The International Pentecostal Holiness Church Extension Loan

Transcription

The International Pentecostal Holiness
Church Extension Loan Fund, Inc.
Annual Members Meeting
Oklahoma City, OK
October 30, 2013
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http://www.elfiphc.org/cobmembers/
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Password:
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Annual Meeting Agenda

Chairman’s Letter to Members

Company Profile

Financial Information Summary

Operational Summary

Legal Summary

Directors and Officers

Questions and Answers
Council of Bishops Report of the Extension Loan Fund
10/28/2013
Website
elfiphc.org
10/28/2013
Chairman’s Letter to Members

Mission

Managing the Balance Sheet

Meeting as set out in the By-Laws of the Fund

December 31, 2012 revenues of $3,890,059

Expenses and losses of $2,644,696

Increase in unrestricted net assets of $1,245,363

September 30, 2013, revenues of $2,474,091

Expenses and losses of $2,116,082

Increase in unrestricted net assets of $358,009

Continuation of multifaceted strategy to improve the financial condition of
the Fund
10/28/2013
Company’s Profile

Founded in 1958, 55 years ago by Rev. R. L. Rex

Established to support the mission and vision of the IPHC – committed to
Vision 20/20

The Fund sells savings and fixed rate certificates to investors, individuals,
churches and institutions

Monies are used to finance properties for churches and institutions of the
IPHC as defined by the manual

Governed by a 7 member Board of Directors

The Directors are elected every 2 years by the Members – Council of
Bishops, next election 2013

Officers and management of the Fund consist of President, two Vice
Presidents, and Secretary-Treasurer appointed by the Board of Directors
10/28/2013
Extension Loan Fund Growth
70,000,000
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
Loans
Assets
10/28/2013
$5,000,000.00
Revenues and Expenses
$4,000,000.00
$3,000,000.00
Revenues
Expenses
$2,000,000.00
Gain/Loss
$1,000,000.00
$0.00
2009
2010
2011
2012
-$1,000,000.00
10/28/2013
2013 YTD
$70,000,000.00
Assets and Loans
$61,988,259.00
$60,000,000.00
$50,000,000.00
$59,360,867.00
$59,192,383.00
$49,917,361.00
$58,842,971.00
$57,456,098.00
$48,402,281.00
$44,779,336.75
$44,618,902.00
$42,916,735.00
$40,000,000.00
Assets
Loans
$30,000,000.00
$20,000,000.00
$10,000,000.00
$0.00
2009
2010
2011
2012
10/28/2013
2013
Loans Outstanding,
Weighted Average Interest Rate
and Principal Balance
As of
December 31,
Weighted Average
Number of Loans
Interest Rate
Aggregate
Principal
Balance
2012
201
7.26%
$44,462,351
2011
211
7.68%
$45,917,706
2010
218
7.65%
$50,247,798
10/28/2013
Loan Activity
For the Year Ended December 31,
2012
2011
2010
Interest income
$3,383,002
$3,595,877
$3,485,046
Principal repayments
$5,261,686
$2,225,750
$4,033,483
New Loans
$4,495,750
$2,286,458
$3,293,390
10/28/2013
Capital Adequacy Ratio

5.00%
Capital adequacy ratio (net assets to total assets) is below
the NASAA Statement of Policy guidelines which is 5%
4.50%
4.12% 4.14%
4.01%
4.04%
3.77%
3.69%
4.00%
3.70%
3.50%
3.59%
3.18%
3.00%
3.01%
2.67%
2.53%
2.50%
2.00%
1.50%
2.45%
2.42%
2.42%
2.17% 2.40%
2.40%
1.96%
1.57%
2.44%
2.24%
2.12%
1.98%
1.87%
1.86%
1.80%
1.64%
1.56%
1.57%
1.00%
0.50%
0.00%
10/28/2013
4.30%
4.25%
4.11%
Fund Balance
Fund Balance
$3,500,000
3,008,894
$2,856,715
$3,000,000
$2,439,754
$2,500,000
$2,000,000
$1,500,000
$2,114,626
$2,024,500
$1,859,682
$1,824,898
$1,284,275
$1,260,019
$1,187,850
$1,119,475
$811,540$836,832
$1,000,000
$657,739
$500,000
$310,940
$0
1999
2000
2001
2002
2003
2004
Fund Balance
2005
2006
2007
2008
2009
10 per. Mov. Avg. (Fund Balance)
10/30/2012
2010
2011
2012
2013
Action Plan to increase the capital
adequacy ratio

Monitor new sales of debt securities based on loan demand

Marketing of properties held by the Fund

Refinancing of loans, when feasible, to increase loan
performance

Maintain the spread between interest income and interest paid
– 3% minimum

Continue following underwriting and loan policies recently
adopted

Closely monitor the Fund’s investments with the input of the
adoption of the new investment policy to maximize gains while
managing risk factors
10/28/2013
Liquidity and Cash Flow

Board has set 10% cash reserve of the outstanding Debt
Securities

On December 31, 2012 the liquidity was 17.99%

As of September 30, 2013 the liquidity was 14.48%

Both figures are above the NASAA guideline of 8%

Cash flows have been sufficient to meet cash requirements
for expenses and payments of interest and principal on the
Debt Securities
10/28/2013
Loans by State
10/28/2013
Loans by Conference
(Dollar Amount and % of Total Value of Loans)
HEA - Heartland, $2,054,278.60, 5%
EPH - Ephesians 4, $2,459,178.58, 6%
SON - Sonshine, $1,891,832.29, 5%
MDS - Mid South, $2,694,629.30, 6%
GRA - Grace Bible, $1,581,142.74, 4%
NEW - New Horizons, $1,428,321.08, 3%
RDM - Redemption Ministries, $1,209,884.85,
3%
APP - Appalachian, $3,766,763.09, 9%
ALP - Alpha, $1,081,460.07, 3%
GOL - Golden West, $1,048,193.95, 3%
NWL - Northwest Latin, $935,876.99, 2%
SOU - South Carolina, $809,594.55, 2%
TEN - Tennessee Valley, $574,741.96, 1%
GEO - Georgia, $564,012.93, 1%
TEX - Texas Latin, $4,537,502.52, 11%
PAC - Pacific Western, $551,393.46, 1%
RED - RED de Ministerio Sonshine,
$465,846.83, 1%
WMM - World Missions Ministries,
$423,258.25, 1%
GRE - Great Plains, $392,304.48, 1%
COR - Cornerstone, $385,801.32, 1%
NON - Non-IPHC Church, $337,221.36, 1%
ROL - Pennsylvania, $248,158.97, 1%
INS - IPHC Institution, $236,678.37, 1%
UPP - Upper South Carolina, $5,605,827.18,
13%
WCH - West Coast Hispanic, $159,930.55, 0%
HAR - Harvest, $132,713.82, 0%
ROC - Rocky Mountain, $85,759.70, 0%
ACT - Acts2Day, $5,994,394.89, 14%
MIS - Mississippi, $65,979.38, 0%
10/28/2013
Loan Delinquencies

As of December 31, 2012 – 13 loans over 90 days delinquent.

Total dollar amount represented $2,630,701 or 5.95% of the
loan portfolio

As of September 30, 2013 - 11 loans over 90 days delinquent.

Total dollar amount represented $2,275,510 or 5.02% of the
loan portfolio

Some of these loans the Fund is receiving partial payments or
interest only payments or rent payments – average $7,521 a
month
10/28/2013
Principal Delinquent Balance
Principal Delinquent Balances
$9,000,000.00
$8,150,326.00
$8,106,794.00
$7,000,000.00
$6,176,987.12
$6,302,864.70
$6,000,000.00
$5,324,489.54
$5,617,510.30 $5,355,423.50
$5,657,973.64
$4,523,308.78
$4,000,000.00
$3,000,000.00
$2,774,181.00
10/28/2013
Sep-13
Aug-13
Jul-13
Jun-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
$0.00
May-13
$1,000,000.00
Apr-13
$2,803,660.97
$2,575,251.34
$2,467,595.09
$2,630,701.72
$2,478,269.13
$2,333,969.01
$2,022,834.81
$2,275,510.41
$2,642,499.28
Jan-13
$2,000,000.00
Mar-13
$5,000,000.00
Feb-13
$8,000,000.00
Resolving Delinquent Loans 90 days +

3 to 6 month forbearance agreements are being
put in place to determine if the loan can be
brought current or restructured

Other options are interest only payments, deferred
payments, reduced payments, outside assistance,
forgiveness of interest

If the loan cannot be restructured or brought
current the Fund will ask for the deed or file
foreclosure.
10/28/2013
Outstanding Debt Securities
$60,000,000.00
$53,438,496.00
$51,229,261.00
$51,142,056.00
$49,140,852.00
$48,165,762.00
$50,000,000.00
$40,000,000.00
Savings
$30,000,000.00
Fixed Rate
$20,000,000.00
$10,000,000.00
$6,670,820.00
$6,669,652.00
$6,451,863.00
$6,502,106.00
$5,913,800.00
10/28/2013
$2009
2010
2011
2012
2013 YTD
Renewals
It has been our historical experience that a significant percentage of the
principal balance of maturing Fixed Rate Certificates is rolled over or reinvested
by Investors. For the last three years the average rate of reinvestment of our
Fixed Rate Certificates was approximately 79%, with the following reinvestment
rate for each year as shown:
Year
Reinvestment Rate of Maturing
Fixed Rate Certificates (Principal Only)
2012
2011
2010
79%
79%
80%
10/28/2013
New Investment Policy

Adopted this year to set the investment policies
and to monitor them against performance targets

Two advisors are being used – Merrill Lynch and
Syntrinsic Investment Counsel

Strive to maintain a return of 2% - 4%

Continue to monitor and reduce, if needed, the
percentage of the portfolio that is invested in
equities – currently moving to reallocate all equities
to fixed investments

Regularly scheduled meetings with Investment
Advisors to review performance and compliance
10/28/2013
Operational Summary Focus for 2014
1.
Continue to work toward increasing the capital reserve
ratio with a goal of 5% - currently 4.25%
2.
Continue working with delinquent loans for solutions and
to bring the loans current again
3.
Monitor Loan Fund investments for returns with the advice
of the investment committee
4.
Continue to use the best commercial real estate agents in
marketing properties for sale in order to reduce the
properties the Fund owns
5.
Continue the use of professional help and consultation in
the areas of accounting and legal compliance – Cole
and Reed CPAs and Lawn Gardner, JD
10/28/2013
Analysis of Income-Expense
Budget vs Actual
Budget
Income
Actual
Income
Percent
Difference
Budget
Expenses
Actual
Percent
Actual
Expenses Difference Income-Expense
$ 3,810,000 $ 3,943,987
3.52%
$3,205,805 $3,508,445
9.44%
11.04%
$ 3,986,000 $ 4,379,918
9.88%
$3,989,000 $3,879,318
-2.75%
11.43%
$ 3,812,000 $ 3,721,340
$3,728,000 $3,890,059
-2.38%
4.35%
$3,180,628 $2,903,568 -8.71%
$3,728,000 $2,644,696 -29.06%
21.98%
32.01%
10/28/2013
Expense Analysis - Assets and Loans
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Assets
12,873,558
15,778,167
17,546,425
19,172,554
27,055,686
33,918,327
40,578,849
45,036,917
48,635,643
50,775,691
52,251,120
57,662,953
59,192,383
61,988,259
58,559,941
57,807,342
Loans
11,678,626
12,819,472
15,671,610
17,223,204
19,570,969
27,179,187
33,073,351
37,037,555
42,885,600
43,902,389
44,762,492
49,674,514
49,917,361
48,402,281
44,618,902
43,819,893
w/Salaries
153,867
162,396
185,126
222,441
282,093
318,733
286,551
386,988
624,116
631,420
648,488
732,232
673,276
804,493
776,148
789,474
10/28/2013
Assets
1.20%
1.03%
1.06%
1.16%
1.04%
0.94%
0.71%
0.86%
1.28%
1.24%
1.24%
1.27%
1.14%
1.30%
1.33%
1.37%
Loans
1.32%
1.27%
1.18%
1.29%
1.44%
1.17%
0.87%
1.04%
1.46%
1.44%
1.45%
1.47%
1.35%
1.66%
1.74%
1.80%
Legal Summary

We offer our Debt Securities for sale in 34 states

Lawn Gardner with the Christensen Law Group, is our legal counsel
who handles all the filings and, where required, registration in the
appropriate states

The offering circular is prepared annually following the audit

The Fund aims to comply with the Statement of Policy as set forth by the
North American Securities Administrators Association

The NASAA Statement of Policy provides other non-financial standards
such as operational and structural standards and standards for the
content of the Offering Circular. The Fund is in compliance with the
non-financial standards and our Offering Circular is prepared in
accordance with such standards.

The following map shows the states in which we sell securities
10/28/2013
States Where Securities are Sold
10/28/2013
Directors and Officers

Seven directors who serve on the Board,
elected by the members (COB) every 2 years

Executive Committee of COB will recommend
candidates

President shall be a director while he holds that
office

Vacancies will be filled by the current Board

Majority of directors shall be experienced in
real estate, banking, accounting, law, finance.
10/28/2013
Current Directors

David Benton, Chairman of the Board, Myrtle Beach, South
Carolina – First Federal Bank

Ronnie Kennett, retired - First Century Bank, Vice Chairman of
the Board, Bluefield, West Virginia

David B. Parker, President, Oklahoma City, OK

Mathew Alfred- Suntrust Bank, Casselberry, Forida

Tandy Hix, senior VP Lending - Independent Banker’s Bank,
Durant, Oklahoma

Jon Forehand, JD, - Allen, Forehand and Adams, LLP - Moultrie,
GA

Garry Bryant, National Field Director, Acts2Day Conference,
Assistant Director EVUSA, Oklahoma City, Oklahoma
10/28/2013
Officers and Staff

David B. Parker, President – served the Loan
Fund since 1996

Stephen Hanscom, Vice President of Lending –
served the Loan Fund since October 2005

Johnny Upton, Vice President– served the Loan
Fund since January 2010

Esther Nix, Office Administrator, served the
Loan Fund since June 2005

Wallace Hamilton, Secretary/Treasurer, served
the Loan Fund since 2008
10/28/2013
Committees

Executive committee – David Benton,
Ronnie Kennett and David Parker

Audit committee – Tandy Hix, Ronnie
Kennett, Mathew Alfred

Investment committee – Jon Forehand,
David Parker, Wallace Hamilton

Compensation committee – Garry Bryant,
David Benton and Tandy Hix
10/28/2013
New Initiatives

Capital Campaign

Building Fund Certificates
10/28/2013
Contact Information

Mailing: P O Box 12609, Oklahoma City, OK 73157

Physical: 7300 NW 39th Expressway, Bethany, OK
73008

Phone: 800-407-8959, 405-792-7160

Fax: 405-526-5011

Email: [email protected]
Web: www.elfiphc.org
Facebook: Loan Fund


10/28/2013
Questions and Answers

The International Pentecostal Holiness Church Extension Loan

Transcription

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