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<p style="margin: 0pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Basis of Presentation</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited financial statements
have been prepared in accordance with the instructions for interim statements and, therefore, do not include all information and
disclosures necessary for fair presentation of results of operations, financial position, and changes in cash flow in conformity
with generally accepted accounting principles. However, in the opinion of management, such statements reflect all adjustments (which
include only normal recurring adjustments) necessary for fair presentation of financial position, results of operations, and cash
flows for the period presented.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The unaudited financial statements of the Company
should be read in conjunction with the December 31, 2011 audited financial statements included in the Company’s Annual Report
on Form 10-K, as filed with the Securities and Exchange Commission for the year ended December 31, 2011. Operating results for
the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Nature of Business</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">American Church Mortgage Company, a Minnesota
corporation, was incorporated on May 27, 1994. The Company was organized to engage primarily in the business of making mortgage
loans to churches and other nonprofit religious organizations throughout the United States, on terms established for individual
organizations.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Accounting Estimates</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management uses estimates and assumptions in
preparing these financial statements in accordance with accounting principles generally accepted in the United States of America.
Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. The most sensitive estimates
relate to the realizability of the mortgage loans receivable, the valuation of the bond portfolio and real estate held for sale.
It is at least reasonably possible that these estimates could change in the near term and that the effect of the change, if any,
may be material to the financial statements.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><i><u>Concentration of Credit Risk</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">The Company's loans have been granted to churches and other non-profit
religious organizations. The ability of the Company’s debtors to honor their contracts is dependent on member contributions
and the involvement in the church or organization of its senior pastor.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Cash and Equivalents</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company considers all highly liquid debt
instruments purchased with maturities of three months or less to be cash equivalents.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company maintains accounts primarily at
two financial institutions. At times throughout the year, the Company’s cash and equivalents balances may exceed amounts
insured by the Federal Deposit Insurance Corporation. Cash in money market funds is not federally insured. The Company had approximately
$3,000 and $0 in money market fund accounts at September 30, 2012 and December 31, 2011, respectively. The Company has not experienced
any losses in such accounts.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><i><u>Bond Portfolio</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for the bond portfolio
under the Accounting Standards Codification (ASC) 320 <i><u>Investments-Debt and Equity Securities</u></i>. The Company classifies
the bond portfolio as “available-for-sale” and measures the portfolio at fair value. While the bonds are generally
held until contractual maturity, the Company classifies them as available-for-sale as the bonds may be used to repay secured investor
certificates or provide additional liquidity or working capital in the short term. The Company has classified $1,135,000 and $873,000
in bonds as current assets as of September 30, 2012 and December 31, 2011, respectively, based on management’s estimates
for liquidity requirements and contractual maturities of certain bonds maturing in 2012 and 2011, respectively.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Allowance for Mortgage Loans Receivable</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company records mortgage loans receivable
at estimated net realizable value, which is the unpaid principal balances of the mortgage loans receivable, less the allowance
for mortgage loans. The Company’s loan loss policy provides an allowance for estimated uncollectible loans based on an evaluation
of the current status of the loan portfolio. This policy reserves for principal amounts outstanding on a particular loan if cumulative
interruptions occur in the normal payment schedule of a loan; therefore, the Company recognizes a provision for losses and an allowance
for the outstanding principal amount of a loan in the Company’s portfolio if the amount is in doubt of collection. Additionally,
no additional interest income is recognized on impaired loans that are declared to be in default and are in the foreclosure process.
At September 30, 2012, the Company reserved $814,292 for fourteen mortgage loans, of which seven are three or more mortgage payments
in arrears. At December 31, 2011, the Company reserved $812,809 for fifteen mortgage loans, of which eight were three or more mortgage
payments in arrears. One of the loans was in the foreclosure process.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A summary of transactions in the allowance
for credit losses for the nine months ended September 30, 2012 is as follows:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; text-align: justify; padding-left: 5.4pt">Balance at December 31, 2011</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">812,809</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-left: 5.4pt">Provision for additional losses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,394</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Charge-offs</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(138,911</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Balance at September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">814,292</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The total impaired loans, which are loans that
are in the foreclosure process or are declared to be in default, were approximately $944,000 and $1,563,000 at September 30, 2012
and December 31, 2011, respectively, which the Company believes are adequately secured by the underlying collateral and the allowance
for mortgage loans. These loans are currently recorded on a non-accrual basis.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recently established a formal policy
in which it will declare a loan to be in default whereupon the loan will be placed on non-accrual status when the following thresholds
have been met: (i) the borrower has missed three consecutive mortgage payments; (ii) the borrower has not communicated to the Company
any legitimate reason for delinquency in its payments to the Company and has not arranged for the re-continuance of payments; (iii)
lines of communication to the borrower have broken down such that any reasonable prospect of rehabilitating the loan and return
of regular payments is gone.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recently established a policy in
which it will accept payments received on non-accrual loans as well as a policy for resuming accrual of interest on loans that
have been placed on non-accrual status. These policies are as follows: (i) The Company will accept payments on loans that are currently
on non-accrual status when a borrower has communicated to us that they intend to meet their mortgage obligations. A payment made
on a non-accrual loan is considered a good faith deposit as to the intent to resume their mortgage payment obligation. This good
faith deposit is credited back to interest first then principal as stated in the mortgage loan documentation. (ii) A letter outlining
the re-payment terms or the restructure terms (if any) of the loan is provided to the borrower. This letter will be signed by the
Senior Pastor and all board members of the borrower. This letter resumes the obligation to make payments on non-accrual loans.
(iii) The borrower must meet all its payment obligations for the next 120 days without interruption in order to be removed from
non-accrual status.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recently established the following
policy for determining when an uncollectable loan or trade receivable is charged off. When a loan is declared in default by its
policy or deemed to be doubtful of collection, the loan committee of the Advisor to the Company will direct the staff to charge-off
the uncollectable receivables.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Loans totaling approximately $2,208,000 and
$3,137,000 exceeded 90 days past due but continued to accrue interest as of September 30, 2012 and December 31, 2011, respectively.
The Company believes that continued interest accruals are appropriate because the loans are well secured, not deemed to be in default
and the Company is actively pursuing collection of past due payments.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Real Estate Held for Sale</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company records real estate held for sale
at the estimated fair value, which is net of the expected expenses related to the sale of the real estate. The Company maintains
continuous efforts to dispose of real estate held for sale at market terms, including purchase price and financing terms. The Company
may allow for temporary occupancy of real estate held for sale. Revenues, including temporary rental payments, and expenses, such
as taxes and insurance, arising from real estate held for sale are recorded on the Statement of Operations in the current period.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Carrying Value of Long-Lived Assets</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company tests long-lived assets or asset
groups for recoverability when events or changes in circumstances indicate that the carrying amount may not be recoverable. Circumstances
which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant
adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally
expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history
of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will
more likely than not be sold or disposed of significantly before the end of the estimated useful life.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Recoverability is assessed based on the carrying
amount of the asset compared to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal
of the asset, as well as specific appraisal in certain instances. An allowance for losses is recognized when the carrying amount
is deemed not recoverable and exceeds fair value as determined through various valuation techniques including, but not limited
to, discounted cash flow models, quoted market values, and third party independent appraisals.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Revenue Recognition</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Interest income on mortgage loans receivable
and the bond portfolio is recognized as earned. Other income included with interest represents cash received for loan origination
fees, which are recognized over the life of the loan as an adjustment to the yield on the loan.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Deferred Financing Costs</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company defers the costs related to obtaining
financing, principally through the issuance of Secured Investor Certificates. These costs are amortized over the life of the financing
using the straight line method, which approximates the effective interest method.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Income Per Common Share</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">No adjustments were made to income for the
purpose of calculating earnings per share, as there were no potential dilutive shares outstanding.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Reclassifications</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain accounts in the prior year financial
statements have been reclassified for comparative purposes to conform with the presentation in the current year financial statements.
These reclassifications had no effect on net income (loss).</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Basis of Presentation</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited financial statements
have been prepared in accordance with the instructions for interim statements and, therefore, do not include all information and
disclosures necessary for fair presentation of results of operations, financial position, and changes in cash flow in conformity
with generally accepted accounting principles. However, in the opinion of management, such statements reflect all adjustments (which
include only normal recurring adjustments) necessary for fair presentation of financial position, results of operations, and cash
flows for the period presented.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The unaudited financial statements of the Company
should be read in conjunction with the December 31, 2011 audited financial statements included in the Company’s Annual Report
on Form 10-K, as filed with the Securities and Exchange Commission for the year ended December 31, 2011. Operating results for
the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u></u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Nature of Business</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">American Church Mortgage Company, a Minnesota
corporation, was incorporated on May 27, 1994. The Company was organized to engage primarily in the business of making mortgage
loans to churches and other nonprofit religious organizations throughout the United States, on terms established for individual
organizations.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Accounting Estimates</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management uses estimates and assumptions in
preparing these financial statements in accordance with accounting principles generally accepted in the United States of America.
Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. The most sensitive estimates
relate to the realizability of the mortgage loans receivable, the valuation of the bond portfolio and real estate held for sale.
It is at least reasonably possible that these estimates could change in the near term and that the effect of the change, if any,
may be material to the financial statements.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><i><u>Concentration of Credit Risk</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">The Company's loans have been granted to churches and other non-profit
religious organizations. The ability of the Company’s debtors to honor their contracts is dependent on member contributions
and the involvement in the church or organization of its senior pastor.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u></u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Cash and Equivalents</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company considers all highly liquid debt
instruments purchased with maturities of three months or less to be cash equivalents.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company maintains accounts primarily at
two financial institutions. At times throughout the year, the Company’s cash and equivalents balances may exceed amounts
insured by the Federal Deposit Insurance Corporation. Cash in money market funds is not federally insured. The Company had approximately
$3,000 and $0 in money market fund accounts at September 30, 2012 and December 31, 2011, respectively. The Company has not experienced
any losses in such accounts.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"></p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><i><u>Bond Portfolio</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for the bond portfolio
under the Accounting Standards Codification (ASC) 320 <i><u>Investments-Debt and Equity Securities</u></i>. The Company classifies
the bond portfolio as “available-for-sale” and measures the portfolio at fair value. While the bonds are generally
held until contractual maturity, the Company classifies them as available-for-sale as the bonds may be used to repay secured investor
certificates or provide additional liquidity or working capital in the short term. The Company has classified $1,135,000 and $873,000
in bonds as current assets as of September 30, 2012 and December 31, 2011, respectively, based on management’s estimates
for liquidity requirements and contractual maturities of certain bonds maturing in 2012 and 2011, respectively.</p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u></u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u></u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Allowance for Mortgage Loans Receivable</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company records mortgage loans receivable
at estimated net realizable value, which is the unpaid principal balances of the mortgage loans receivable, less the allowance
for mortgage loans. The Company’s loan loss policy provides an allowance for estimated uncollectible loans based on an evaluation
of the current status of the loan portfolio. This policy reserves for principal amounts outstanding on a particular loan if cumulative
interruptions occur in the normal payment schedule of a loan; therefore, the Company recognizes a provision for losses and an allowance
for the outstanding principal amount of a loan in the Company’s portfolio if the amount is in doubt of collection. Additionally,
no additional interest income is recognized on impaired loans that are declared to be in default and are in the foreclosure process.
At September 30, 2012, the Company reserved $814,292 for fourteen mortgage loans, of which seven are three or more mortgage payments
in arrears. At December 31, 2011, the Company reserved $812,809 for fifteen mortgage loans, of which eight were three or more mortgage
payments in arrears. One of the loans was in the foreclosure process.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A summary of transactions in the allowance
for credit losses for the nine months ended September 30, 2012 is as follows:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; text-align: justify; padding-left: 5.4pt">Balance at December 31, 2011</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">812,809</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-left: 5.4pt">Provision for additional losses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,394</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Charge-offs</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(138,911</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Balance at September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">814,292</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The total impaired loans, which are loans that
are in the foreclosure process or are declared to be in default, were approximately $944,000 and $1,563,000 at September 30, 2012
and December 31, 2011, respectively, which the Company believes are adequately secured by the underlying collateral and the allowance
for mortgage loans. These loans are currently recorded on a non-accrual basis.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recently established a formal policy
in which it will declare a loan to be in default whereupon the loan will be placed on non-accrual status when the following thresholds
have been met: (i) the borrower has missed three consecutive mortgage payments; (ii) the borrower has not communicated to the Company
any legitimate reason for delinquency in its payments to the Company and has not arranged for the re-continuance of payments; (iii)
lines of communication to the borrower have broken down such that any reasonable prospect of rehabilitating the loan and return
of regular payments is gone.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recently established a policy in
which it will accept payments received on non-accrual loans as well as a policy for resuming accrual of interest on loans that
have been placed on non-accrual status. These policies are as follows: (i) The Company will accept payments on loans that are currently
on non-accrual status when a borrower has communicated to us that they intend to meet their mortgage obligations. A payment made
on a non-accrual loan is considered a good faith deposit as to the intent to resume their mortgage payment obligation. This good
faith deposit is credited back to interest first then principal as stated in the mortgage loan documentation. (ii) A letter outlining
the re-payment terms or the restructure terms (if any) of the loan is provided to the borrower. This letter will be signed by the
Senior Pastor and all board members of the borrower. This letter resumes the obligation to make payments on non-accrual loans.
(iii) The borrower must meet all its payment obligations for the next 120 days without interruption in order to be removed from
non-accrual status.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recently established the following
policy for determining when an uncollectable loan or trade receivable is charged off. When a loan is declared in default by its
policy or deemed to be doubtful of collection, the loan committee of the Advisor to the Company will direct the staff to charge-off
the uncollectable receivables.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Loans totaling approximately $2,208,000 and
$3,137,000 exceeded 90 days past due but continued to accrue interest as of September 30, 2012 and December 31, 2011, respectively.
The Company believes that continued interest accruals are appropriate because the loans are well secured, not deemed to be in default
and the Company is actively pursuing collection of past due payments.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u></u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Real Estate Held for Sale</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company records real estate held for sale
at the estimated fair value, which is net of the expected expenses related to the sale of the real estate. The Company maintains
continuous efforts to dispose of real estate held for sale at market terms, including purchase price and financing terms. The Company
may allow for temporary occupancy of real estate held for sale. Revenues, including temporary rental payments, and expenses, such
as taxes and insurance, arising from real estate held for sale are recorded on the Statement of Operations in the current period.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Carrying Value of Long-Lived Assets</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company tests long-lived assets or asset
groups for recoverability when events or changes in circumstances indicate that the carrying amount may not be recoverable. Circumstances
which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant
adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally
expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history
of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will
more likely than not be sold or disposed of significantly before the end of the estimated useful life.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Recoverability is assessed based on the carrying
amount of the asset compared to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal
of the asset, as well as specific appraisal in certain instances. An allowance for losses is recognized when the carrying amount
is deemed not recoverable and exceeds fair value as determined through various valuation techniques including, but not limited
to, discounted cash flow models, quoted market values, and third party independent appraisals.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u></u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Revenue Recognition</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Interest income on mortgage loans receivable
and the bond portfolio is recognized as earned. Other income included with interest represents cash received for loan origination
fees, which are recognized over the life of the loan as an adjustment to the yield on the loan.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u></u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Deferred Financing Costs</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company defers the costs related to obtaining
financing, principally through the issuance of Secured Investor Certificates. These costs are amortized over the life of the financing
using the straight line method, which approximates the effective interest method.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Income Per Common Share</u></i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">No adjustments were made to income for the
purpose of calculating earnings per share, as there were no potential dilutive shares outstanding.</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; text-align: justify; padding-left: 5.4pt">Balance at December 31, 2011</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">812,809</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-left: 5.4pt">Provision for additional losses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,394</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Charge-offs</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(138,911</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Balance at September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">814,292</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
</table>
3000
0
1135000
873000
814292
812809
2208000
3137000
812809
140394
-138911
814292
944000
1563000
<p style="margin: 0pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>2. FAIR VALUE MEASUREMENTS</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company measures certain financial instruments
at fair value in our balance sheets. The fair value of these instruments is based on valuations that include inputs that can be
classified within one of the three levels of a hierarchy. Level 1 inputs include quoted market prices in an active market for identical
assets or liabilities. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level
2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other
observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no
market data.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Except for the bond portfolio, which is required
by authoritative accounting guidance to be recorded at fair value on our Balance Sheets, the Company elected not to record any
other financial assets or liabilities at fair value on a recurring basis. We recorded additional provisions for losses on our St.
Agnes and Agape bonds (Note 3), which totaled $1,000,000 and $100,000 for the three and nine months ended September 30, 2012 and
September 30, 2011, respectively. Total allowance for losses on our bond portfolio equaled $2,000,000 and $1,000,000 at September
30, 2012 and December 31, 2011, respectively.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">The following table summarizes the Company’s financial
instruments that were measured at fair value on a recurring basis:</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; padding-left: 6pt"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"> </td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Fair Value</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Measurement</p></td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 6pt">September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Fair Value</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Level 3</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Bond portfolio</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">8,935,482</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">8,935,482</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; padding-left: 6pt"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"> </td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Fair Value</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Measurement</p></td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 6pt">December 31, 2011</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Fair Value</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Level 3</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Bond portfolio</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,996,923</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,996,923</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We determine the fair value of the bond portfolio
shown in the table above by comparing it with similar instruments in inactive markets. The analysis reflects the contractual terms
of the bonds, which are callable at par by the issuer at any time, and the anticipated cash flows of the bonds, and uses observable
and unobservable market-based inputs. Unobservable inputs include our internal credit rating and selection of similar bonds for
valuation.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">The change in Level 3 assets measured at fair value
on a recurring basis is summarized as follows:</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Bond Portfolio</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; padding-left: 6pt">Balance at December 31, 2011</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">9,996,923</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt">Purchases</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">40,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 6pt">Allowances for losses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,000,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 6pt">Proceeds</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(101,441</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt">Balance at September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">8,935,482</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Real estate held for sale and impaired loans
are recorded at fair value on a nonrecurring basis. The fair value of real estate held for sale was based upon the listed sales
price less expected selling costs, which is a Level 2 input. There were no provisions for losses on real estate held for sale for
the three and nine months ended September 30, 2012 and 2011. The fair value of impaired loans was based upon the Company’s
loan loss policy, which is Level 3 input. The Company reserved an additional provision of $236,039 and $142,899 for loan losses
at September 30, 2012 and 2011, respectively.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">The following table summarizes the Company’s financial
instruments that were measured at fair value on a nonrecurring basis:</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="15" style="text-align: center; border-bottom: Black 1pt solid">September 30, 2012</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 1</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 2</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 3</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Fair Value at <br />September 30, <br />2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-left: 5.4pt">Impaired Loans</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">592,577</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">592,577</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Real estate held for resale</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">713,497</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">713,497</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">713,497</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">592,577</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,306,074</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="15" style="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 1</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 2</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 3</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Fair Value at December 31, <br />2011</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-left: 5.4pt">Impaired Loans</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">1,188,050</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">1,188,050</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Real estate held for resale</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">714,322</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">714,322</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">714,322</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,188,050</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,902,372</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">The change in Level 2 and Level 3 assets measured at
fair value on a nonrecurring basis is summarized as follows:</p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Fair Value</u></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Measurement</u></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Level 3</u></p></td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Fair Value</u></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Measurement</u></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Level 2</u></p></td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Impaired Loans</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Real Estate Held for Sale            </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; padding-left: 6pt">Balance at December 31, 2011</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,188,050</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">714,322</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt">Additions/Acquisitions</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">379,355</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt">Dispositions/Proceeds</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(384,576</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(380,180</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt">Provision for other than temporary losses</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(210,897</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt">Balance at September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">592,577</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">713,497</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; padding-left: 6pt"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"> </td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Fair Value</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Measurement</p></td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 6pt">September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Fair Value</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Level 3</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Bond portfolio</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">8,935,482</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">8,935,482</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; padding-left: 6pt"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"> </td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Fair Value</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Measurement</p></td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 6pt">December 31, 2011</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Fair Value</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Level 3</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Bond portfolio</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,996,923</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,996,923</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Bond Portfolio</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; padding-left: 6pt">Balance at December 31, 2011</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">9,996,923</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt">Purchases</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">40,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 6pt">Allowances for losses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,000,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 6pt">Proceeds</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(101,441</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt">Balance at September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">8,935,482</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="15" style="text-align: center; border-bottom: Black 1pt solid">September 30, 2012</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 1</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 2</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 3</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Fair Value at <br />September 30, <br />2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-left: 5.4pt">Impaired Loans</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">592,577</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">592,577</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Real estate held for resale</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">713,497</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">713,497</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">713,497</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">592,577</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,306,074</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="15" style="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 1</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 2</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Level 3</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Fair Value at December 31, <br />2011</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-left: 5.4pt">Impaired Loans</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">1,188,050</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">1,188,050</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Real estate held for resale</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">714,322</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">714,322</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">—  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">714,322</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,188,050</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,902,372</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Fair Value</u></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Measurement</u></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Level 3</u></p></td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Fair Value</u></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Measurement</u></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>Level 2</u></p></td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Impaired Loans</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Real Estate Held for Sale            </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; padding-left: 6pt">Balance at December 31, 2011</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,188,050</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">714,322</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt">Additions/Acquisitions</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">379,355</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt">Dispositions/Proceeds</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(384,576</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(380,180</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt">Provision for other than temporary losses</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(210,897</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt">Balance at September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">592,577</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">713,497</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
</table>
8935482
9996923
8935482
9996923
40000
-1000000
-101441
592577
1188050
592577
1188050
713497
714322
713497
714322
1306074
1902372
592577
1188050
713497
714322
379355
-384576
-380180
-210897
236039
142899
107310
163283
144666
1418291
1289490
18000
75313
<p style="margin: 0pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>3. MORTGAGE LOANS RECEIVABLE AND BOND PORTFOLIO</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At September 30, 2012, the Company had mortgage
loans receivable totaling $30,959,076. The loans bear interest ranging from 1.00% to 10.25% with a weighted average of approximately
8.47% at September 30, 2012. The Company had mortgage loans receivable totaling $29,870,023 that bore interest ranging from 1.00%
to 10.25% with a weighted average of approximately 8.40% at December 31, 2011.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has a portfolio of secured church
bonds at September 30, 2012 and December 31, 2011, which are carried at fair value. The bonds pay either semi-annual or quarterly
interest ranging from 5.25% to 10.40%. The aggregate value of secured church bonds equaled approximately $10,935,000 at September
30, 2012 with a weighted average interest rate of 7.92% and approximately $10,997,000 at December 31, 2011 with a weighted average
interest rate of 7.92%. These bonds are due at various maturity dates through July 2039.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.1pt">The contractual
maturity schedule for mortgage loans receivable and the bond portfolio as of September 30, 2012, is as follows:</font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="width: 57%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="width: 23%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">Mortgage Loans</td>
<td style="width: 20%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">Bond Portfolio</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">October 1, 2012 through September 30, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$     2,294,712</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$    1,134,000</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">October 1, 2013 through December 31, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">417,206</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">262,000</td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,755,704</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">676,000</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2015</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">934,075</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">146,000</td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2016</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,042,144</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">122,500</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Thereafter</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">24,515,235</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">8,594,982</td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">           </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">30,959,076</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> 10,935,482    </td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Less loan loss and bond loss allowances</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(814,292)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(2,000,000)</td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Less deferred origination income</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><u>(564,369</u>)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">______-__</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">            Totals</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u>29,580,415</u></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-underline-style: double; text-align: right">$ <font style="text-underline-style: double"><u>8,935,482</u></font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company currently owns $2,035,000 First
Mortgage Bonds issued by St. Agnes Missionary Baptist Church located in Houston, Texas. The total principal amount of First Mortgage
Bonds issued by St. Agnes is $13,375,000. St. Agnes defaulted on its payment obligations to bondholders in June 2007. The church
subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the three properties that secure the First Mortgage
Bonds in November 2007, which was dismissed in September 2008, and the church was subsequently foreclosed upon. The Company, along
with all other bondholders, has a superior lien over all other creditors. No accrual for interest receivable from the First Mortgage
Bonds is recorded by the Company. The Company has an aggregate allowance for losses of $1,800,000 and $800,000 for the First Mortgage
Bonds at September 30, 2012 and December 31, 2011, respectively, which effectively reduces the bonds to the fair value amount management
believes will be recovered. In March 2009, a lease was signed with St. Agnes to permit it to remain in the property while submitting
lease payments to bondholders as partial interest payments. Lease payments began in the second quarter of 2009, however St. Agnes
failed to make all required lease payments and was evicted from the property in the first quarter of 2010. The trustee has sold
one of the properties. The trustee has not provided details of the sale to bondholders as of September 30, 2012.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company currently owns $637,000 First Mortgage
Bonds and $497,000 Second Mortgage Bonds issued by Agape Assembly Baptist Church located in Orlando, Florida. The total principal
amount of First Mortgage Bonds issued by Agape is $7,200,000, and the total principal amount of Second Mortgage Bonds issued is
$715,000. Agape defaulted on its payment obligations to bondholders in September 2010. The church subsequently commenced a Chapter
11 bankruptcy reorganization proceeding regarding the property that secures the First Mortgage Bonds in December 2010. Agape is
currently performing under a loan modification agreement. The trustee is collecting weekly sinking fund payments from the Church,
however this has not yet resulted in any disbursements to bondholders as of September 30, 2012. The trustee is working toward a
resolution with the Church which should result in payment of both interest and principal to bondholders in the first quarter of
2013. The Company, along with all other bondholders, has a superior lien over all other creditors. The Company has an aggregate
allowance for losses of $200,000 for the First and Second Mortgage Bonds at September 30, 2012 and December 31, 2011, respectively,
which effectively reduces the bonds to the fair value amount management believes will be recovered.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 12, 2012, the Company completed the
sale of a property held for sale. The purchase price of the property was $475,000. The purchaser provided a $20,000 cash down payment.
The Company provided a $500,000 loan to the qualified church to purchase the property which is located in Baton Rouge, Louisiana.
The terms of the loan were consistent with market terms for such financing. This property was acquired by the Company through foreclosure, and the Company took possession of the property
in March 2012. The Company recorded a gain of $95,645 in connection with this transaction. This amount has been recorded as a reduction
of the provision for losses on mortgage loans receivable.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 57%; padding-right: 5.4pt; padding-left: 5.4pt"></td></tr></table>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="width: 53%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="width: 18%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">Mortgage Loans</td>
<td style="width: 29%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">Bond Portfolio</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">October 1, 2012 through September 30, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$     2,294,712</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$    1,134,000</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">October 1, 2013 through December 31, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">417,206</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">262,000</td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,755,704</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">676,000</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2015</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">934,075</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">146,000</td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2016</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,042,144</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">122,500</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Thereafter</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">24,515,235</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">8,594,982</td></tr>
<tr style="text-align: right; vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">           </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt">30,959,076</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  10,935,482</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Less loan loss and bond loss allowances</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(814,292)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(2,000,000)</td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Less deferred origination income</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><u>(564,369</u>)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">______-__</td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">            Totals</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u>29,580,415</u></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-underline-style: double; text-align: right">$ <font style="text-underline-style: double"><u>8,935,482</u></font></td></tr>
</table>
2294712
1134000
417206
262000
1755704
676000
934075
146000
1042144
122500
24515235
8594982
30959076
10935482
814292
2000000
564369
29580415
8935482
10948000
10997000
2035000
13375000
1300000
637000
497000
7200000
715000
200000
28991234
29870023
<p style="margin: 0pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>4. SECURED INVESTOR CERTIFICATES</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Secured investor certificates are collateralized
by certain mortgage loans receivable or secured church bonds of approximately the same value as the certificates. The weighted
average interest rate on the certificates was 6.65% at September 30, 2012 and December 31, 2011, respectively. Holders of the secured
investor certificates may renew certificates at the current rates and terms upon maturity at the Company’s discretion. Renewals
upon maturity are considered neither proceeds from nor issuance of secured investor certificates. Renewals totaled approximately
$308,000 and $676,000 for the nine months ended September 30, 2012 and 2011, respectively. The secured investor certificates have
certain financial and non-financial covenants indentified in the respective series’ trust indentures.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The estimated maturity schedule for the secured
investor certificates at September 30, 2012 is as follows:</p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="width: 76%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="width: 20%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="width: 4%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">October 1, 2012 through September 30, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$     1,587,000</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">October 1, 2013 through December 31, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">271,000</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,876,000</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2015</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">2,568,000</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">2016</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">3,146,000</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Thereafter</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right"> 17,110,000</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">           Totals</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u>26,558,000</u></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-underline-style: double; text-align: right"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In October 2008, the Company filed a registration
statement with the Securities and Exchange Commission to offer $20,000,000 worth of Series C secured investor certificates. The
offering was declared effective by the SEC on March 30, 2009 and was amended in January 2010 and again in June 2011. The offering
concluded March 30, 2012. The certificates were offered in multiples of $1,000 with interest rates ranging from 4.50% to 7.25%,
subject to changing market rates, and maturities from 4 to 7 and 13 to 20 years. The certificates are collateralized by certain
mortgage loans receivable and church bonds of approximately the same value. At September 30, 2012, approximately 7,932 Series C
certificates had been issued and were outstanding for $7,932,000, of which 2,586 Series C certificates were issued through its
stock repurchase program (see Note 5).</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 1%; text-align: left"> </td><td style="width: 43%; text-align: right">October 1, 2012 through September 30, 2013</td><td style="width: 1%; text-align: left"> </td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 43%; text-align: right">1,587,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td style="text-align: right">October 1, 2013 through December 31, 2013</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">271,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2014</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,876,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td style="text-align: left; vertical-align: bottom">2015</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,568,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td style="text-align: left; vertical-align: bottom">2016</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,146,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: left; vertical-align: bottom">Thereafter</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">17,110,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: left; vertical-align: bottom">          Totals</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">26,558,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse"><tr style="vertical-align: top"><td style="padding-right: 5.4pt; padding-left: 5.4pt; text-underline-style: double; text-align: right"></td></tr>
</table>
1587000
271000
1876000
2568000
3146000
17110000
2586
308000
676000
1000
7932000
7932
<p style="margin: 0pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>5. STOCK EXCHANGE AND REPURCHASE PROGRAMS</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company commenced a stock
exchange program effective February 2, 2010 whereby it offered to shareholders on an ongoing basis (until terminated or
modified by the Board of Directors) an exchange of one $1,000 principal amount Series C secured investor certificate for 200
shares of common stock of the Company, and, with respect to odd-lot holders above 200 shares converted into certificates, the
sum of $5.00 cash for each remaining share. This exchange ratio was determined by management and approved by the Board of
Directors, and was established as a basis for the completion of the exchange offer. This ratio was not intended to represent
the amount at which the Company or any other party would be expected to purchase common stock in an arm’s-length
transaction. The Company’s Board of Directors approved up to 1,000,000 shares to be repurchased. As of September 30,
2012, requests representing approximately 532,743 shares have been submitted for share exchanges. The Company did not
exchange any shares during the three or nine months ended September 30, 2012. The Company exchanged 528,974 shares during
the year ended December 31, 2011 for 2,586 Series C certificates ($2,586,000 in principal amount) and paid $76,870 in cash
for remainder shares. The program was terminated by the Board of Directors on April 12, 2012 since the Company terminated the
Series C secured investor certificate offering. (See Note 4).</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company commenced a share repurchase plan
on July 19, 2011 whereby it offers to shareholders on an ongoing, first-come, first-served basis (until terminated or modified
by the Board of Directors) the repurchase of an aggregate of up to 250,000 shares of common stock at $4.00 per share. Shares may
be purchased at the sole discretion of the Company, subject to the funds available after meeting Company obligations. Shareholders
must present for repurchase either: (i) a minimum of 500 Shares, or (ii) the total number of Shares registered in such Shareholder’s
name. The Company repurchased 75,313 shares for $301,252 during the nine months ended September 30, 2012. As of December 31, 2011,
the Company had repurchased an aggregate of 160,927 shares for $643,229 in cash under the program. The Program may be modified
or rescinded at the Board’s discretion upon 10 days’ notice to shareholders.</p>
<p style="margin: 0pt"></p>
200
5
1000000
2586
2586000
76870
250000
4
500
14863
160927
59453
643229
532743
1000
<p style="margin: 0pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>6. TRANSACTIONS WITH AFFILIATES</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has an Advisory Agreement with
Church Loan Advisors, Inc. (the “Advisor”). The Advisor is responsible for the day-to-day operations of the Company
and provides office space and administrative services. The Advisor and the Company are related through common ownership and common
management. A majority of the independent board members approve the advisory agreement on an annual basis. The Company paid the
Advisor management and origination fees of approximately $153,000 and $101,000 during the three months ended September 30, 2012
and 2011, respectively, and $350<font style="font-size: 8pt"> </font>,000 and $320,000 during the nine months ended September
30, 2012 and 2011, respectively.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="margin: 0pt"></p>
350000
320000
153000
101000
<p style="margin: 0pt"></p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><b></b></p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><b>7. FAIR VALUE OF FINANCIAL INSTRUMENTS</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is required to disclose the fair
value information about financial instruments, where it is practicable to estimate that value. Because assumptions used in these
valuation techniques are inherently subjective in nature, the estimated fair values cannot always be substantiated by comparison
to independent market quotes and, in many cases, the estimated fair values could not necessarily be realized in an immediate sale
or settlement of the instrument.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value estimates presented herein are
based on relevant information available to management as of September 30, 2012 and December 31, 2011, respectively. Management
is not aware of any factors that would significantly affect these estimated fair value amounts. As these reporting requirements
exclude certain financial instruments and all non-financial instruments, the aggregate fair value amounts presented herein do not
represent management’s estimate of the underlying value of the Company.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The estimated fair values of the Company’s
financial instruments, none of which are held for trading purposes, are as follows:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">  </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="7" style="text-align: center; border-bottom: Black 1pt solid">September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td colspan="7" style="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">Carrying</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">Fair</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">Carrying</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">Fair</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Amount</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Value</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Amount</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Value</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 40%; text-align: left; padding-left: 5.4pt">Cash and equivalents</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">196,486</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">196,486</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">611,911</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">611,911</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt">Accounts receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">177,765</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">177,765</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">133,683</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">133,683</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 5.4pt">Interest receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,449</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,449</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">135,990</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">135,990</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt">Mortgage loans receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">30,959,076</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">39,809,789</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">29,870,023</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">36,100,291</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 5.4pt">Bond portfolio</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,935,482</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,935,482</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,996,923</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,996,923</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt">Secured investor certificates</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,558,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">30,017,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,542,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">30,374,749</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following methods and assumptions were
used by the Company to estimate the fair value of each class of financial instrument for which it is practicable to estimate that
value:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Cash and equivalents</i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Due to their short-term nature, the carrying
amount of cash and cash equivalents approximates fair value.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Accounts receivable</i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying amount of accounts receivable
approximates fair value.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Interest receivable</i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying amount of interest receivable
approximates fair value.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Mortgage loans receivable</i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value of the mortgage
loans receivable is currently more than the carrying value as the portfolio is currently yielding a higher rate than
similar mortgages with similar terms for borrowers with similar credit quality. The credit markets in which we conduct
business have experienced a decrease in interest rates resulting in the fair value of the mortgage loans increasing during
the three or nine months ended September 30, 2012 and 2011, respectively.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Bond portfolio</i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We determine the fair value of the bond portfolio
shown in the table above by comparing with similar instruments in inactive markets. The analysis reflects the contractual terms
of the bonds, which are callable at par by the issuer at any time, and the anticipated cash flows of the bonds and uses observable
and unobservable market-based inputs. Unobservable inputs include our internal credit rating and selection of similar bonds for
valuation.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Secured investor certificates</i></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value of the secured investor certificates
is currently greater than the carrying value due to higher interest rates than current market rates.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="7" style="text-align: center; border-bottom: Black 1pt solid">September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td colspan="7" style="text-align: center; border-bottom: Black 1pt solid">December 31, 2011</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">Carrying</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">Fair</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">Carrying</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">Fair</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Amount</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Value</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Amount</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Value</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 40%; text-align: left; padding-left: 5.4pt">Cash and equivalents</td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">196,486</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">196,486</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">611,911</td><td style="width: 1%; text-align: left"> </td><td style="width: 3%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">611,911</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt">Accounts receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">177,765</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">177,765</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">133,683</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">133,683</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 5.4pt">Interest receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,449</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,449</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">135,990</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">135,990</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt">Mortgage loans receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">30,959,076</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">39,809,789</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">29,870,023</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">36,100,291</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 5.4pt">Bond portfolio</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,935,482</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,935,482</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,996,923</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,996,923</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt">Secured investor certificates</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,558,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">30,017,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,542,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">30,374,749</td><td style="text-align: left"> </td></tr>
</table>
196486
611911
196486
611911
177765
133683
177765
133683
30959076
29870023
39809789
36100291
8935482
10996923
8935482
10996923
26558000
30017000
30137819
30374749
475000
20000
500000
95645
20000000
109500