0000934543-11-000022.txt : 20110812 0000934543-11-000022.hdr.sgml : 20110812 20110812133404 ACCESSION NUMBER: 0000934543-11-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20110630 FILED AS OF DATE: 20110812 DATE AS OF CHANGE: 20110812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CHURCH MORTGAGE CO CENTRAL INDEX KEY: 0000934543 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 411793975 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25919 FILM NUMBER: 111030505 BUSINESS ADDRESS: STREET 1: 10237 YELLOW CIRCLE DRIVE STREET 2: STE 700 CITY: MINNEAPOLIS STATE: MN ZIP: 55343 BUSINESS PHONE: 6129459455 MAIL ADDRESS: STREET 1: 10237 YELLOW CIRCLE DR CITY: MINNEAPOLIS STATE: MN ZIP: 55343 10-Q 1 frm10q063011.htm FORM 10Q 06/30/2011

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Under Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2011

o Transition Report Under Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the Transition Period from ------------to------------

Commission File Number 000-25919

American Church Mortgage Company

(Exact name of registrant as specified in its charter)

Minnesota	41-1793975
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

10237 Yellow Circle Drive Minnetonka, MN	55343
(Address of principal executive offices)	(Zip Code)

(952) 945-9455

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

(Do not check if a smaller reporting company)

Smaller reporting company x

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class		Outstanding at August 12, 2011
Common Stock, $0.01 par value per share		1,940,338 shares

AMERICAN CHURCH MORTGAGE COMPANY



INDEX
	Page No.



PART I. FINANCIAL INFORMATION


Item 1. Financial Statements:

Balance Sheets		2 - 3

Statements of Operations		4 - 5

Statements of Cash Flows		6 - 7

Notes to Financial Statements		7 - 18

Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations		19 – 24

Items 4. Controls and Procedures		25


PART II. OTHER INFORMATION

Item 1. Legal Proceedings		26

Item 1A. Risk Factors		26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26

Item 3. Defaults Upon Senior Securities		27

Item 4. (Removed and Reserved)		27

Item 5. Other Information		27

Item 6. Exhibits		27

Signatures		29

AMERICAN CHURCH MORTGAGE COMPANY

Minnetonka, Minnesota

Unaudited Financial Statements

June 30, 2011

AMERICAN CHURCH MORTGAGE COMPANY



Balance Sheets

ASSETS		June 30, 2011		December 31, 2010
		(Unaudited)
Current Assets
Cash and equivalents	$	997,187	$	350,339
Accounts receivable		109,908		112,209
Interest receivable		132,080		139,441
Current maturities of mortgage loans receivable, net of
allowance of $15,157 and $28,574 and deferred
origination fees of $43,009 and $39,965 at June 30,
2011 and December 31, 2010, respectively		543,890		1,193,149
Current maturities of bond portfolio, at fair value		873,000		627,000
Prepaid expenses and other assets		22,723		7,407
Total current assets		2,678,788		2,429,545

Mortgage Loans Receivable, net of current maturities,
allowance of $760,220 and $683,255 and deferred
origination fees of $523,743 and $532,873 at June
30, 2011 and December 31, 2010, respectively		28,913,847		28,952,689

Bond Portfolio, at fair value, net of current maturities		9,285,211		9,650,849

Real Estate Held for Sale		848,102		727,532

Deferred Offering Costs,
net of accumulated amortization of $764,525 and $705,923
at June 30, 2011 and December 31, 2010, respectively		847,415		845,694
Total Assets	$	42,573,363	$	42,606,309


Notes to Unaudited Financial Statements are an integral part of these Statements

AMERICAN CHURCH MORTGAGE COMPANY

Balance Sheets

LIABILITIES AND STOCKHOLDERS’ EQUITY		June 30, 2011			December 31, 2010
		(Unaudited)
Current Liabilities
Current maturities of secured investor certificates	$	516,000		$	902,000
Line of credit		900,000			1,416,000
Accounts payable		445,242			37,364
Management fee payable		—			22,357
Dividends payable		213,437			194,311
Total current liabilities		2,074,679			2,572,032

Deposit on real estate held for sale		45,000			45,000

Secured Investor Certificates, Series B, net of current maturities		18,574,000			18,307,000
Secured Investor Certificates, Series C		5,631,000			5,134,000
Total liabilities		26,324,679			26,058,032

Stockholders’ Equity
Common stock, par value $.01 per share
Authorized, 30,000,000 shares
Issued and outstanding, 1,940,338 shares at
June 30, 2011 and 1,943,107 at December 31, 2010		19,403			19,431
Additional paid-in capital		20,161,514			20,175,331
Accumulated deficit		(3,932,233	)		(3,646,485	)
Total stockholders’ equity		16,248,684			16,548,277

Total liabilities and stockholders' equity	$	42,573,363		$	42,606,309


Notes to Unaudited Financial Statements are an integral part of these Statements

AMERICAN CHURCH MORTGAGE COMPANY

Statements of Operations

	For the Six Months Ended
	June 30, 2011		June 30, 2010
	(Unaudited)		(Unaudited)

Interest and Other Income	$	1,620,101	$	1,690,803

Interest Expense		913,961		857,345

Net Interest Income		706,140		833,458

Provision for losses on mortgage loans receivable		86,944		142,171
Provision for losses on bonds		100,000		—
Provision for Losses on Mortgage Loans Receivable and Bonds		186,944		142,171

Net Interest Income after Provision for Mortgage and Bond Losses		519,196		691,287

Operating Expenses
Other operating expenses		378,391		409,816
Real estate impairment		—		92,000
Total Operating Expense		378,391		501,816

Operating Income		140,805		189,471

Other Income		321		7,862

Net Income	$	141,126	$	197,333

Basic and Diluted Income Per Share	$	0.07	$	0.08

Dividends Declared Per Share	$	0.22	$	0.20

Weighted Average Common Shares Outstanding -
Basic and Diluted		1,941,291		2,372,831


Notes to Unaudited Financial Statements are an integral part of these Statements

AMERICAN CHURCH MORTGAGE COMPANY

Statements of Operations

	For the Three Months Ended
	June 30, 2011		June 30, 2010
	(Unaudited)		(Unaudited)

Interest and Other Income	$	831,735	$	790,994

Interest Expense		458,498		433,370

Net Interest Income		373,237		357,624

Provision for losses on mortgage loans receivable		41,381		88,679
Provision for losses on bonds		100,000		—
Provision for Losses on Mortgage Loans Receivable and Bonds		141,381		88,679

Net Interest Income after Provision for Mortgage and Bond Losses		231,856		268,945

Operating Expenses
Other operating expenses		198,867		202,539
Real estate impairment		—		92,000
Total Operating Expense		198,867		294,539

Operating Income (Loss)		32,989		(25,594	)

Other Income		164		3,117

Net Income (Loss)	$	33,153	$	(22,477	)

Basic and Diluted Income (Loss) Per Share	$	0.02	$	(0.01	)

Dividends Declared Per Share	$	0.11	$	0.10

Weighted Average Common Shares Outstanding -
Basic and Diluted		1,919,016		2,275,762


Notes to Unaudited Financial Statements are an integral part of these Statements

AMERICAN CHURCH MORTGAGE COMPANY

Statements of Cash Flows

	For the Six Months Ended
	June 30, 2011			June 30, 2010
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities
Net income	$	141,126		$	197,333
Adjustments to reconcile net income to net cash
from operating activities:
Impairment on real estate held for sale		—			92,000
Provision for losses on mortgage loans receivable		86,944			142,171
Provision for losses on bonds		100,000			—
Amortization of loan origination discounts		(20,786	)		(15,982	)
Amortization of deferred costs		58,602			64,552
Change in assets and liabilities
Accounts receivable		44,069			23,416
Interest receivable		7,361			16,186
Prepaid expenses		(15,316	)		(8,468	)
Accounts payable		407,878			(38,704	)
Management fee payable		(22,357	)		—
Net cash provided by operating activities		787,521			472,504

Cash Flows from Investing Activities
Origination of mortgage loans		(30,449	)		—
Proceeds from origination fees		14,700			18,736
Collections of mortgage loans		475,354			167,286
Investment in bonds		(31,046	)		—
Proceeds from bonds		50,684			1,348,137
Net cash provided by investing activities		479,243			1,534,159

Cash Flows from Financing Activities
Payments on line of credit, net		(516,000	)		(1,288,315	)
Proceeds from secured investor certificates		484,000			630,000
Payments on secured investor certificate maturities		(119,000	)		(394,000	)
Payments for deferred costs		(60,323	)		(93,200	)
Stock redemptions		(845	)		—
Dividends paid		(407,748	)		(494,416	)
Net cash used for financing activities		(619,916	)		(1,639,931	)

Net Increase in Cash and Equivalents		646,848			366,732

Cash and Equivalents - Beginning		350,339			67,137

Cash and Equivalents - Ending	$	997,187		$	433,869

Notes to Unaudited Financial Statements are an integral part of these Statements

AMERICAN CHURCH MORTGAGE COMPANY

Statements of Cash Flows - Continued

	For the Six Months Ended
	June 30, 2011		June 30, 2010
	(Unaudited)		(Unaudited)
Supplemental Cash Flow Information

Dividends payable	$	213,437	$	211,311

Mortgages receivable reclassified to
real estate held for sale	$	144,666	$	—

Interest paid	$	855,359	$	792,794

Secured investor certificates issued
through the stock repurchase program	$	13,000	$	1,744,000

Notes to Unaudited Financial Statements are an integral part of these Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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.

The unaudited financial statements of the Company should be read in conjunction with the December 31, 2010 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, 2010. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

Nature of Business

American Church Mortgage Company, a Minnesota corporation, was incorporated on May 27, 1994. The Company operates as a real estate investment trust (“REIT”), and 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.

Accounting Estimates

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.

Concentration of Credit Risk

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 upon a number of factors, including member contributions and the involvement in the church or organization of its senior pastor.

Cash and Equivalents

The Company considers all highly liquid debt instruments purchased with maturities of three months or less to be cash equivalents.

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 $5,000 in money market fund accounts at both June 30, 2011 and December 31, 2010. The Company has not experienced any losses in such accounts.

Bond Portfolio

The Company accounts for the bond portfolio under the Accounting Standards Codification (ASC) 320. 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 proceeds from the sale of bonds may be used to repay secured investor certificates or provide additional liquidity or working capital in the short term. The Company has classified $873,000 and $627,000 in bonds as current assets as of June 30, 2011 and December 31, 2010, respectively, based on management’s estimates for liquidity requirements and contractual maturities of certain bonds maturing in 2011 and 2010, respectively.

Allowance for Mortgage Loans Receivable

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 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 an allowance 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, which are loans that are declared to be in default or are in the foreclosure process. At June 30, 2011, the Company reserved $775,377 for sixteen mortgage loans, of which eight are three or more mortgage payments in arrears. One of the loans is in the foreclosure process. At December 31, 2010, the Company reserved $711,829 for sixteen mortgage loans, of which ten were three or more mortgage payments in arrears. Three of the loans were in the foreclosure process.

A summary of transactions in the allowance for credit losses for the six months ended June 30, 2011 is as follows:

Balance at December 31, 2010	$	711,829
Provision for additional losses		86,944
Reclassification to real estate held for sale		(23,396	)
Charge-offs		—
Balance at June 30, 2011	$	775,377

The total impaired loans were approximately $1,593,000 and $2,248,000 at June 30, 2011 and December 31, 2010, respectively, which the Company believes are adequately secured by the underlying collateral and the allowance for mortgage loans.

Loans totaling approximately $2,538,000 and $2,989,000 exceeded 90 days past due but continued to accrue interest as of June 30, 2011 and December 31, 2010, 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.

Real Estate Held for Sale

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.

Carrying Value of Long-Lived Assets

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.

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.

Revenue Recognition

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.

Deferred Financing Costs

The Company defers the costs related to obtaining financing. These costs are amortized over the life of the financing using the straight line method, which approximates the effective interest method.

Income Per Common Share

No adjustments were made to income for the purpose of calculating earnings per share, as there were no potentially dilutive shares outstanding.

2. FAIR VALUE MEASUREMENTS

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.

Except for the bond portfolio, which is required by authoritative accounting guidance to be recorded at fair value in 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 $100,000 and $200,000 for the periods ended June 30, 2011 and December 31, 2010, respectively. Total allowance for losses on our bond portfolio equaled $800,000 and $700,000 at June 30, 2011 and December 31, 2010, respectively.

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring basis:

			Fair Value Measurement
June 30, 2011	Fair Value		Level 3

Bond portfolio	$	10,158,211	$	10,158,211

			Fair Value Measurement
December 31, 2010	Fair Value		Level 3

Bond portfolio	$	10,277,849	$	10,277,849

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.

The change in Level 3 assets measured at fair value on a recurring basis is summarized as follows:

	Bond Portfolio

Balance at December 31, 2010	$	10,277,849
Purchases		31,046
Proceeds		(50,684	)
Allowance for losses		(100,000	)
Balance at June 30, 2011	$	10,158,211

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 allowances for losses recorded during the periods ended June 30, 2011 and 2010.

The following table summarizes the Company’s financial instruments that were measured at fair value on a nonrecurring basis:

	June 30, 2011
	Level 1		Level 2		Level 3		Fair Value at June 30, 2011
Impaired Loans	$	—	$	—	$	1,241,640	$	1,241,640
Real estate held for resale		—		848,102		—		848,102
	$	—	$	848,102	$	1,241,640	$	2,089,742

	December 31, 2010
	Level 1		Level 2		Level 3		Fair Value at December 31, 2010
Impaired Loans	$	—	$	—	$	1,840,000	$	1,840,000
Real estate held for resale		—		727,532		—		727,532
	$	—	$	727,532	$	1,840,000	$	2,567,532

The change in Level 2 and Level 3 assets measured at fair value on a nonrecurring basis is summarized as follows:

	Fair Value Measurement Level 3			Fair Value Measurement Level 2

	Impaired Loans			Real Estate Held for Sale

Balance at December 31, 2010	$	1,840,000		$	727,532
Additions/Acquisitions		15,267			121,270
Dispositions/Proceeds		(578,990	)		(700	)
Additional provision for losses		(34,637	)		—
Balance at June 30, 2011	$	1,241,640		$	848,102

3. MORTGAGE LOANS RECEIVABLE AND BOND PORTFOLIO

At June 30, 2011, the Company had mortgage loans receivable totaling $30,799,866. The loans bear interest ranging from 5.00% to 10.25% with a weighted average of approximately 8.36% at June 30, 2011. The Company had mortgage loans receivable totaling $31,430,505 that bore interest ranging from 5.00% to 10.25% with a weighted average of approximately 8.30% at December 31, 2010.

The Company has a portfolio of secured church bonds at June 30, 2011 and December 31, 2010, 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 $10,958,211 at June 30, 2011 with a weighted average interest rate of 7.90% and approximately $10,991,000 at December 31, 2010 with a weighted average interest rate of 7.92%. These bonds are due at various maturity dates through July 2039.

The contractual maturity schedule for mortgage loans receivable and the bond portfolio as of June 30, 2011, is as follows:

	Mortgage Loans			Bond Portfolio

July 1, 2011 through June 30, 2012	$	602,056		$	873,000
July 1, 2012 through December 31, 2012		327,533			69,000
2013		1,688,318			605,000
2014		828,351			681,000
2015		969,046			146,000
Thereafter		26,384,562			8,584,211
		30,799,866			10,958,211
Less loan loss and bond loss allowances		(775,377	)		(800,000	)
Less deferred origination income		(566,752	)		______-__
Totals	$	29,457,737		$	10,158,211

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 September 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 $700,000 and $600,000 for the First Mortgage Bonds at June 30, 2011 and December 31, 2010, 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 is currently attempting to sell the three properties.

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. The Company, along with all other bondholders, has a superior lien over all other creditors. The Company has an allowance for losses of $100,000 for the First and Second Mortgage Bonds at both June 30, 2011 and December 31, 2010, which effectively reduces the bonds to the fair value amount management believes will be recovered.

4. SECURED INVESTOR CERTIFICATES

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 6.69% and 6.73% at June 30, 2011 and December 31, 2010, 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 $366,000 and $405,000 for the six months ended June 30, 2011 and 2010, respectively. The secured investor certificates have certain financial and non-financial covenants indentified in the respective series’ trust indentures.

The estimated maturity schedule for the secured investor certificates at June 30, 2011 is as follows:


July 1, 2011 through June 30, 2012	$	516,000
July 1, 2012 through December 31, 2012		1,181,000
2013		1,172,000
2014		1,733,000
2015		1,982,000
Thereafter		18,137,000

Totals	$	24,721,000

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 originally declared effective by the SEC on March 30, 2009, was subsequently amended in December 2009 and declared effective in January 2010, and was amended again in May and June 2011 and was declared effective on June 27, 2011. The certificates are being 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 June 30, 2011, approximately 3,050 Series C certificates had been issued for $3,050,000. The Company has also issued 2,581 Series C certificates through its stock repurchase program (see Note 5).

5. STOCK REPURCHASE PROGRAMS

The Company commenced a stock repurchase program (the “2010 Program”) effective February 2, 2010 whereby it offers 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 has approved up to 1,000,000 shares to be repurchased. As of June 30, 2011, requests representing approximately 532,000 shares have been submitted for share exchanges. The Company exchanged 2,769 shares during the six months ended June 30, 2011 for 13 Series C certificates ($13,000 in principal amount) and paid $845 in cash for remainder shares. The Company exchanged 528,974 shares during the year ended December 31, 2010 for 2,568 Series C certificates ($2,568,000 in principal amount) and paid $76,870 in cash for remainder shares. The cash paid is reflected on the Statements of Cash Flows as “stock redemptions.”

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 Program may be modified or rescinded at the Board’s discretion upon 10 days’ notice to shareholders.

6. LINE OF CREDIT

The Company has a $1.42 million line of credit with Beacon Bank. Interest is charged monthly at the rate of 6.00%. We had outstanding balances of $900,000 and $1,416,000 at June 30, 2011 and December 31, 2010, respectively. The line of credit is secured by a first priority security interest in substantially all of the Company’s assets other than collateral pledged to secure the Company’s Series B and Series C secured investor certificates. The maturity date for the line is December 31, 2011, but, at the Company’s election, may be extended to December 31, 2012 if one half of the outstanding balance at December 31, 2010 is paid by December 31, 2011. The line of credit has various financial and non-financial covenants. At June 30, 2011, the Company was in compliance with financial and non-financial covenants.

7. TRANSACTIONS WITH AFFILIATES

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. The Company paid the Advisor management and origination fees of approximately $109,000 and $96,000 during the three months ended June 30, 2011 and 2010, respectively, and $211,000 and $192,000 during the six months ended June 30, 2011 and 2010, respectively.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

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.

The fair value estimates presented herein are based on relevant information available to management as of June 30, 2011 and December 31, 2010, 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.

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are as follows:

	June 30, 2011				December 31, 2010
		Carrying		Fair		Carrying		Fair
		Amount		Value		Amount		Value

Cash and equivalents	$	997,187	$	997,187	$	350,339	$	350,339
Accounts receivable		109,908		109,908		112,209		112,209
Interest receivable		132,080		132,080		139,441		139,441
Mortgage loans receivable		29,457,737		31,877,261		30,145,838		29,650,126
Bond portfolio		10,158,211		10,158,211		10,277,849		10,277,849
Secured investor certificates		24,721,000		29,421,270		24,343,000		27,952,977
Line of credit		900,000		900,000		1,416,000		1,416,000

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:

Cash and equivalents

Due to their short-term nature, the carrying amount of cash and cash equivalents approximates fair value.

Accounts receivable

The carrying amount of accounts receivable approximates fair value.

Interest receivable

The carrying amount of interest receivable approximates fair value.

Mortgage loans receivable

The fair value of the mortgage loans receivable is currently greater 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 rising during the six months ended June 30, 2011.

Bond portfolio

and uses observable and unobservable market-based inputs. Unobservable inputs include our internal credit rating and selection of similar bonds for valuation.

Secured investor certificates

The fair value of the secured investor certificates is currently greater than the carrying value due to higher interest rates than current market rates.

Line of credit

The carrying amount of the line of credit approximates fair value.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this section and elsewhere in this Form 10-Q constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, (i) trends affecting our financial condition or results of operations; (ii) our business and growth strategies; (iii) the mortgage loan industry and the financial status of religious organizations; (iv) our financing plans; and other risks detailed in the Company’s other periodic reports filed with the Securities and Exchange Commission. The words “believe”, “expect”, “anticipate”, “may”, “plan”, “should”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance.

A detailed statement of risks and uncertainties is contained in our reports to the SEC, including, in particular, our Annual Report on Form 10-K for the year ended December 31, 2010 and other public filings and disclosures. Investors and shareholders are urged to read these documents carefully.

Plan of Operation

We were founded in May 1994 and commenced active business operations on April 15, 1996 after the completion of our initial public offering.

We have completed public offerings of common stock and debt securities. In October 2008, we filed a registration statement with the Securities and Exchange Commission for a public offering of $20,000,000 worth of Series C Secured Investor Certificates, which may be purchased in multiples of $1,000 at 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 offering was originally declared effective by the SEC on March 30, 2009, was subsequently amended in December 2009 and declared effective in January 2010, and was amended again in May and June 2011 and was declared effective on June 27, 2011. At June 30, 2011, approximately 3,050 Series C certificates had been issued for $3,050,000. The Company has also issued 2,581 Series C certificates in connection with its 2010 stock repurchase program (the “2010 Program”). On July 19, 2011, the Company commenced a separate share repurchase program (the “2011 Program”), which will allow shareholders to present their shares to the Company for repurchase at $4.00 per share.

We currently have seventy-one first mortgage loans aggregating $30,784,859 in principal amount, one second mortgage loan of $15,007 in principal amount and a first mortgage bond portfolio with par values aggregating $10,971,500. Funding of additional first mortgage loans and purchase of first mortgage bonds issued by churches is expected to continue on an on-going basis as more investable assets become available through: (i) future sales of securities; (ii) prepayment and repayment at maturity of existing loans and bonds; and (iii) borrowed funds. The Company has made only one such investment since the fourth quarter of 2010 due principally to conditions that management considers less than favorable in the markets in which our business is generally conducted. The above capital sources and interest received on loans and bonds provide general working capital to the Company.

Results of Operations

Fiscal 2011 Six Months Compared to Fiscal 2010 Six Months

Net income for the Company’s six months ended June 30, 2011 and 2010 was approximately $141,000 and $197,000, respectively, on total interest and other income of approximately $1,620,000 and $1,691,000, respectively. Interest and other income is comprised of interest from loans, interest from bonds, amortization of bond discounts and amortization of loan origination fees. As of June 30, 2011, the Company’s loans receivable have interest rates ranging from 5.00% to 10.25%, with an average, principal-adjusted interest rate of 8.36%. The Company’s bond portfolio has an average current yield of 7.90% as of June 30, 2011. As of June 30, 2010, the average, principal-adjusted interest rate on the Company’s portfolio of loans was 8.43% and the Company’s portfolio of bonds had an average current yield of 7.70%. The decrease in interest income was due to the scheduled repayment of mortgage loans and the maturation and sale of some of the bonds in our portfolio.

Interest expense was approximately $914,000 and $857,000 for the six months ended June 30, 2011 and 2010, respectively. The increase in interest expense was due to the sale of additional secured investor certificates. Net interest margin decreased from 49.29% to 43.59% resulting primarily from a decline in interest and other income of approximately 4.00% compared to an increase in interest expense of 6.60%.

We continually assess our loan portfolio and reserve for potential losses based on the payment history, status of loans and market conditions. Due to changing economic conditions and the current status of, and trends in, our loan portfolio, which has seen a significant rise in both past due loans and loans in the foreclosure process during the past several years, we made changes to our loan policy in fiscal 2009 to permit us to accelerate the recording of provisions when amounts become past due. We continue to monitor the policy in light of changing economic conditions. In addition, we have written off accrued interest on certain loans as a result of these changes. These changes to our loan loss policy have increased the amount of reserves against potential loan losses and our expense of past due amounts that are deemed doubtful of collection.

Provision for losses on mortgage loans receivable increased for the six months ended June 30, 2011 as we recorded additional provision against the mortgage loans. We recorded an additional provision for losses on loans during the six months ended June 30, 2011 of approximately $87,000 compared to approximately $142,000 for the six months ended June 30, 2010. At June 30, 2011, we reserved approximately $775,000 for sixteen mortgage loans, of which eight are three or more mortgage payments in arrears. One of these loans is in the foreclosure process. At December 31, 2010, we reserved approximately $712,000 for sixteen mortgage loans, of which ten were three or more mortgage payments in arrears.

Our lending practices limit deployment of our capital to churches and other non-profit religious organizations. The total principal amount of our second mortgage loans is limited to 20% of our average invested assets. We currently have one second mortgage loan of approximately $15,000 in principal amount outstanding. We do not loan to any borrower who has been in operation for less than two years and the borrower must demonstrate they can service the debt outstanding for the prior three years based on historical financial statements. We do not loan money based on projections or pledge programs. The loan amount to any borrower cannot exceed 75% loan to appraised value. Typically, we do not loan over 70% loan to value except in extenuating circumstances. In addition, the borrower’s long-term debt (including the proposed loan) cannot exceed four times the borrower’s gross income for the previous twelve month period.

Historically, loans in our portfolio are outstanding for an average of four and a half years. Our borrowers are typically small independent churches with little or no borrowing history. Once a church establishes a payment history with us, they look to refinance their loan with a local bank, credit union or other financial institution which is willing to provide financing since the borrower has established a payment history and have demonstrated they can meet their mortgage debt obligations.

Operating expenses for the six months ended June 30, 2011 decreased to approximately $354,000 compared to $502,000 at June 30, 2010. The decrease is the result of lower costs associated with real estate held for sale, a decrease in real estate impairment, and the fact that we did not sustain a capital loss on the sale of bonds from our portfolio as we did during the six months ended June 30, 2010. This is due to the fact that no bonds were sold during the six months ended June 30, 2011.

Fiscal 2011 Second Quarter Compared to Fiscal 2010 Second Quarter

The Company had net income of approximately $33,000 for the three months ended June 30, 2011 and experienced a loss of approximately $22,000 for the three months ended June 30, 2010, on total interest and other income of approximately $832,000 and $791,000, respectively. Interest expense was approximately $458,000 and $433,000 for the three months ended June 30, 2011 and 2010, respectively. The increase in net interest income was approximately $16,000. In addition, the Company experienced a reduction in provisions for losses on mortgage loans receivable in the approximate amount of $23,000.

Operating expenses for the three months ended June 30, 2011 decreased to approximately $175,000 compared to $295,000 at June 30, 2010. The decrease in operating expenses is due to decreases in real estate impairment, legal fees and costs associated with real estate held for sale, as well as the fact that we did not sustain a capital loss on the sale of bonds from our portfolio as we did during the three months ended June 30, 2010. This is due to the fact that no bonds were sold during the three months ended June 30, 2011.

Mortgage Loans and Bond Portfolio

One mortgage loan was refinanced into a new loan during the six months ended June 30, 2011. No other mortgage loans were paid in full or funded during the six months ended June 30, 2011.

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 June 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 $700,000 and $600,000 for the First Mortgage Bonds at June 30, 2011 and December 31, 2010, 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 is currently attempting to sell the three properties.

Bonds issued is $715,000. Agape defaulted on its payment obligations to bondholders in June 2010. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the property that secures the First Mortgage Bonds in December 2010. The Company, along with all other bondholders, has a superior lien over all other creditors. The Company has an allowance for losses of $100,000 for the First and Second Mortgage Bonds at both June 30, 2011 and December 31, 2010, which effectively reduces the bonds to the fair value amount management believes will be recovered.

Dividends

We have elected to operate as a real estate investment trust (REIT), therefore we are required, among other things, to distribute to shareholders at least 90% of “Taxable Income” in order to maintain our REIT status. The dividends declared and paid to shareholders may include cash from origination fees even though they are not recognized as income in their entirety for the period under generally accepted accounting principles in the United States. We earned origination fees of approximately $14,700 for the three and six months ended June 30, 2011. We earned origination fees of approximately $7,100 and $18,700 for the three and six months ended June 30, 2010, respectively.

We paid a dividend of $.10 for each share held of record on January 25, 2011. The dividend, which was paid January 28, 2011, represents a 4.00% annual rate of return on each share of common stock owned, assuming a purchase price of $10 per share.

We paid a dividend of $.11 for each share held of record on April 26, 2011. The dividend, which was paid April 29, 2011, represents a 4.40% annual rate of return on each share of common stock owned, assuming a purchase price of $10 per share.

Our Board of Directors declared a dividend of $.11 for each share held of record on July 26, 2011. The dividend, which was paid July 29, 2011, represents a 4.40% annual rate of return on each share of common stock owned, assuming a purchase price of $10 per share.

Liquidity and Capital Resources

We generate revenue through implementation of our business plan of making mortgage loans to, and acquiring first mortgage bonds issued by, churches and other non-profit religious organizations. Our revenue is derived principally from interest income, and secondarily through the origination fees and renewal fees generated by the mortgage loans we make. We also earn income through interest on funds that are invested pending their use in funding mortgage loans and on income generated on church bonds. Our principal recurring expenses are advisory fees, legal and accounting fees, interest payments on secured investor certificates and our line of credit. Our liabilities at June 30, 2011 are primarily comprised of: dividends declared as of June 30, 2011 but not yet paid; our line of credit balance; and our secured investor certificates.

Our future capital needs are expected to be met by: (i) the additional sale of securities; (ii) prepayment and repayment at maturity of mortgage loans we make; (iii) borrowed funds; and (iv) bonds that mature or we sell from our bond portfolio. We believe that the “rolling” effect of mortgage loans maturing and bond repayments will provide a supplemental source of capital to fund our business operations in future years. Nevertheless, we believe that it may be desirable, if not necessary, to sell additional securities in order to enhance our capacity to make mortgage loans on a continuous basis. There can be no assurance we will be able to raise additional capital on terms acceptable for such purposes.

2010, respectively. The line of credit is secured by a first priority security interest in substantially all of the Company’s assets other than collateral pledged to secure the Company’s Series B and Series C secured investor certificates. The maturity date for the line is December 31, 2011, but, at the Company’s election, may be extended to December 31, 2012 if one half of the outstanding balance at December 31, 2010 is paid by December 31, 2011. The line of credit has various financial and non-financial covenants. At June 30, 2011, the Company was in compliance with financial and non-financial covenants. We will continue to pay the line of credit by: (i) selling bonds in our church bond portfolio; (ii) using proceeds from the sale of the secured investor certificates; or (iii) using principal payments and pre-payments received from current borrowers.

In October 2008, we filed with the Securities and Exchange Commission a registration statement to offer $20,000,000 worth of Series C Secured Investor Certificates to qualified investors. The offering was originally declared effective by the SEC on March 30, 2009, was subsequently amended in December 2009 and declared effective in January 2010, and was amended again in May and June 2011 and was declared effective on June 27, 2011. These certificates are expected to provide a source of capital to fund additional loans to qualified borrowers, pay down existing maturing certificates and to pay down our line of credit which, at times, may provide funds at less favorable terms than funds obtained through our certificate offering. At June 30, 2011, approximately $3,050,000 had been collected from the issuance of 3,050 Series C certificates. The proceeds were used to pay down our line of credit and maturing certificates. We may also use proceeds from the sale of secured investor certificates to pay dividends, if needed.

The Company commenced a share repurchase plan (the “2011 Program”) 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 Program may be modified or rescinded at the Board’s discretion upon 10 days’ notice to shareholders.

During the six months ended June 30, 2011, our total assets decreased by approximately $33,000 due to a decrease in mortgage loans receivable resulting from payments on mortgage loans. Current liabilities decreased by approximately $497,000 for the six months ended June 30, 2011 due to decreases in current maturities of our secured investor certificates and payments made on our line of credit balance. Non-current liabilities increased by approximately $764,000 for the six months ended June 30, 2011 due to the sale, renewal and issuance through the 2010 Program of secured investor certificates.

For the six months ended June 30, 2011, cash from operating activities increased to approximately $796,000 from $473,000 for the comparative period ended June 30, 2010, primarily related to an increase in accounts payable due to insurance proceeds held pending disbursement for repairs to a church building that experienced a fire.

For the six months ended June 30, 2011, cash provided by investing activities was approximately $479,000 compared to cash provided by investing activities of approximately $1,534,000 for the comparative six months ended June 30, 2010, due to an increase in collections of mortgage loans, which was offset by a decrease in proceeds from bonds.

For the six months ended June 30, 2011, cash used for financing activities decreased to approximately $628,000 from $1,691,000 for the comparative six months ended June 30, 2010, primarily due to a decrease in payments on our line of credit and secured investor certificate maturities.

Critical Accounting Estimates

Preparation of our financial statements requires estimates and judgments to be made that affect the amounts of assets, liabilities, revenues and expenses reported. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. We evaluate these estimates based on assumptions we believe to be reasonable under the circumstances.

The difficulty in applying these policies arises from the assumptions, estimates and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions. As the difficulty increases, the level of precision decreases, meaning that actual results can and probably will be different from those currently estimated.

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. 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 and the valuations 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.

We estimate the value of real estate we hold pending re-sale based on a number of factors. We look at the current condition of the property as well as current market conditions in determining a fair value, which will determine the listing price of each property. Each property is valued based on its current listing price less any anticipated selling costs, including for example, realtor commissions. Since churches are single use facilities, the listing price of the property may be lower than the total amount owed to us. Attorney fees, taxes, utilities and real estate commission fees will also reduce the amount we collect from the sale of a property we have acquired through foreclosure. The fair value of the real estate held for sale includes estimates of expenses related to the sale of the real estate.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Items 4. Controls and Procedures

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’s management, including the principal executive officer and the principal accounting officer, of the effectiveness of the Company’s disclosure controls and procedures as of the end of the quarter ended June 30, 2011. Based on that evaluation, the principal executive officer and the principal accounting officer concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and that information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal accounting officer, to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

During the six months ended June 30, 2011, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not applicable.

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

(a) Not Applicable

(b) Not Applicable

(c)

Issuer Purchases of Equity Securities*

Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Number of Shares that May Yet Be Purchased Under the Plan
January 1, 2011 to January 31, 2011	0	$5.00	0	471,026
February 1, 2011 to February 28, 2011	0	$5.00	0	471,026
March 1, 2011 to March 31, 2011	2,769	$5.00	2,769	468,257
April 1, 2011 to April 30, 2011	0	$5.00	0	468,257
May 1, 2011 to May 31, 2011	0	$5.00	0	468,257
June 1, 2011 to June 30, 2011	0	$5.00	0	468,257
Totals:	2,769		2,769

*The Company commenced a stock repurchase program (the “2010 Program”) effective February 2, 2010 whereby it offers 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 after conversion, we paid the sum of $5.00 cash for each remaining share. The Company’s Board of Directors has approved up to 1,000,000 shares to be repurchased under the 2010 Program. The Company exchanged 2,769

shares during the six months ended June 30, 2011 for 13 Series C certificates ($13,000 in principal amount) and paid $845 in cash for remainder shares.

The Company commenced a share repurchase plan (the “2011 Program”) 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 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 Program may be modified or rescinded at the Board’s discretion upon 10 days’ notice to shareholders. See Exhibit 4.1 for additional information regarding the 2011 Program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit

Number Title of Document

4.1 American Church Mortgage Company Share Repurchase Plan

31.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the of the Sarbanes-Oxley Act of 2002.

32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the of the Sarbanes-Oxley Act of 2002.

101*

The following financial information from our Quarterly Report on Form 10-Q for the quarter of ended June 30, 2011, filed with the SEC on August 12, 2011, is formatted in eXtensible Business Reporting Language (XBRL): (i) the Balance Sheets at June 30, 2011 and December 31, 2010; (ii) the Statements of Operations for the six months ended June 30, 2011 and 2010 and for the three months ended June 30, 2011 and 2010; (iii) the Statements of Cash Flows for the six months ended June 30, 2011 and 2010; and (iv) the Notes to Financial Statements (Unaudited).

_________________________

*The XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed" or part of a registration statement or prospectus for purposes of Sections 11 or 12

of the Securities Act of 1933, as amended, additionally the data shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under these sections.

SIGNATURES

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

Dated: August 12, 2011

AMERICAN CHURCH MORTGAGE COMPANY

By: /s/ Philip J. Myers

Philip J. Myers

Chief Executive Officer

(Principal Executive Officer)

By: /s/ Scott J. Marquis

Scott J. Marquis

Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

EX-31.1 2 exhibit311.htm OFFICER'S CERTIFICATE

Exhibit 31.1

OFFICER'S CERTIFICATE

PURSUANT TO SECTION 302

I, Philip J. Myers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Church Mortgage Company.

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

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-5(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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

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

Dated: August 12, 2011

By:	/s/ Philip J. Myers
	Philip J. Myers
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2 3 exhibit312.htm OFFICER'S CERTIFICATE

Exhibit 31.2

OFFICER’S CERTIFICATE

PURSUANT TO SECTION 302

I, Scott J. Marquis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Church Mortgage Company.

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

Dated: August 12, 2011

By:	/s/ Scott J. Marquis
	Scott J. Marquis
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

EX-32.1 4 exhibit321.htm CERTIFICATION

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Church Mortgage Company (the “Company”) on Form 10-Q for the period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: August 12, 2011	By: /s/ Philip J. Myers
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2 5 exhibit322.htm CERTIFICATION

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated: August 12, 2011	By: /s/ Scott J. Marquis
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

EX-4.1 6 exhibit41.htm SHARE REPURCHASE PROGRAM

Exhibit 4.1

AMERICAN CHUCH MORTGAGE COMPANY

SHARE REPURCHASE PLAN

Dated July 13, 2011

The Board of Directors (the “Board”) of American Church Mortgage Company, a Minnesota corporation (the “Company”), has adopted this Share Repurchase Plan (the “Repurchase Plan”) by which shares of the Company’s common stock, par value $0.01 per share (“Shares”), may be repurchased by the Company from shareholders subject to certain conditions and limitations. The purpose of this Repurchase Plan is to provide limited interim liquidity for shareholders under the terms, conditions and limitations set forth below until a liquidity event occurs. No shareholder is required to participate in the Repurchase Plan.

1. Repurchase of Shares. The Company may, at the Board’s sole discretion, repurchase up to 250,000 Shares presented to the Company for cash to the extent it has sufficient proceeds to do so and subject to the conditions and limitations set forth herein. Any and all Shares repurchased by the Company shall be canceled, and will have the status of authorized but unissued Shares. Shares acquired by the Company through the Repurchase Plan will not be reissued unless they are first registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and other appropriate state securities laws or otherwise issued pursuant to exemptions from applicable registration requirements of such laws.

2. Share Redemptions.

a. Repurchase Price. The prices per Share at which the Company will repurchase Shares will be as follows: for shareholders who have continuously held their Shares for at least one year, (i) the redemption price per Share shall be $4.00 (less a $20 administrative fee that the Company may, in its discretion, charge for repurchases), or (ii) such price as the Board may otherwise determine.

3. Funding and Operation of Repurchase Plan. The Company may make purchases under the Repurchase Plan, at its sole discretion, as funds allow, the allocation of funds to be utilized for such purposes being subordinated to all other obligations of the Company. The Company may repurchase Shares on a continuous basis.

4. Shareholder Requirements. Any shareholder may request a repurchase with respect to all or a designated portion of their Shares, subject to the following conditions and limitations:

a. Holding Period. Only Shares that have been held by the presenting shareholder for at least one (1) year are eligible for repurchase by the Company.

b. No Encumbrances. All Shares presented for repurchase must be owned by the shareholder(s) making the presentment, or the party presenting the Shares must be authorized to do so by the owner(s) of the Shares. Such Shares must be fully transferable and not subject to any liens or other encumbrances.

c. Share Repurchase Form. The presentment of Shares must be accompanied by a completed Share Repurchase Request form, a copy of which is attached hereto as Exhibit A. All Share certificates must be properly endorsed.

d. Presentment; Minimum Amounts. All Shares presented and all completed Share Repurchase Request received by the Company (or any repurchase agent) will be accepted or rejected for repurchase by the Company within 30 calendar days of the Company’s receipt of completed Share Repurchase Requests (accompanied by endorsed Shares). To be eligible for participation, 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.

e. Repurchase Request Withdrawal. A shareholder may withdraw his or her repurchase request upon written notice to the Company at any time prior to the date of repurchase.

f. Ineffective Withdrawal. In the event the Company receives a written notice of withdrawal from a shareholder after the Company has repurchased all or a portion of such shareholder’s Shares, the notice of withdrawal shall be ineffective with respect to the Shares already repurchased, but shall be effective with respect to

any of such shareholder’s Shares that have not been repurchased. The Company shall provide any such shareholder with prompt written notice of the ineffectiveness or partial ineffectiveness of such shareholder’s written notice of withdrawal.

g. Repurchase Agent. The Company may utilize a registered broker dealer in connection with the repurchases under this Plan.

h. Termination, Amendment or Suspension of Plan. The Board, in its sole discretion, may terminate, amend or suspend the Repurchase Plan if it determines to do so is in the best interest of the Company. A determination by the Board to terminate, amend or suspend the Repurchase Plan will require the affirmative vote of a majority of the Board, including a majority of the independent Directors. If the Company terminates, amends or suspends the Repurchase Plan, the Company will provide shareholders with ten (10) days prior written notice and the Company will disclose the changes in the appropriate current or periodic report filed with the Securities and Exchange Commission.

5. Miscellaneous.

a. Advisor Ineligible. The Advisor to the Company, Church Loan Advisors, Inc., shall not be permitted to participate in the Repurchase Plan.

b. Liability. Neither the Company nor any repurchase agent shall have any liability to any shareholder for the value of the shareholder’s Shares, the repurchase price of the shareholder’s Shares, or for any damages resulting from the shareholder’s presentation of his or her Shares, the repurchase of the Shares under this Repurchase Plan or from the Company’s determination not to repurchase Shares under the Repurchase Plan, except as a result from the Company’s or the repurchase agent’s gross negligence, recklessness or violation of applicable law; provided, however, that nothing contained herein shall constitute a waiver or limitation of any rights or claims a shareholder may have under federal or state securities laws.

c. Taxes. Shareholders shall have complete responsibility for payment of all taxes, assessments, and other applicable obligations resulting from the Company’s repurchase of Shares.

EXHIBIT A

AMERICAN CHURCH MORTGAGE COMPANY

SHARE REPURCHASE REQUEST FORM

Dear Shareholder:

If you are interested in having us repurchase your outstanding shares of American Church Mortgage Company Common Stock for cash, please sign this reservation form where indicated and return the form to us.

	Shareholder Number:

	Number of Shares Certificated:
	Number of Shares in Book Entry:
	Total Number of Shares Owned:

Total amount of cash you will receive if we purchase all of your outstanding shares (less a $20 administrative fee):

By signing and submitting this form, the undersigned hereby acknowledges and represents to each the Company and our repurchase agent the following:

· The undersigned is the owner (or duly authorized agent of the owner) of the Shares presented for repurchase, and thus is authorized to present the Shares for repurchase.

· The Shares presented for repurchase are eligible for repurchase pursuant to the Share Repurchase Plan. The Shares are fully transferable and have not been assigned, pledged, or otherwise encumbered in any way.

· The undersigned hereby indemnifies and holds harmless the Company, our repurchase agent, and each of their respective officers, Directors and employees from and against any liabilities, damages, expenses, including reasonable attorneys’ fees, arising out of or in connection with any misrepresentation made herein.

· Stock certificates for the Shares presented for repurchase (if applicable) are enclosed, properly endorsed with Medallion Signature Guarantee.

It is recommended that this Share Repurchase Request and any attached stock certificates be sent to our repurchase agent at the address below via overnight courier, certified mail, or other means of guaranteed delivery. Your signature(s) on your certificate must be Medallion Signature Guaranteed. If your shares are shown in book-entry form, a signed Medallion Signature Guaranteed stock power will need to be completed. This Share Repurchase Request form can be used as a substitute for a signed stock power. However, it must be Medallion Signature Guaranteed. This form cannot be used as a substitute for your certificated shares. If you have lost or cannot find your certificate it will need to be replaced prior to us repurchasing your shares. Please contact us regarding replacing your lost certificate.

Your Share Repurchase Request will be processed by our repurchase agent: American Investors Group, Inc., (“AIGI”) a securities broker-dealer and a FINRA member firm. If AIGI does not have an account application on file for you, an account application must be completed in order to process your repurchase request. AIGI can provide a Medallion Signature Guarantee if we have a current account application on file from you.

You can obtain both a stock power and account application form from our website www.churchbondsusa.com. Click on the link called “Library” and you will find both AIGI’s account application and a stock power which you can download, or you can call our office and we will be glad to mail you an account application and/or stock power.

Return the signed and Medallion Guaranteed Share Repurchase Request Form, stock certificate or stock power and account application (if applicable) to:

American Investors Group, Inc.

10237 Yellow Circle Drive

Minnetonka, MN 55343-9101

If you have any questions, please contact the Company at 1-800-815-1175 ext. 127.


Signature of Owner (Date)		Signature of Co-Owner (if applicable) (Date)

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13000 1744000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Basis of Presentation   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.   The unaudited financial statements of the Company should be read in conjunction with the December 31, 2010 audited financial statements included in the Companys Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the year ended December 31, 2010. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.   Nature of Business   American Church Mortgage Company, a Minnesota corporation, was incorporated on May 27, 1994. The Company operates as a real estate investment trust (REIT), and 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.   Accounting Estimates   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.   Concentration of Credit Risk   The Company's loans have been granted to churches and other non-profit religious organizations. The ability of the Companys debtors to honor their contracts is dependent upon a number of factors, including member contributions and the involvement in the church or organization of its senior pastor.         Cash and Equivalents   The Company considers all highly liquid debt instruments purchased with maturities of three months or less to be cash equivalents.   The Company maintains accounts primarily at two financial institutions. At times throughout the year, the Companys 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 $5,000 in money market fund accounts at both June 30, 2011 and December 31, 2010. The Company has not experienced any losses in such accounts.   Bond Portfolio The Company accounts for the bond portfolio under the Accounting Standards Codification (ASC) 320. 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 proceeds from the sale of bonds may be used to repay secured investor certificates or provide additional liquidity or working capital in the short term. The Company has classified $873,000 and $627,000 in bonds as current assets as of June 30, 2011 and December 31, 2010, respectively, based on managements estimates for liquidity requirements and contractual maturities of certain bonds maturing in 2011 and 2010, respectively.   Allowance  for Mortgage Loans Receivable   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 Companys loan 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 an allowance for losses and an allowance for the outstanding principal amount of a loan in the Companys portfolio if the amount is in doubt of collection. Additionally, no additional interest income is recognized on impaired loans, which are loans that are declared to be in default or are in the foreclosure process. At June 30, 2011, the Company reserved $775,377 for sixteen mortgage loans, of which eight are three or more mortgage payments in arrears. One of the loans is in the foreclosure process. At December 31, 2010, the Company reserved $711,829 for sixteen mortgage loans, of which ten were three or more mortgage payments in arrears. Three of the loans were in the foreclosure process.   A summary of transactions in the allowance for credit losses for the six months ended June 30, 2011 is as follows:         <table align="center" cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 71%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Balance at December 31, 2010</td> <td style="width: 8%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="width: 21%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> $ 711,829</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Provision for additional losses</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">86,944</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Reclassification to real estate held for sale</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">(23,396)</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">  Charge-offs</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; text-decoration: underline">            -</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Balance at June 30, 2011</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; text-underline-style: double"> $ 775,377</td></tr> </table>   The total impaired loans were approximately $1,593,000 and $2,248,000 at June 30, 2011 and December 31, 2010, respectively, which the Company believes are adequately secured by the underlying collateral and the allowance for mortgage loans.   Loans totaling approximately $2,538,000 and $2,989,000 exceeded 90 days past due but continued to accrue interest as of June 30, 2011 and December 31, 2010, 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.   Real Estate Held for Sale   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.   Carrying Value of Long-Lived Assets   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.   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.   Revenue Recognition   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.   Deferred Financing Costs   The Company defers the costs related to obtaining financing. These costs are amortized over the life of the financing using the straight line method, which approximates the effective interest method.   Income Per Common Share   No adjustments were made to income for the purpose of calculating earnings per share, as there were no potentially dilutive shares outstanding.   2. FAIR VALUE MEASUREMENTS   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.   Except for the bond portfolio, which is required by authoritative accounting guidance to be recorded at fair value in 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 $100,000 and $200,000 for the periods ended June 30, 2011 and December 31, 2010, respectively. Total allowance for losses on our bond portfolio equaled $800,000 and $700,000 at June 30, 2011 and December 31, 2010, respectively.   The following table summarizes the Companys financial instruments that were measured at fair value on a recurring basis: <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: 52%; padding-right: 6pt; padding-left: 6pt"> </td> <td style="width: 24%; padding-right: 6pt; padding-left: 6pt">                      </td> <td style="width: 24%; padding-right: 6pt; padding-left: 6pt"> Fair Value Measurement</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">June 30, 2011</td> <td style="padding-right: 6pt; padding-left: 6pt; text-decoration: underline; text-align: right">Fair Value</td> <td style="padding-right: 6pt; padding-left: 6pt; text-decoration: underline; text-align: right">Level 3</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-underline-style: double; text-align: right"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Bond portfolio</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-underline-style: double; text-align: right">$10,158,211</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-underline-style: double; text-align: right"> $10,158,211</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="width: 52%; padding-right: 6pt; padding-left: 6pt"> </td> <td style="width: 24%; padding-right: 6pt; padding-left: 6pt">                       </td> <td style="width: 24%; padding-right: 6pt; padding-left: 6pt"> Fair Value Measurement</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">December 31, 2010</td> <td style="padding-right: 6pt; padding-left: 6pt; text-decoration: underline; text-align: right">Fair Value</td> <td style="padding-right: 6pt; padding-left: 6pt; text-decoration: underline; text-align: right">Level 3</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-underline-style: double; text-align: right"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Bond portfolio</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-underline-style: double; text-align: right">$10,277,849</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-underline-style: double; text-align: right"> $10,277,849</td></tr> </table>   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.   The change in Level 3 assets measured at fair value on a recurring basis is summarized as follows: <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: 69%; padding-right: 6pt; padding-left: 6pt"> </td> <td style="width: 31%; padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">Bond Portfolio</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Balance at December 31, 2010</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right">$10,277,849</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Purchases</td> <td style="padding-right: 6pt; padding-left: 6pt; text-align: right">31,046</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Proceeds</td> <td style="padding-right: 6pt; padding-left: 6pt; text-align: right">(50,684)</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Allowance for losses</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">  (100,000)      </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Balance at June 30, 2011</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-underline-style: double; text-align: right"> $10,158,211</td></tr> </table>   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 allowances for losses recorded during the periods ended June 30, 2011 and 2010.   The following table summarizes the Companys financial instruments that were measured at fair value on a nonrecurring basis: <table cellspacing="0" cellpadding="0" align="left" 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"> </td> <td colspan="7" style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">June 30, 2011</td></tr> <tr> <td style="width: 35%; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="width: 15%; vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Level 1</td> <td style="width: 2%; vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td> <td style="width: 12%; vertical-align: bottom; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Level 2</td> <td style="width: 2%; vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td> <td style="width: 14%; vertical-align: bottom; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Level 3</td> <td style="width: 2%; vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td> <td style="width: 18%; vertical-align: top; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Fair Value at June 30, 2011</td></tr> <tr> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Impaired Loans</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$                  -              </td> <td style="vertical-align: top; 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> <td style="vertical-align: top; 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">$1,241,640</td> <td style="vertical-align: top; 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">$1,241,640</td></tr> <tr> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Real estate held for resale</td> <td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">                 -                  </td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">848,102</td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">            - </td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">848,102</td></tr> <tr> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="border-bottom: windowtext 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$                  - </td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$848,102</td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$1,241,640</td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$2,089,742</td></tr> </table>     <table cellspacing="0" cellpadding="0" align="left" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td colspan="7" style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">December 31, 2010</td></tr> <tr> <td style="width: 35%; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="width: 15%; vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Level 1</td> <td style="width: 2%; vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td> <td style="width: 12%; vertical-align: bottom; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Level 2</td> <td style="width: 2%; vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td> <td style="width: 14%; vertical-align: bottom; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Level 3</td> <td style="width: 2%; vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td> <td style="width: 18%; vertical-align: top; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> Fair Value at December 31, 2010</td></tr> <tr> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Impaired Loans</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$                  -              </td> <td style="vertical-align: top; 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> <td style="vertical-align: top; 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">$1,840,000</td> <td style="vertical-align: top; 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">$1,840,000</td></tr> <tr> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Real estate held for resale</td> <td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">                 -                  </td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">727,532</td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">            - </td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">727,532</td></tr> <tr> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="border-bottom: windowtext 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$                  - </td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$727,532</td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$1,840,000</td> <td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="border-bottom: windowtext 1.5pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$2,567,532</td></tr> </table>     The change in Level 2 and Level 3 assets measured at fair value on a nonrecurring basis is summarized as follows: <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: 56%; padding-right: 6pt; padding-left: 6pt"> </td> <td style="width: 22%; padding-right: 6pt; padding-left: 6pt"> Fair Value Measurement Level 3</td> <td style="width: 22%; padding-right: 6pt; padding-left: 6pt"> Fair Value Measurement Level 2</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">Impaired Loans</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">Real Estate Held for Sale            </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Balance at December 31, 2010</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right">$1,840,000</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-align: right">$727,532</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Additions/Acquisitions</td> <td style="padding-right: 6pt; padding-left: 6pt; text-align: right">15,267</td> <td style="padding-right: 6pt; padding-left: 6pt; text-align: right">121,270</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Dispositions/Proceeds</td> <td style="padding-right: 6pt; padding-left: 6pt; text-align: right">(578,990)</td> <td style="padding-right: 6pt; padding-left: 6pt; text-align: right">(700)</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Additional provision for losses</td> <td style="padding-right: 16.5pt; padding-left: 0.25in; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">   (34,637) </td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">            -</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 6pt; padding-left: 6pt">Balance at June 30, 2011</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-underline-style: double; text-align: right">$1,241,640</td> <td style="padding-right: 6pt; padding-left: 6pt; tab-stops: center 3.0in right 6.0in; text-underline-style: double; text-align: right"> $848,102</td></tr> </table>   3. MORTGAGE LOANS RECEIVABLE AND BOND PORTFOLIO   At June 30, 2011, the Company had mortgage loans receivable totaling $30,799,866. The loans bear interest ranging from 5.00% to 10.25% with a weighted average of approximately 8.36% at June 30, 2011. The Company had mortgage loans receivable totaling $31,430,505 that bore interest ranging from 5.00% to 10.25% with a weighted average of approximately 8.30% at December 31, 2010.   The Company has a portfolio of secured church bonds at June 30, 2011 and December 31, 2010, 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 $10,958,211 at June 30, 2011 with a weighted average interest rate of 7.90% and approximately $10,991,000 at December 31, 2010 with a weighted average interest rate of 7.92%. These bonds are due at various maturity dates through July 2039.   The contractual maturity schedule for mortgage loans receivable and the bond portfolio as of June 30, 2011, is as follows: <table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 57%; padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="width: 24%; padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">Mortgage Loans</td> <td style="width: 19%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">Bond Portfolio</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">July 1, 2011 through June 30, 2012</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">$      602,056</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$       873,000</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">July 1, 2012 through December 31, 2012</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">327,533</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">69,000</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">2013</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,688,318</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">605,000</td></tr> <tr style="vertical-align: top"> <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">828,351</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">681,000</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">2015</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">969,046</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">146,000</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Thereafter</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">26,384,562</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">8,584,211</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">           </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">30,799,866</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">  10,958,211    </td></tr> <tr style="vertical-align: top"> <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"> (775,377)</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> (800,000)</td></tr> <tr style="vertical-align: top"> <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; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">    (566,752)</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">______-__</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">            Totals</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-underline-style: double; text-align: right"> $29,457,737</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-underline-style: double; text-align: right"> $10,158,211</td></tr> </table>   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 September 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 $700,000 and $600,000 for the First Mortgage Bonds at June 30, 2011 and December 31, 2010, 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 is currently attempting to sell the three properties.   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. The Company, along with all other bondholders, has a superior lien over all other creditors. The Company has an allowance for losses of $100,000 for the First and Second Mortgage Bonds at both June 30, 2011 and December 31, 2010, which effectively reduces the bonds to the fair value amount management believes will be recovered.   4. SECURED INVESTOR CERTIFICATES   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 6.69% and 6.73% at June 30, 2011 and December 31, 2010, respectively. Holders of the secured investor certificates may renew certificates at the current rates and terms upon maturity at the Companys discretion. Renewals upon maturity are considered neither proceeds from nor issuance of secured investor certificates. Renewals totaled approximately $366,000 and $405,000 for the six months ended June 30, 2011 and 2010, respectively. The secured investor certificates have certain financial and non-financial covenants indentified in the respective series trust indentures.    The estimated maturity schedule for the secured investor certificates at June 30, 2011 is as follows: <table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 76%; padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="width: 20%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td> <td style="width: 4%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">July 1, 2011 through June 30, 2012</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">$      516,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">July 1, 2012 through December 31, 2012</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,181,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">2013</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,172,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr> <tr style="vertical-align: top"> <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">1,733,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">2015</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">1,982,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Thereafter</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: right">  18,137,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <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"> <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"> $24,721,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-underline-style: double; text-align: right"> </td></tr> </table>   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 originally declared effective by the SEC on March 30, 2009, was subsequently amended in December 2009 and declared effective in January 2010, and was amended again in May and June 2011 and was declared effective on June 27, 2011. The certificates are being 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 June 30, 2011, approximately 3,050 Series C certificates had been issued for $3,050,000. The Company has also issued 2,581 Series C certificates through its stock repurchase program (see Note 5).   7. TRANSACTIONS WITH AFFILIATES   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. The Company paid the Advisor management and origination fees of approximately $109,000 and $96,000 during the three months ended June 30, 2011 and 2010, respectively, and $211,000 and $192,000 during the six months ended June 30, 2011 and 2010, respectively. 8. FAIR VALUE OF FINANCIAL INSTRUMENTS 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.   The fair value estimates presented herein are based on relevant information available to management as of June 30, 2011 and December 31, 2010, 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 managements estimate of the underlying value of the Company.    The estimated fair values of the Companys financial instruments, none of which are held for trading purposes, are as follows: <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"> </td> <td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: center">June 30, 2011</td> <td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: center">December 31, 2010</td></tr> <tr style="vertical-align: top"> <td style="width: 36%; padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="width: 16%; padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: center">Carrying</td> <td style="width: 16%; padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: center">Fair</td> <td style="width: 16%; padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: center">Carrying</td> <td style="width: 16%; padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: center">Fair</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: center">Amount</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: center">Value</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: center">Amount</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-decoration: underline; text-align: center">Value</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right"> </td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Cash and equivalents</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">$      997,187</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">$      997,187</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">$       350,339</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; tab-stops: center 3.0in right 6.0in; text-align: right">$       350,339</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Accounts receivable</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">109,908</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">109,908</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">112,209</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">112,209</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Interest receivable</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">132,080</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">132,080</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">139,441</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">139,441</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Mortgage loans receivable</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">29,457,737</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">31,877,261</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">30,145,838</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">29,650,126</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Bond portfolio</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">10,158,211</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">10,158,211</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">10,277,849</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">10,277,849</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Secured investor certificates</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">24,721,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">29,421,270</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">24,343,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">27,952,977</td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt">Line of credit</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">900,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">900,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,416,000</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,416,000</td></tr> </table>   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:   Cash and equivalents   Due to their short-term nature, the carrying amount of cash and cash equivalents approximates fair value.   Accounts receivable   The carrying amount of accounts receivable approximates fair value.   Interest receivable   The carrying amount of interest receivable approximates fair value.   Mortgage loans receivable   The fair value of the mortgage loans receivable is currently greater 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 rising during the six months ended June 30, 2011.   Bond portfolio   We determine the fair value of the bond portfolio shown in the table above by comparing the bonds we hold 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.   Secured investor certificates   The fair value of the secured investor certificates is currently greater than the carrying value due to higher interest rates than current market rates.   Line of credit   The carrying amount of the line of credit approximates fair value.

140805

32989

189471

-25594

6. LINE OF CREDIT   The Company has a $1.42 million line of credit with Beacon Bank. Interest is charged monthly at the rate of 6.00%. We had outstanding balances of $900,000 and $1,416,000 at June 30, 2011 and December 31, 2010, respectively. The line of credit is secured by a first priority security interest in substantially all of the Companys assets other than collateral pledged to secure the Companys Series B and Series C secured investor certificates. The maturity date for the line is December 31, 2011, but, at the Companys election, may be extended to December 31, 2012 if one half of the outstanding balance at December 31, 2010 is paid by December 31, 2011. The line of credit has various financial and non-financial covenants. At June 30, 2011, the Company was in compliance with financial and non-financial covenants.

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350339

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EX-101.SCH 9 acmc-20110630.xsd XBRL SCHEMA FILE 0001 - Document - Document and Entity Information link:presentationLink link:calculationLink link:definitionLink 0002 - Statement - Balance Sheets link:presentationLink link:calculationLink link:definitionLink 0003 - Statement - Balance Sheets (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 0004 - Statement - Statements of Operations 6 Months link:presentationLink link:calculationLink link:definitionLink 0005 - Statement - Statements of Operations 3 Months link:presentationLink link:calculationLink link:definitionLink 0006 - Statement - Statements of Cash Flows link:presentationLink link:calculationLink link:definitionLink 0007 - Statement - Statements of Cash Flows (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 0008 - Disclosure - Summary of Significant Accounting Pollicies link:presentationLink link:calculationLink link:definitionLink 0009 - Disclosure - Fair Value Measurments link:presentationLink link:calculationLink link:definitionLink 0010 - Disclosure - Mortgage Loans Receivable and Bond Portfolio link:presentationLink link:calculationLink link:definitionLink 0011 - Disclosure - Secured Investor Certificates link:presentationLink link:calculationLink link:definitionLink 0012 - Disclosure - Line Of Credit link:presentationLink link:calculationLink link:definitionLink 0013 - Disclosure - Transactions With Affiliates link:presentationLink link:calculationLink link:definitionLink 0014 - Disclosure - Fair Value Of Financial Instruments link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 10 acmc-20110630_cal.xml XBRL CALCULATION FILE EX-101.DEF 11 acmc-20110630_def.xml XBRL DEFINITION FILE EX-101.LAB 12 acmc-20110630_lab.xml XBRL LABEL FILE Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Is Entity a Well-known Seasoned Issuer? Is Entity a Voluntary Filer? Is Entity's Reporting Status Current? Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus ASSETS Current Assets Cash and equivalents Accounts receivable Interest receivable Current naturities of mortgage loans receivable, net of allowance of $15,157 and $28,574 and deferred origination fees of $43,009 and $39,965 at June 30, 2011 and December 31, 2010, respectively Current maturities of bond portfolio, at fair value Prepaid expenses and other assets Total current assets Mortgage Loans Receivable, net of current maturities, allowance fo $760,220 and $683,255 and deferred origination fees of $523,743 and $532,873 at June 30, 2011 and December 31, 2010, respectively Bond Portfolio, at fair value, net of current maturities Real Estate Held for Sale Deferred Offering Costs, net of accumulated amortization of $764,525 and $705,923 at June 30, 2011 and December 31, 2010, respectively Total Assets LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current maturities of secured investor certificates Line of credit Accounts payable Management fee payable Dividends payable Total current liabilities Deposit on real estate held for sale Secured Investor Certificates, Series B, net of current maturities Secured Investor Certificates, Series C Total liabilities Stockholders' Equity Common stock, par value $.01 per share, Authorized, 30,000,000 shares, Issued and outstanding, 1,940,338 shares at June 30, 2011 and 1,943,107 at December 31, 2010 Additional paid-in capital Accumulated deficit Total stockholders' equity Total liabilities and stockholders' equity Current allowance for current maturities of mortgage loans recievable Current deferred origination fees for current mortgage loans recievable Allowance for mortgage loans recievable Deferred origination fees for mortgage loans recievable Accumulated amortization for deferred offering costs Common Stock, par value Common Stock, Authorized Common Stock, Issued Common Stock, Outstanding Interest and Other Income Interest Expense Net Interest Income Provision for losses on mortgage loans receivable Provision for losses on bonds Provision for Losses on Mortgage Loans Receivable and Bonds Net Interest Income after Provision for Mortgage and Bond Losses Operating Expenses Other operating expenses Real estate impairment Total Operating Expenses Operating Income Other Income Net Income Basic and Diluted Income Per Share Dividends Declared Per Share Weighted Average Common Shares Outstanding - Basic and Diluted Basic and Diluted Income (Loss) Per Share Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash from operating activites: Impairment on real estate held for sale Amortization of loan origination discounts Amortization of deferred costs Change in assets and liabilities Accounts receivable Interest receivable Prepaid expenses Accounts payable Management fee payable Net cash provided by operating activities Cash Flows from Investing Activities Origination of mortgage loans Proceeds from origination fees Collections of mortgage loans Investment in bonds Proceeds from bonds Net cash provided by investing activities Cash Flows from Financing Activities Payments on line of credit, net Proceeds from secured investor certificates Payments on secured investor certificate maturities Payments for deferred costs Stock redemptions Dividends paid Net cash used for financing activities Net Increase (Decrease) in Cash and Equivalents Cash and Equivalents - Beginning of Year Cash and Equivalents - End of Year Supplemental Cash Flow Information Dividends Payable Mortgages receivable reclassified to real estate held for sale Interest paid Secured investor certificates issued through the stock repurchase program Summary of Significant Accounting Pollicies Fair Value Measurments Mortgage Loans Receivable and Bond Portfolio Secured Investor Certificates Line Of Credit Transactions With Affiliates Fair Value Of Financial Instruments Assets, Current Assets Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Allowance for Notes, Loans and Financing Receivable, Current DeferredOrginiationFeesLoansReceivableCurrent Allowance for Notes, Loans and Financing Receivable, Noncurrent DeferredOrginiationFeesLoansReceivableNoncurrent Accumulated Amortization, Deferred Finance Costs Interest Income (Expense), Net ProvisionForLossesOnMortgageLoansReceivableAndBonds NetInterestIncomeAfterAllowances TotalOperatingExpenses Operating Income (Loss) Increase (Decrease) in Accounts Receivable Increase (Decrease) in Accrued Interest Receivable, Net Increase (Decrease) in Accounts Payable ManagementFeePayable Net Cash Provided by (Used in) Operating Activities Net Cash Provided by (Used in) Investing Activities Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, at Carrying Value Dividends Payable (Deprecated 2009-01-31) Current portion of bond portfolio Bond Portfolio Net of Current Maturities Mortgage Loans Due (Current 12 month period) Mortgage Loans Due Net of Current Series B Certificates Series C Certificates Deferred Origination Fees due in next 12 months Deferred Origination Fees net of Current Provision for losses on Mortgage Loans Provision for Losses on Bonds Total provisions for mortgage loans and bonds Net Interest Income Real Estate Impairment Reserve Total Operating Expenses Changes in Assets and Liabilites Text Block Managment Fee Payable Proceeds from Origination Income Collections of Mortgage Loans Investment in Bonds Proceeds from Sale of Certificates Payments made on maturing Certificates Payment of Deferred Offering Costs Adjustment to Net Income Text Block Origination of Mortgage Loans Certificates Issued through Stock Exchange Program Summary of Significant Accounting Policies Fair Value Measurments Text Block Mortgage Loans Receivable Secured Investor Certificates Text Block Transactions with Affliliates Text Block Fair Value of Financial Instruments Text Block Mortgage Reclassified to Real Estate Held for ReSale XML 13 R3.htm IDEA: XBRL DOCUMENT

Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Current Assets
Current allowance for current maturities of mortgage loans recievable	$ 15,157	$ 28,574
Current deferred origination fees for current mortgage loans recievable	43,009	39,965
Allowance for mortgage loans recievable	760,220	683,255
Deferred origination fees for mortgage loans recievable	523,743	532,873
Accumulated amortization for deferred offering costs	$ 764,525	$ 705,923
Stockholders' Equity
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, Authorized	30,000,000	30,000,000
Common Stock, Issued	1,940,338	1,943,107
Common Stock, Outstanding	1,940,338	1,943,107

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Statements of Operations 6 Months (USD $)	3 Months Ended		6 Months Ended
Statements of Operations 6 Months (USD $)	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Interest and Other Income	$ 831,735	$ 790,994	$ 1,620,101	$ 1,690,803
Interest Expense	458,498	433,370	913,961	857,345
Net Interest Income	373,237	357,624	706,140	833,458
Provision for losses on mortgage loans receivable	41,381	88,679	86,944	142,171
Provision for losses on bonds	100,000		100,000
Provision for Losses on Mortgage Loans Receivable and Bonds	141,381	88,679	186,944	142,171
Net Interest Income after Provision for Mortgage and Bond Losses	231,856	268,945	519,196	691,287
Other operating expenses	198,867	202,539	378,391	409,816
Real estate impairment		92,000		92,000
Total Operating Expenses	198,867	294,539	378,391	501,816
Operating Income	32,989	(25,594)	140,805	189,471
Other Income	164	3,117	321	7,862
Net Income	$ 33,153	$ (22,477)	$ 141,126	$ 197,333
Basic and Diluted Income Per Share	$ 0.02	$ 0.01	$ 0.07	$ 0.08
Dividends Declared Per Share	$ 0.11	$ 0.10	$ 0.22	$ 0.20
Weighted Average Common Shares Outstanding - Basic and Diluted	1,919,016	2,275,762	1,941,291	2,372,831

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Document and Entity Information	6 Months Ended
Document and Entity Information	Jun. 30, 2011	Aug. 12, 2011
Entity Registrant Name	American Church Mortgage Company
Entity Central Index Key	0000934543
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,940,338
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2011

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Line Of Credit

6 Months Ended

Jun. 30, 2011

Line Of Credit

6. LINE OF CREDIT

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Summary of Significant Accounting Pollicies

6 Months Ended

Jun. 30, 2011

Summary of Significant Accounting Pollicies

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Nature of Business

Accounting Estimates

Concentration of Credit Risk

Cash and Equivalents

The Company considers all highly liquid debt instruments purchased with maturities of three months or less to be cash equivalents.

Bond Portfolio

Allowance for Mortgage Loans Receivable

A summary of transactions in the allowance for credit losses for the six months ended June 30, 2011 is as follows:

Balance at December 31, 2010		$ 711,829
Provision for additional losses		86,944
Reclassification to real estate held for sale		(23,396)
Charge-offs		-
Balance at June 30, 2011		$ 775,377

Real Estate Held for Sale

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.

Carrying Value of Long-Lived Assets

Revenue Recognition

Deferred Financing Costs

The Company defers the costs related to obtaining financing. These costs are amortized over the life of the financing using the straight line method, which approximates the effective interest method.

Income Per Common Share

No adjustments were made to income for the purpose of calculating earnings per share, as there were no potentially dilutive shares outstanding.

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Fair Value Of Financial Instruments

6 Months Ended

Jun. 30, 2011

Fair Value Of Financial Instruments

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of the Company’s financial instruments, none of which are held for trading purposes, are as follows:

	June 30, 2011		December 31, 2010
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value

Cash and equivalents	$ 997,187	$ 997,187	$ 350,339	$ 350,339
Accounts receivable	109,908	109,908	112,209	112,209
Interest receivable	132,080	132,080	139,441	139,441
Mortgage loans receivable	29,457,737	31,877,261	30,145,838	29,650,126
Bond portfolio	10,158,211	10,158,211	10,277,849	10,277,849
Secured investor certificates	24,721,000	29,421,270	24,343,000	27,952,977
Line of credit	900,000	900,000	1,416,000	1,416,000

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:

Cash and equivalents

Due to their short-term nature, the carrying amount of cash and cash equivalents approximates fair value.

Accounts receivable

The carrying amount of accounts receivable approximates fair value.

Interest receivable

The carrying amount of interest receivable approximates fair value.

Mortgage loans receivable

Bond portfolio

We determine the fair value of the bond portfolio shown in the table above by comparing the bonds we hold 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.

Secured investor certificates

The fair value of the secured investor certificates is currently greater than the carrying value due to higher interest rates than current market rates.

Line of credit

The carrying amount of the line of credit approximates fair value.

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Transactions With Affiliates

6 Months Ended

Jun. 30, 2011

Transactions With Affiliates

7. TRANSACTIONS WITH AFFILIATES

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Statements of Cash Flows (USD $)	6 Months Ended
Statements of Cash Flows (USD $)	Jun. 30, 2011	Jun. 30, 2010
Net income	$ 141,126	$ 197,333
Impairment on real estate held for sale		92,000
Provision for losses on mortgage loans receivable	86,944	142,171
Provision for losses on bonds	100,000
Amortization of loan origination discounts	(20,786)	(15,982)
Amortization of deferred costs	58,602	64,552
Accounts receivable	44,069	23,416
Interest receivable	7,361	16,186
Prepaid expenses	(15,316)	(8,468)
Accounts payable	407,878	(38,704)
Management fee payable	(22,357)
Net cash provided by operating activities	787,521	472,504
Cash Flows from Investing Activities
Origination of mortgage loans	(30,449)
Proceeds from origination fees	14,700	18,736
Collections of mortgage loans	475,354	167,286
Investment in bonds	(31,046)
Proceeds from bonds	50,684	1,348,137
Net cash provided by investing activities	479,243	1,534,159
Cash Flows from Financing Activities
Payments on line of credit, net	(516,000)	(1,288,315)
Proceeds from secured investor certificates	484,000	630,000
Payments on secured investor certificate maturities	(119,000)	(394,000)
Payments for deferred costs	(60,323)	(93,200)
Stock redemptions	(845)
Dividends paid	(407,748)	(494,416)
Net cash used for financing activities	(619,916)	(1,639,931)
Net Increase (Decrease) in Cash and Equivalents	646,848	366,732
Cash and Equivalents - Beginning of Year	350,339	67,137
Cash and Equivalents - End of Year	$ 997,187	$ 433,869

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Fair Value Measurments

6 Months Ended

Jun. 30, 2011

Fair Value Measurments

2. FAIR VALUE MEASUREMENTS

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring basis:

		Fair Value Measurement
June 30, 2011	Fair Value	Level 3

Bond portfolio	$10,158,211	$10,158,211

		Fair Value Measurement
December 31, 2010	Fair Value	Level 3

Bond portfolio	$10,277,849	$10,277,849

The change in Level 3 assets measured at fair value on a recurring basis is summarized as follows:

	Bond Portfolio

Balance at December 31, 2010	$10,277,849
Purchases	31,046
Proceeds	(50,684)
Allowance for losses	(100,000)
Balance at June 30, 2011	$10,158,211

The following table summarizes the Company’s financial instruments that were measured at fair value on a nonrecurring basis:

	June 30, 2011
	Level 1	Level 2	Level 3	Fair Value at June 30, 2011
Impaired Loans	$ -	$ -	$1,241,640	$1,241,640
Real estate held for resale	-	848,102	-	848,102
	$ -	$848,102	$1,241,640	$2,089,742

	December 31, 2010
	Level 1	Level 2	Level 3	Fair Value at December 31, 2010
Impaired Loans	$ -	$ -	$1,840,000	$1,840,000
Real estate held for resale	-	727,532	-	727,532
	$ -	$727,532	$1,840,000	$2,567,532

The change in Level 2 and Level 3 assets measured at fair value on a nonrecurring basis is summarized as follows:

	Fair Value Measurement Level 3	Fair Value Measurement Level 2

	Impaired Loans	Real Estate Held for Sale

Balance at December 31, 2010	$1,840,000	$727,532
Additions/Acquisitions	15,267	121,270
Dispositions/Proceeds	(578,990)	(700)
Additional provision for losses	(34,637)	-
Balance at June 30, 2011	$1,241,640	$848,102

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Mortgage Loans Receivable and Bond Portfolio

6 Months Ended

Jun. 30, 2011

Mortgage Loans Receivable and Bond Portfolio

3. MORTGAGE LOANS RECEIVABLE AND BOND PORTFOLIO

The contractual maturity schedule for mortgage loans receivable and the bond portfolio as of June 30, 2011, is as follows:

	Mortgage Loans	Bond Portfolio

July 1, 2011 through June 30, 2012	$ 602,056	$ 873,000
July 1, 2012 through December 31, 2012	327,533	69,000
2013	1,688,318	605,000
2014	828,351	681,000
2015	969,046	146,000
Thereafter	26,384,562	8,584,211
	30,799,866	10,958,211
Less loan loss and bond loss allowances	(775,377)	(800,000)
Less deferred origination income	(566,752)	______-__
Totals	$29,457,737	$10,158,211

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Secured Investor Certificates

6 Months Ended

Jun. 30, 2011

Secured Investor Certificates

4. SECURED INVESTOR CERTIFICATES

The estimated maturity schedule for the secured investor certificates at June 30, 2011 is as follows:


July 1, 2011 through June 30, 2012	$ 516,000
July 1, 2012 through December 31, 2012	1,181,000
2013	1,172,000
2014	1,733,000
2015	1,982,000
Thereafter	18,137,000

Totals	$24,721,000

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Statements of Operations 3 Months (USD $)	3 Months Ended		6 Months Ended
Statements of Operations 3 Months (USD $)	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Interest and Other Income	$ 831,735	$ 790,994	$ 1,620,101	$ 1,690,803
Interest Expense	458,498	433,370	913,961	857,345
Net Interest Income	373,237	357,624	706,140	833,458
Provision for losses on mortgage loans receivable	41,381	88,679	86,944	142,171
Provision for losses on bonds	100,000		100,000
Provision for Losses on Mortgage Loans Receivable and Bonds	141,381	88,679	186,944	142,171
Net Interest Income after Provision for Mortgage and Bond Losses	231,856	268,945	519,196	691,287
Other operating expenses	198,867	202,539	378,391	409,816
Real estate impairment		92,000		92,000
Total Operating Expenses	198,867	294,539	378,391	501,816
Operating Income	32,989	(25,594)	140,805	189,471
Other Income	164	3,117	321	7,862
Net Income	$ 33,153	$ (22,477)	$ 141,126	$ 197,333
Basic and Diluted Income (Loss) Per Share	$ 0.02	$ 0.01	$ 0.07	$ 0.08
Dividends Declared Per Share	$ 0.11	$ 0.10	$ 0.22	$ 0.20
Weighted Average Common Shares Outstanding - Basic and Diluted	1,919,016	2,275,762	1,941,291	2,372,831

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Statements of Cash Flows (Parenthetical) (USD $)	6 Months Ended
Statements of Cash Flows (Parenthetical) (USD $)	Jun. 30, 2011	Jun. 30, 2010
Dividends Payable	$ 213,437	$ 211,311
Mortgages receivable reclassified to real estate held for sale	144,666
Interest paid	855,359	792,794
Secured investor certificates issued through the stock repurchase program	$ 13,000	$ 1,744,000

- Definition

Carrying value as of the balance sheet date of dividends declared but unpaid on equity securities issued by the entity and outstanding. For classified balance sheets, used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer); for unclassified balance sheets, used to reflect the total liabilities (regardless of due date).

+ References+ Details