, is payable one hundred twenty (120) days after each advance made or earlier in the event that collateral loan becomes more than sixty (60) days delinquent and the Company fails to cure such delinquency. The interest rate on the Note is set at prime plus 0.50%.  At September 30, 2020, the prime rate was 3.25%.  Our Board Chairperson, R. Michael Lee, serves as the Chief Executive Officer and President of KCT. The Company approved the KCT line of credit in accordance with its Related Party Transaction Policy, concluded that the terms of the KCT line of credit were in the best interests of the Company, and entered into on terms no less favorable to the Company than could be obtained from an independent third party.

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 $213 thousand and $368 thousand at September 30, 2020 and December 31, 2019, respectively.

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 Part I “Financial Information” of this Report. 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

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extend through 2033. The loan portfolio had a weighted average rate of 6.51% and 6.44% as of September 30, 2020 and December 31, 2019, respectively.

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

	September 30,		December 31,
	2020		2019
Loans to evangelical churches and related organizations:
Real estate secured	$	121,976	$	130,889
Unsecured		149		160
Total loans		122,125		131,049
Deferred loan fees, net		(537)		(631)
Loan discount		(232)		(182)
Allowance for loan losses		(1,523)		(1,393)
Loans, net	$	119,833	$	128,843

Allowance for Loan Losses

The following table shows the changes in the allowance for loan losses for the nine months ended September 30, 2020 and the year ended December 31, 2019 (dollars in thousands):

	Nine months ended		Year ended
	September 30, 2020		December 31, 2019
Balance, beginning of period	$	1,393	$	2,480
Provision for loan loss		195		(544)
Charge-offs		(65)		(923)
Recoveries		—		380
Balance, end of period	$	1,523	$	1,393

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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
	September 30, 2020		December 31, 2019
Loans:
Individually evaluated for impairment	$	6,181	$	8,843
Collectively evaluated for impairment		115,944		122,206
Balance	$	122,125	$	131,049
Allowance for loan losses:
Individually evaluated for impairment	$	290	$	175
Collectively evaluated for impairment		1,233		1,218
Balance	$	1,523	$	1,393

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 September 30, 2020
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	93,636	$	3,486	$	1,400	$	—	$	98,522
Watch		17,204		31		187		—		17,422
Special mention		—		—		—		—		—
Substandard		5,677		—		—		—		5,677
Doubtful		504		—		—		—		504
Loss		—		—		—		—		—
Total	$	117,021	$	3,517	$	1,587	$	—	$	122,125

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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

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 September 30, 2020
	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 Still Accruing
Church loans:
Wholly-Owned First	$	—	$	—	$	4,185	$	4,185	$	112,836	$	117,021	$	—
Wholly-Owned Junior		—		—		—		—		3,517		3,517		—
Participation First		—		—		—		—		1,587		1,587		—
Participation Junior		—		—		—		—		—		—		—
Total	$	—	$	—	$	4,185	$	4,185	$	117,940	$	122,125	$	—

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 Still 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	$	—

Impaired Loans

The following tables are summaries of impaired loans by loan class as of and for the three and nine months ended September 30, 2020 and 2019, and the year ended December 31, 2019, respectively. The unpaid principal balance is the contractual principal outstanding on the loan. The recorded balance is the unpaid principal balance less any interest payments that management has recorded against principal. The recorded investment is the recorded

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balance less discounts taken. The related allowance reflects specific reserves taken on the impaired loans (dollars in thousands):

Impaired Loans (by class) As of September 30, 2020									For the three months ended September 30, 2020				For the nine months ended September 30, 2020
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	9,877	$	9,813	$	9,652	$	—	$	9,672	$	92	$	10,978	$	266
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		—		—
Participation Junior		—		—		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		290		290		290		290		290		—		290		—
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		296		11
Participation Junior		—		—		—		—		—		—		—		—
Total:
Church loans	$	10,167	$	10,103	$	9,942	$	290	$	9,962	$	92	$	11,564	$	277

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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

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Impaired Loans (by class) As of September 30, 2019									For the three months ended September 30, 2019				For the nine months ended September 30, 2019
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	6,563	$	6,325	$	6,342	$	—	$	6,215	$	60	$	6,018	$	118
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		1,158		—
Participation Junior		—		—		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		877		567		568		114		1,038		—		2,100		—
Wholly-Owned Junior		215		181		181		135		178		—		179		—
Participation First		1,302		1,274		1,274		103		1,283		—		1,283		—
Participation Junior		—		—		—		—		—		—		—		—
Total:
Church loans	$	8,957	$	8,347	$	8,365	$	352	$	8,714	$	60	$	10,738	$	118

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

Loans on Nonaccrual Status (by class)
	as of
	September 30, 2020		December 31, 2019
Church loans:
Wholly-Owned First	$	6,181	$	6,405
Wholly-Owned Junior		—		—
Participation First		—		1,230
Participation Junior		—		—
Total	$	6,181	$	7,635

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A summary of loans the Company restructured during the three and nine-month periods ended September 30, 2020 and 2019 is as follows (dollars in thousands):

Troubled Debt Restructurings (by class)
For the nine months ended September 30, 2020
	Number of Loans			Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		1	$		1,936	$	1,955	$	1,947
Wholly-Owned Junior
Participation First
Participation Junior
Total		1		$	1,936	$	1,955	$	1,947

There were no loanmodifications made during the three months ended September 30, 2020 that qualified as troubled debt restructurings.

Troubled Debt Restructurings (by class)
For the three months ended September 30, 2019
	Number of Loans			Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		1	$		723	$	890	$	890
Wholly-Owned Junior		1			167		—		—
Participation First		—			—		—		—
Participation Junior		—			—		—		—
Total		2		$	890	$	890	$	890

Troubled Debt Restructurings (by class)
For the nine months ended September 30, 2019
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		3	$	2,404	$	2,582	$	2,578
Wholly-Owned Junior		1		166		—		—
Participation First		—		—		—		—
Participation Junior		—		—		—		—
Total		4	$	2,570	$	2,582	$	2,578

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For the loan restructured during nine months ended September 30, 2020, the Company agreed to a forbearance agreement with the borrower whereby management added accrued interest and fees to the loan’s principal balance, and the borrower will be making interest-only payments for 12 months. For one of the loans restructured during nine months ended September 30, 2019, the Company agreed to a forbearance agreement with the borrower whereby management lowered the interest rate and added accrued interest and fees to the loan’s principal balance. For another loan, the Company agreed to extend the maturity date of the loan and added fees to the balance of the loan. For the two loans restructured during the three months ended September 30, 2019, the Company created two new loans, lowered the interest rate on both, and completely charged off one of the loans. The Company has one restructured loan that is past maturity as of September 30, 2020.

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 and will make adjustments to the risk ratings and specific reserves associated with troubled debt restructurings as deemed necessary.

As of September 30, 2020, the Company has no commitments to advance additional funds in connection with loans modified as troubled debt restructurings.

As discussed in Note 1 to the financial statements, the CARES Act provided the Company an option to elect to not account for certain loan modifications related to COVID-10 as troubled debt restructurings as long as the borrowers were not more than 30 days past due as of December 31, 2019. The loan restructurings made during the nine-month period ended September 30, 2020 and 2019 were not related to COVID-19 modifications.

As of September 30, 2020, the Company has granted certain loan payment concessions, which qualify under the CARES Act, and the Company has elected not to account for these modifications as troubled debt restructurings. These modifications include granting temporary payment relief measures. For any payment deferral requests the Company approves, the maturity date of the mortgage note will not be extended, and any deferred payments will increase the principal amount due at maturity. The Company granted 40 loan payment deferral requests of various terms under the CARES Act. All but four of the borrowers have begun making their regular payments as of September 30, 2020.

Note 5: Investment 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

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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 joint venture incurred losses of $6 thousand for the nine months ended September 30, 2020. The joint venture did not incur any gains or losses during the nine months ended September 30, 2019. As of September 30, 2020 and December 31, 2019, the value of the Company’s investment in the property was $889 thousand and $891 thousand, respectively. Management’s impairment analysis of the investment as of September 30, 2020 has determined that the investment is not impaired.

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 the scope of ASC 606 are noted as such (dollars in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Non-interest income, in scope
Wealth advisory fees	$	66	$	89	$	247	$	217
Investment brokerage fees		117		318		223		1,002
Gains on loan sales		21		—		61		—
Lease income		17		—		47		—
Gain on debt extinguishment		2,400		—		2,400		—
Other non-interest income		2		2		7		20
Non-interest income, out of scope
Lending fees		43		36		113		86
Total non-interest income	$	2,666	$	445	$	3,098	$	1,325

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Note 7: Loan Sales

The following table shows the amount of loan participation sales and the resulting changes in servicing assets recorded during nine months ended September 30, 2020 and 2019, and the year ended December 31, 2019. 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
	Nine months ended				Year ended
	September 30,				December 31,
	2020		2019		2019
Loan participation interests sold by the Company	$	16,533	$	—	$	—
Servicing Assets
Balance, beginning of period	$	100	$	212	$	212
Additions:
Servicing obligations from sale of loan participations		85		—		—
Subtractions:
Amortization		(37)		(103)		(112)
Balance, end of period	$	148	$	109	$	100

Note 8: Foreclosed Assets

The Company’s investment in foreclosed assets was $301 thousand at September 30, 2020 and December 31, 2019. 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 September 30, 2020. The Company did not record any loss provisions on foreclosed assets during the nine months ended September 30, 2020.  

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

Foreclosed Asset Expenses (Income)	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Net loss (gain) on sale of real estate	$	—	$	—	$	—	$	—
Provision for losses		—		—		—		—
Operating expenses, net of income		—		11		8		11
Net expense (income)	$	—	$	11	$	8	$	11

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Note 9: Premises and Equipment

The table below summarizes the premises and equipment owned by the Company (dollars in thousands):

	As of
	September 30,		December 31,
	2020		2019
Furniture and office equipment	$	521	$	503
Computer system		214		214
Leasehold improvements		43		43
Total premises and equipment		778		760
Less accumulated depreciation and amortization		(546)		(544)
Premises and equipment, net	$	232	$	216

	2020		2019
Depreciation and amortization expense for the nine months ended September 30,	$	39	$	30

Note 10: Credit Facilities

The Company has one secured term-debt credit facility. The facility is non-revolving and does not have an option to renew or extend additional credit. Additionally, the facility does not contain a prepayment penalty. Under the terms of the credit facility, the Company must maintain a minimum collateralization ratio of at least 120%. 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. The collateral securing the facility at September 30, 2020 and December 31, 2019 satisfied the 120% minimum. As of September 30, 2020, the Company has only pledged qualifying mortgage loans as collateral on the credit facility. In addition, the credit facility includes a number of borrower covenants. The Company is in compliance with these covenants as of September 30, 2020 and December 31, 2019, respectively.

Previously, the Company had an additional term-debt credit facility that carried the same terms as the facility it currently has. On September 25, 2020, the Company reached an agreement with OSK VII, LLC to pay off the entire outstanding contractual principal balance of $15.0 million. The Company realized $2.4 million in gains on the extinguishment of debt because of this agreement. The Company was in compliance with its covenants and its minimum collateralization ratio on the facility at December 31, 2019 and at the time of the payoff.

On April27, 2020, MP Securities applied for and received a Paycheck Protection Program loan (“PPP Loan”) granted under the CARES Act. According to the terms of the program,

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as administered by the Small Business Association, payments on the loan are deferred for six months, deferred interest is capitalized into the principal balance of the loan, and qualifying amounts of the principal balance of the loan and deferred interest are eligible to be forgiven if MP Securities retains employees and maintains salary levels for its existing employees. Qualifying amounts include amounts equal to eligible payroll costs, certain rent payments, and utility payments as defined by the program. No collateral is required to be pledged for the PPP Loan.

The following table summarizes the principal terms the Company’s term debt as of September 30, 2020:

Nature of Borrowing	Interest Rate	Interest Rate Type	Amount Outstanding		Monthly Payment		Maturity Date	Amount of Loan Collateral Pledged		Amount of Cash Pledged
Term Loan	2.525%	Fixed	$	52,433	$	450	11/1/2026	$	65,966	$	—
PPP Loan	1.000%	Fixed	$	111	$	—	4/27/2022	$	—	$	—

Future principal contractual payments of the Company’s term debt during the twelve-month periods ending September 30, are as follows (dollars in thousands):

2021	$	4,134
2022		4,346
2023		4,343
2024		4,451
2025		4,567
Thereafter		30,703
	$	52,544

Note that the above table includes future contractual principal payments of the PPP Loan, disregarding potential forgiveness.

On September 30, 2020, Ministry Partners Investment Company, LLC, entered into a Loan and Security Agreement with KCT Credit Union, an Illinois state chartered financial institution (“CUSO LOC”). The CUSO LOC is a $7.0 million short-term demand credit facility with a one-year maturity date of September 30, 2021. The facility carried a balance of zero at September 30, 2020.The interest rate on the facility is equal to the United States Prime Rate plus 0.50%.The interest rate was 3.75% on September 30, 2020. The CUSO LOC will automatically renew for another one-year term unless either party furnishes written notice at least thirty (30) days prior to the termination date that it does not intend to renew the agreement. The Company has secured the CUSO LOC with certain of its mortgage loan investments. The Company may draw funds on the CUSO LOC at any time until the line is fully drawn. Repayment of each advance is due one hundred and twenty (120) days after the advance is made or earlier in the event that a collateral loan becomes more than sixty (60) days delinquent and the Company fails to cure such deficiency. To secure its obligations under the CUSO LOC, the Company has agreed to grant a priority first lien and security interest in certain of its mortgage loan investments and maintain a minimum collateralization ratio measured by taking outstanding balance of mortgage notes

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pledged under the facility as compared to the total amount of principal owed on the CUSO LOC. The minimum ratio must equal at least 120%. The CUSO LOC contains typical affirmative covenants for a credit facility of this nature. The Company was in compliance with these covenants at September 30, 2020. As of September 30 2020, the Company did not have an outstanding balance on the CUSO LOC.

Note 11: Investor Notes Payable

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

		As of				As of
		September 30, 2020				December 31, 2019
SEC Registered Public Offerings	Offering Type	Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Class A Offering	Unsecured	$	306	2.12	%	$	487	3.97	%
Class 1 Offering	Unsecured		14,388	3.75	%		22,098	4.01	%
Class 1A Offering	Unsecured		42,780	3.07	%		32,732	3.70	%
Public Offering Total		$	57,474	3.23	%	$	55,317	3.82	%
Private Offerings	Offering Type
Subordinated Notes	Unsecured	$	11,328	4.59	%	$	11,317	5.24	%
Secured Notes	Secured		6,515	3.99	%		6,467	3.98	%
Private Offering Total		$	17,843	4.37	%	$	17,784	4.78	%
Total Investor Notes Payable		$	75,317	3.50	%	$	73,101	4.06	%
Investor Notes Payable Totals by Security	Offering Type
Unsecured Total	Unsecured	$	68,802	3.46	%	$	66,634	4.06	%
Secured Total	Secured	$	6,515	3.99	%	$	6,467	3.98	%

Future maturities for the Company’s investor notes during the twelve-month periods ending September 30,are as follows (dollars in thousands):

2021	$	24,433
2022		17,264
2023		7,847
2024		13,224
2025		12,549
	$	75,317

Debt issuance costs related to the Company’s investor notes payable were $25 thousand and $55 thousand at September 30, 2020 and December 31, 2019, respectively.

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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 September 30, 2020 and December 31, 2019. 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 September 30, 2020 and December 31, 2019. 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

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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 at September 30, 2020 and December 31, 2019.  

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 is authorized to offer up to $80.0 million in Secured Notes to qualified investors. On December 31, 2017, the Company terminated its 2015 Secured Note offering.

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 $1.05of loans receivable collateralizes one dollar of secured notes. At September 30, 2020 and December 31, 2019, the loans receivable collateral securing the Secured Notes had an outstanding balance of $9,127thousand and $13,019 thousand, respectively. The September 30, 2020 and December 31, 2019 collateral balance was sufficient to satisfy the minimum collateral requirement of the Secured Notes offering. As of September 30, 2020 and December 31, 2019, the Company did not have cash pledged for the benefit of the Secured Notes.

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 2018 Secured Note offering terminated on 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:
	September 30, 2020		December 31, 2019
Undisbursed loans	$	2,323	$	1,999

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 September 30, 2020, the Company was a defendant in a wrongful termination of employment lawsuit. On October16, 2020, the Company reached a settlement agreement with the plaintiff. Under the terms of the agreement, the Company is not liable for any settlement payments.

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. In March 2020, the Company signed an agreement to extend the Fresno office lease for two additional years to March 31, 2022. The Company has determined that both leases are operating leases.

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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. Right-of-use assets included in Other Assets were $478 thousand and $536 thousand at September 30, 2020 and December 31, 2019, respectively. Lease liabilities included in Other Liabilities were $490 thousand and $545 thousand at September 30, 2020 and December 31, 2019, respectively.

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

	For the
	Three months ended						Nine months ended						Year ended
	September 30,						September 30,						December 31,
	2020			2019			2020			2019			2019
Lease cost
Operating lease cost	$	44		$	43		$	131		$	130		$	174
Other information
Cash paid for operating leases		43			41			127			123			164
Right-of-use assets obtained in exchange for operating lease liabilities		—			—			53			680			680
Weighted average remaining lease term (in years)		2.79			4.17			2.79			4.17			3.96
Weighted-average discount rate		4.60	%		4.77	%		4.60	%		4.77	%		4.77	%

Future minimum lease payments and lease costs for the twelve months ending September 30, are as follows (dollars in thousands):

	Lease Payments		Lease Costs
2021	$	172	$	174
2022		163		160
2023		154		146
2024		39		37
Total	$	528	$	517

Note 13: 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

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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 no voting 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.

Note 14: Retirement Plans

401(k)

All of the Company’s employees are eligible to participate the Company’s 401(k) plan administered by, Automated Data Processing, Inc. (“ADP”), 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 this is 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 nine months ended September 30, 2020 and 2019 were $60 thousand and $44 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 for the nine months ended September 30, 2020 or 2019.

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Note 15: 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.

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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 September 30, 2020 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 and restricted cash	$	17,976	$	17,976	$	—	$	—	$	17,976
Certificates of deposit		1,757				1,757				1,757
Loans, net		119,833		—		—		118,966		118,966
Investment in joint venture		889		—		—		889		889
Accrued interest receivable		835		—		—		835		835
FINANCIAL LIABILITIES:
Term-debt	$	52,544	$	—	$	—	$	44,481	$	44,481
Investor notes payable		75,292		—		—		77,293		77,293
Other financial liabilities		514		—		—		514		514

			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 and restricted cash	$	25,993	$	25,993	$	—	$	—	$	25,993
Loans, net		128,843		—		—		126,438		126,438
Investment in joint venture		891		—		—		891		891
Accrued interest receivable		635		—		—		635		635
FINANCIAL LIABILITIES:
Term-debt	$	71,427	$	—	$	—	$	55,072	$	55,072
Investor notes payable		73,046		—		—		74,592		74,592
Other financial liabilities		503		—		—		503		503

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 September 30, 2020 and December 31, 2019.  

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

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

Certificates of deposit – Management estimates fair value by using a present value discounted cash flow with a discount rate approximating the current market rate for similar assets. Management classifies certificates of deposits as Level 2 of the fair value hierarchy.

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 September 30, 2020 and December 31, 2019.

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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 September 30, 2020:
Collateral-dependent loans (net of allowance and discount)	$	—	$	—	$	5,815	$	5,815
Investment in joint venture		—		—		889		889
Foreclosed assets (net of allowance)		—		—		301		301
Total	$	—	$	—	$	7,005	$	7,005
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	$	—	$	—	$	9,832	$	9,832

Impaired Loans

The Company records loans that management considers impaired at fair value on a nonrecurring basis. Once a loan is considered impaired, the fair value is measured using one of several methods, including collateral liquidation value, market value of similar debt and discounted cash flows. Those impaired loans not requiring a specific charge against the allowance represent loans for which the fair value of the expected repayments or collateral meet or exceed the recorded investment in the loan. Loans which management deems to be impaired are primarily valued on a nonrecurring basis at the fair value of the underlying real estate collateral. Such fair values are obtained using independent appraisals, which the Company considers to be Level 3 inputs.

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

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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 fair value of impaired loans at September 30, 2020 has decreased from December 31, 2019 as two loans previously classified as impaired were classified as non-impaired, performing loans. In addition, one impaired loan that was outstanding at December 31, 2019 was sold during the first nine months of 2020.

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):

September 30, 2020
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired Loans	$	5,815	Discounted appraised value	Selling cost / Estimated market decrease	21% - 81%  (23%)
Investment in joint venture		889	Internal evaluations	Estimated future market value	0%  (0%)
Foreclosed Assets		301	Internal evaluations	Selling cost	6%  (6%)

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%)

Note 16: 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. MPC is not subject to state or federal tax payments.

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MP Realty incurred a tax loss for the years ended December 31, 2019 and 2018, 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 $407 thousand and $402 thousand, respectively, which begin to expire in 2030. Management assessed its ability to realize the deferred tax asset and determined that a 100% valuation against the deferred tax asset was appropriate at September 30, 2020 and December 31, 2019.

Tax years ended December 31, 2017 through December 31, 2019 remain subject to examination by the Internal Revenue Service and the tax years ended December 31, 2016 through December 31, 2019 remain subject to examination by the California Franchise Tax Board.

Note 17: 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 has two reportable 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.

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Financial information with respect to the reportable segments for the three and nine months ended September 30, 2020 is as follows (dollars in thousands):

Three months ended September 30, 2020
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	4,514	$	409	$	—	$	(227)	$	4,696
Total non-interest expense and provision for tax		1,185		289		1		—		1,475
Net profit		1,852		120		(1)		21		1,992

Nine months ended September 30, 2020
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	9,002	$	1,202	$	—	$	(726)	$	9,478
Total non-interest expense and provision for tax		2,923		895		1		—		3,819
Net profit (loss)		1,601		307		(1)		128		2,035
Total assets		139,724		2,933		371		(60)		142,968

Financial information with respect to the reportable segments for the three and nine months ended September 30, 2019 is as follows (dollars in thousands):

Three months ended September 30, 2019
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	2,465	$	620	$	—	$	(212)	$	2,873
Total non-interest expense and provision for tax		1,006		280		—		—		1,286
Net profit (loss)		12		340		—		47		399

Nine months ended September 30, 2019
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	7,971	$	1,947	$	—	$	(725)	$	9,193
Total non-interest expense and provision for tax		3,029		841		(2)		—		3,868
Net profit (loss)		824		1,106		2		(14)		1,918
Total assets		158,621		2,452		55		(30)		161,098

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Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis compares the results of operations for the three and nine-month periods ended September 30, 2020 and 2019. It should be read in conjunction with our December 31, 2019 Annual Report on Form 10-K and the accompanying unaudited financial statements and Notes set forth in this report.

SAFE HARBOR CAUTIONARY STATEMENT

This Form 10-Q contains forward-looking statements regarding Ministry Partners Investment Company, LLC and our wholly-owned subsidiaries, MPF, MP Realty, MPC, and MP Securities, including, without limitation, statements regarding our expectations with respect to revenue, credit losses, levels of non-performing assets, expenses, earnings and other measures of financial performance. Statements that are not statements of historical facts may be deemed to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend,” “should,” “seek,” “will,” and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them. These forward-looking statements reflect the current views of our management.

These forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that are subject to change based upon various factors (many of which are beyond our control). Such risks, uncertainties, and other factors that could cause our financial performance to differ materially from the expectations expressed in such forward-looking statements include, but are not limited to, the risks set forth in our Annual Report on Form 10-K for the year ended December 31, 2019, as well as the following:

· The health emergency known as the COVID-19 pandemic has resulted in economic disruptions that could adversely affect the ability of our borrowers to make loan payments. As the pandemic spread, state, and local governments ordered non-essential businesses to close, public gatherings to be discontinued, and residents to shelter at home. Churches, faith-based ministries, private schools, daycare centers, and Christian colleges were forced to discontinue public gatherings, worship services, classes, and conference events. Churches that typically receive weekly offerings of tithes and cash contributions have been relying on online giving options and contributions sent by mail. Church revenues are also dependent on general economic conditions, including unemployment rates and economic disruption to businesses, schools, and financial markets. While state and local governments have gradually eased restrictions in the U.S. on holding worship services, churches have been carefully reviewing and preparing new worship 3

service guidelines that will enable them to continue to serve the needs of the communities they serve. The long-term impact of the COVID-19 virus cannot be determined at this time and could have an adverse impact on the timing of loan repayments, liquidity, cash flow, loan defaults, collateral values, loan loss reserves, compliance with loan covenants, and our financial condition. The impact of the virus on economic activity could also vary significantly throughout the U.S. With the geographic concentration of our loans in California and Maryland, the regional effects of the virus could affect the Company’s financial condition, liquidity, and results of operations. Due to rapidly changing events surrounding the gradual re-opening of businesses, schools, daycare centers and religious gatherings, no assurances or predictions can be given with confidence as to the severity of, duration and long-term effect, if any, of the pandemic.

As used in this quarterly report, the terms “we”, “us”, “our” or the “Company” means Ministry Partners Investment Company, LLC and our wholly-owned subsidiaries, MPF, MP Realty, MP Securities, and MPC.

4

OVERVIEW

We generated $1,992 thousand and $2,035 thousand in net income for the three and nine-month periods ended September 30, 2020. The significant factor was a $2,400 thousand gain on debt extinguishment for the quarter ended September 30, 2020. This was the result of an agreement to pay off one of our term loan borrowings. This transaction affected several other areas of our financial performance as described in more detail below.

Recent Developments: COVID-19 Impact on the Company’s Business

Our borrowers are primarily churches, Christian schools, educational institutions, and faith-based ministries. Beginning in March2020, many state governments issued stay at home orders that resulted in many of our borrowers being unable to conduct services with members in attendance. In response to these orders, the majority of our church and ministry borrowers changed their worship services to include an online experience. These churches began depending upon online giving and contributions made by mail to support their ministries. To support our borrowers during the initial shutdown we granted various payment relief options to the borrowers impacted by the pandemic. Interest will continue to accrue under the loans. During the quarter ended June 30, 2020, we granted 35 borrowers deferral requests of various terms. However, during the quarter ended September 30, 2020 we saw a significant decrease in the requests for pandemic related help. In the third quarter of 2020, we had three borrowers who requested extensions of deferrals that had been granted in prior quarters, but there were no new borrowers to request a payment deferral.

Many of the state governments eased the initial shutdown orders that began in March 2020 during the quarter ended September 30, 2020. With the restrictions gradually lifted, churches began holding worship services in their facilities. However, if COVID-19 cases begin increasing in the fall of 2020, some state governments may reinstate restrictions on church meetings. As of the date of this Report, the impact these new restrictions may have on our borrowers’ revenue andtheir ability to make their loan payments remains unknown.

The Company will continue to monitor the impact of Covid-19 on the borrowers it serves, taking into account regional differences in the adverse effects and impact of the pandemic throughout the U.S. As a result, the Company may need to work with churches that have been substantially impacted by the economic effects of the pandemic and may need to grant additional deferrals through the remainder of 2020.

In management’s view, the payment deferrals we made during the three and nine-month periods ended September 30, 2020 did not have a material impact on the Company’s cash position or its revenue. For payment deferral requests the Company granted, the maturity date of the mortgage note was not extended. While deferred payments increased the principal amount due at maturity on these loans, the Company’s net income and liquidity have not been adversely affected.  

5

Financial Condition

This discussion focuses on the overall performance of our consolidated balance sheet. As we are a non-bank financial institution, the balance sheet is the primary driver of our earnings.

Comparison of Financial Condition at September 30, 2020 and December 31, 2019

					Comparison
	2020		2019		$ Difference		% Difference
	(Unaudited)		(Audited)
	(dollars in thousands)
Assets:
Cash	$	17,926	$	25,993	$	(8,067)		(31%)
Restricted cash		50		52		(2)		(4%)
Certificates of deposit		1,757		—		1,757		100%
Loans receivable, net of allowance for loan losses of $1,523 and $1,393 as of September 30, 2020 and December 31, 2019, respectively		119,833		128,843		(9,010)		(7%)
Accrued interest receivable		835		635		200		31%
Investment in joint venture		889		891		(2)		(0%)
Property and equipment, net		232		216		16		7%
Foreclosed assets, net		301		301		—		—%
Servicing assets		148		100		48		48%
Other assets		997		990		7		1%
Total assets	$	142,968	$	158,021	$	(15,053)		(10%)
Liabilities and members’ equity
Liabilities:
Term-debt	$	52,544	$	71,427	$	(18,883)		(26%)
Investor notes payable, net of debt issuance costs of $25 and $55 as of September 30, 2020 and December 31, 2019, respectively		75,292		73,046		2,246		3%
Accrued interest payable		301		266		35		13%
Other liabilities		1,999		2,211		(212)		(10%)
Total liabilities		130,136		146,950		(16,814)		(11%)
Members' Equity:
Series A preferred units		11,715		11,715		—		—%
Class A common units		1,509		1,509		—		—%
Accumulated deficit		(392)		(2,153)		1,761		(82%)
Total members' equity		12,832		11,071		1,761		16%
Total liabilities and members' equity	$	142,968	$	158,021	$	(15,053)		(10%)

On November 4, 2011, we entered into a credit facility refinancing transaction with the National Credit Union Administration Board As Liquidating Agent of Western Corporate Federal Credit Union (“NCUA”) for a $23,500 thousand credit facility refinancing transaction (the “Wescorp loan”). On June 28, 2019, the NCUA assigned all of its rights, title and interest under the Wescorp loan to OSK VII, LLC. Effective as of September 25, 2020, the Company paid off the entire unpaid principal balance of $15,000 thousand, plus accrued interest due on the Wescorp loan.

6

This transaction was the cause of the 10% decrease in our total assets and extinguished $15,000thousand in term-debt. We funded the debt payoff through existing cash we set aside for this type of opportunity as well as raising cash through investor note sales and from our loans receivable portfolio.

In order to conserve our cash and to increase our non-interest income we intend to sell participation interests in the majority of our loans acquisitions. For the nine months ended September 30, 2020, we originated $16,152 thousand in loans and sold loans receivable of $16,533 thousand during the same period. We also received $8,626 thousand in loan principal collections during that time, mostly due to early loan payoffs from borrowers who took advantage of low interest rates. Therefore, our loan portfolio provided $9,007 thousand in cash during the nine months ended September 30, 2020. In addition, we opened a $7,000 thousand warehouse line of credit with KCT Credit Union, an Elgin, Illinois credit union,for the specific purpose of funding investments in mortgage loans and offering participation interests in these loans through a short-term credit facility. This facility allows us to maintain cash balances by borrowing to fund loan origination. We must repay each advance within one hundred twenty (120) days after receiving the advance. Prior to closing the originated loan, it is our policy and practice to seek participants that will purchase a participation interest in the originated loan. After we sell these loan participation interests, we intend to pay off the advance made on the line of credit subsequent to closing and funding the originated loan.  

We increased cash by $2,246 thousand through net investor note sales. 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. In addition, we filed a post-effective amendment to our prospectus on May13, 2020 to increase the spreads on our investor notes to enhance their marketability after the decrease in U.S. Treasury rates from which the note rates are derived.

The overall net result of these items was a reduction of $8,067 thousand in Cash, restricted cash, and certificates of deposit during the nine months ended September 30, 2020.Furthermore, due to the gain on debt extinguishment of $2,400 thousand, our total members’ equity increased 16% or $1,761 thousand for the nine months ended September 30, 2020.

7

Liquidity and Capital Resources

COVID-19 Impact on the Company’s Liquidity

In response to the uncertainty created from the COVID-19 pandemic, management began to generate liquidity from its loans receivable portfolio by selling participation interests in its loans receivable. During the nine months ended September 30, 2020, the Company generated cash from loan sales of $16,533 thousand. We plan to raise more cash through loan and investor note sales, if necessary, to keep sufficient levels of cash available to meet our debt obligations to investors as well as obligations under our term-debt credit facilities.

Cash, restricted cash, and certificates of deposit were $19,733 thousand ($19.7 million) as of September 30, 2020 and our liquidity ratio was 22%. These liquidity levels are significantly higher than the cash amounts the Company has historically carried.

Due to management’s desire to provide liquidity and safety for our investors amid the general uncertainty during the initial stage of the pandemic, we applied for and received a Paycheck Protection Program Loan (“PPP loan”) for $111 thousand. The maturity date of the loan is April 27, 2022. This loan or a portion of this loan may be forgiven if the Company qualifies for forgiveness of the loan under the CARES Act, as amended by the Paycheck Protection Program Flexibility Act and Small Business Administration (“SBA”) regulations promulgated thereunder. On June22, 2020, the SBA issued an Interim Final Rule. The amount of the PPP loan forgiveness will depend, in part, on the total amount spent by the Company over the twenty four (24)week period commencing on the date the PPP loan funds were disbursed on payroll costs and rental payments. The Company is continuing to monitor the SBA revisions, when issued, on loan forgiveness guidelines to determine whether it qualifies for any loan forgiveness under the SBA’s final rule.

September 30, 2020 vs. September 30, 2019

Our liquidity policy, set by our Board of Managers, sets a minimum liquidity ratio and contains contingency protocol if our liquidity falls below the minimum. Our liquidity ratio was 22% at September 30, 2020, which is above the minimum set by our policy.

As described above in our analysis on the Company’s financial condition, we intend to sell participation interests in a significant portion of our loan acquisitions in order to conserve cash and increase our non-interest income. This model will allow us to acquire loans with little liquidity deployment while still allowing the Company to fulfill one of its key missional objectives of providing financing to Christian churches and ministries. We implemented this participation model in 2020 and as a result, the Company sold $16,533 thousand in loans during the nine months ended September 30, 2020 compared to no loan sales in the nine months ended September 30, 2019. Of this total, $9,882 thousand of the loan sales were from new loans funded in 2020 while the remainder was from loans funded in previous years.

8

On September 30, 2020, we opened a warehouse line of credit with KCT Credit Union, an Elgin Illinois credit union, to help facilitate this business model. The warehouse line is restricted to use for holding new loan originations while the Company finds buyers to participate in the origination. We believe using this process will reduce the time it takes to fund a new loan. Reliance on a loan participation model requires that these loans meet rigorous underwriting guidelines that will be acceptable to the financial institutions we intend to target as potential participants in these loans. We believe this strategy will improve the liquidity of our loan portfolio going forward.

The payoff of the Wescorp credit facility debt had significant impact of our net income for the quarter ended September 30, 2020, thereby enabling the Company to be able to report a $2,400 thousand gain on the extinguishment of this debt. The payoff of the Wescorp loan also offers several additional benefits to the Company’s cash flow and liquidity going forward. The monthly payment of $129 thousand will no longer be required reducing the monthly cash flow needed. Paying the debt early eliminated the future requirement to make the large balloon payment. Also, paying off the debt released approximately $22,000 thousand ($22.0 million) of loans pledged as collateral on the Wescorp loan. These loans are now available to secure other credit facilities or to be sold if additional liquidity is needed.

Debt Securities

Historically, we have been successful in generating reinvestments by our debt security holders when the notes they hold mature. Our note renewal rate remains stable and our advisory team continues to expand their clientele, which has also increased new note sales.  

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

2019	75%
2018	62%
2017	64%

The renewal rate for the quarter ended September 30, 2020 as compared to September 30, 2019 is as follows:

Three-month period ended September 30, 2020	64%
Three-month period ended September 30, 2019	74%

Term-debt Credit Facilities

Other than the PPP loan, we have funded a significant portion of our balance sheet through term-debt. Because these non-PPP term loans have a fixed rate until maturity in 2026, they provide a stable cost of funds.

The table below is a summary of the Company’s remaining $52,544 thousand in term-debt after the Wescorp loan payoff as of September 30, 2020 (dollars in thousands):

9

Nature of Borrowing	Interest Rate	Interest Rate Type	Amount Outstanding		Monthly Payment		Maturity Date	Amount of Loan Collateral Pledged		Amount of Cash Pledged
Term Loan	2.525%	Fixed	$	52,433	$	450	11/1/2026	$	65,966	$	—
PPP Loan	1.000%	Fixed	$	111	$	—	4/27/2022	$	—	$	—

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 credit facilities are our earnings, the debt securities we sell, and net cash flow from our loans receivable portfolio. We cannot use our warehouse line of credit from KCT Credit Union to pay down our term-debt, as it is only available to warehouse new loan originations.

The following table shows the maturity schedule on our credit facilities for the next five years and thereafter as of September 30, 2020 (dollars in thousands):

2021	$	4,134
2022		4,346
2023		4,343
2024		4,451
2025		4,567
Thereafter		30,703
	$	52,544

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 September 30, 2020, we are in compliance with our covenants on our investor notes payable and term-debt credit facilities.

· For additional information regarding our investor notes payable, refer to “Note 11. Investor Notes Payable”, to Part I “Financial Information” of this Report beginning at page F-1.

· For additional information on our credit facilities, refer to “Note 10. Credit Facilities”, to Part I “Financial Information” of this Report beginning at page F-1.

10

Results of Operations: Three and Nine Months Ended September 30, 2020

The analysis below describes the Company’s results of operations for the three and nine-month periods ended September 30, 2020 compared to the three and nine-month periods ended September 30, 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.

11

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 Three Months Ended September 30,
	(Dollars in Thousands)
	2020							2019
	Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate
Assets:
Interest-earning accounts with other financial institutions	$	28,353	$	26		0.36	%	$	20,633	$	88		1.70	%
Interest-earning loans [1]		116,796		2,004		6.81	%		134,871		2,340		6.90	%
Total interest-earning assets		145,149		2,030		5.55	%		155,504		2,428		6.21	%
Non-interest-earning assets		8,088		—		—	%		7,400		—		—	%
Total Assets		153,237		2,030		5.26	%		162,904		2,428		5.93	%
Liabilities:
Investor notes payable gross of debt issuance costs		73,074		642		3.49	%		75,122		781		4.14	%
Term-debt		67,209		427		2.53	%		73,530		468		2.53	%
Total interest-bearing liabilities		140,283		1,069		3.02	%		148,652		1,249		3.34	%
Debt issuance cost				28							22
Total interest-bearing liabilities net of debt issuance cost	$	140,283		1,097		3.10	%	$	148,652		1,271		3.40	%
Net interest income			$	933						$	1,157
Net interest margin						2.55	%						2.96	%

[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
	Three Months Ended September 30, 2020 vs. 2019
	Increase (Decrease) Due to Change in
	Volume		Rate		Total
	(Dollars in Thousands)
Increase in Interest Income:
Interest-earning accounts with other financial institutions	$	23	$	(85)	$	(62)
Interest-earning loans		(305)		(31)		(336)
Total interest-earning assets		(282)		(116)		(398)
Increase (Decrease) in Interest Expense:
Investor notes payable gross of debt issuance costs		(36)		(103)		(139)
Term-debt		(41)		—		(41)
Debt issuance cost		—		6		6
Total interest-bearing liabilities		(77)		(97)		(174)
Change in net interest income	$	(205)	$	(19)	$	(224)

12

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 Nine Months Ended September 30,
	(Dollars in Thousands)
	2020							2019
	Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate
Assets:
Interest-earning accounts with other financial institutions	$	28,137	$	142		0.67	%	$	18,960	$	250		1.77	%
Interest-earning loans [1]		120,117		6,238		6.92	%		137,315		7,618		7.44	%
Total interest-earning assets		148,254		6,380		5.73	%		156,275		7,868		6.75	%
Non-interest-earning assets		8,075		—		—	%		8,906		—		—	%
Total Assets		156,329		6,380		5.44	%		165,181		7,868		6.39	%
Liabilities:
Investor notes payable gross of debt issuance costs		73,867		2,046		3.69	%		76,008		2,351		4.15	%
Term-debt		69,286		1,310		2.52	%		74,777		1,412		2.53	%
Total interest-bearing liabilities	$	143,153		3,356		3.12	%	$	150,785		3,763		3.35	%
Debt issuance cost				73							65
Total interest-bearing liabilities net of debt issuance cost	$	143,153		3,429		3.19	%	$	150,785		3,828		3.40	%
Net interest income			$	2,951						$	4,040
Net interest margin						2.65	%						3.47	%

[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
	Nine Months Ended September 30, 2020 vs. 2019
	Increase (Decrease) Due to Change in
	Volume		Rate		Total
	(Dollars in Thousands)
Increase (Decrease) in Interest Income:
Interest-earning accounts with other financial institutions	$	90	$	(198)	$	(108)
Interest-earning loans		(870)		(510)		(1,380)
Total interest-earning assets		(780)		(708)		(1,488)
Increase (Decrease) in Interest Expense:
Investor notes payable gross of debt issuance costs		(229)		(76)		(305)
Term-debt		(96)		(6)		(102)
Debt issuance cost		—		8		8
Total interest-bearing liabilities		(325)		(74)		(399)
Change in net interest income	$	(455)	$	(634)	$	(1,089)

13

Total interest income for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 decreased mostly due to a volume variance on interest-earning loans and a rate variance on interest-earning accounts with other financial institutions. The volume variance on loans was due to the loan sales and early payoffs as described above. The rate variance on interest-earning accounts with other financial institutionswas due to banks lowering their deposit rates in response to a decrease in the Fed Funds rate. These were also the reasons for the volume variance on interest-earning loans and the rate variance on interest-earning accounts with other financial institutions for the nine months ended September 30,2020 compared to the nine months ended September 30, 2019. In addition, interest-earning loans had a rate variance of $510 thousand during these periods. The reason for the rate variance was due to a $511 thousand recovery of interest income in the nine months ended September 30, 2019. The recovery was due to the payoff of two loans that had been classified as non-accrual loans. The Company recovered interest income that we had previously written off against the loan’s recorded balance when the loan paid off.

Total interest expense decreased by $174 thousand and $399 thousand, respectively, for the three and nine months ended September 30, 2020 compared to September 30, 2019due to both a volume and rate variance. The rate variance on investor notes payable was due to the decrease in market rates related to the Federal Reserve’s response to the COVID-19 pandemic. The decrease in interest expense on investor notes payable due to the volume variance was due to a decrease in average investor notes payable. Average investor notes outstanding have decreased from 2019 due to the maturity and non-renewal of several large notes early in the year. New notes sales, primarily in the third quarter, have increased the outstanding balance of notes payable from $73.1 million at March 31, 2020 to $75.3 million at September 30, 2020. Interest expense on term-debt decreased due to a decrease in the average balance due to contractual monthly principal payments made. The Wescorp loan payoff did not materially affect these results since the payoff was late in the quarter, on September 25, 2020.

Overall, we believe that our net interest income will be lower overall going forward compared to past years as our balance sheet contracted due to the payoff of the Wescorp loan. However, we estimate the Wescorp loan payoff will improve the net interest margin in the quarter ending December 31, 2020 and going forward due to low yielding investments paying off higher cost of funds. In addition, we expect our non-interest income related to servicing and selling loans to increase due to the changes in our loan participation business model described above.

14

Provision and non-interest income and expense

	Three months ended
	September 30,				Comparison
	(dollars in thousands)
	2020		2019		$ Difference		% Difference
Net interest income	$	933	$	1,157	$	(224)		(19%)
Provision (credit) for loan losses		132		(83)		215		(259%)
Net interest income after provision (credit) for loan losses		801		1,240		(439)		(35%)
Total non-interest income		2,666		445		2,221		499%
Total non-interest expenses		1,471		1,281		190		15%
Income before provision for income taxes		1,996		404		1,592		394%
Provision for income taxes and state LLC fees		4		5		(1)		(20%)
Net income	$	1,992	$	399	$	1,593		399%

	Nine months ended
	September 30,				Comparison
	(dollars in thousands)
	2020		2019		$ Difference		% Difference
Net interest income	$	2,951	$	4,040	$	(1,089)		(27%)
Provision (credit) for loan losses		195		(421)		616		(146%)
Net interest income after provision for loan losses		2,756		4,461		(1,705)		(38%)
Total non-interest income		3,098		1,325		1,773		134%
Total non-interest expenses		3,804		3,854		(50)		(1%)
Income before provision for income taxes		2,050		1,932		118		6%
Provision for income taxes and state LLC fees		15		14		1		7%
Net income	$	2,035	$	1,918	$	117		6%

Net interest income after provision for loan losses decreased by $439 thousand for the quarter ended September 30, 2020 over the quarter ended September 30, 2019. This decrease was primarily due to the decrease in net interest income described above and a $160 thousand decrease in provision for loan losses. Net interest income after provision for loan losses decreased by $1,705 thousand for the nine months endedSeptember 30, 2020 over the nine months ended September 30, 2019. This decrease was primarily due the decrease in net interest income described above, as well as to a credit in provision expense related to loan loss recoveries on loan payoffs that occurred in the nine months ended September 30, 2019.  

The increase in non-interest income for the three and nine months ended September 30, 2020 compared to the three and nine months ended September 30, 2019 was the result the gain on debt extinguishment of $2,400 thousand due to the payoff of the Wescorp loan offset by a decrease in broker-dealer commissions and fees. The decrease in broker-dealer commissions and fees was due to a few large institutional commission generating income investments the Company sold in the nine months ending September 30,2019 that did not occur in the nine months ending September 30, 2020.  Due to the gain on debt extinguishment, the Company accrued additional amounts for bonuses and for tithes made

15

to charitable organizations, which caused an increase non-interest expenses for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019.

16

Item 3: Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Act of 1934 and are not required to provide the information under this item.

17

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Financial Officer, supervised and participated in an evaluation of our disclosure controls and procedures as of September 30, 2020. After evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) as of the end of the period covered by this quarterly report, our Chief Financial Officer has concluded that as of the evaluation date, our disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this quarterly report was being prepared.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports filed under the Exchange Act is accumulated and communicated to our management, including the President and Principal Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

The Company made no changes in internal controls during the nine months ended September 30, 2020.  

18

PART II - OTHER INFORMATION

Item 1: 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 September 30, 2020, 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.

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Act of 1934 and are not required to provide the information under this item.

19

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds:

None

20

Item 3: Defaults upon Senior Securities:

None

21

Item 4: Mine Safety Disclosure:

None

22

Item 5: Other Information:

None

23

Item 6. Exhibits 

Exhibit No.	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) (**)
31.2	Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) (**)
32.1	Certification of President and Chief Executive Officer pursuant to 18 U.S.C. §1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (**)
32.2	Certification of Principal Accounting Officer pursuant to 18 U.S.C. §1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (**)
101*	The following information from Ministry Partners Investment Company, LLC’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income for the nine-month periods ended September30, 2020 and 2019; (ii) Consolidated Balance Sheets as of September30, 2020 and December 31, 2019; (iii) Consolidated Statements of Cash Flows for the nine months ended September30, 2020 and 2019; and (iv) Notes to Consolidated Financial Statements.

*   Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.

**   Filed herewith

24

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 6, 2020

	MINISTRY PARTNERS INVESTMENT
	COMPANY, LLC
(Registrant)	By: /s/ Joseph W. Turner, Jr.
	Joseph W. Turner, Jr.,
	Chief Executive Officer

25

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY

ACT OF 2002

I, Joseph W. Turner, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Ministry Partners Investment Company, LLC;

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 issuer as of, and for, the periods presented in this report;

4.    The registrant'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 registrant 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 registrant, 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially effect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (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 registrant'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 registrant's internal control over financial reporting.

Date: November 6, 2020	By:	/s/ Joseph W. Turner, Jr.
		Joseph W. Turner, Jr.
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF ACTING PRINCIPAL FINANCIAL

AND ACCOUNTING OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Brian S. Barbre, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Ministry Partners Investment Company, LLC;

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 issuer as of, and for, the periods presented in this report;

4.    The registrant'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 registrant 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 registrant, 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially effect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (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 registrant'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 registrant's internal control over financial reporting.

Date: November 6, 2020	By:	/s/ Brian S. Barbre
		Brian S. Barbre
		Principal Accounting Officer

EX-32.1

EXHIBIT 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 capacity as Chief Executive Officer of Ministry Partners Investment Company, LLC, (the “Company”) that, to his knowledge, this Quarterly Report on Form 10-Q for the period ended September 30, 2020 (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:November 6, 2020	By:	/s/ Joseph W. Turner, Jr.
		Joseph W. Turner, Jr.,
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2

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 capacity as Principal Accounting Officer of Ministry Partners Investment Company, LLC, (the "Company") that, to his knowledge, this Quarterly Report on Form 10-Q for the period ended September 30, 2020 (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: November 6, 2020	By:	/s/ Brian S. Barbre
		Brian S. Barbre,
		Principal Accounting Officer

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2020 shares
Document And Entity Information [Abstract]
Entity Registrant Name	MINISTRY PARTNERS INVESTMENT COMPANY, LLC
Entity Central Index Key	0000944130
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	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

XML

Consolidated Balance Sheets - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Assets:
Cash and cash equivalents	$ 17,926,000	$ 25,993,000
Restricted cash	50,000	52,000
Certificates of deposit	1,757,000	0
Loans receivable, net of allowance for loan losses of $1,523 and $1,393 as of September 30, 2020 and December 31, 2019, respectively	119,833,000	128,843,000
Accrued interest receivable	835,000	635,000
Investment in joint venture	889,000	891,000
Property and equipment, net	232,000	216,000
Foreclosed assets, net	301,000	301,000
Servicing assets	148,000	100,000
Other assets	997,000	990,000
Total assets	142,968,000	158,021,000
Liabilities:
Term-debt	52,544,000	71,427,000
Investor notes payable, net of debt issuance costs of $25 and $55 as of September 30, 2020 and December 31 2019, respectively	75,292,000	73,046,000
Accrued interest payable	301,000	266,000
Other liabilities	1,999,000	2,211,000
Total liabilities	130,136,000	146,950,000
Members' Equity:
Series A preferred units, 1,000,000 units authorized, 117,100 units issued and outstanding at September 30, 2020 and December 31, 2019 (liquidation preference of $100 per unit); See Note 13	11,715,000	11,715,000
Class A common units, 1,000,000 units authorized, 146,522 units issued and outstanding at September 30, 2020 and December 31, 2019; See Note 13	1,509,000	1,509,000
Accumulated deficit	(392,000)	(2,153,000)
Total members' equity	12,832,000	11,071,000
Total liabilities and members' equity	$ 142,968,000	$ 158,021,000

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Consolidated Balance Sheets [Abstract]
Loans receivable, allowance for loan losses	$ 1,523	$ 1,393
Investor notes payable, debt issuance costs	$ 25	$ 55
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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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Interest income:
Interest on loans	$ 2,004	$ 2,340	$ 6,238	$ 7,618
Interest on interest-bearing accounts	26	88	142	250
Total interest income	2,030	2,428	6,380	7,868
Interest expense:
Term-debt	427	468	1,310	1,412
Investor notes payable	670	803	2,119	2,416
Total interest expense	1,097	1,271	3,429	3,828
Net interest income	933	1,157	2,951	4,040
Provision (credit) for loan losses	132	(83)	195	(421)
Net interest income after provision (credit) for loan losses	801	1,240	2,756	4,461
Non-interest income:
Broker-dealer commissions and fees	183	407	470	1,219
Other income	83	38	228	106
Gain on debt extinguishment	2,400		2,400
Total non-interest income	2,666	445	3,098	1,325
Non-interest expenses:
Salaries and benefits	811	693	2,191	2,078
Marketing and promotion	206	58	224	259
Office occupancy	46	44	134	132
Office operations and other expenses	343	392	994	1,113
Foreclosed assets, net		11	8	11
Legal and accounting	65	83	253	261
Total non-interest expenses	1,471	1,281	3,804	3,854
Income before provision for income taxes	1,996	404	2,050	1,932
Provision for income taxes and state LLC fees	4	5	15	14
Net income	$ 1,992	$ 399	$ 2,035	$ 1,918

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 2,035	$ 1,918
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	39	30
Amortization of deferred loan fees	(194)	(196)
Amortization of debt issuance costs	72	65
Provision (credit) for loan losses	195	(421)
Accretion of loan discount	(22)	(79)
Gain on sale of loans	(61)
Loss (gain) on sale of fixed assets	8	(1)
Gain on extinguishment of debt	(2,400)
Changes in:
Accrued interest receivable	(201)	(6)
Other assets	32	(566)
Accrued interest payable	34	9
Other liabilities	(188)	1,797
Net cash provided (used) by operating activities	(651)	2,550
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases		(2,255)
Loan originations	(16,152)	(4,634)
Loan sales	16,533
Loan principal collections	8,626	15,222
Purchase of certificates of deposit	(1,757)
Purchase of property and equipment	(87)	(163)
Sale of property and equipment	24	4
Net cash provided by investing activities	7,187	8,174
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on term debt	(16,483)	(3,785)
Net change in investor notes payable	2,216	5,967
Debt issuance costs	(42)	(49)
Dividends paid on preferred units	(296)	(264)
Net cash provided (used) by financing activities	(14,605)	1,869
Net increase (decrease) in cash and restricted cash	(8,069)	12,593
Cash, cash equivalents, and restricted cash at beginning of period	26,045	9,928
Cash, cash equivalents, and restricted cash at end of period	17,976	22,521
Supplemental disclosures of cash flow information
Interest paid	3,395	3,820
Income taxes paid	20	20
Supplemental disclosures of non-cash transactions
Servicing assets recorded	85
Leased assets obtained in exchange of new operating lease liabilities	53	680
Lease liabilities recorded	53	680
Dividends declared to preferred unit holders	$ 214	$ 237

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Nature of Business and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Nature of Business and Summary of Significant Accounting Policies [Abstract]

Nature of Business and Summary of Significant Accounting Policies

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

Nature of Business

The Company was formed in California in 1991. The Company’s primary operations are financing commercial real property secured loans and providing investment advisory and insurance services and products for the benefit of evangelical churches, ministries, and individuals.

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 Delaware not-for-profit 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 insurance 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 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. 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. The MPC Board of Directors approved its first charitable grant during the nine months ended September 30, 2020.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company 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 California corporation to a California limited liability company by filing the Articles of Organization-Conversion with the California Secretary of State. At that time, 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.

Risks and Uncertainties

Some of the Company’s borrowers have been adversely impacted by the outbreak of COVID-19 and it could impair their ability to fulfill their financial obligations to the Company. On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the U.S. a national emergency. At that time, due to the pandemic’s spread, state and local governments ordered non-essential businesses to close, banned public gatherings, and required residents to shelter at home. These initial orders required churches, faith-based ministries, private schools, daycare centers, and Christian colleges to discontinue public gatherings, worship services, classes, and conference events. Churches that had typically received weekly offerings of tithes and cash contributions became dependent on online giving options and contributions sent by mail. Since that time, state and local governments lifted the initial restrictions. However, spikes in the pandemic’s spread have caused some states to reinstate restrictions to some degree. Church revenues are also dependent on general economic conditions, including unemployment rates and economic disruption to businesses, schools, and financial markets. Federal banking institutions have encouraged lenders to work with borrowers to provide loan payment relief. Furthermore, Congress enacted legislation that provided relief from reporting loan classifications that would have otherwise required adverse financial reporting obligations due to modifications granted to borrowers as a troubled debt restructuring (“TDR”) because of the COVID-19 pandemic. In addition, in response to COVID-19, the Federal Reserve reduced the Federal Funds rate to zero on March 16, 2020. The reduction in interest rates and other effects of the COVID-19 pandemic raise uncertainties that could negatively affect the Company’s net interest income and non-interest income. While there has been no material impact to the Company’s employees to date, COVID-19 could also potentially create widespread business continuity issues for the Company.

Congress, the President, and the Federal Reserve have taken several actions designed to cushion the economic fallout. Most notably, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law at the end of March 2020 as a $2 trillion legislative package. The goal of the CARES Act is to prevent a severe economic downturn through various measures, including direct financial aid to American families and economic stimulus to significantly impacted industry sectors. The package also includes extensive emergency funding for hospitals and providers.

On June 5, 2020, the Paycheck Protection Flexibility Act (“Flexibility Act”) was enacted and signed into law. The Flexibility Act amended the CARES Act to extend the covered period that measures eligibility for the loan forgiveness and required use of funds from June 30, 2020 to December 31, 2020. The Flexibility Act also extends the period within which to measure whether the loan will qualify for forgiveness to a twenty four (24) week period beginning on the date the loan is disbursed. Finally, the Flexibility Act provides that a borrower must use at least 60% of the proceeds of the PPP loan for payroll costs to be eligible for loan forgiveness. In addition to the general impact of COVID-19, certain provisions of the CARES Act, as well as other recent legislative and regulatory relief efforts, could have material direct and indirect effect on the Company’s operations.

The Company’s operations are dependent upon the willingness and ability of its employees, borrowers, noteholders, and investment clients to conduct financial transactions. If the global response to contain COVID-19 results in reinstatement of lock-down or curtailment of activities orders, the Company could experience a material adverse effect on its business, financial condition, results of operations, and cash flows. While it is not possible to know the full extent of the impact that COVID-19 and resulting measures to curtail its spread will have on the Company’s operations, the Company is disclosing potentially material items of which it is aware.

Cash, Cash Equivalents, and Restricted Cash

Cash equivalents include time deposits and highly liquid debt instruments with original maturities of three months or less. The Company had demand deposits and money market deposit accounts as of September 30, 2020 and December 31, 2019.  

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 restricted cash and management classifies it as such on our balance sheet.

Certificates of Deposit

Certificates of deposit include investments in certificates of deposit held at financial institutions that carry original maturities of greater than three months. The Company had $1,757 thousand in certificates of various terms greater than three months as of September 30, 2020. The Company had no certificates of deposit with original maturities of greater than three months at December 31, 2019.

Details of certificates owned by the Company are as follows (dollars in thousands):

Certificate	Open Date	Certificate Amount		Interest Rate	Maturity Date
CD 1	1/13/2020	$	1,000	2.25%	10/13/2021
CD 2	4/1/2020	$	757	1.95%	1/1/2021

Reclassifications

The Company has made certain reclassifications to the 2019 financial statements to conform to the 2020 presentation. These reclassifications do not affect members’ equity or consolidated balance sheets for the nine months ended September 30, 2019.

Use of Estimates

The Company’s creation of consolidated financial statements that conform to United States Generally Accepted Accounting Principles (“U.S. 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. The estimates and assumptions made by the Company’s management also affect 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 our financial instruments. Actual results could differ from these estimates.

Investment in Joint Venture

In 2016, the Company entered into a joint venture agreement to develop and sell property we acquired as part of a Deed in Lieu of Foreclosure agreement reached with one of our borrowers. The joint venture owns a property located in Santa Clarita, California.

On a periodic basis, management analyzes the Company’s investment in the joint venture for impairment. In this analysis, management compares the carrying value of the investment to the estimated value of the underlying real property. The Company 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 in the joint venture. Management records these valuation changes as realized gains or losses on investment on the Company’s consolidated statements of operations.  

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 related to restructured loans and represent interest accrued and unpaid which the Company added to the restructured loan’s principal balance. 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 its 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

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. 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. Under Accounting Standards Codification (“ASC”) 340-10, the concessions granted must last longer than an insignificant period of time for the loan to be considered a troubled debt restructuring. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal then due and payable, management measures any impairment on the restructured loan in the same manner as for impaired loans as noted above.

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.

In accordance with industry standards, the Company classifies a loan as impaired if management has modified it as part of a troubled debt restructuring. However, troubled debt restructures, upon meeting certain performance conditions, are eligible to receive non-classified loan ratings (pass or watch) 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.

Section 403 of the CARES Act provides that a qualifying loan modification or extension is exempt by law from classification as a troubled debt restructuring pursuant to FASB ASC 340-10. On April 7, 2020, the Office of the Comptroller of the Currency and related financial agencies issued OCC Bulletin 2020-35, which provides further guidance regarding when a loan modification or extension is not subject to classification as a TDR pursuant to FASB ASC 340-10.

Under section 4013 of the CARES Act, financial institutions may elect not to categorize a loan modification as a troubled debt restructuring if it is

(1) related to COVID-19;

(2) executed on a loan that was not more than thirty (30) days past due as of December 31, 2019; and

(3) executed between March 31, 2020, and the earlier of (A) sixty (60) days after the date of the National Emergency or (B) December 31, 2020.

For all other loan modifications, federal agencies that regulate financial institutions have confirmed with FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to relief being extended, would not be classified as a troubled debt restructuring. This treatment includes short-term modifications including payment deferrals, fee waivers, and extension of repayment terms. Management of the Company has elected to pursue taking these measures with some of its qualifying borrowers during the three months ended September 30, 2020.

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 its debt obligations and should 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 Company’s Board of Managers. Potential for loss under adverse circumstances is elevated for loans in this category, but is 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 prospects for repayment of the loan under the terms of the loan agreement 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 the estimated market value of the collateral, 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 value of the collateral. 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, the possibility of the borrower obtaining additional capital, the borrower’s ability to refinance the loan, or the ability of the borrower to pledge 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, at a point either in time or over time. The Company recognizes revenue from a performance obligation that is transferred at a point in time 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 in advance 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.

Gains on sales of loans receivable

From time to time, the Company sells participation interests in loans receivable that it services. Upon completion of the loan sale, the Company recognizes a gain based on certain factors including the maturity date of the loan, the percentage of the loan sold and retained, and the servicing rate charged to the participant on the sold portion.

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 financial statements are carrying the recorded amount at management’s estimate of 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 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

Debt issuance costs consist of costs related to the acquisition of debt. 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, which approximates the interest method.

Employee Benefit Plan

The Company records contributions to the qualified employee retirement plan 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

Recently adopted accounting standards

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements by requiring that Level 3 fair value disclosures include the range and weighted average of significant unobservable inputs used to develop those fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 was effective for the Company on January 1, 2020 and did not have a material impact on the Company’s financial statement disclosures.

In March 2020, various regulatory agencies issued an interagency statement on loan modifications and reporting for financial institutions working with borrowers affected by the Coronavirus. The interagency statement was effective immediately and impacted accounting for loan modifications. Under Accounting Standards Codification 310-40, “Receivables – Troubled Debt Restructurings by Creditors,” (“ASC 310-40”), a restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be considered TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. This interagency guidance is expected to have a material impact on the Company’s financial statements; however, this impact cannot be quantified at this time.

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 of the new standard.

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Pledge of Cash and Restricted Cash

9 Months Ended

Sep. 30, 2020

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, which will be classified as restricted cash. At September 30, 2020 and December 31, 2019, 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):

	September 30,				December 31,
	2020		2019		2019
Cash and cash equivalents	$	17,926	$	22,470	$	25,993
Restricted cash		50		51		52
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	17,976	$	22,521	$	26,045

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

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Related Party Transactions

9 Months Ended

Sep. 30, 2020

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.

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

	September 30,		December 31,
	2020		2019
Total funds held on deposit at ECCU	$	3,482	$	365
Loan participations purchased from and serviced by ECCU		259		1,495

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

	Three months ended
	September 30,
	2020		2019
Interest earned on funds held with ECCU	$	8	$	—
Interest income earned on loans purchased from ECCU		4		38
Fees paid to ECCU from MP Securities Networking Agreement		5		5
Income from Successor Servicing Agreement with ECCU		2		2
Rent expense on lease agreement with ECCU		37		37

	Nine months ended
	September 30,
	2020		2019
Interest earned on funds held with ECCU	$	13	$	—
Interest income earned on loans purchased from ECCU		11		113
Loans sold to ECCU		1,164		—
Fees paid to ECCU from MP Securities Networking Agreement		7		9
Income from Master Services Agreement with ECCU		—		14
Income from Successor Servicing Agreement with ECCU		7		8
Rent expense on lease agreement with ECCU		110		73

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 nine months ended September 30, 2020 and 2019.  

Loans sold:

From time to time, the Company will sell loans to ECCU. On January 23, 2020, the Company sold an impaired loan to ECCU in order to recoup its recorded investment in the loan. The Company had previously purchased this loan from ECCU and ECCU was servicing the loan. The Company did not sell any loans to ECCU during the nine months ended September 30, 2019.

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, entered into a Networking Agreement with ECCU in October 2014 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”).

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

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 mortgage loans that ECCU has designated. 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. In October 2019, the agreement was 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.

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

	September 30,		December 31,
	2020		2019
Total funds held on deposit at ACCU	$	6,720	$	10,343
Loan participations purchased from and serviced by ACCU		1,126		1,603

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

	Three months ended
	September 30,
	2020		2019
Interest earned on funds held with ACCU	$	12	$	43
Loans sold to ACCU		441		—
Interest income earned on loans purchased from ACCU		14		21
Fees paid based on MP Securities Networking Agreement with ACCU		23		7

	Nine months ended
	September 30,
	2020		2019
Dollar amount of loan participation interests purchased from ACCU	$	—	$	1,435
Interest earned on funds held with ACCU		69		115
Loans sold to ACCU		441		—
Interest income earned on loans purchased from ACCU		42		63
Fees paid based on MP Securities Networking Agreement with ACCU		50		31

Loan participation interests:

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.

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. On April 29, 2020, the Company sold back to ACCU a $441 thousand loan participation interest that it had previously purchased from ACCU.

MP Securities Networking Agreement with ACCU:

MP Securities entered into a Networking Agreement with ACCU in July 2014 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 entered into 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.

The Company has also entered into a Loan Participation Agreement with Navy Federal Credit Union (“NFCU”), an owner of both the Company’s Class A Common Units and Series A Preferred Units. Under this agreement, the Company sold NFCU a $5.0 million loan participation interest in one of its construction loans on March 20, 2020. As of September 30, 2020, NFCU’s outstanding balance of the drawn portion of the loan was $1.9 million. As part of this agreement, the Company retained the right to service the loan, and it charges NFCU 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. See, “Note 11. Investor Notes Payable” to Part I, Item I “Financial Information” of this Report.

Line of Credit with KCT Credit Union

On September 30, 2020, the Company entered into a Loan and Security Agreement with KCT Credit Union, an Illinois state chartered financial institution (“KCT”). The KCT line of credit is a $7.0 million short-term demand facility with a maturity date ending September 30, 2021. The line of credit will automatically renew for a one-year term unless either party furnishes written notice at least thirty (30) days prior to the maturity date that it does not intend to renew the agreement. The KCT line of credit is secured by certain mortgage loans held as collateral and the Company is required to maintain a minimum collateralization ratio of 120% measured by the outstanding balance of mortgage notes pledged as compared to the total amount owed on the line of credit. As of September 30, 2020, the Company did not have an outstanding balance on the line. The KCT line of credit is evidenced by a promissory note, is payable one hundred twenty (120) days after each advance made or earlier in the event that collateral loan becomes more than sixty (60) days delinquent and the Company fails to cure such delinquency. The interest rate on the Note is set at prime plus 0.50%. At September 30, 2020, the prime rate was 3.25%.  Our Board Chairperson, R. Michael Lee, serves as the Chief Executive Officer and President of KCT. The Company approved the KCT line of credit in accordance with its Related Party Transaction Policy, concluded that the terms of the KCT line of credit were in the best interests of the Company, and entered into on terms no less favorable to the Company than could be obtained from an independent third party.

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 $213 thousand and $368 thousand at September 30, 2020 and December 31, 2019, respectively.

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Loans Receivable and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2020

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 Part I “Financial Information” of this Report. 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 6.51%and 6.44% as of September 30, 2020 and December 31, 2019, respectively.

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

	September 30,		December 31,
	2020		2019
Loans to evangelical churches and related organizations:
Real estate secured	$	121,976	$	130,889
Unsecured		149		160
Total loans		122,125		131,049
Deferred loan fees, net		(537)		(631)
Loan discount		(232)		(182)
Allowance for loan losses		(1,523)		(1,393)
Loans, net	$	119,833	$	128,843

Allowance for Loan Losses

The following table shows the changes in the allowance for loan losses for the nine months ended September 30, 2020 and the year ended December 31, 2019 (dollars in thousands):

	Nine months ended		Year ended
	September 30, 2020		December 31, 2019
Balance, beginning of period	$	1,393	$	2,480
Provision for loan loss		195		(544)
Charge-offs		(65)		(923)
Recoveries		—		380
Balance, end of period	$	1,523	$	1,393

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
	September 30, 2020		December 31, 2019
Loans:
Individually evaluated for impairment	$	6,181	$	8,843
Collectively evaluated for impairment		115,944		122,206
Balance	$	122,125	$	131,049
Allowance for loan losses:
Individually evaluated for impairment	$	290	$	175
Collectively evaluated for impairment		1,233		1,218
Balance	$	1,523	$	1,393

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 September 30, 2020
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	93,636	$	3,486	$	1,400	$	—	$	98,522
Watch		17,204		31		187		—		17,422
Special mention		—		—		—		—		—
Substandard		5,677		—		—		—		5,677
Doubtful		504		—		—		—		504
Loss		—		—		—		—		—
Total	$	117,021	$	3,517	$	1,587	$	—	$	122,125

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

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 September 30, 2020
	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 Still Accruing
Church loans:
Wholly-Owned First	$	—	$	—	$	4,185	$	4,185	$	112,836	$	117,021	$	—
Wholly-Owned Junior		—		—		—		—		3,517		3,517		—
Participation First		—		—		—		—		1,587		1,587		—
Participation Junior		—		—		—		—		—		—		—
Total	$	—	$	—	$	4,185	$	4,185	$	117,940	$	122,125	$	—

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 Still 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	$	—

Impaired Loans

The following tables are summaries of impaired loans by loan class as of and for the three and nine months ended September 30, 2020 and 2019, and the year ended December 31, 2019, respectively. The unpaid principal balance is the contractual principal outstanding on the loan. The recorded balance is the unpaid principal balance less any interest payments that management has recorded against principal. The recorded investment is 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 September 30, 2020									For the three months ended September 30, 2020				For the nine months ended September 30, 2020
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	9,877	$	9,813	$	9,652	$	—	$	9,672	$	92	$	10,978	$	266
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		—		—
Participation Junior		—		—		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		290		290		290		290		290		—		290		—
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		296		11
Participation Junior		—		—		—		—		—		—		—		—
Total:
Church loans	$	10,167	$	10,103	$	9,942	$	290	$	9,962	$	92	$	11,564	$	277

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 September 30, 2019									For the three months ended September 30, 2019				For the nine months ended September 30, 2019
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	6,563	$	6,325	$	6,342	$	—	$	6,215	$	60	$	6,018	$	118
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		1,158		—
Participation Junior		—		—		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		877		567		568		114		1,038		—		2,100		—
Wholly-Owned Junior		215		181		181		135		178		—		179		—
Participation First		1,302		1,274		1,274		103		1,283		—		1,283		—
Participation Junior		—		—		—		—		—		—		—		—
Total:
Church loans	$	8,957	$	8,347	$	8,365	$	352	$	8,714	$	60	$	10,738	$	118

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

Loans on Nonaccrual Status (by class)
	as of
	September 30, 2020		December 31, 2019
Church loans:
Wholly-Owned First	$	6,181	$	6,405
Wholly-Owned Junior		—		—
Participation First		—		1,230
Participation Junior		—		—
Total	$	6,181	$	7,635

A summary of loans the Company restructured during the three and nine-month periods ended September 30, 2020 and 2019 is as follows (dollars in thousands):

Troubled Debt Restructurings (by class)
For the nine months ended September 30, 2020
	Number of Loans			Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		1	$		1,936	$	1,955	$	1,947
Wholly-Owned Junior
Participation First
Participation Junior
Total		1		$	1,936	$	1,955	$	1,947

There were no loan modifications made during the three months ended September 30, 2020 that qualified as troubled debt restructurings.

Troubled Debt Restructurings (by class)
For the three months ended September 30, 2019
	Number of Loans			Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		1	$		723	$	890	$	890
Wholly-Owned Junior		1			167		—		—
Participation First		—			—		—		—
Participation Junior		—			—		—		—
Total		2		$	890	$	890	$	890

Troubled Debt Restructurings (by class)
For the nine months ended September 30, 2019
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		3	$	2,404	$	2,582	$	2,578
Wholly-Owned Junior		1		166		—		—
Participation First		—		—		—		—
Participation Junior		—		—		—		—
Total		4	$	2,570	$	2,582	$	2,578

For the loan restructured during nine months ended September 30, 2020, the Company agreed to a forbearance agreement with the borrower whereby management added accrued interest and fees to the loan’s principal balance, and the borrower will be making interest-only payments for 12 months.  For one of the loans restructured during nine months ended September 30, 2019, the Company agreed to a forbearance agreement with the borrower whereby management lowered the interest rate and added accrued interest and fees to the loan’s principal balance. For another loan, the Company agreed to extend the maturity date of the loan and added fees to the balance of the loan. For the two loans restructured during the three months ended September 30, 2019, the Company created two new loans, lowered the interest rate on both, and completely charged off one of the loans. The Company has one restructured loan that is past maturity as of September 30, 2020.

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 and will make adjustments to the risk ratings and specific reserves associated with troubled debt restructurings as deemed necessary.

As of September 30, 2020, the Company has no commitments to advance additional funds in connection with loans modified as troubled debt restructurings.  

As discussed in Note 1 to the financial statements, the CARES Act provided the Company an option to elect to not account for certain loan modifications related to COVID-10 as troubled debt restructurings as long as the borrowers were not more than 30 days past due as of December 31, 2019. The loan restructurings made during the nine-month period ended September 30, 2020 and 2019 were not related to COVID-19 modifications.

As of September 30, 2020, the Company has granted certain loan payment concessions, which qualify under the CARES Act, and the Company has elected not to account for these modifications as troubled debt restructurings. These modifications include granting temporary payment relief measures. For any payment deferral requests the Company approves, the maturity date of the mortgage note will not be extended, and any deferred payments will increase the principal amount due at maturity. The Company granted 40 loan payment deferral requests of various terms under the CARES Act. All but four of the borrowers have begun making their regular payments as of September 30, 2020.

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Investment in Joint Venture

9 Months Ended

Sep. 30, 2020

Investment in Joint Venture [Abstract]

Investment in Joint Venture

Note 5: Investment 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 joint venture incurred losses of $6 thousand for the nine months ended September 30, 2020. The joint venture did not incur any gains or losses during the nine months ended September 30, 2019. As of September 30, 2020 andDecember 31, 2019, the value of the Company’s investment in the property was $889 thousand and $891 thousand, respectively. Management’s impairment analysis of the investment as of September 30, 2020 has determined that the investment is not impaired.

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Revenue Recognition

9 Months Ended

Sep. 30, 2020

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 the scope of ASC 606 are noted as such (dollars in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Non-interest income, in scope
Wealth advisory fees	$	66	$	89	$	247	$	217
Investment brokerage fees		117		318		223		1,002
Gains on loan sales		21		—		61		—
Lease income		17		—		47		—
Gain on debt extinguishment		2,400		—		2,400		—
Other non-interest income		2		2		7		20
Non-interest income, out of scope
Lending fees		43		36		113		86
Total non-interest income	$	2,666	$	445	$	3,098	$	1,325

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Loan Sales

9 Months Ended

Sep. 30, 2020

Loan Sales [Abstract]

Loan Sales

Note 7: Loan Sales

The following table shows the amount of loan participation sales and the resulting changes in servicing assets recorded during nine months ended September 30, 2020 and 2019, and the year ended December 31, 2019. 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
	Nine months ended				Year ended
	September 30,				December 31,
	2020		2019		2019
Loan participation interests sold by the Company	$	16,533	$	—	$	—
Servicing Assets
Balance, beginning of period	$	100	$	212	$	212
Additions:
Servicing obligations from sale of loan participations		85		—		—
Subtractions:
Amortization		(37)		(103)		(112)
Balance, end of period	$	148	$	109	$	100

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Foreclosed Assets

9 Months Ended

Sep. 30, 2020

Foreclosed Assets [Abstract]

Foreclosed Assets

Note 8: Foreclosed Assets

The Company’s investment in foreclosed assets was $301 thousand at September 30, 2020 and December 31, 2019. 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 September 30, 2020. The Company did not record any loss provisions on foreclosed assets during the nine months ended September 30, 2020.  

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

Foreclosed Asset Expenses (Income)	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Net loss (gain) on sale of real estate	$	—	$	—	$	—	$	—
Provision for losses		—		—		—		—
Operating expenses, net of income		—		11		8		11
Net expense (income)	$	—	$	11	$	8	$	11

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Premises and Equipment

9 Months Ended

Sep. 30, 2020

Premises and Equipment [Abstract]

Premises and Equipment

Note 9: Premises and Equipment

The table below summarizes the premises and equipment owned by the Company (dollars in thousands):

	As of
	September 30,		December 31,
	2020		2019
Furniture and office equipment	$	521	$	503
Computer system		214		214
Leasehold improvements		43		43
Total premises and equipment		778		760
Less accumulated depreciation and amortization		(546)		(544)
Premises and equipment, net	$	232	$	216

	2020		2019
Depreciation and amortization expense for the nine months ended September 30,	$	39	$	30

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Credit Facilities

9 Months Ended

Sep. 30, 2020

Credit Facilities and Investor Notes Payable [Abstract]

Credit Facilities

Note 10: Credit Facilities

The Company has one secured term-debt credit facility. The facility is non-revolving and does not have an option to renew or extend additional credit. Additionally, the facility does not contain a prepayment penalty. Under the terms of the credit facility, the Company must maintain a minimum collateralization ratio of at least 120%. 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. The collateral securing the facility at September 30, 2020 and December 31, 2019 satisfied the 120% minimum. As of September 30, 2020, the Company has only pledged qualifying mortgage loans as collateral on the credit facility. In addition, the credit facility includes a number of borrower covenants. The Company is in compliance with these covenants as of September 30, 2020 and December 31, 2019, respectively.

Previously, the Company had an additional term-debt credit facility that carried the same terms as the facility it currently has. On September 25, 2020, the Company reached an agreement with OSK VII, LLC to pay off the entire outstanding contractual principal balance of $15.0 million. The Company realized $2.4 million in gains on the extinguishment of debt because of this agreement. The Company was in compliance with its covenants and its minimum collateralization ratio on the facility at December 31, 2019 and at the time of the payoff.

On April27, 2020, MP Securities applied for and received a Paycheck Protection Program loan (“PPP Loan”) granted under the CARES Act. According to the terms of the program, as administered by the Small Business Association, payments on the loan are deferred for six months, deferred interest is capitalized into the principal balance of the loan, and qualifying amounts of the principal balance of the loan and deferred interest are eligible to be forgiven if MP Securities retains employees and maintains salary levels for its existing employees. Qualifying amounts include amounts equal to eligible payroll costs, certain rent payments, and utility payments as defined by the program. No collateral is required to be pledged for the PPP Loan.

The following table summarizes the principal terms the Company’s term debt as of September 30, 2020:

Nature of Borrowing	Interest Rate	Interest Rate Type	Amount Outstanding		Monthly Payment		Maturity Date	Amount of Loan Collateral Pledged		Amount of Cash Pledged
Term Loan	2.525%	Fixed	$	52,433	$	450	11/1/2026	$	65,966	$	—
PPP Loan	1.000%	Fixed	$	111	$	—	4/27/2022	$	—	$	—

Future principal contractual payments of the Company’s term debt during the twelve-month periods ending September 30, are as follows (dollars in thousands):

2021	$	4,134
2022		4,346
2023		4,343
2024		4,451
2025		4,567
Thereafter		30,703
	$	52,544

Note that the above table includes future contractual principal payments of the PPP Loan, disregarding potential forgiveness.

On September 30, 2020, Ministry Partners Investment Company, LLC, entered into a Loan and Security Agreement with KCT Credit Union, an Illinois state chartered financial institution (“CUSO LOC”). The CUSO LOC is a $7.0 million short-term demand credit facility with a one-year maturity date of September 30, 2021. The facility carried a balance of zero at September 30, 2020. The interest rate on the facility is equal to the United States Prime Rate plus 0.50%. The interest rate was 3.75% on September 30, 2020. The CUSO LOC will automatically renew for another one-year term unless either party furnishes written notice at least thirty (30) days prior to the termination date that it does not intend to renew the agreement. The Company has secured the CUSO LOC with certain of its mortgage loan investments. The Company may draw funds on the CUSO LOC at any time until the line is fully drawn. Repayment of each advance is due one hundred and twenty (120) days after the advance is made or earlier in the event that a collateral loan becomes more than sixty (60) days delinquent and the Company fails to cure such deficiency. To secure its obligations under the CUSO LOC, the Company has agreed to grant a priority first lien and security interest in certain of its mortgage loan investments and maintain a minimum collateralization ratio measured by taking outstanding balance of mortgage notes pledged under the facility as compared to the total amount of principal owed on the CUSO LOC. The minimum ratio must equal at least 120%. The CUSO LOC contains typical affirmative covenants for a credit facility of this nature. The Company was in compliance with these covenants at September 30, 2020. As of September 30 2020, the Company did not have an outstanding balance on the CUSO LOC.

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Investor Notes Payable

9 Months Ended

Sep. 30, 2020

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
		September 30, 2020				December 31, 2019
SEC Registered Public Offerings	Offering Type	Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Class A Offering	Unsecured	$	306	2.12	%	$	487	3.97	%
Class 1 Offering	Unsecured		14,388	3.75	%		22,098	4.01	%
Class 1A Offering	Unsecured		42,780	3.07	%		32,732	3.70	%
Public Offering Total		$	57,474	3.23	%	$	55,317	3.82	%
Private Offerings	Offering Type
Subordinated Notes	Unsecured	$	11,328	4.59	%	$	11,317	5.24	%
Secured Notes	Secured		6,515	3.99	%		6,467	3.98	%
Private Offering Total		$	17,843	4.37	%	$	17,784	4.78	%
Total Investor Notes Payable		$	75,317	3.50	%	$	73,101	4.06	%
Investor Notes Payable Totals by Security	Offering Type
Unsecured Total	Unsecured	$	68,802	3.46	%	$	66,634	4.06	%
Secured Total	Secured	$	6,515	3.99	%	$	6,467	3.98	%

Future maturities for the Company’s investor notes during the twelve-month periods ending September 30,are as follows (dollars in thousands):

2021	$	24,433
2022		17,264
2023		7,847
2024		13,224
2025		12,549
	$	75,317

Debt issuance costs related to the Company’s investor notes payable were $25 thousand and $55 thousand at September 30, 2020 and December 31, 2019, 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 September 30, 2020 and December 31, 2019. 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 September 30, 2020 and December 31, 2019. 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 at September 30, 2020 and December 31, 2019.  

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 is authorized to offer up to $80.0 million in Secured Notes to qualified investors. On December 31, 2017, the Company terminated its 2015 Secured Note offering.

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 September 30, 2020 and December 31, 2019, the loans receivable collateral securing the Secured Notes had an outstanding balance of $9,127thousand and $13,019 thousand, respectively. The September 30, 2020 and December 31, 2019 collateral balance was sufficient to satisfy the minimum collateral requirement of the Secured Notes offering. As of September 30, 2020 and December 31, 2019, the Company did not have cash pledged for the benefit of the Secured Notes.

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 2018 Secured Note offering terminated on April 30, 2020.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

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:
	September 30, 2020		December 31, 2019
Undisbursed loans	$	2,323	$	1,999

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 September 30, 2020, the Company was a defendant in a wrongful termination of employment lawsuit. On October 16, 2020, the Company reached a settlement agreement with the plaintiff. Under the terms of the agreement, the Company is not liable for any settlement payments.

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. In March 2020, the Company signed an agreement to extend the Fresno office lease for two additional years to March 31, 2022. 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. Right-of-use assets included in Other Assets were $478 thousand and $536 thousand at September 30, 2020 and December 31, 2019, respectively. Lease liabilities included in Other Liabilities were $490 thousand and $545 thousand at September 30, 2020 and December 31, 2019, respectively.

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

	For the
	Three months ended						Nine months ended						Year ended
	September 30,						September 30,						December 31,
	2020			2019			2020			2019			2019
Lease cost
Operating lease cost	$	44		$	43		$	131		$	130		$	174
Other information
Cash paid for operating leases		43			41			127			123			164
Right-of-use assets obtained in exchange for operating lease liabilities		—			—			53			680			680
Weighted average remaining lease term (in years)		2.79			4.17			2.79			4.17			3.96
Weighted-average discount rate		4.60	%		4.77	%		4.60	%		4.77	%		4.77	%

Future minimum lease payments and lease costs for the twelve months ending September 30, are as follows (dollars in thousands):

	Lease Payments		Lease Costs
2021	$	172	$	174
2022		163		160
2023		154		146
2024		39		37
Total	$	528	$	517

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Preferred and Common Units Under LLC Structure

9 Months Ended

Sep. 30, 2020

Preferred and Common Units Under LLC Structure [Abstract]

Preferred And Common Units Under LLC Structure

Note 13: 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 no voting 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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Retirement Plans

9 Months Ended

Sep. 30, 2020

Retirement Plans [Abstract]

Retirement Plans

Note 14: Retirement Plans

401(k)

All of the Company’s employees are eligible to participate the Company’s 401(k) plan administered by, Automated Data Processing, Inc. (“ADP”), 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 this is 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 nine months ended September 30, 2020 and 2019 were $60thousand and $44 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 for the nine months ended September 30, 2020 or 2019.  

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Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 15: 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 September 30, 2020 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 and restricted cash	$	17,976	$	17,976	$	—	$	—	$	17,976
Certificates of deposit		1,757				1,757				1,757
Loans, net		119,833		—		—		118,966		118,966
Investment in joint venture		889		—		—		889		889
Accrued interest receivable		835		—		—		835		835
FINANCIAL LIABILITIES:
Term-debt	$	52,544	$	—	$	—	$	44,481	$	44,481
Investor notes payable		75,292		—		—		77,293		77,293
Other financial liabilities		514		—		—		514		514

			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 and restricted cash	$	25,993	$	25,993	$	—	$	—	$	25,993
Loans, net		128,843		—		—		126,438		126,438
Investment in joint venture		891		—		—		891		891
Accrued interest receivable		635		—		—		635		635
FINANCIAL LIABILITIES:
Term-debt	$	71,427	$	—	$	—	$	55,072	$	55,072
Investor notes payable		73,046		—		—		74,592		74,592
Other financial liabilities		503		—		—		503		503

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 September 30, 2020 and December 31, 2019.  

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

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

Certificates of deposit – Management estimates fair value by using a present value discounted cash flow with a discount rate approximating the current market rate for similar assets. Management classifies certificates of deposits as Level 2 of the fair value hierarchy.

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 September 30, 2020 and December 31, 2019.

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 September 30, 2020:
Collateral-dependent loans (net of allowance and discount)	$	—	$	—	$	5,815	$	5,815
Investment in joint venture		—		—		889		889
Foreclosed assets (net of allowance)		—		—		301		301
Total	$	—	$	—	$	7,005	$	7,005
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	$	—	$	—	$	9,832	$	9,832

Impaired Loans

The Company records loans that management considers impaired at fair value on a nonrecurring basis. Once a loan is considered impaired, the fair value is measured using one of several methods, including collateral liquidation value, market value of similar debt and discounted cash flows. Those impaired loans not requiring a specific charge against the allowance represent loans for which the fair value of the expected repayments or collateral meet or exceed the recorded investment in the loan. Loans which management deems to be impaired are primarily valued on a nonrecurring basis at the fair value of the underlying real estate collateral. Such fair values are obtained using independent appraisals, which the Company considers to be Level 3 inputs.

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 fair value of impaired loans at September 30, 2020 has decreased from December 31, 2019 as two loans previously classified as impaired were classified as non-impaired, performing loans. In addition, one impaired loan that was outstanding at December 31, 2019 was sold during the first nine months of 2020.

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):

September 30, 2020
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired Loans	$	5,815	Discounted appraised value	Selling cost / Estimated market decrease	21% - 81%  (23%)
Investment in joint venture		889	Internal evaluations	Estimated future market value	0%  (0%)
Foreclosed Assets		301	Internal evaluations	Selling cost	6%  (6%)

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%)

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Income Taxes and State LLC Fees

9 Months Ended

Sep. 30, 2020

Income Taxes and State LLC Fees [Abstract]

Income Taxes and State LLC Fees

Note 16: 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. MPC is not subject to state or federal tax payments.

MP Realty incurred a tax loss for the years ended December 31, 2019 and 2018, 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 $407 thousand and $402 thousand, respectively, which begin to expire in 2030. Management assessed its ability to realize the deferred tax asset and determined that a 100% valuation against the deferred tax asset was appropriate at September 30, 2020 and December 31, 2019.

Tax years ended December 31, 2017 through December 31, 2019 remain subject to examination by the Internal Revenue Service and the tax years ended December 31, 2016 through December 31, 2019 remain subject to examination by the California Franchise Tax Board.

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Segment Information

9 Months Ended

Sep. 30, 2020

Segment Information [Abstract]

Segment Information

Note 17: 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 has two reportable 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 three and nine months ended September 30, 2020 is as follows (dollars in thousands):

Three months ended September 30, 2020
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	4,514	$	409	$	—	$	(227)	$	4,696
Total non-interest expense and provision for tax		1,185		289		1		—		1,475
Net profit		1,852		120		(1)		21		1,992

Nine months ended September 30, 2020
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	9,002	$	1,202	$	—	$	(726)	$	9,478
Total non-interest expense and provision for tax		2,923		895		1		—		3,819
Net profit (loss)		1,601		307		(1)		128		2,035
Total assets		139,724		2,933		371		(60)		142,968

Financial information with respect to the reportable segments for the three and nine months ended September 30, 2019 is as follows (dollars in thousands):

Three months ended September 30, 2019
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	2,465	$	620	$	—	$	(212)	$	2,873
Total non-interest expense and provision for tax		1,006		280		—		—		1,286
Net profit (loss)		12		340		—		47		399

Nine months ended September 30, 2019
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	7,971	$	1,947	$	—	$	(725)	$	9,193
Total non-interest expense and provision for tax		3,029		841		(2)		—		3,868
Net profit (loss)		824		1,106		2		(14)		1,918
Total assets		158,621		2,452		55		(30)		161,098

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Nature of Business and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Nature of Business and Summary of Significant Accounting Policies [Abstract]

Nature of Business

Nature of Business

The Company was formed in California in 1991. The Company’s primary operations are financing commercial real property secured loans and providing investment advisory and insurance services and products for the benefit of evangelical churches, ministries, and individuals.

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 Delaware not-for-profit 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 insurance 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 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. 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. The MPC Board of Directors approved its first charitable grant during the nine months ended September 30, 2020.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company 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 California corporation to a California limited liability company by filing the Articles of Organization-Conversion with the California Secretary of State. At that time, 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.

Risks and Uncertainties

Risks and Uncertainties

Some of the Company’s borrowers have been adversely impacted by the outbreak of COVID-19 and it could impair their ability to fulfill their financial obligations to the Company. On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the U.S. a national emergency. At that time, due to the pandemic’s spread, state and local governments ordered non-essential businesses to close, banned public gatherings, and required residents to shelter at home. These initial orders required churches, faith-based ministries, private schools, daycare centers, and Christian colleges to discontinue public gatherings, worship services, classes, and conference events. Churches that had typically received weekly offerings of tithes and cash contributions became dependent on online giving options and contributions sent by mail. Since that time, state and local governments lifted the initial restrictions. However, spikes in the pandemic’s spread have caused some states to reinstate restrictions to some degree. Church revenues are also dependent on general economic conditions, including unemployment rates and economic disruption to businesses, schools, and financial markets. Federal banking institutions have encouraged lenders to work with borrowers to provide loan payment relief. Furthermore, Congress enacted legislation that provided relief from reporting loan classifications that would have otherwise required adverse financial reporting obligations due to modifications granted to borrowers as a troubled debt restructuring (“TDR”) because of the COVID-19 pandemic. In addition, in response to COVID-19, the Federal Reserve reduced the Federal Funds rate to zero on March 16, 2020. The reduction in interest rates and other effects of the COVID-19 pandemic raise uncertainties that could negatively affect the Company’s net interest income and non-interest income. While there has been no material impact to the Company’s employees to date, COVID-19 could also potentially create widespread business continuity issues for the Company.

Congress, the President, and the Federal Reserve have taken several actions designed to cushion the economic fallout. Most notably, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law at the end of March 2020 as a $2 trillion legislative package. The goal of the CARES Act is to prevent a severe economic downturn through various measures, including direct financial aid to American families and economic stimulus to significantly impacted industry sectors. The package also includes extensive emergency funding for hospitals and providers.

On June 5, 2020, the Paycheck Protection Flexibility Act (“Flexibility Act”) was enacted and signed into law. The Flexibility Act amended the CARES Act to extend the covered period that measures eligibility for the loan forgiveness and required use of funds from June 30, 2020 to December 31, 2020. The Flexibility Act also extends the period within which to measure whether the loan will qualify for forgiveness to a twenty four (24) week period beginning on the date the loan is disbursed. Finally, the Flexibility Act provides that a borrower must use at least 60% of the proceeds of the PPP loan for payroll costs to be eligible for loan forgiveness. In addition to the general impact of COVID-19, certain provisions of the CARES Act, as well as other recent legislative and regulatory relief efforts, could have material direct and indirect effect on the Company’s operations.

The Company’s operations are dependent upon the willingness and ability of its employees, borrowers, noteholders, and investment clients to conduct financial transactions. If the global response to contain COVID-19 results in reinstatement of lock-down or curtailment of activities orders, the Company could experience a material adverse effect on its business, financial condition, results of operations, and cash flows. While it is not possible to know the full extent of the impact that COVID-19 and resulting measures to curtail its spread will have on the Company’s operations, the Company is disclosing potentially material items of which it is aware.

Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash

Cash equivalents include time deposits and highly liquid debt instruments with original maturities of three months or less. The Company had demand deposits and money market deposit accounts as of September 30, 2020 and December 31, 2019.  

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 restricted cash and management classifies it as such on our balance sheet.

Certificates of Deposit

Certificates of Deposit

Certificates of deposit include investments in certificates of deposit held at financial institutions that carry original maturities of greater than three months. The Company had $1,757 thousand in certificates of various terms greater than three months as of September 30, 2020. The Company had no certificates of deposit with original maturities of greater than three months at December 31, 2019.

Details of certificates owned by the Company are as follows (dollars in thousands):

Certificate	Open Date	Certificate Amount		Interest Rate	Maturity Date
CD 1	1/13/2020	$	1,000	2.25%	10/13/2021
CD 2	4/1/2020	$	757	1.95%	1/1/2021

Reclassifications

Reclassifications

The Company has made certain reclassifications to the 2019 financial statements to conform to the 2020 presentation. These reclassifications do not affect members’ equity or consolidated balance sheets for the nine months ended September 30, 2019.

Use of Estimates

Use of Estimates

The Company’s creation of consolidated financial statements that conform to United States Generally Accepted Accounting Principles (“U.S. 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. The estimates and assumptions made by the Company’s management also affect 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 our financial instruments. Actual results could differ from these estimates.

Investment in Joint Venture

Investment in Joint Venture

In 2016, the Company entered into a joint venture agreement to develop and sell property we acquired as part of a Deed in Lieu of Foreclosure agreement reached with one of our borrowers. The joint venture owns a property located in Santa Clarita, California.

On a periodic basis, management analyzes the Company’s investment in the joint venture for impairment. In this analysis, management compares the carrying value of the investment to the estimated value of the underlying real property. The Company 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 in the joint venture. Management records these valuation changes as realized gains or losses on investment on the Company’s consolidated statements of operations.  

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

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 related to restructured loans and represent interest accrued and unpaid which the Company added to the restructured loan’s principal balance. 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 its 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

Impairment Analysis

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. 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. Under Accounting Standards Codification (“ASC”) 340-10, the concessions granted must last longer than an insignificant period of time for the loan to be considered a troubled debt restructuring. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal then due and payable, management measures any impairment on the restructured loan in the same manner as for impaired loans as noted above.

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.

In accordance with industry standards, the Company classifies a loan as impaired if management has modified it as part of a troubled debt restructuring. However, troubled debt restructures, upon meeting certain performance conditions, are eligible to receive non-classified loan ratings (pass or watch) 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.

Section 403 of the CARES Act provides that a qualifying loan modification or extension is exempt by law from classification as a troubled debt restructuring pursuant to FASB ASC 340-10. On April 7, 2020, the Office of the Comptroller of the Currency and related financial agencies issued OCC Bulletin 2020-35, which provides further guidance regarding when a loan modification or extension is not subject to classification as a TDR pursuant to FASB ASC 340-10.

Under section 4013 of the CARES Act, financial institutions may elect not to categorize a loan modification as a troubled debt restructuring if it is

(1) related to COVID-19;

(2) executed on a loan that was not more than thirty (30) days past due as of December 31, 2019; and

(3) executed between March 31, 2020, and the earlier of (A) sixty (60) days after the date of the National Emergency or (B) December 31, 2020.

For all other loan modifications, federal agencies that regulate financial institutions have confirmed with FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to relief being extended, would not be classified as a troubled debt restructuring. This treatment includes short-term modifications including payment deferrals, fee waivers, and extension of repayment terms. Management of the Company has elected to pursue taking these measures with some of its qualifying borrowers during the three months ended September 30, 2020.

Loan Charge-offs

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 its debt obligations and should 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 Company’s Board of Managers. Potential for loss under adverse circumstances is elevated for loans in this category, but is 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 prospects for repayment of the loan under the terms of the loan agreement 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 the estimated market value of the collateral, 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 value of the collateral. 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, the possibility of the borrower obtaining additional capital, the borrower’s ability to refinance the loan, or the ability of the borrower to pledge 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

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

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, at a point either in time or over time. The Company recognizes revenue from a performance obligation that is transferred at a point in time 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 in advance 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.

Gains on sales of loans receivable

From time to time, the Company sells participation interests in loans receivable that it services. Upon completion of the loan sale, the Company recognizes a gain based on certain factors including the maturity date of the loan, the percentage of the loan sold and retained, and the servicing rate charged to the participant on the sold portion.

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 financial statements are carrying the recorded amount at management’s estimate of 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 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

Debt issuance costs consist of costs related to the acquisition of debt. 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, which approximates the interest method.

Employee Benefit Plan

Employee Benefit Plan

The Company records contributions to the qualified employee retirement plan 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

Recently adopted accounting standards

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements by requiring that Level 3 fair value disclosures include the range and weighted average of significant unobservable inputs used to develop those fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 was effective for the Company on January 1, 2020 and did not have a material impact on the Company’s financial statement disclosures.

In March 2020, various regulatory agencies issued an interagency statement on loan modifications and reporting for financial institutions working with borrowers affected by the Coronavirus. The interagency statement was effective immediately and impacted accounting for loan modifications. Under Accounting Standards Codification 310-40, “Receivables – Troubled Debt Restructurings by Creditors,” (“ASC 310-40”), a restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be considered TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. This interagency guidance is expected to have a material impact on the Company’s financial statements; however, this impact cannot be quantified at this time.

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 of the new standard.

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Nature of Business and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2020

Nature of Business and Summary of Significant Accounting Policies [Abstract]

Details of Certificates of Deposit

Certificate	Open Date	Certificate Amount		Interest Rate	Maturity Date
CD 1	1/13/2020	$	1,000	2.25%	10/13/2021
CD 2	4/1/2020	$	757	1.95%	1/1/2021

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Pledge of Cash and Restricted Cash (Tables)

9 Months Ended

Sep. 30, 2020

Pledge of Cash and Restricted Cash [Abstract]

Reconciliation of Cash, Cash Equivalents, and Restricted Cash

	September 30,				December 31,
	2020		2019		2019
Cash and cash equivalents	$	17,926	$	22,470	$	25,993
Restricted cash		50		51		52
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	17,976	$	22,521	$	26,045

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2020

ECCU [Member]

Related Party Transaction [Line Items]

Summary of Related Party Balances

	September 30,		December 31,
	2020		2019
Total funds held on deposit at ECCU	$	3,482	$	365
Loan participations purchased from and serviced by ECCU		259		1,495

Schedule of Related Party Transactions

	Three months ended
	September 30,
	2020		2019
Interest earned on funds held with ECCU	$	8	$	—
Interest income earned on loans purchased from ECCU		4		38
Fees paid to ECCU from MP Securities Networking Agreement		5		5
Income from Successor Servicing Agreement with ECCU		2		2
Rent expense on lease agreement with ECCU		37		37

	Nine months ended
	September 30,
	2020		2019
Interest earned on funds held with ECCU	$	13	$	—
Interest income earned on loans purchased from ECCU		11		113
Loans sold to ECCU		1,164		—
Fees paid to ECCU from MP Securities Networking Agreement		7		9
Income from Master Services Agreement with ECCU		—		14
Income from Successor Servicing Agreement with ECCU		7		8
Rent expense on lease agreement with ECCU		110		73

ACCU [Member]

Related Party Transaction [Line Items]

Summary of Related Party Balances

	September 30,		December 31,
	2020		2019
Total funds held on deposit at ACCU	$	6,720	$	10,343
Loan participations purchased from and serviced by ACCU		1,126		1,603

Schedule of Related Party Transactions

	Three months ended
	September 30,
	2020		2019
Interest earned on funds held with ACCU	$	12	$	43
Loans sold to ACCU		441		—
Interest income earned on loans purchased from ACCU		14		21
Fees paid based on MP Securities Networking Agreement with ACCU		23		7

	Nine months ended
	September 30,
	2020		2019
Dollar amount of loan participation interests purchased from ACCU	$	—	$	1,435
Interest earned on funds held with ACCU		69		115
Loans sold to ACCU		441		—
Interest income earned on loans purchased from ACCU		42		63
Fees paid based on MP Securities Networking Agreement with ACCU		50		31

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Loans Receivable and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2020

Loans Receivable and Allowance for Loan Losses [Abstract]

Summary of Loans

	September 30,		December 31,
	2020		2019
Loans to evangelical churches and related organizations:
Real estate secured	$	121,976	$	130,889
Unsecured		149		160
Total loans		122,125		131,049
Deferred loan fees, net		(537)		(631)
Loan discount		(232)		(182)
Allowance for loan losses		(1,523)		(1,393)
Loans, net	$	119,833	$	128,843

Schedule of Changes in Allowance for Loan Losses

	Nine months ended		Year ended
	September 30, 2020		December 31, 2019
Balance, beginning of period	$	1,393	$	2,480
Provision for loan loss		195		(544)
Charge-offs		(65)		(923)
Recoveries		—		380
Balance, end of period	$	1,523	$	1,393

Schedule of Loans and Allowance for Loan Losses by Impairment Methodology

	Loans and Allowance for Loan Losses (by segment)
	As of
	September 30, 2020		December 31, 2019
Loans:
Individually evaluated for impairment	$	6,181	$	8,843
Collectively evaluated for impairment		115,944		122,206
Balance	$	122,125	$	131,049
Allowance for loan losses:
Individually evaluated for impairment	$	290	$	175
Collectively evaluated for impairment		1,233		1,218
Balance	$	1,523	$	1,393

Schedule of Loan Portfolio Credit Quality Indicators by Class

Credit Quality Indicators (by class)
As of September 30, 2020
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	93,636	$	3,486	$	1,400	$	—	$	98,522
Watch		17,204		31		187		—		17,422
Special mention		—		—		—		—		—
Substandard		5,677		—		—		—		5,677
Doubtful		504		—		—		—		504
Loss		—		—		—		—		—
Total	$	117,021	$	3,517	$	1,587	$	—	$	122,125

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

Schedule of Age Analysis of Past Due Loans by Class

Age Analysis of Past Due Loans (by class)
As of September 30, 2020
	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 Still Accruing
Church loans:
Wholly-Owned First	$	—	$	—	$	4,185	$	4,185	$	112,836	$	117,021	$	—
Wholly-Owned Junior		—		—		—		—		3,517		3,517		—
Participation First		—		—		—		—		1,587		1,587		—
Participation Junior		—		—		—		—		—		—		—
Total	$	—	$	—	$	4,185	$	4,185	$	117,940	$	122,125	$	—

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 Still 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	$	—

Schedule of Impaired Loans by Class

Impaired Loans (by class) As of September 30, 2020									For the three months ended September 30, 2020				For the nine months ended September 30, 2020
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	9,877	$	9,813	$	9,652	$	—	$	9,672	$	92	$	10,978	$	266
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		—		—
Participation Junior		—		—		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		290		290		290		290		290		—		290		—
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		296		11
Participation Junior		—		—		—		—		—		—		—		—
Total:
Church loans	$	10,167	$	10,103	$	9,942	$	290	$	9,962	$	92	$	11,564	$	277

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 September 30, 2019									For the three months ended September 30, 2019				For the nine months ended September 30, 2019
	Unpaid Principal Balance		Recorded Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Church loans:
Wholly-Owned First	$	6,563	$	6,325	$	6,342	$	—	$	6,215	$	60	$	6,018	$	118
Wholly-Owned Junior		—		—		—		—		—		—		—		—
Participation First		—		—		—		—		—		—		1,158		—
Participation Junior		—		—		—		—		—		—		—		—
With an allowance recorded:
Church loans:
Wholly-Owned First		877		567		568		114		1,038		—		2,100		—
Wholly-Owned Junior		215		181		181		135		178		—		179		—
Participation First		1,302		1,274		1,274		103		1,283		—		1,283		—
Participation Junior		—		—		—		—		—		—		—		—
Total:
Church loans	$	8,957	$	8,347	$	8,365	$	352	$	8,714	$	60	$	10,738	$	118

Schedule of Loans on Nonaccrual Status by Class

Loans on Nonaccrual Status (by class)
	as of
	September 30, 2020		December 31, 2019
Church loans:
Wholly-Owned First	$	6,181	$	6,405
Wholly-Owned Junior		—		—
Participation First		—		1,230
Participation Junior		—		—
Total	$	6,181	$	7,635

Schedule of Troubled Debt Restructurings by Class

Troubled Debt Restructurings (by class)
For the nine months ended September 30, 2020
	Number of Loans			Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		1	$		1,936	$	1,955	$	1,947
Wholly-Owned Junior
Participation First
Participation Junior
Total		1		$	1,936	$	1,955	$	1,947

There were no loan modifications made during the three months ended September 30, 2020 that qualified as troubled debt restructurings.

Troubled Debt Restructurings (by class)
For the three months ended September 30, 2019
	Number of Loans			Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		1	$		723	$	890	$	890
Wholly-Owned Junior		1			167		—		—
Participation First		—			—		—		—
Participation Junior		—			—		—		—
Total		2		$	890	$	890	$	890

Troubled Debt Restructurings (by class)
For the nine months ended September 30, 2019
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Recorded Investment At Period End
Church loans:
Wholly-Owned First		3	$	2,404	$	2,582	$	2,578
Wholly-Owned Junior		1		166		—		—
Participation First		—		—		—		—
Participation Junior		—		—		—		—
Total		4	$	2,570	$	2,582	$	2,578

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2020

Revenue Recognition [Abstract]

Schedule of Disaggregated Revenue

	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Non-interest income, in scope
Wealth advisory fees	$	66	$	89	$	247	$	217
Investment brokerage fees		117		318		223		1,002
Gains on loan sales		21		—		61		—
Lease income		17		—		47		—
Gain on debt extinguishment		2,400		—		2,400		—
Other non-interest income		2		2		7		20
Non-interest income, out of scope
Lending fees		43		36		113		86
Total non-interest income	$	2,666	$	445	$	3,098	$	1,325

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Loan Sales (Tables)

9 Months Ended

Sep. 30, 2020

Loan Sales [Abstract]

Schedule of Servicing Assets

	For the
	Nine months ended				Year ended
	September 30,				December 31,
	2020		2019		2019
Loan participation interests sold by the Company	$	16,533	$	—	$	—
Servicing Assets
Balance, beginning of period	$	100	$	212	$	212
Additions:
Servicing obligations from sale of loan participations		85		—		—
Subtractions:
Amortization		(37)		(103)		(112)
Balance, end of period	$	148	$	109	$	100

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Foreclosed Assets (Tables)

9 Months Ended

Sep. 30, 2020

Foreclosed Assets [Abstract]

Foreclosed Asset Expenses

Foreclosed Asset Expenses (Income)	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Net loss (gain) on sale of real estate	$	—	$	—	$	—	$	—
Provision for losses		—		—		—		—
Operating expenses, net of income		—		11		8		11
Net expense (income)	$	—	$	11	$	8	$	11

XML

Premises and Equipment (Tables)

9 Months Ended

Sep. 30, 2020

Premises and Equipment [Abstract]

Summary of Premises and Equipment

	As of
	September 30,		December 31,
	2020		2019
Furniture and office equipment	$	521	$	503
Computer system		214		214
Leasehold improvements		43		43
Total premises and equipment		778		760
Less accumulated depreciation and amortization		(546)		(544)
Premises and equipment, net	$	232	$	216

	2020		2019
Depreciation and amortization expense for the nine months ended September 30,	$	39	$	30

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Credit Facilities (Tables)

9 Months Ended

Sep. 30, 2020

Line of Credit Facility [Line Items]

Summary of Principal Terms of Term Debt

Nature of Borrowing	Interest Rate	Interest Rate Type	Amount Outstanding		Monthly Payment		Maturity Date	Amount of Loan Collateral Pledged		Amount of Cash Pledged
Term Loan	2.525%	Fixed	$	52,433	$	450	11/1/2026	$	65,966	$	—
PPP Loan	1.000%	Fixed	$	111	$	—	4/27/2022	$	—	$	—

Credit Facilities [Member]

Line of Credit Facility [Line Items]

Future Principal Contractual Payments of Term Debt

2021	$	4,134
2022		4,346
2023		4,343
2024		4,451
2025		4,567
Thereafter		30,703
	$	52,544

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Investor Notes Payable (Tables)

9 Months Ended

Sep. 30, 2020

Debt Instrument [Line Items]

Schedule of Investor Notes Payable

		As of				As of
		September 30, 2020				December 31, 2019
SEC Registered Public Offerings	Offering Type	Amount		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate
Class A Offering	Unsecured	$	306	2.12	%	$	487	3.97	%
Class 1 Offering	Unsecured		14,388	3.75	%		22,098	4.01	%
Class 1A Offering	Unsecured		42,780	3.07	%		32,732	3.70	%
Public Offering Total		$	57,474	3.23	%	$	55,317	3.82	%
Private Offerings	Offering Type
Subordinated Notes	Unsecured	$	11,328	4.59	%	$	11,317	5.24	%
Secured Notes	Secured		6,515	3.99	%		6,467	3.98	%
Private Offering Total		$	17,843	4.37	%	$	17,784	4.78	%
Total Investor Notes Payable		$	75,317	3.50	%	$	73,101	4.06	%
Investor Notes Payable Totals by Security	Offering Type
Unsecured Total	Unsecured	$	68,802	3.46	%	$	66,634	4.06	%
Secured Total	Secured	$	6,515	3.99	%	$	6,467	3.98	%

Notes Payable [Member]

Debt Instrument [Line Items]

Schedule of Maturities of Notes Payable

2021	$	24,433
2022		17,264
2023		7,847
2024		13,224
2025		12,549
	$	75,317

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies [Abstract]

Unfunded Commitments

	Contract Amount at:
	September 30, 2020		December 31, 2019
Undisbursed loans	$	2,323	$	1,999

Information About Existing Operating Leases

	For the
	Three months ended						Nine months ended						Year ended
	September 30,						September 30,						December 31,
	2020			2019			2020			2019			2019
Lease cost
Operating lease cost	$	44		$	43		$	131		$	130		$	174
Other information
Cash paid for operating leases		43			41			127			123			164
Right-of-use assets obtained in exchange for operating lease liabilities		—			—			53			680			680
Weighted average remaining lease term (in years)		2.79			4.17			2.79			4.17			3.96
Weighted-average discount rate		4.60	%		4.77	%		4.60	%		4.77	%		4.77	%

Future Minimum Lease Payments and Lease Costs

	Lease Payments		Lease Costs
2021	$	172	$	174
2022		163		160
2023		154		146
2024		39		37
Total	$	528	$	517

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Measurements [Abstract]

Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments

			Fair Value Measurements at September 30, 2020 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 and restricted cash	$	17,976	$	17,976	$	—	$	—	$	17,976
Certificates of deposit		1,757				1,757				1,757
Loans, net		119,833		—		—		118,966		118,966
Investment in joint venture		889		—		—		889		889
Accrued interest receivable		835		—		—		835		835
FINANCIAL LIABILITIES:
Term-debt	$	52,544	$	—	$	—	$	44,481	$	44,481
Investor notes payable		75,292		—		—		77,293		77,293
Other financial liabilities		514		—		—		514		514

			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 and restricted cash	$	25,993	$	25,993	$	—	$	—	$	25,993
Loans, net		128,843		—		—		126,438		126,438
Investment in joint venture		891		—		—		891		891
Accrued interest receivable		635		—		—		635		635
FINANCIAL LIABILITIES:
Term-debt	$	71,427	$	—	$	—	$	55,072	$	55,072
Investor notes payable		73,046		—		—		74,592		74,592
Other financial liabilities		503		—		—		503		503

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 September 30, 2020:
Collateral-dependent loans (net of allowance and discount)	$	—	$	—	$	5,815	$	5,815
Investment in joint venture		—		—		889		889
Foreclosed assets (net of allowance)		—		—		301		301
Total	$	—	$	—	$	7,005	$	7,005
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	$	—	$	—	$	9,832	$	9,832

Schedule of Valuation Methodologies Used to Measure the Fair Value Adjustments for Level 3 Assets Recorded at Fair Value on a Nonrecurring Basis

September 30, 2020
Assets	Fair Value (in thousands)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired Loans	$	5,815	Discounted appraised value	Selling cost / Estimated market decrease	21% - 81%  (23%)
Investment in joint venture		889	Internal evaluations	Estimated future market value	0%  (0%)
Foreclosed Assets		301	Internal evaluations	Selling cost	6%  (6%)

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%)

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Information [Abstract]

Schedule of Financial Information by Reportable Segments

Financial information with respect to the reportable segments for the three and nine months ended September 30, 2020 is as follows (dollars in thousands):

Three months ended September 30, 2020
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	4,514	$	409	$	—	$	(227)	$	4,696
Total non-interest expense and provision for tax		1,185		289		1		—		1,475
Net profit		1,852		120		(1)		21		1,992

Nine months ended September 30, 2020
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	9,002	$	1,202	$	—	$	(726)	$	9,478
Total non-interest expense and provision for tax		2,923		895		1		—		3,819
Net profit (loss)		1,601		307		(1)		128		2,035
Total assets		139,724		2,933		371		(60)		142,968

Financial information with respect to the reportable segments for the three and nine months ended September 30, 2019 is as follows (dollars in thousands):

Three months ended September 30, 2019
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	2,465	$	620	$	—	$	(212)	$	2,873
Total non-interest expense and provision for tax		1,006		280		—		—		1,286
Net profit (loss)		12		340		—		47		399

Nine months ended September 30, 2019
	Finance Company		Investment Advisor and Insurance Firm		Other Segments		Adjustments / Eliminations		Total
Total revenue	$	7,971	$	1,947	$	—	$	(725)	$	9,193
Total non-interest expense and provision for tax		3,029		841		(2)		—		3,868
Net profit (loss)		824		1,106		2		(14)		1,918
Total assets		158,621		2,452		55		(30)		161,098

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Nature of Business and Summary of Significant Accounting Policies (Narrative) (Details)	9 Months Ended
	Sep. 30, 2020 USD ($) segment item	Dec. 31, 2019 USD ($)
Significant Accounting Policies [Line Items]
Certificates of deposit | $	$ 1,757,000	$ 0
Number of loan portfolio segments | segment	1
Types of revenue, number | item	2
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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Nature of Business and Summary of Significant Accounting Policies (Details of Certificates of Deposit) (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Certificates of deposit	$ 1,757,000	$ 0
CD1 [Member]
Certificates of deposit	$ 1,000,000
Interest Rate	2.25%
Maturity Date	Oct. 13, 2021
CD2 [Member]
Certificates of deposit	$ 757,000
Interest Rate	1.95%
Maturity Date	Jan. 01, 2021

XML

Pledge of Cash and Restricted Cash (Narrative) (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Pledge of Cash and Restricted Cash [Abstract]
Pledged cash	$ 0	$ 0

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Pledge of Cash and Restricted Cash (Reconciliation of Cash, Cash Equivalents, and Restricted Cash) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Pledge of Cash and Restricted Cash [Abstract]
Cash and cash equivalents	$ 17,926	$ 25,993	$ 22,470
Restricted Cash	50	52	51
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$ 17,976	$ 26,045	$ 22,521	$ 9,928

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Related Party Transactions (Narrative) (Details)				3 Months Ended	9 Months Ended
	Mar. 20, 2020 USD ($) loan	Jan. 23, 2020 loan	Aug. 14, 2013 USD ($) loan	Sep. 30, 2020 USD ($)	Sep. 30, 2020 USD ($) loan	Sep. 30, 2019 loan	Dec. 31, 2019 USD ($)
Related Party Transaction [Line Items]
Loans sold to related party					$ 1,164,000
Facility maturity date					Sep. 30, 2021
Line of credit				$ 52,544,000	$ 52,544,000		$ 71,427,000
ECCU [Member]
Related Party Transaction [Line Items]
Number of Loans purchased from related party | loan					0	0
Number of loans sold to related party | loan		1				0
ACCU [Member]
Related Party Transaction [Line Items]
Loans sold to related party				441,000
UFCU [Member]
Related Party Transaction [Line Items]
Number of loans sold to related party | loan			1
Loans sold to related party			$ 5,000,000
Board of Directors and Executive Management [Member]
Related Party Transaction [Line Items]
Notes held by related parties				213,000	$ 213,000		$ 368,000
Navy Federal Credit Union [Member]
Related Party Transaction [Line Items]
Number of loans sold to related party | loan	1
Loans sold to related party	$ 5,000,000
Outstanding balance				1,900,000	1,900,000
KCT Credit Union [Member]
Related Party Transaction [Line Items]
Maximum borrowing capacity				$ 7,000,000	$ 7,000,000
Facility maturity date					Sep. 30, 2021
Facility renewal period					1 year
Minimum cancellation notice					30 days
Minimum collateralization ratio				120.00%	120.00%
Line of credit				$ 0	$ 0
Maturity period					120 days
Delinquency period					60 days
Spread over prime rate					0.50%
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%
MP Securities [Member] | ECCU [Member] | Networking Agreement [Member]
Related Party Transaction [Line Items]
Notice period for termination of agreement					30 days
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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Related Party Transactions (Summary of Related Party Balances) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
ECCU [Member]
Related Party Transaction [Line Items]
Total funds held on deposit	$ 3,482	$ 365
Loan participations purchased from and serviced by related party	259	1,495
ACCU [Member]
Related Party Transaction [Line Items]
Total funds held on deposit	6,720	10,343
Loan participations purchased from and serviced by related party	$ 1,126	$ 1,603

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Related Party Transactions (Schedule of Related Party Transactions) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Related Party Transaction [Line Items]
Interest earned on funds held with related party			$ 13
Interest income earned on loans purchased from related party			11	$ 113
Loans sold to related party			1,164
Income from related party	$ 2,666	$ 445	3,098	1,325
Networking Agreement [Member]
Related Party Transaction [Line Items]
Fees paid to and expenses with related party			7	9
Master Services Agreement [Member]
Related Party Transaction [Line Items]
Income from related party				14
Successor Servicing Agreement [Member]
Related Party Transaction [Line Items]
Income from related party			7	8
Rent Expense [Member]
Related Party Transaction [Line Items]
Fees paid to and expenses with related party			110	73
ECCU [Member]
Related Party Transaction [Line Items]
Interest earned on funds held with related party	8
Interest income earned on loans purchased from related party	4	38
ECCU [Member] | Networking Agreement [Member] | MP Securities [Member]
Related Party Transaction [Line Items]
Fees paid to and expenses with related party	5	5
ECCU [Member] | Successor Servicing Agreement [Member]
Related Party Transaction [Line Items]
Income from related party	2	2
ECCU [Member] | Lease Agreement [Member]
Related Party Transaction [Line Items]
Fees paid to and expenses with related party	37	37
ACCU [Member]
Related Party Transaction [Line Items]
Dollar amount of loan participation interests purchased from related party				1,435
Interest earned on funds held with related party	12	43	69	115
Interest income earned on loans purchased from related party	14	21	42	63
Loans sold to related party	441
Income from related party			441
Fees paid to and expenses with related party	$ 23	$ 7
ACCU [Member] | Networking Agreement [Member]
Related Party Transaction [Line Items]
Fees paid to and expenses with related party			$ 50	$ 31

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Loans Receivable and Allowance for Loan Losses (Narrative) (Details)	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2019 loan	Sep. 30, 2020 USD ($) segment loan item	Sep. 30, 2019 loan	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loan categories | item		4
Loan interest rate		6.51%		6.44%
Number of loan portfolio segments | segment		1
Loans modified, number of new loans	2
Loans modified, number of loans charged off	1
Number of restructured loans past maturity		1
Funds committed to be advanced in connection with impaired loans | $		$ 0
Number of loans deferred, CARES Act		40
Number of deferred loans for which repayment has not resumed, CARES Act		4
Interest Only Payments [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of restructured loans		1
Interest Rate Reduction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of restructured loans			1
Extended Maturity Date [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of restructured loans			1
New Loan and Interest Rate Reduction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of restructured loans	2

XML

Loans Receivable and Allowance for Loan Losses (Summary of Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 122,125	$ 131,049
Deferred loan fees, net	(537)	(631)
Loan discount	(232)	(182)
Allowance for loan losses	(1,523)	(1,393)	$ (2,480)
Loans, net	119,833	128,843
Real Estate Secured [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	121,976	130,889
Unsecured [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 149	$ 160

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Loans Receivable and Allowance for Loan Losses (Schedule of Changes in Allowance for Loan Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Loans Receivable and Allowance for Loan Losses [Abstract]
Balance, beginning of period			$ 1,393	$ 2,480	$ 2,480
Provision for loan loss	$ 132	$ (83)	195	$ (421)	(544)
Charge-offs			(65)		(923)
Recoveries					380
Balance, end of period	$ 1,523		$ 1,523		$ 1,393

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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	Sep. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Loans Receivable and Allowance for Loan Losses [Abstract]
Loans: Individually evaluated for impairment	$ 6,181	$ 8,843
Loans: Collectively evaluated for impairment	115,944	122,206
Loans: Balance	122,125	131,049
Allowance for loan losses: Individually evaluated for impairment	290	175
Allowance for loan losses: Collectively evaluated for impairment	1,233	1,218
Allowance for loan losses: Balance	$ 1,523	$ 1,393	$ 2,480

XML

Loans Receivable and Allowance for Loan Losses (Schedule of Loan Portfolio Credit Quality Indicators by Class) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	$ 122,125	$ 131,049
Wholly-Owned First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	117,021	124,157
Wholly-Owned Junior [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	3,517	3,589
Participation First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,587	3,303
Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	98,522	102,113
Pass [Member] | Wholly-Owned First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	93,636	96,674
Pass [Member] | Wholly-Owned Junior [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	3,486	3,557
Pass [Member] | Participation First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,400	1,882
Watch [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	17,422	20,093
Watch [Member] | Wholly-Owned First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	17,204	19,870
Watch [Member] | Wholly-Owned Junior [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	31	32
Watch [Member] | Participation First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	187	191
Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	5,677	8,333
Substandard [Member] | Wholly-Owned First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	5,677	7,103
Substandard [Member] | Participation First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans		1,230
Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	504	510
Doubtful [Member] | Wholly-Owned First [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	$ 504	$ 510

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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	Sep. 30, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 4,185	$ 5,907
Current	117,940	125,142
Loans: Balance	122,125	131,049
Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,185	5,907
Wholly-Owned First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,185	5,907
Current	112,836	118,250
Loans: Balance	117,021	124,157
Wholly-Owned First [Member] | Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,185	5,907
Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	3,517	3,589
Loans: Balance	3,517	3,589
Participation First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,587	3,303
Loans: Balance	$ 1,587	$ 3,303

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Loans Receivable and Allowance for Loan Losses (Schedule of Impaired Loans by Class) (Details) - Church Loans [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unpaid Principal Balance, Total	$ 10,167	$ 8,957	$ 10,167	$ 8,957	$ 14,081
Recorded Balance, Total	10,103	8,347	10,103	8,347	13,924
Recorded Investment, Total	9,942	8,365	9,942	8,365	13,824
Related Allowance	290	352	290	352	175
Average Recorded Investment, Total	9,962	8,714	11,564	10,738	14,579
Interest Income Recognized, Total	92	60	277	118	1,202
Wholly-Owned First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unpaid Principal Balance, With no allowance recorded	9,877	6,563	9,877	6,563	12,497
Unpaid Principal Balance, With an allowance recorded	290	877	290	877	290
Recorded Balance, With no allowance recorded	9,813	6,325	9,813	6,325	12,404
Recorded Balance, With an allowance recorded	290	567	290	567	290
Recorded Investment, With no allowance recorded	9,652	6,342	9,652	6,342	12,304
Recorded Investment, With an allowance recorded	290	568	290	568	290
Related Allowance	290	114	290	114	110
Average Recorded Investment, With no allowance recorded	9,672	6,215	10,978	6,018	12,343
Average Recorded Investment, With an allowance recorded	290	1,038	290	2,100	973
Interest Income Recognized, With no allowance recorded	$ 92	60	266	118	1,202
Wholly-Owned Junior [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unpaid Principal Balance, With an allowance recorded		215		215
Recorded Balance, With an allowance recorded		181		181
Recorded Investment, With an allowance recorded		181		181
Related Allowance		135		135
Average Recorded Investment, With an allowance recorded		178		179
Participation First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unpaid Principal Balance, With an allowance recorded		1,302		1,302	1,294
Recorded Balance, With an allowance recorded		1,274		1,274	1,230
Recorded Investment, With an allowance recorded		1,274		1,274	1,230
Related Allowance		103		103	65
Average Recorded Investment, With no allowance recorded				1,158
Average Recorded Investment, With an allowance recorded		$ 1,283	296	$ 1,283	$ 1,263
Interest Income Recognized, With an allowance recorded			$ 11

XML

Loans Receivable and Allowance for Loan Losses (Schedule of Loans on Nonaccrual Status by Class) (Details) - Church Loans [Member] - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	$ 6,181	$ 7,635
Wholly-Owned First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	$ 6,181	6,405
Participation First [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans		$ 1,230

XML

Loans Receivable and Allowance for Loan Losses (Schedule of Troubled Debt Restructurings by Class) (Details) - Church Loans [Member] $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($) loan	Sep. 30, 2020 USD ($) loan	Sep. 30, 2019 USD ($) loan
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans | loan	2	1	4
Pre-Modification Outstanding Recorded Investment	$ 890	$ 1,936	$ 2,570
Post-Modification Outstanding Recorded Investment	890	1,955	2,582
Recorded Investment At Period End	$ 890	$ 1,947	$ 2,578
Wholly-Owned First [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans | loan	1	1	3
Pre-Modification Outstanding Recorded Investment	$ 723	$ 1,936	$ 2,404
Post-Modification Outstanding Recorded Investment	890	1,955	2,582
Recorded Investment At Period End	$ 890	$ 1,947	$ 2,578
Wholly-Owned Junior [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans | loan	1		1
Pre-Modification Outstanding Recorded Investment	$ 167		$ 166

XML

Investment in Joint Venture (Narrative) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2015
Investment in Joint Venture [Abstract]
Investment in joint venture	$ 889,000		$ 891,000	$ 900,000
Income (loss) from joint venture investment	$ (6,000)	$ 0

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Revenue Recognition (Schedule of Disaggregated Revenue) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) item	Sep. 30, 2019 USD ($)
Disaggregation of Revenue [Line Items]
Total non-interest income	$ 2,666	$ 445	$ 3,098	$ 1,325
Types of revenue, number | item			2
Wealth Advisory Fees [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	66	89	$ 247	217
Investment Brokerage Fees [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	117	318	223	1,002
Gain on Loan Sales [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	21		61
Lease Income [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	17		47
Gain on Debt Extinguishment [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	2,400		2,400
Other Non-Interest Income [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	2	2	7	20
Lending Fees [Member]
Disaggregation of Revenue [Line Items]
Total non-interest income	$ 43	$ 36	$ 113	$ 86

XML

Loan Sales (Schedule of Servicing Assets) (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Loan Sales [Abstract]
Loan participation interests sold by the Company	$ 16,533
Balance, beginning of period	100	$ 212	$ 212
Additions: Servicing obligations from sale of loan participations	85
Subtractions: Amortization	(37)	(103)	(112)
Balance, end of period	$ 148	$ 109	$ 100

XML

Foreclosed Assets (Narrative) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Foreclosed Assets [Abstract]
Foreclosed assets	$ 301,000	$ 301,000
Allowance for losses on foreclosed assets	0
Loss provision on foreclosed assets	$ 0

XML

Foreclosed Assets (Foreclosed Asset Expenses) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Foreclosed Assets [Abstract]
Operating expenses, net of income	$ 11	$ 8	$ 11
Net expense (income)	$ 11	$ 8	$ 11

XML

Premises and Equipment (Summary of Premises and Equipment) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Total premises and equipment	$ 778		$ 760
Less accumulated depreciation and amortization	(546)		(544)
Premises and equipment, net	232		216
Depreciation and amortization expense	39	$ 30
Furniture And Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment	521		503
Computer System [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment	214		214
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total premises and equipment	$ 43		$ 43

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Credit Facilities (Narrative) (Details)		3 Months Ended	9 Months Ended
	Sep. 25, 2020 USD ($)	Sep. 30, 2020 USD ($) item	Sep. 30, 2020 USD ($) item	Dec. 31, 2019 USD ($)
Line of Credit Facility [Line Items]
Number of credit facilities | item		1	1
Gain on debt extinguishment		$ 2,400,000	$ 2,400,000
Facility maturity date			Sep. 30, 2021
Line of credit		$ 52,544,000	$ 52,544,000	$ 71,427,000
KCT Credit Union [Member]
Line of Credit Facility [Line Items]
Minimum collateralization ratio		120.00%	120.00%
Maximum borrowing capacity		$ 7,000,000	$ 7,000,000
Expiration period			1 year
Facility maturity date			Sep. 30, 2021
Line of credit		$ 0	$ 0
Spread over prime rate			0.50%
Interest rate		3.75%	3.75%
Facility renewal period			1 year
Minimum cancellation notice			30 days
Maturity period			120 days
Delinquency period			60 days
Credit Facility One [Member]
Line of Credit Facility [Line Items]
Minimum collateralization ratio		120.00%	120.00%
Credit Facility Two [Member]
Line of Credit Facility [Line Items]
Debt repaid	$ 15,000,000
Gain on debt extinguishment	$ 2,400,000

XML

Credit Facilities (Summary of Principal Terms of Term Debt) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Line of Credit Facility [Line Items]
Maturity Date	Sep. 30, 2021
Term Loan [Member]
Line of Credit Facility [Line Items]
Interest Rate	2.525%
Amount Outstanding	$ 52,433
Monthly Payment	$ 450
PPP Loan [Member]
Line of Credit Facility [Line Items]
Interest Rate	1.00%
Amount Outstanding	$ 111
Loans Receivable [Member] | Term Loan [Member]
Line of Credit Facility [Line Items]
Maturity Date	Nov. 01, 2026
Amount of Collateral Pledged	$ 65,966
Loans Receivable [Member] | PPP Loan [Member]
Line of Credit Facility [Line Items]
Maturity Date	Apr. 27, 2022
Amount of Collateral Pledged

XML

Credit Facilities (Future Principal Contractual Payments of Term Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Line of Credit Facility [Line Items]
Total	$ 75,317	$ 73,101
Credit Facilities [Member]
Line of Credit Facility [Line Items]
2021	4,134
2022	4,346
2023	4,343
2024	4,451
2025	4,567
Thereafter	30,703
Total	$ 52,544

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Investor Notes Payable (Narrative) (Details)	9 Months Ended
	Sep. 30, 2020 USD ($) item	Dec. 31, 2019 USD ($)	Apr. 30, 2018 USD ($)	Feb. 28, 2018 USD ($)	Jan. 31, 2015 USD ($)
Debt Instrument [Line Items]
Debt issuance costs	$ 25,000	$ 55,000
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				$ 90,000,000
Secured Notes [Member]
Debt Instrument [Line Items]
Notes authorized, maximum			$ 80,000,000		$ 80,000,000
Secured Notes [Member] | Cash [Member]
Debt Instrument [Line Items]
Minimum collateralization ratio	100.00%
Collateral pledged	$ 0	0
Secured Notes [Member] | Loans Receivable [Member]
Debt Instrument [Line Items]
Minimum collateralization ratio	105.00%
Subordinated Notes [Member] | Loans Receivable [Member]
Debt Instrument [Line Items]
Collateral pledged	$ 9,127,000	$ 13,019,000
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

XML

Investor Notes Payable (Schedule of Investor Notes Payable) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Amount	$ 75,317	$ 73,101
Weighted Average Interest Rate	3.50%	4.06%
Public Offerings [Member]
Debt Instrument [Line Items]
Amount	$ 57,474	$ 55,317
Weighted Average Interest Rate	3.23%	3.82%
Public Offerings [Member] | Class A [Member]
Debt Instrument [Line Items]
Amount	$ 306	$ 487
Weighted Average Interest Rate	2.12%	3.97%
Public Offerings [Member] | Class 1 [Member]
Debt Instrument [Line Items]
Amount	$ 14,388	$ 22,098
Weighted Average Interest Rate	3.75%	4.01%
Public Offerings [Member] | Class 1A [Member]
Debt Instrument [Line Items]
Amount	$ 42,780	$ 32,732
Weighted Average Interest Rate	3.07%	3.70%
Private Offerings [Member]
Debt Instrument [Line Items]
Amount	$ 17,843	$ 17,784
Weighted Average Interest Rate	4.37%	4.78%
Private Offerings [Member] | Subordinated Notes [Member]
Debt Instrument [Line Items]
Amount	$ 11,328	$ 11,317
Weighted Average Interest Rate	4.59%	5.24%
Private Offerings [Member] | Secured Notes [Member]
Debt Instrument [Line Items]
Amount	$ 6,515	$ 6,467
Weighted Average Interest Rate	3.99%	3.98%
Unsecured [Member]
Debt Instrument [Line Items]
Amount	$ 68,802	$ 66,634
Weighted Average Interest Rate	3.46%	4.06%
Secured [Member]
Debt Instrument [Line Items]
Amount	$ 6,515	$ 6,467
Weighted Average Interest Rate	3.99%	3.98%

XML

Investor Notes Payable (Schedule of Maturities of Notes Payable) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Total	$ 75,317	$ 73,101
Notes Payable [Member]
Debt Instrument [Line Items]
2021	24,433
2022	17,264
2023	7,847
2024	13,224
2025	12,549
Total	$ 75,317

XML

Commitments and Contingencies (Narrative) (Details) $ in Thousands	Sep. 30, 2020 USD ($) item	Dec. 31, 2019 USD ($)
Commitments And Contingencies [Line Items]
Right-of-use assets	$ 478	$ 536
Lease liabilities	$ 490	$ 545
Brea [Member]
Commitments And Contingencies [Line Items]
Lease renewal term	5 years
Number of lease extension options remaining | item	0
Fresno [Member]
Commitments And Contingencies [Line Items]
Lease renewal term	2 years

XML

Commitments and Contingencies (Unfunded Commitments) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Undisbursed Loans [Member]
Commitments And Contingencies [Line Items]
Unfunded Commitments	$ 2,323	$ 1,999

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Commitments and Contingencies (Information About Existing Operating Leases) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Commitments and Contingencies [Abstract]
Operating lease cost	$ 44	$ 43	$ 131	$ 130	$ 174
Cash paid for operating leases	$ 43	$ 41	127	123	164
Right-of-use assets obtained in exchange for operating lease liabilities			$ 53	$ 680	$ 680
Weighted average remaining lease term (in years)	2 years 9 months 15 days	4 years 2 months 1 day	2 years 9 months 15 days	4 years 2 months 1 day	3 years 11 months 16 days
Weighted-average discount rate	4.60%	4.77%	4.60%	4.77%	4.77%

XML

Commitments and Contingencies (Future Minimum Lease Payments and Lease Costs) (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Commitments and Contingencies [Abstract]
Lease Payments, 2021	$ 172
Lease Payments, 2022	163
Lease Payments, 2023	154
Lease Payments, 2024	39
Lease Payments, Total	528
Lease Costs, 2021	174
Lease costs, 2022	160
Lease costs, 2023	146
Lease Costs, 2024	37
Lease Costs, Total	$ 517

XML

Preferred and Common Units Under LLC Structure (Narrative) (Details)	9 Months Ended
	Sep. 30, 2020 item / shares item $ / shares	Dec. 31, 2019 $ / 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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Retirement Plans (Narrative) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
401(k) plan [Member]
Defined Benefit Plan Disclosure [Line Items]
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	$ 60,000	$ 44,000
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

XML

Fair Value Measurements (Narrative) (Details)	9 Months Ended
	Sep. 30, 2020 loan
Fair Value Measurements [Abstract]
Number of loans reclassified to non-impaired loans	2
Number of impaired loans sold	1

XML

Fair Value Measurements (Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments) (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Value, Cash and restricted cash	$ 17,976,000	$ 26,045,000	$ 22,521,000	$ 9,928,000
Carrying Value, Certificates of deposit	1,757,000	0
Carrying Value, Loans, net	119,833,000	128,843,000
Carrying Value, Investment in joint venture	889,000	891,000			$ 900,000
Carrying Value, Term-debt	52,544,000	71,427,000
Carrying Value, Investor notes payable	75,292,000	73,046,000
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Value, Cash and restricted cash	17,976,000	25,993,000
Carrying Value, Certificates of deposit	1,757,000
Carrying Value, Loans, net	119,833,000	128,843,000
Carrying Value, Investment in joint venture	889,000	891,000
Carrying Value, Accrued interest receivable	835,000	635,000
Carrying Value, Term-debt	52,544,000	71,427,000
Carrying Value, Investor notes payable	75,292,000	73,046,000
Carrying Value, Other financial liabilities	514,000	503,000
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value, Cash and restricted cash	17,976,000	25,993,000
Fair Value, Certificates of deposit	1,757,000
Fair Value, Loans, net	118,966,000	126,438,000
Fair Value, Investment in joint venture	889,000	891,000
Fair Value, Accrued interest receivable	835,000	635,000
Fair Value, Term-debt	44,481,000	55,072,000
Fair Value, Investor notes payable	77,293,000	74,592,000
Fair Value, Other financial liabilities	514,000	503,000
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 and restricted cash	17,976,000	25,993,000
Significant Other Observable Inputs Level 2 [Member] | Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value, Certificates of deposit	1,757,000
Significant Unobservable Inputs Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Value, Investment in joint venture	889,000	891,000
Fair Value, Loans, net	5,815,000	8,640,000
Significant Unobservable Inputs Level 3 [Member] | Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value, Loans, net	118,966,000	126,438,000
Fair Value, Investment in joint venture	889,000	891,000
Fair Value, Accrued interest receivable	835,000	635,000
Fair Value, Term-debt	44,481,000	55,072,000
Fair Value, Investor notes payable	77,293,000	74,592,000
Fair Value, Other financial liabilities	$ 514,000	$ 503,000

XML

Fair Value Measurements (Schedule of Fair Value Measured on a Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Foreclosed assets (net of allowance)	$ 301	$ 301
Significant Unobservable Inputs Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral-dependent loans (net of allowance and discount)	5,815	8,640
Foreclosed assets (net of allowance)	301	301
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)	5,815	8,640
Investment in joint venture	889	891
Foreclosed assets (net of allowance)	301	301
Total	7,005	9,832
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)	5,815	8,640
Investment in joint venture	889	891
Foreclosed assets (net of allowance)	301	301
Total	$ 7,005	$ 9,832

XML

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) $ in Thousands	Sep. 30, 2020 USD ($) item	Dec. 31, 2019 USD ($) item	Dec. 31, 2015 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Investment in joint venture | $	$ 889	$ 891	$ 900
Foreclosed assets | $	301	301
Significant Unobservable Inputs Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis, Valuation Techniques [Line Items]
Impaired Loans | $	5,815	8,640
Investment in joint venture | $	889	891
Foreclosed assets | $	$ 301	$ 301
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
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	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	0.21
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	0.81
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	0.23
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	0.06

XML

Income Taxes and State LLC Fees (Narrative) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2020	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
California Franchise Tax Board [Member] | Minimum [Member]
Income Tax Disclosure [Line Items]
State minimum franchise tax	800
MP Securities [Member] | California Franchise Tax Board [Member]
Income Tax Disclosure [Line Items]
Gross receipt fee based on turnover	6,000
MP Securities [Member] | California Franchise Tax Board [Member] | Minimum [Member]
Income Tax Disclosure [Line Items]
State minimum franchise tax	$ 800
MP Realty [Member]
Income Tax Disclosure [Line Items]
Operating loss carryforwards		$ 407,000	$ 402,000
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

XML

Segment Information (Narrative) (Details)	9 Months Ended
	Sep. 30, 2020 segment
Segment Information [Abstract]
Number of segments	2

XML

Segment Information (Schedule of Financial Information by Reportable Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Segment Reporting Information [Line Items]
Revenue	$ 4,696	$ 2,873	$ 9,478	$ 9,193
Non-interest expense and provision for tax	1,475	1,286	3,819	3,868
Net profit (loss)	1,992	399	2,035	1,918
Total assets	142,968	161,098	142,968	161,098	$ 158,021
Adjustments/Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	(227)	(212)	(726)	(725)
Net profit (loss)	21	47	128	(14)
Total assets	(60)	(30)	(60)	(30)
Finance Company [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue	4,514	2,465	9,002	7,971
Non-interest expense and provision for tax	1,185	1,006	2,923	3,029
Net profit (loss)	1,852	12	1,601	824
Total assets	139,724	158,621	139,724	158,621
Investment Advisor and Insurance Firm [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue	409	620	1,202	1,947
Non-interest expense and provision for tax	289	280	895	841
Net profit (loss)	120	340	307	1,106
Total assets	2,933	2,452	2,933	2,452
Other Segments [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Non-interest expense and provision for tax	1		1	(2)
Net profit (loss)	(1)		(1)	2
Total assets	$ 371	$ 55	$ 371	$ 55