ministry10q033113.htm

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 þ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No 

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements	F-1

Consolidated Balance Sheets at March 31, 2013 (unaudited) and December 31, 2012 (audited)	F-1

Consolidated Statements of Income (unaudited) for the three months ended March 31, 2013 and 2012	F-2

Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2013 and 2012	F-3

Notes to Consolidated Financial Statements	F-4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3. Quantitative and Qualitative Disclosures About Market Risk	13

Item 4. Controls and Procedures	14

PART II — OTHER INFORMATION	14

Item 1. Legal Proceedings	14
Item 1A. Risk Factors	14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3. Defaults Upon Senior Securities	14
Item 4. Mine Safety Disclosures	14
Item 5. Other Information	14
Item 6. Exhibits	15

SIGNATURES	15

Exhibit 31.1 — Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

Exhibit 31.2 — Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

Exhibit 32.1 — Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2 — Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

	2013			2012
Assets:	(Unaudited)			(Audited)
Cash	$	9,782		$	10,068
Loans receivable, net of allowance for loan losses of $3,012 and $4,005 as of March 31, 2013 and December 31, 2012, respectively		147,931			152,428
Accrued interest receivable		656			672
Property and equipment, net		184			216
Debt issuance costs, net		76			95
Foreclosed assets		4,379			2,914
Other assets		403			252
Total assets	$	163,411		$	166,645
Liabilities and members’ equity
Liabilities:
Borrowings from financial institutions	$	102,657		$	103,833
Notes payable		50,527			52,564
Accrued interest payable		22			7
Other liabilities		598			693
Total liabilities		153,804			157,097
Members' Equity:
Series A preferred units, 1,000,000 units authorized, 117,100 units issued and outstanding at March 31, 2013 and December 31, 2012 (liquidation preference of $100 per unit)		11,715			11,715
Class A common units, 1,000,000 units authorized, 146,522 units issued and outstanding at March 31, 2013 and December 31, 20121,509		1,509			1,509
Accumulated deficit		(3,617	)		(3,676	)
Total members' equity		9,607			9,548
Total liabilities and members' equity	$	163,411		$	166,645

	Three months ended March 31,
	2013			2012
Interest income:
Interest on loans	$	2,369		$	2,515
Interest on interest-bearing accounts		24			35
Total interest income		2,393			2,550
Interest expense:
Borrowings from financial institutions		645			691
Notes payable		532			624
Total interest expense		1,177			1,315
Net interest income		1,216			1,235
Provision for loan losses		8			104
Net interest income after provision for loan losses		1,208			1,131
Non-interest income		20			16
Non-interest expenses:
Salaries and benefits		571			458
Marketing and promotion		21			36
Office operations		308			370
Foreclosed assets, net		(4	)		(17	)
Legal and accounting		185			209
Total non-interest expenses		1,081			1,056
Income before provision for income taxes		147			91
Provision for income taxes		4			4
Net income	$	143		$	87

	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	143		$	87
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation		32			30
Amortization of deferred loan fees		(35	)		(22	)
Amortization of debt issuance costs		41			51
Provision for loan losses		8			104
Accretion of allowance for loan losses on restructured loans		(23	)		(13	)
Accretion of loan discount		(1	)		(2	)
Changes in:
Accrued interest receivable		16			15
Other assets		(151	)		(162	)
Other liabilities and accrued interest payable		(80	)		32
Net cash provided (used) by operating activities		(50	)		120
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan purchases		(875	)		(5,289	)
Loan originations		(2,665	)		(71	)
Loan principal collections, net		6,623			7,736
Purchase of property and equipment		--			(26	)
Net cash provided by investing activities		3,083			2,350
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in borrowings from financial institutions		(1,176	)		(1,490	)
Net changes in notes payable		(2,037	)		546
Debt issuance costs		(22	)		(2	)
Dividends paid on preferred units		(84	)		(89	)
Net cash used by financing activities		(3,319	)		(1,035	)
Net increase (decrease) in cash		(286	)		1,435
Cash at beginning of period		10,068			11,167
Cash at end of period	$	9,782		$	12,602
Supplemental disclosures of cash flow information
Interest paid	$	1,163		$	1,315
Income taxes paid	$	--		$	--
Transfer of loans to foreclosed assets	$	1,465		$	717

The accounting and financial reporting policies of MINISTRY PARTNERS INVESTMENT COMPANY, LLC (the “Company”, “we”, or “our”) and our wholly-owned subsidiaries, Ministry Partners Funding, LLC, MP Realty Services, Inc., and Ministry Partners Securities, LLC, conform to accounting principles generally accepted in the United States and general financial industry practices. The accompanying interim consolidated financial statements have not been audited. A more detailed description of our accounting policies is included in our 2012 annual report filed on Form 10-K. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2013 and for the three months ended March 31, 2013 and 2012 have been made.

Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The results of operations for the periods ended March 31, 2013 and 2012 are not necessarily indicative of the results for the full year.

Ministry Partners Investment Company, LLC (the “Company”) was incorporated in California in 1991 as a C corporation and converted to a limited liability company on December 31, 2008. The Company is owned by a group of 11 federal and state chartered credit unions, as well as the Asset Management Assistance Center of the National Credit Union Administration (“NCUA”), none of which owns a majority of the voting equity units of the Company. One credit union owns only preferred units while the others own both common and preferred units. Offices of the Company are located in Brea, California. The Company provides funds for real property secured loans for the benefit of evangelical churches and church organizations. The Company funds its operations primarily through the sale of debt and equity securities and through other borrowings. Most of the Company’s loans are purchased from its largest equity investor, the Evangelical Christian Credit Union (“ECCU”), of Brea, California. The Company also originates church and ministry loans independently. Nearly all of the Company’s business and operations currently are conducted in California and its mortgage loan investments cover approximately 29 states, with the largest number of loans made to California borrowers.

In 2007, the Company created a wholly-owned special purpose subsidiary, Ministry Partners Funding, LLC (“MPF”), for the purpose of warehousing church and ministry mortgages purchased from ECCU or originated by the Company for later securitization. MPF’s loan purchasing activity continued through early 2010, after which its operations ceased and its assets, including loans, were transferred to the Company. MPF has no liabilities and is currently inactive. The Company closed down active operations of MPF effective as of December 31, 2009 but intends to maintain MPF’s existence as a Delaware limited liability company for possible future use as a financing vehicle to effect debt financing transactions. MPF did not securitize any of its loans.

On November 13, 2009, the Company formed a wholly-owned subsidiary, MP Realty Services, Inc., a California corporation (“MP Realty”). MP Realty provides loan brokerage and other real estate services to credit unions, financial institutions, churches and ministries in connection with the Company’s mortgage financing activities and services it provides to federal and state chartered credit unions. On February 23, 2010, the California Department of Real Estate issued MP Realty a license to operate as a corporate real estate broker.

On April 26, 2010, we formed Ministry Partners Securities, LLC, a Delaware limited liability company (“MP Securities”). On July 6, 2010, MP Securities became a registered broker dealer firm under Section 15 of the Securities Exchange Act of 1934. Effective as of March 2, 2011, MP Securities’ application for membership in the Financial Industry Regulatory Authority (“FINRA”) was approved. MP Securities has been formed to provide financing solutions for churches, charitable institutions and faith-based organizations and act as a selling agent for securities offered by such entities. In May of 2012, MP Securities began selling Secured Investment Certificates on our behalf. On September 24, 2012, MP Securities received a no-objections letter from FINRA, thereby authorizing it to act as a selling agent for the Company’s Class A Notes offering under a registration statement declared effective by the U.S. Securities and Exchange Commission (“SEC”) on October 11, 2012. In November 2012, MP Securities also began selling investments in mutual funds. In March 2013, we signed a selling agreement with MP Securities that enable the firm to sell our Series 1 Subordinated Capital Notes and 2013 International Notes on our behalf. In addition to serving as a selling agent for our Class A Notes and other debt securities, MP Securities will distribute debt securities issued by religious organizations, as well as by business members of credit unions it serves and will act as a selling agent in placing mortgage backed business loans made by credit unions to institutional investors.

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

By operation of law, the converted entity continued with all of the rights, privileges and powers of the corporate entity and is managed by a group of managers that previously served as the Board of Directors. The executive officers and key management team remained intact. The converted entity by operation of law possessed all of the properties and assets of the converted corporation and remains responsible for all of the notes, debts, contract claims and obligations of the converted corporation.

Since the conversion became effective, the Company is managed by a group of managers that provides oversight of the affairs and carries out their duties similar to the role and function that the Board of Directors performed under the previous bylaws. Operating like a Board of Directors, the managers have full, exclusive and complete discretion, power and authority to oversee the management of Company affairs. Instead of Articles of Incorporation and Bylaws, management structure and governance procedures are now governed by the provisions of an Operating Agreement that has been entered into by and between the Company’s managers and members.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to, but are not limited to, the determination of the allowance for loan losses and the valuation of foreclosed real estate.

Through midnight on December 31, 2012, all of our cash held at credit unions was insured by the National Credit Union Insurance Fund, while all cash held at other financial institutions was insured by the Federal Deposit Insurance Corporation (“FDIC”). This unlimited insurance expired on January 1, 2013. We maintain cash that may exceed insured limits after December 31, 2012. We do not expect to incur losses in our cash accounts.

Loans that management has the intent and ability to hold for the foreseeable future are reported at their outstanding unpaid principal balance adjusted for an allowance for loan losses, deferred loan fees and costs, and loan discounts. Interest income on loans is accrued on a daily basis using the interest method. Loan origination fees and costs are deferred and recognized as an adjustment to the related loan yield using the straight-line method, which results in an amortization that is materially the same as the interest method. Loan discounts represent an offset against interest accrued and unpaid which has been added to loans that have been restructured. Loan discounts are accreted to interest income over the term of the loan using the interest method once the loan is no longer considered impaired and is no longer in its restructure period. Loan discounts may also represent the difference between the purchase price of a loan and the outstanding principal balance of the loan. These discounts are accreted to interest income over the term of the loan using the interest method.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income. The interest on these loans is accounted for on the cash basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The Company sets aside an allowance or reserve for loan losses through charges to earnings, which are shown in the Company’s Consolidated Statements of Operations as a provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of general and specific components. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. In establishing the allowance for loan losses, management considers significant factors that affect the collectability of the Company’s loan portfolio. While historical loss experience provides a reasonable starting point for the analysis, such experience by itself does not form a sufficient basis to determine the appropriate level of the allowance for loan losses. Management also considers qualitative (or environmental) factors that are likely to cause estimated credit losses associated with our existing portfolio to differ from historical loss experience, including:

These factors are adjusted on an on-going basis and have been increased in recent years in light of the economic recession and credit crisis. The specific component of the Company’s allowance for loan losses relates to loans that are classified as impaired. For such loans, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

All loans in the loan portfolio are subject to impairment analysis. The Company reviews its loan portfolio monthly by examining delinquency reports and information related to the financial condition of its borrowers and collateral value of its loans. Through this process, the Company identifies potential impaired loans. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting future scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. A loan is generally deemed to be impaired when it is 90 days or more past due, or earlier when facts and circumstances indicate that it is probable that a borrower will be unable to make payments in accordance with the loan contract.

Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the obtainable market price, or the fair value of the collateral if the loan is collateral-dependent. When the Company modifies the terms of a loan for a borrower that is experiencing financial difficulties, a troubled debt restructuring is deemed to have occurred and the loan is classified as impaired. Loans or portions thereof are charged off when they are determined by management to be uncollectible. Uncollectability is evaluated periodically on all loans classified as “Loans of Lesser Quality.” As the Company has an established practice of working to explore every possible means of repayment with its borrowers, it has historically not charged off a loan until just prior to the completion of the foreclosure process. Among other variables, management will consider factors such as the financial condition of the borrower, and the value of the underlying collateral in assessing uncollectability.

A troubled debt restructuring is a loan for which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to a borrower that the Company would not otherwise consider. From time to time, we have restructured a mortgage loan in light of the borrower's circumstances and capabilities. We review each of these cases on an individual basis and approve any restructure based on the guidance stipulated in our collections policy. If we decide to accept a loan restructure, we generally will not forgive or reduce the principal amount owed on the loan; in addition, the typical maturity term for a restructured loan does not exceed five years. A restructuring of a loan usually involves an interest rate modification, extension of the maturity date, or reduction of accrued interest owed on the loan on a contingent or absolute basis.

When we receive a request for a modification or restructure, we evaluate the strength of the borrower’s financial condition, leadership of the pastoral team and board, developments that have impacted the church and its leadership team, local economic conditions, the value of the underlying collateral, the borrower’s commitment to sound budgeting and financial controls, whether there is a denominational guaranty of any portion of the indebtedness, debt service coverage for the borrower, availability of other collateral and any other relevant factors unique to the borrower. While we have no written policy that establishes criteria for when a request for restructuring a loan will be approved, our Credit Review Committee reviews each request, solicits written reports and recommendations from management, and summaries of the requests and actions taken by the Credit Review Committee are presented to the Company’s managers for their review at quarterly meetings throughout the year.

Loans that are renewed at below-market terms are considered to be troubled debt restructurings if the below-market terms represent a concession due to the borrower’s troubled financial condition. Troubled debt restructurings are classified as impaired loans and are measured at the present value of estimated future cash flows using the loan's effective rate at inception of the loan. The change in the present value of cash flows attributable to the passage of time is reported as interest income. If the loan is considered to be collateral dependent, impairment is measured based on the fair value of the collateral.

In the current economic market, loan restructures often produce a better outcome for our loan portfolio than a foreclosure action. Given our specialized knowledge and experience working with churches and ministries, entering into a loan modification often enables our borrowers to keep their ministries intact and avoid foreclosure. With a successful loan restructure, we avoid a loan charge-off and protect the interests of the investors and borrowers we serve.

Management segregates the loan portfolio into portfolio segments for purposes of evaluating the allowance for loan losses. A portfolio segment is defined as the level at which the Company develops and documents a systematic method for determining its allowance for loan losses. The portfolio segments are segregated based on loan types and the underlying risk factors present in each loan type. Such risk factors are periodically reviewed by management and revised as deemed appropriate.

Wholly-Owned Junior Collateral Position. This portfolio class consists of the wholly-owned loans for which the Company possesses a lien on the underlying collateral that is superseded by another lien on the same collateral. This class also contains any loans that are not secured. These loans present higher credit risk than loans for which the Company possesses a senior lien due to the increased risk of loss should the loan default.

Participations First Collateral Position. This portfolio class consists of the participated loans for which the Company possesses a senior lien on the collateral underlying the loan. Loan participations present higher credit risk than wholly-owned loans because the Company does not maintain full control over the disposition and direction of actions regarding the management and collection of the loans. The lead lender directs most servicing and collection activities and major actions must be coordinated and negotiated with the other participants, whose best interests regarding the loan may not align with those of the Company.

Participations Junior Collateral Position. This portfolio class consists of the participated loans for which the Company possesses a lien on the underlying collateral that is superseded by another lien on the same collateral. Loan participations in the junior collateral position loans have higher credit risk than wholly-owned loans and participated loans where the Company possesses a senior lien on the collateral. The increased risk is the result of the factors presented above relating to both junior lien positions and participations.

The Company’s policies provide for the classification of loans that are considered to be of lesser quality as watch, substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those assets characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, based on currently existing facts, conditions and values. Assets (or portions of assets) classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets that do not expose the Company to risk sufficient to warrant classification in one of the aforementioned categories, but which possess potential weaknesses that deserve close attention, are designated as watch.

Assets acquired through foreclosure or other proceedings are initially recorded at fair value at the date of foreclosure less estimated costs of disposal, which establishes a new cost. After foreclosure, valuations are periodically performed by management and foreclosed assets held for sale are carried at the lower of cost or fair value, less estimated costs of disposal. Any write-down to fair value at the time of foreclosure is charged to the allowance for loan losses. If the fair value, less costs to sell, of the foreclosed property decreases during the holding period, a valuation allowance is established with a charge to operating expenses taken. The Company’s real estate assets acquired through foreclosure or other proceedings are evaluated regularly to ensure that the recorded amount is supported by its current fair value and that valuation allowances to reduce the varying amount to fair value less estimated costs of disposal are recorded as necessary. Revenue and expense from the operation of the Company’s foreclosed assets and changes in the valuation allowance are included in net expenses from foreclosed assets. When the foreclosed property is sold, a gain or loss is recognized on the sale for the difference between the sales proceeds and the carrying amount of the property.

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to have been surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

From time to time, the Company sells participation interests in mortgage loans it has originated or acquired. In order to recognize the transfer of a portion of a financial asset as a sale, the transferred portion and any portion that continues to be held by the transferor must represent a participating interest and the transfer of the participating interest must meet the conditions for surrender of control. To qualify as a participating interest (i) each portion of a financial asset must represent a proportionate ownership interest in an entire financial asset, (ii) from the date of transfer, all cash flows received from the entire financial asset must be divided proportionately among the participating interest holders in an amount equal to their share of ownership, (iii) the transfer must be made on a non-recourse basis (other than standard representations and warranties made under the loan participation sale agreement) to, or subordination by, any participating interest holder, and (iv) no party has the right to pledge or exchange the entire financial asset. If the participating interest or surrender of control criteria is not met, the transaction is accounted for as a secured borrowing arrangement.

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

Effective December 31, 2008, the Company converted from a C corporation to a California limited liability company (LLC). As a result, the stockholders of the Company became members of the LLC on the conversion date. The LLC is treated as a partnership for income tax purposes; therefore, the Company is no longer a tax-paying entity for federal or state income tax purposes, and no federal or state income tax will be recorded in its financial statements after the date of conversion. Income and losses of the Company are passed through to the members of the LLC for tax reporting purposes. The Company is subject to a California gross receipts fee of approximately $12,000 per year for years ending on and after December 31, 2009. The Company’s subsidiaries are LLCs except for MP Realty, which was organized as a California corporation. MP Realty incurred a tax loss for the year ended December 31, 2012 and recorded a provision of $800 for the state minimum franchise tax.

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

We maintain most of our cash funds at ECCU, our largest equity investor. Total funds held with ECCU were $9.4 million and $9.5 million at March 31, 2013 and December 31, 2012, respectively. Interest earned on funds held with ECCU totaled $24.2 thousand and $35.1 thousand for the three months ended March 31, 2013 and 2012, respectively.

We lease physical facilities and purchase other services from ECCU pursuant to a written lease and services agreement. Charges of $31.8 thousand and $28.9 thousand for the three months ended March 31, 2013 and 2012, respectively, were incurred for these services and are included in office operations expense. The method used to arrive at the periodic charge is based on the fair market value of services provided. We believe that this method is reasonable.

From time to time, we purchase mortgage loans, including loan participation interests from ECCU, our largest equity owner. During the three month periods ended March 31, 2013 and March 31, 2012, we purchased $875 thousand and $1.8 million of loans from ECCU, respectively. With regards to all loans purchased from ECCU, we recognized $878.4 thousand and $1.6 million of interest income during the three months ended March 31, 2013 and 2012, respectively. ECCU currently acts as the servicer for 46 of the 122 loans in the Company’s loan portfolio. Under the terms of the loan servicing agreement we entered into with ECCU, a servicing fee of 50 to 65 basis points is deducted from the interest payments the Company receives on the wholly-owned loans ECCU services for the Company. In lieu of a servicing fee, loan participations the Company purchases from ECCU generally have pass-through rates which are up to 100 basis points lower than the loan’s contractual rate. The Company negotiates the pass-through interest rates with ECCU on a loan by loan basis. At March 31, 2013, the Company’s investment in wholly-owned loans serviced by ECCU totaled $21.6 million, while the Company’s investment in loan participations serviced by ECCU totaled $39.4 million. From time to time, the Company pays fees for additional services ECCU provides for servicing these loans. We did not pay any of these fees during the three months ended March 31, 2012. We paid fewer than one thousand dollars of such fees during the three months ended March 31, 2013.

ECCU has also repurchased mortgage loans from us as part of our liquidity management practices. In addition, ECCU has from time to time repurchased from the Company fractional participations in the loan investments which ECCU already services, usually around 1% of the loan balance, to facilitate compliance with National Credit Union Association (“NCUA”) rules when participations in those loans were sold to federal credit unions. Each sale or purchase of a mortgage loan investment or participation interest with ECCU was consummated under a Related Party Transaction Policy adopted by the Company’s Board. No gain or loss was incurred on these sales. No whole loans or loan participations were sold to ECCU during the three months ended March 31, 2013 and 2012, respectively.

On December 14, 2007, the Board of Directors appointed R. Michael Lee to serve as a Company director. Mr. Lee serves as Vice President Member Relations, Midwest Region, of Alloya Corporate Federal Credit Union (“Alloya”), formerly Members United Corporate Federal Credit Union (“Members United”). See Note 6 for information regarding the Company’s borrowings from Members United. The Company has $91.9 thousand on deposit with Alloya as of March 31, 2013.

We have also entered into a selling agreement with our wholly-owned subsidiary, MP Securities, pursuant to which MP Securities will act as a selling agent for our 2012 Secured Investment Certificates, which are notes we sell under a private placement memorandum and which are secured by loans or cash. The sales commissions and cost reimbursements paid to any broker-dealer firms that are engaged to assist in the distribution of such certificates will not exceed 3% of the amount of certificates sold.

MP Securities will also act as a selling agent for our Class A Notes offering pursuant to a Registration Statement which was declared effective by the SEC on October 11, 2012. Our affiliate, MP Securities, will sell most of the Class A Notes being registered. Each participating broker in the Class A Notes offering, including MP Securities, will be entitled to receive commissions ranging from .5%, plus an amount equal to .25% per annum on the average note balance for a Variable Series Note to 5% for a Flex Series or 60 month Fixed Series Note depending on whether it sells a Fixed Series, Variable Series or Flex Series note and the term of the respective note sold (12 months to 84 months). For repeat purchasers of our Class A Notes, the gross commissions payable to the managing broker and share of commissions payable to MP Securities as a participating broker in the offering will be reduced by 0.25% of the total amount of Class A Notes sold in the offering to a repeat investor who is then, or has been within the immediately preceding thirty (30) days, a noteholder.

In addition, we have entered into selling agreements with MP Securities pursuant to which MP Securities will act as a selling agent for our Series 1 Subordinated Capital Notes offering and our 2013 International Notes offering, which are notes we sell under private placement memoranda. The sales commissions and cost reimbursements paid to any broker-dealer firms that are engaged to assist in the distribution of these notes will not exceed 2.5% of the amount of certificates sold.

To assist in evaluating any related transactions we may enter into with a related party, our Board has adopted a Related Party Transaction Policy. Under this policy, a majority of the members of our Board and majority of our independent Board members must approve a material transaction that we enter into with a related party. As a result, we anticipate that all future transactions that we undertake with an affiliate or related party will be on terms believed by our management to be no less favorable than are available from unaffiliated third parties and will be approved by a majority of our independent Board members.

We originate church mortgage loans, participate in church mortgage loans and also purchase entire church mortgage loans. The loans fall into four classes: whole loans for which the Company possesses the first collateral position, whole loans that are either unsecured or for which the Company possesses a junior collateral position, participated loans for which the Company possesses the first collateral position and participated loans for which the Company possesses a junior collateral position. All of the loans are made to various evangelical churches and related organizations, primarily to purchase, construct or improve facilities. Loan maturities extend through 2023. Loans yielded a weighted average of 6.38% as of March 31, 2013, compared to a weighted average yield of 6.36% as of December 31, 2012.

On May 15, 2012, the Company entered into a Loan Purchase Agreement with Trinity Pacific Investments and Trinity Pacific OC involving two mortgage loan interests it had acquired from ECCU, which were the subject of foreclosure proceedings. In exchange for transferring all rights, title and interest in these two mortgage loan interests, the Company received $2.425 million in cash and was relieved of any further obligations regarding the mortgage loan interests sold. Both loans were considered impaired. The recorded investment in these loans was $2.460 million after discounts. The loans also carried a total of $300 thousand in specific reserves that had been recorded in prior periods and set aside as a loan loss provision. As a result of this Loan Purchase Agreement transaction, $35 thousand of these specific reserves were charged off against our allowance for loan losses. The Company reversed the remaining $265 thousand of specific reserves related to these two loans, reducing the Company’s provision and allowance for loan losses and improving the Company’s balance sheet and statement of income as of and for the year ended December 31, 2012.

On September 18, 2012, the Company entered into a Deed in Lieu of Foreclosure Agreement with one of its borrowers. As a result of this agreement, the Company received the property securing one of its impaired mortgage loan interests. The Company has recorded the entire outstanding amount of the loan, $958.8 thousand, as a real estate owned asset on its financial statements. As the value of the collateral less estimated costs to sell is greater than the the Company’s investment, no valuation allowance has been recorded on this property.

On February 26, 2013, the Company entered into a Whole Loan Purchase and Sale Agreement with ECCU. As a result of this agreement, the Company received a loan and first trust deed to the underlying collateral on a church facility in exchange for $875 thousand. The principal balance on this loan was $1.1 million at the time the agreement was entered into. The Company recorded a discount for the difference between the cash paid and the principal balance. The Company already had in its portfolio a loan made to the same borrower secured by a second trust deed on the property securing the purchased loan. Immediately after the purchase, the Company restructured the loan as part of a troubled debt restructuring agreement pursuant to the Company’s collection policies. This loan is included in the Company’s financial statements as an impaired and non-accrual loan but is not considered collateral-dependent.

On March 15, 2013, the Company entered into a Deed in Lieu of Foreclosure Agreement with one of its borrowers and took title to the real estate property securing two impaired loans. The loans had a carrying value of $1.5 million, net of discounts and specific reserves totaling $1.1 million, at March 15, 2013. No additional reserves were required to be taken on the acquired real property as a result of this transaction. The reserves on these loans were charged off at acquisition and the property was recorded in foreclosed assets at $1.5 million. No valuation allowance has been recorded against the property at March 31, 2013.

An allowance for loan losses of $3.0 million as of March 31, 2013 and $4.0 million as of December 31, 2012 has been established for loans receivable. For the three month period ended March 31, 2013, we reported total charge-offs of $977.9 thousand on two of our mortgage loan investments. Management believes that the allowance for loan losses as of March 31, 2013 and December 31, 2012 is appropriate.

Non-performing loans include non-accrual loans, loans 90 days or more past due and still accruing, restructured loans, and other impaired loans where the net present value of estimated future cash flows is lower than the outstanding principal balance. Non-accrual loans represent loans on which interest accruals have been discontinued. Restructured loans are loans in which the borrower has been granted a concession on the interest rate or the original repayment terms due to financial distress. Non-performing loans are closely monitored on an ongoing basis as part of our loan review and work-out process. The potential risk of loss on these loans is evaluated by comparing the loan balance to the fair value of any underlying collateral or the present value of projected future cash flows. The following is a summary of our nonperforming loans (dollars in thousands):

	March 31		December 31		March 31
	2013		2012		2012

Impaired loans with an allowance for loan loss	$	11,519	$	11,128	$	15,873
Impaired loans without an allowance for loan loss		5,433		7,431		7,233
Total impaired loans	$	16,952	$	18,559	$	23,106

Allowance for loan losses related to impaired loans	$	2,048	$	2,987	$	3,206

Total non-accrual loans	$	16,731	$	18,338	$	22,147

Total loans past due 90 days or more and still accruing	$	--	$	--	$	--

We had ten nonaccrual loans as of March 31, 2013 and eleven at December 31, 2012. As of March 31, 2013, we have completed foreclosure proceedings on two loan participation interests we acquired from ECCU. We also acquired two properties under the provisions of Deed in Lieu of Foreclosure Agreements we entered into with two of our borrowers. In addition, we have two loans totaling $3.4 million that are currently in foreclosure proceedings. There is a reserve of $338.0 thousand that has been recorded as an allowance for loan losses on these loans. In April 2012, we completely wrote off one nonaccrual loan as uncollectible. However, as this loan carried a discount for the entire principal balance, our recorded investment in the loan was zero and the write-off had no impact on our net loans receivable balance.

The Company’s loan portfolio is comprised of one segment – church loans. The loans fall into four classes: whole loans for which the Company possesses the first collateral position, whole loans that are either unsecured or for which the Company possesses a junior collateral position, participated loans for which the Company possesses the first collateral position, and participated loans for which the Company possesses a junior collateral position.



	Loans and Allowance for Loan Losses (by segment) As of
	March 31, 2013		December 31, 2012

Loans:

Individually evaluated
for impairment	$	16,952	$	18,559

Collectively
evaluated for impairment	$	135,099	$	138,837

Balance	$	152,051	$	157,396

Allowance for loan losses:

Individually evaluated
for impairment	$	2,048	$	2,987

Collectively
evaluated for impairment	$	964	$	1,018

Balance	$	3,012	$	4,005

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

Substandard: Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, ministry, or environmental conditions which have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that some future loss will be sustained if such weaknesses are not corrected.

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

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

	Credit Quality Indicators (by class)
	As of March 31, 2013

	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total
Grade:
Pass	$	83,341	$	1,770	$	34,992	$	966	$	121,069
Watch		11,074		3,568		4,501		-		19,143
Substandard		764		3,440		-		-		4,204
Doubtful		4,804		-		2,831		-		7,635
Loss		-		-		-		-		-
Total	$	99,983	$	8,778	$	42,324	$	966	$	152,051

Credit Quality Indicators (by class) As of December 31, 2012
	Wholly-Owned First		Wholly-Owned Junior		Participation First		Participation Junior		Total

Grade:
Pass	$	81,316	$	1,780	$	39,249	$	966	$	123,311
Watch		11,405		3,644		4,515		-		19,564
Substandard		2,942		3,877		-		-		6,819
Doubtful		4,866		-		2,836		-		7,702
Loss		-		-		-		-		-
Total	$	100,529	$	9,301	$	46,600	$	966	$	157,396

Age Analysis of Past Due Loans (by class)
As of March 31, 2013

													Recorded
					Greater								Investment
	30-59 Days		60-89 Days		Than		Total				Total		90 Days or more
	Past Due		Past Due		90 Days		Past Due		Current		Loans		and Accruing

Church loans:
Wholly-Owned First	$	9,866	$	-	$	764	$	10,630	$	89,353	$	99,983	$	-
Wholly-Owned Junior		-		-		-		-		8,778		8,778		-
Participation First		5,183		-		2,611		7,794		34,530		42,324		-
Participation Junior		-		-		-		-		966		966		-

Total	$	15,049	$	-	$	3,375	$	18,424	$	133,627	$	152,051	$	-

Age Analysis of Past Due Loans (by class)
As of December 31, 2012

													Recorded
					Greater								Investment
	30-59 Days		60-89 Days		Than		Total				Total		90 Days or more
	Past Due		Past Due		90 Days		Past Due		Current		Loans		and Accruing

Church loans:
Wholly-Owned First	$	1,260	$	2,129	$	814	$	4,203	$	96,326	$	100,529	$	-
Wholly-Owned Junior		3,865		436		-		4,301		5,000		9,301		-
Participation First		2,555		2,632		2,611		7,798		38,802		46,600		-
Participation Junior		-		-		-		-		966		966		-

Total	$	7,680	$	5,197	$	3,425	$	16,302	$	141,094	$	157,396	$	-

The following table are summaries of impaired loans by loan class at March 31, 2013, March 31, 2012 and December 31, 2012. The recorded investment in impaired loans reflects the balances in the financials statements, whereas the unpaid principal balance reflects the balances before discounts and partial chargeoffs (dollars in thousands):

Impaired Loans (by class)
As of and for the three months ended March 31, 2013

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

With no related allowance recorded:
Church loans:
Wholly-Owned First	$	4,839	$	5,545	$	-	$	4,857	$	39
Wholly-Owned Junior		214		220		-		215		3
Participation First		-		-		-		-		-
Participation Junior		-		-		-		-		-

With an allowance recorded:
Church loans:
Wholly-Owned First		5,213		5,601		1,559		5,271		29
Wholly-Owned Junior		3,175		3,220		357		3,248		40
Participation First		2,831		2,993		132		2,833		-
Participation Junior		-		-		-		-		-

Total:
Church loans	$	16,272	$	17,579	$	2,048	$	16,424	$	111

Impaired Loans (by class)
As of and for the Year Ended December 31, 2012

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

With no related allowance recorded:
Church loans:
Wholly-Owned First	$	3,997	$	4,466	$	-	$	4,111	$	115
Wholly-Owned Junior		215		221		-		216		12
Participation First		2,611		2,744		-		2,633		-
Participation Junior		-		-		-		-		-

With an allowance recorded:
Church loans:
Wholly-Owned First		7,339		7,860		2,595		7,444		153
Wholly-Owned Junior		3,592		3,671		373		3,603		202
Participation First		225		251		19		238		-
Participation Junior		-		-		-		-		-

Total:
Church loans	$	17,979	$	19,213	$	2,987	$	18,245	$	482

Impaired Loans (by class)
As of and for the three months ended March 31, 2012

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

With no related allowance recorded:
Church loans:
Wholly-Owned First	$	4,196	$	4,354	$	-	$	4,216	$	29
Wholly-Owned Junior		217		224		-		218		3
Participation First		2,655		2,655		-		2,655		-
Participation Junior		-		-		-		-		-

With an allowance recorded:
Church loans:
Wholly-Owned First		10,272		10,814		2,825		10,282		59
Wholly-Owned Junior		4,289		4,810		361		4,291		26
Participation First		249		249		20		978		-
Participation Junior		-		-		-		-		-

Total:
Church loans	$	21,878	$	23,106	$	3,206	$	22,640	$	117

Troubled Debt Restructurings (by class)
For the three months ended March 31, 2013



			Pre-Modification Outstanding		Post-Modification Outstanding		Recorded
	Number of Loans		Recorded Investment		Recorded Investment		Investment At Period End

Church loans:
Wholly-Owned First		1	$	875	$	876	$	876
Wholly-Owned Junior		-		-		-		-
Participation First		-		-		-		-
Participation Junior		-		-		-		-

Total		1	$	875	$	876	$	876

Troubled Debt Restructurings (by class)
For the three months ended March 31, 2012



			Pre-Modification Outstanding		Post-Modification Outstanding		Recorded
	Number of Loans		Recorded Investment		Recorded Investment		Investment At Period End

Church loans:
Wholly-Owned First		1	$	2,494	$	2,494	$	2,494
Wholly-Owned Junior		1		-		-		-
Participation First		1		271		249		249
Participation Junior		-		-		-		-

Total		3	$	2,765	$	2,743	$	2,743

For the loan restructured during the three months ended March 31, 2013 as well as for the two of the three loans restructured during the three months ended March 31, 2012, unpaid accrued interest at the time of the loan restructure was added to the principal balance. The amount of interest added was also recorded as a loan discount, and thus did not increase our net loan balance. The other loan restructured during the three months ended March 31, 2012 represents the modified loan balance upon foreclosure on two of three underlying properties. In addition, for each of the restructured loans, the interest rate was lowered. Each borrower involved in a troubled debt restructuring was experiencing financial difficulties at the time the loan was restructured.

Troubled Debt Restructurings Defaulted (by class)
During the three months ended March 31, 2013


	Number of		Recorded
	Loans		Investment

Troubled debt restructurings that subsequently defaulted:
Church loans:
Wholly-Owned First		1	$	2,317
Wholly-Owned Junior		-		-
Participation First		-		-
Participation Junior		-		-
Total:
Church loans		1	$	2,317

Troubled Debt Restructurings Defaulted (by class)
During the three months ended March 31, 2012


	Number of		Recorded
	Loans		Investment

Troubled debt restructurings that subsequently defaulted:
Church loans:
Wholly-Owned First		-	$	-
Wholly-Owned Junior		-		-
Participation First		1		249
Participation Junior		-		-
Total:
Church loans		1	$	249

Loans modified in a troubled debt restructuring are closely monitored for delinquency as an early indicator for future default. If loans modified in a troubled debt restructuring subsequently default, the Company evaluates such loans for potential further impairment. As a result of this evaluation, specific reserves may be increased or adjustments may be made in the allocation of reserves.

Assets acquired through foreclosure or other proceedings are initially recorded at fair value at the date of foreclosure less estimated costs of disposal, which establishes a new cost. After foreclosure, valuations are periodically performed by management and foreclosed assets held for sale are carried at the lower of cost or fair value, less estimated costs of disposal. Any write-down to fair value at the time of foreclosure is charged to the allowance for loan losses. The Company’s real estate assets acquired through foreclosure or other proceedings are evaluated regularly to ensure that the recorded amount is supported by its current fair value and that valuation allowances to reduce the varying amount to fair value less estimated costs of disposal are recorded as necessary. Revenue and expense from the operation of the Company’s foreclosed assets and changes in the valuation allowance are included in net expenses from foreclosed assets.

Foreclosed assets consist of five properties. One property was acquired during 2011 in satisfaction of a secured loan. The property had a carrying value of $1.4 million at March 31, 2013 and no valuation allowance has been required for this property. An additional two properties were acquired in February 2012 in partial satisfaction of a secured loan. The properties had a carrying value of $581.2 thousand at March 31, 2013 which includes a $136.0 valuation allowance. One property was acquired in September 2012 as a result of a Deed in Lieu of Foreclosure Agreement the Company entered into with a borrower. The property had a carrying value of $958.8 thousand at March 31, 2013 and no valuation allowance has been required for this property. Finally, one property was acquired in March 2013 as a result of another Deed in Lieu of Foreclosure Agreement the Company entered into with a borrower. The property had a carrying value of $1.5 million at March 31, 2013 and no valuation allowance has been required for this property. The Company held $4.4 million and $2.9 million of foreclosed assets at March 31, 2013 and December 31, 2012, respectively.

During the year ended December 31, 2011, the Company sold participations in two church loans totaling $5.4 million but retained servicing responsibilities for these loans. As a result, we recorded servicing assets totaling $146.9 thousand, which are being amortized using the interest method. The amortization of servicing assets is recorded as an adjustment to interest income and totaled $5.6 thousand for the three months ended March 31, 2013. We did not sell participations in any loans during the three months ended March 31, 2013 or the year ended December 31, 2012.

On October 12, 2007, the Company entered into two note and security agreements with Members United, a federally chartered credit union located in Warrenville, Illinois, which provides financial services to member credit unions. One note and security agreement was for a secured $10 million revolving line of credit, which is referred to as the “$10 Million LOC,” and the other was for a secured $50 million revolving line of credit. The latter was amended on May 8, 2009 to allow the Company to borrow up to $100 million through the revolving line of credit. The Company refers to this as the “$100 Million CUSO Line.” Both credit facilities were secured by certain mortgage loans. The Company utilized the $10 Million LOC for short-term liquidity purposes and the $100 Million CUSO Line for mortgage loan investments.

Pursuant to the terms of the Company’s promissory note with Members United, once the loan was fully drawn, the total outstanding balance was termed out over a five year period with a 30 year amortization payment schedule. In addition, the term loan interest rate was specified by Members United and was re-priced to a market fixed or variable rate determined at the time the loan is restructured. We used our $100 million Members United credit facility to assist us in financing our business. For 2011, the weighted average interest rate we paid on the Members United facility was 3.98%.

On November 4, 2011, the Company and the National Credit Union Administration Board As Liquidating Agent of Members United Corporate Federal Credit Union (“Lender”) entered into an $87.3 million credit facility refinancing transaction (the “MU Credit Facility”). The MU Credit Facility replaced the original $100 million CUSO Line entered into by and between the Company and Members United Corporate Federal Credit Union on May 7, 2008. Unless the principal amount of the indebtedness due is accelerated under the terms of the MU Credit Facility loan documents, the principal balance and any interest due on the MU Credit Facility will mature on October 31, 2018. Accrued interest is due and payable monthly in arrears on the MU Credit Facility on the first day of each month at the lesser of the maximum interest rate permitted by applicable law under the loan documents or 2.525%. The term loan may be repaid or retired without penalty, but any amounts repaid or prepaid under the MU Credit Facility may not be re-borrowed. The balance of the MU Credit Facility was $80.6 million and $81.3 million at March 31, 2013 and December 31, 2012, respectively.

The MU Credit Facility includes a number of borrower covenants, including affirmative covenants to maintain the collateral free of liens, to timely pay the amounts due on the facility, to provide the Lender with interim or annual financial statements and annual and periodic reports filed with the U.S. Securities and Exchange Commission and maintain a minimum collateralization ratio of at least 128%. If at any time the Company fails to maintain its required minimum collateralization ratio, it will be required to deliver cash or qualifying mortgage loans in an amount sufficient to enable it to meet its obligation to maintain a minimum collateralization ratio. As of December 31, 2012, the collateral securing the MU Credit Facility had an aggregate principal balance of $104.2 million which satisfied the minimum collateralization ratio for this facility. As of March 31, 2013, the collateral securing the MU Credit Facility had an aggregate principal balance of $101.5 million, which represents a $1.7 million deficiency in collateral. To maintain its compliance with the minimum collateralization ratio, on May 6, 2013, the Company made an additional $200 thousand payment to reduce the principal balance of the facility and added three loans with an aggregate principal balance of $1.45 million as additional collateral for the facility. As of the filing date of the March 31, 2013 Form 10-Q, the Company is in compliance with the minimum collateralization ratio requirement under the MU Credit Facility.

In addition to the minimum collateralization requirement, the MU Credit Facility also includes covenants which prevent the Company from renewing or extending a loan pledged as collateral under this facility unless certain conditions have been met and requires the borrower to deliver current financial statements to the Company. Under the terms of the MU Credit Facility, the Company has established a lockbox maintained for the benefit of Lender that will receive all payments made by collateral obligors. The Company’s obligation to repay the outstanding balance on this facility may be accelerated upon the occurrence of an “Event of Default” as defined in the MU Credit Facility. Such Events of Default include, among others, failure to make timely payments due under the MU Credit Facility and the Company's breach of any of its covenants. As of March 31, 2013 and December 31, 2012, the Company was in compliance with its covenants under the MU Credit Facility.

On November 30, 2009, the Company entered into a Loan and Security agreement with Western Corporate Federal Credit Union (“WesCorp”), a federally chartered credit union located in San Dimas, California. The agreement provided for a secured $28 million term loan, referred to as the “WesCorp Facility.” We used $24.6 million of the proceeds from the WesCorp credit facility to pay-off our Bank of Montreal credit facility. The WesCorp credit facility had a fixed interest rate of 3.95% and was initially secured by approximately $59.2 million of mortgage loans we previously pledged to secure a credit facility we had established with the Bank of Montreal but has been subsequently paid off. Thus, the loan was initially secured by excess collateral of approximately $30.8 million.

On March 20, 2009, the NCUA assumed control of WesCorp under a conservatorship proceeding initiated by the NCUA under regulations adopted under the Federal Credit Union Act. Effective as of October 1, 2010, WesCorp was placed into liquidation by the NCUA. Pursuant to a letter dated October 25, 2010, we were advised that our WesCorp credit facility had been transferred to the Asset Management Assistance Center (“AMAC”), a facility established by the NCUA.

On November 4, 2011, the Company and the National Credit Union Administration Board As Liquidating Agent of Western Corporate Federal Credit Union (previously herein defined as “Lender”) entered into a $23.5 million credit facility refinancing transaction (the “WesCorp Credit Facility Extension”). The WesCorp Credit Facility Extension amends, restates and replaces the WesCorp Facility entered into by and between the Company and Western Corporate Federal Credit Union on November 30, 2009. Unless the principal amount due on the WesCorp Credit Facility Extension is accelerated under the terms of the loan documents evidencing such credit facility, the principal balance and any interest due on the facility will be payable in full on October 31, 2018. Accrued interest on the WesCorp Credit Facility Extension is due monthly in arrears on the first day of each month at the lesser of the maximum rate permitted by applicable law under the loan documents or 2.525%. The term loan may be repaid or retired without penalty, but any amounts repaid or prepaid under the WesCorp Credit Facility Extension may not be re-borrowed. As of March 31, 2013 and December 31, 2012, $22.0 and $22.5 million, respectively, was outstanding on the WesCorp Credit Facility Extension.

The WesCorp Credit Facility Extension includes a number of borrower covenants, including affirmative covenants to maintain the collateral free of liens, to timely pay the amounts due on the facility, to provide the Lender with interim or annual financial statements and annual and periodic reports filed with the U.S. Securities and Exchange Commission and maintain a minimum collateralization ratio of at least 150%. If at any time the Company fails to maintain its required minimum collateralization ratio, it will be required to deliver cash or qualifying mortgage loans in an amount sufficient to enable it to meet its obligation to maintain a minimum collateralization ratio. As of March 31, 2013 and December 31, 2012, the collateral securing the WesCorp Credit Facility Extension had an aggregate principal balance of $33.1 million and $34.2 million, respectively, which satisfies the minimum collateralization ratio for this facility. As of March 31, 2013 and December 31, 2012, the Company was in compliance with its covenants under the Wescorp Credit Facility Extension.

We also rely on our investor notes to make investments in mortgage loan assets and fund our general operations. Except for our private offering of secured notes, the notes are unsecured and are payable to investors who have purchased the securities, including individuals, churches, and Christian ministries, many of whom are members of ECCU. Notes pay interest at stated spreads over an index rate that is adjusted every month. Interest can be reinvested or paid at the investor's option. The Company may repurchase all or a portion of these notes at any time at its sole discretion, and may allow investors to redeem their notes prior to maturity at its sole discretion. We have offered our investor notes under registered offerings with the SEC and in private placements that are exempt under the provisions of the Securities Act of 1933, as amended. Our Alpha Class Notes were initially registered with the SEC in July 2001 and an additional $75.0 million of new Alpha Notes were registered with the SEC in May 2007. The sale of our Alpha Class Notes was discontinued in April 2008.

The Alpha Class Notes contain covenants pertaining to limitations on restricted payment, maintenance of tangible net worth, limitation on issuance of additional notes and incurrence of indebtedness. The Alpha Class Notes require the Company to maintain a minimum tangible adjusted net worth, as defined in the Loan and Standby Trust Agreement, of not less than $4.0 million. The Company’s other indebtedness, as defined in the Loan and Standby Trust Agreement, and subject to certain exceptions enumerated therein, may not exceed $10.0 million outstanding at any time while any Alpha Class Note is outstanding. The Company is in compliance with these covenants as of March 31, 2013. At March 31, 2013 and December 31, 2012, $1.5 million and $2.8 million of Alpha Class Notes were outstanding, respectively.

In addition to the Alpha Class Notes, the Company has also offered its Class A Notes in three series, including a Fixed Series, Flex Series and Variable Series pursuant to registration statements filed with the SEC. On June 24, 2011, we filed a Registration Statement with the SEC seeking to register an additional $75 million of the Company’s Class A Notes. All of the Class A Notes are unsecured. The offering includes three categories of notes, including a fixed interest note, a variable interest note, and a flex note, which allows borrowers to increase their interest rate once a year with certain limitations. The interest rates the Company pays on the Fixed Series Notes and the Flex Series Notes are determined by reference to the Swap Index, an index that is based upon a weekly average Swap rate reported by the Federal Reserve Board, and is in effect on the date they are issued, or in the case of the Flex Series Notes, on the date the interest rate is reset. These notes bear interest at the Swap Index plus a rate spread of 1.7% to 2.5% and have maturities ranging from 12 to 84 months. The interest rates the Company pays on the Variable Series Notes are determined by reference to the Variable Index in effect on the date the interest rate is set and bear interest at a rate of the Swap Index plus a rate spread of 1.50% to 1.80%. Effective as of January 5, 2009, the Variable Index is defined under the Class A Notes as the three month LIBOR rate.

The Class A Notes also contain restrictive covenants pertaining to paying dividends, making redemptions, acquiring, purchasing or making certain payments, requiring the maintenance of minimum tangible net worth, limitations on the issuance of additional notes and incurring of indebtedness. The Class A Notes require the Company to maintain a minimum tangible adjusted net worth, as defined in the Class A Notes Trust Indenture Agreement, of not less than $4.0 million. The Company is not permitted to issue any Class A Notes if, after giving effect to such issuance, the Alpha Class Notes then outstanding would have an aggregate unpaid balance exceeding $100.0 million. The Company’s other indebtedness, as defined in the Class A Notes Trust Indenture Agreement, and subject to certain exceptions enumerated therein, may not exceed $20.0 million outstanding at any time while any Class A Notes are outstanding. The Company was in compliance with these covenants as of March 31, 2013.

The Class A Notes were issued under a Trust Indenture between the Company and U.S. Bank National Association (US Bank). The Class A Notes are part of up to $200 million of Class A Notes the Company may issue pursuant to the US Bank Indenture. At March 31, 2013 and December 31, 2012, $39.1 million and $40.5 million of these notes were outstanding, respectively.

Effective as of May 15, 2012, the Company temporarily discontinued the sale of the Class A Notes and deregistered the securities remaining unsold under the Company’s Registration Statement on Form S-1 initally filed with the SEC on December 23, 2009 and declared effective on June 3, 2010. The Company subsequently filed a Registration Statement seeking to register $75 million of its Class A Notes with the SEC. This Registration Statement was declared effective as of October 11, 2012, and the Company thereafter resumed the sale of its Class A Notes.

Historically, most of the Company’s unsecured notes have been renewed by investors upon maturity. Because the Company has discontinued its sale of Alpha Class Notes effective as of April 18, 2008, all holders of such notes that mature in the future may reinvest such sums by purchasing Class A Notes that have been registered with the Securities and Exchange Commission. For matured notes that are not renewed, the Company funds the redemption in part through proceeds from the repayment of loans, and issuing new notes payable.

From time to time, we have also sold unsecured general obligation notes having various terms to ministries and ministry related organizations in private offerings under the Securities Act of 1933, as amended. Except for a small number of investors (in total not exceeding 35 persons), the holders of these notes are accredited investors within the meaning of Regulation D under the Securities Act.

During the quarter ended June 30, 2012, the Company launched the sale of its 2012 Secured Investment Certificates pursuant to a limited offering to qualified investors that meet the requirements of Rule 506 of Regulation D. The secured investment certificates have been offered with maturity terms of 36, 60 and 84 months at an interest rate fixed on the date of issuance, as determined by the then current seven-day average rate reported by the U.S. Federal Reserve Board for interest rate swaps. Wilmington Savings Fund Society, FSB, serves as the trustee for the secured investment certificates. Under the terms of the Trust Indenture entered into with Wilmington Savings Fund Society, FSB, the Company has established a mortgage loan investment fund for the benefit of investors and is required to maintain a minimum collateralization ratio equal to at least 105% of the principal amount of secured investment certificates that are issued and outstanding.

The Trust Indenture entered into with Wilimington Savings Fund Society , FSB, also contains standard covenants which require the Company to refrain from permitting any other senior lien to be created or maintained on the collateral securing the certificates, refrain from paying any dividends on the Company’s equity units if there is an uncured event of default with respect to the certificates, make timely payments of interest and principal due on the certificates and secure the assets of the fund. The Company is in compliance with these covenants as of March 31, 2013. At March 31, 2013, $56.0 thousand of these secured certificates were outstanding and $67.8 thousand in cash was pledged as collateral on these notes. At December 31, 2012, $55.7 thousand of these secured certificates were outstanding and $67.8 thousand in cash was pledged as collateral on these notes.

During the quarter ended March 31, 2013, the Company launched the sale of its Series 1 Subordinated Capital Notes pursuant to a limited offering to qualified investors that meet the requirements of Rule 506 of Regulation D. The Series 1 Subordinated Capital Notes have been offered with maturity terms from 12 to 60 months at an interest rate fixed on the date of issuance, as determined by the then current seven-day average rate reported by the U.S. Federal Reserve Board for interest rate swaps. The Company has also launched the sale of a new offering of its 2013 International Notes. This offering was made only to qualified investors that meet the requirements of Rule 902 of Regulation S. Under both of these offerings, the Company is subject to certain covenants, including limitations on restricted payments, limitations on the amount of notes that can be sold, restrictions on mergers and acquisitions, and proper maintenance of books and records. The Company was in compliance with these convenants at March 31, 2013. No notes were outstanding under either of these new offerings at March 31, 2013.

The Series A Preferred Units are entitled to a cumulative Preferred Return, payable quarterly in arrears, equal to the liquidation preference times a dividend rate of 190 basis points over the 1-year LIBOR rate in effect on the last day of the calendar month in which the Preferred Return is paid. In addition, the Series A Preferred Units are entitled to an annual Preferred Distribution, payable in arrears, equal to 10% of the Company’s profits, after subtracting from profits the Preferred Return.

The Series A Preferred Units have a liquidation preference of $100 per unit; have no voting rights; and are subject to redemption in whole or in part at the Company’s election on December 31 of any year, for an amount equal to the liquidation preference of each unit, plus any accrued and unpaid Preferred Return and Preferred Distribution on such units. The Preferred Units have priority as to earnings and distributions over the Common Units. The resale of the Company’s Preferred Units and Common Units are subject to the Company’s first right of refusal to purchase units proposed to be transferred. Upon the Company’s failure to pay a Preferred Return for four consecutive quarters, the holders of the Series A Preferred Units have the right to appoint two managers.

Employees who are at least 21 years of age are eligible to participate in the Automated Data Processing, Inc. (“ADP”) 401(k) plan upon the hire date. No minimum service is required and the minimum age is 21. Each employee may elect voluntary contributions not to exceed 60% of salary, subject to certain limits based on Federal tax law. The plan has a matching program, which qualifies as a Safe Harbor 401(k) plan. As a Safe Harbor Section 401(k) plan, the Company matches each eligible employee’s contribution, dollar for dollar, up to 3% of the employee’s compensation, and 50% of the employee’s contribution that exceeds 3%, up to a maximum contribution of 5% of the employee’s compensation. Company matching contributions for the three months ended March 31, 2013 and 2012 were $19.7 and $12.6 thousand, respectively.

The profit sharing plan is for all employees who, at the end of the calendar year, are at least 21 years old, still employed, and have at least 900 hours of service during the plan year. The amount annually contributed on behalf of each qualified employee is determined by the managers and is calculated as a percentage of the eligible employee's annual earnings. Plan forfeitures are used to reduce our annual contribution. The Company made no profit sharing contributions for the plan during the year ended December 31, 2012. No profit sharing contribution has been made or approved for the three months ended March 31, 2013.

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

The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments. At March 31, 2013 and December 31, 2012, the following financial instruments were outstanding whose contract amounts represent credit risk (dollars in thousands):

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in inactive markets, inputs that are observable for the asset or liability (such as interest rates, prepayment speeds, credit risks, etc.), or inputs that are derived principally from or corroborated by observable market data by correlation or by other means.

Level 3 inputs are unobservable and reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

	Fair Value Measurements at March 31, 2013 using

			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Value		Level 1		Level 2		Level 3		Fair Value
FINANCIAL ASSETS:
Cash	$	9,782	$	9,782	$	-	$	-	$	9,782
Loans, net		147,931		-		-		150,376		150,376
Accrued interest receivable		656		-		-		656		656
FINANCIAL LIABILITIES:
Bank borrowings	$	102,657	$	-	$		$	105,397	$	105,397
Notes payables		50,527		-		-		51,891		51,891
Other financial liabilities		105		-				105		105

	Fair Value Measurements at December 31, 2012 using

			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Value		Level 1		Level 2		Level 3		Fair Value
FINANCIAL ASSETS:
Cash	$	10,068	$	10,068	$	-	$	-	$	10,068
Loans, net		152,428		-		-		155,165		155,165
Accrued interest receivable		672		-		-		672		672
FINANCIAL LIABILITIES:
Notes payables	$	52,564	$	-	$		$	54,120	$	54,120
Bank borrowings		103,833		-				106,614		106,614
Other financial liabilities		96		-				96		96

Management uses judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at March 31, 2013 and December 31, 2012.

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

Borrowings from Financial Institutions – The fair value of borrowings from financial institutions are estimated using discounted cash flow analyses based on current incremental borrowing rates for similar types of borrowing arrangements. The discount rate is estimated Company management by using market rates which reflect the interest rate risk inherent in the notes.

Off-Balance Sheet Instruments – The fair value of loan commitments is based on fees currently charged to enter into similar agreements, taking into account the remaining term of the agreements and the counterparties' credit standing. The fair value of loan commitments is insignificant at March 31, 2013 and December 31, 2012.

Certain assets are measured at fair value on a nonrecurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents such assets carried on the balance sheet by caption and by level within the valuation hierarchy (dollars in thousands):

	Fair Value Measurements Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets at March 31, 2013:
Collateral dependent loans (net of allowance and discount)	$	-	$	-	$	6,613	$	6,613
Foreclosed assets		-		-		4,379		4,379
	$	-	$	-	$	10,992	$	10,992


Assets at December 31, 2012:
Collateral dependent loans (net of allowance and discount)	$	-	$	-	$	8,262	$	8,262
Foreclosed assets		-		-		2,914		2,914
	$	-	$	-	$	11,176	$	11,176

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

Real estate acquired through foreclosure or other proceedings (foreclosed assets) is initially recorded at fair value at the date of foreclosure less estimated costs of disposal, which establishes a new cost. After foreclosure, valuations are periodically performed and foreclosed assets held for sale are carried at the lower of cost or fair value, less estimated costs of disposal. The fair values of real properties initially are determined based on appraisals. In some cases, adjustments were made to the appraised values for various factors including age of the appraisal, age of comparables included in the appraisal, and known changes in the market or in the collateral. Subsequent valuations of the real properties are based on management estimates or on updated appraisals. Foreclosed assets are categorized under Level 3 when significant adjustments are made by management to appraised values based on unobservable inputs. Otherwise, foreclosed assets are categorized under Level 2 if their values are based solely on appraisals.

Assets	Fair Value	Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired Loans	$6,613	Discounted appraised value	Selling cost	10% (10%)
		Internal evaluations	Discount due to age of appraisal	0% - 5% (0.12%)

		Internal evaluations	Discount due to additional selling and management costs	0% - 10% (3.8%)
Foreclosed assets	$4,379	Discounted appraised value	Selling cost	10% - 15% (11.68%)
Foreclosed assets	$4,379	Internal evaluations	Discount due to market activity	0% - 19% (2.52%)

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

These forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that are subject to change based upon various factors (many of which are beyond our control). Such risks, uncertainties and other factors that could cause our financial performance to differ materially from the expectations expressed in such forward-looking statements include, but are not limited to, the risks set forth in our Annual Report on Form 10-K for the year ended December 31, 2012, as well as the following:

We were incorporated in 1991 as a credit union service organization and we invest in and originate mortgage loans made to evangelical churches, ministries, schools and colleges. Our loan investments are generally secured by a first mortgage lien on properties owned and occupied by evangelical churches, schools, colleges and ministries. We converted to a limited liability company form of organization on December 31, 2008.

	Three months ended March 31,						Comparison
	2013			2012			$ Difference			% Difference
Interest income:
Interest on loans	$	2,369		$	2,515		$	(146	)		(6%)
Interest on interest-bearing accounts		24			35			(11	)		(31%)
Total interest income		2,393			2,550			(157	)		(6%)
Interest expense:
Borrowings from financial institutions		645			691			(46	)		(7%)
Notes payable		532			624			(92	)		(15%)
Total interest expense		1,177			1,315			(138	)		(10%)
Net interest income		1,216			1,235			(19	)		(2%)
Provision for loan losses		8			104			(96	)		(92%)
Net interest income after provision for loan losses		1,208			1,131			77			7%
Non-interest income		20			16			4			25%
Non-interest expenses:
Salaries and benefits		571			458			113			25%
Marketing and promotion		21			36			(15	)		(42%)
Office operations		308			370			(62	)		(17%)
Foreclosed assets, net		(4	)		(17	)		13			(76%)
Legal and accounting		185			209			(24	)		(11%)
Total non-interest expenses		1,081			1,056			25			2%
Income before provision for income taxes		147			91			56			62%
Provision for income taxes		4			4			--			--%
Net income	$	143		$	87		$	56			64%

During the three months ended March 31, 2013, we reported net income of $143 thousand. Our profitability in the first quarter of 2013 is primarily attributable to lower borrowing rates on our borrowings from financial institutions and our notes payable as well as reductions in provisions for loan losses. The lower borrowing rates on our primary credit facilities are a result of a refinancing transaction the Company entered into with the NCUA in November 2011 that lowered the interest rates on $110 million of borrowings on our two credit facilities to 2.53%. While we took $8 thousand of provisions for loan losses in the first quarter of 2013, this represented a $96 thousand decrease from provisions taken in the quarter ended March 2012.

The decrease in our total interest income as compared to the prior year is due entirely to the decrease in the mortgage loan assets held in our loan portfolio. Our average interest-earning loans decreased from $153.1 million during the first quarter of 2012 to $146.1 million during the first quarter of 2013, a decrease of $7.0 million. Due to a lower average cash balance the Company held in interest bearing accounts as compared to the prior year, we received $11 thousand less in interest income from our money market accounts held with other institutions as compared to the three month period ended March 31, 2012.

Total interest expense decreased by $138 thousand from the first quarter of 2012 primarily because of the decrease in the average balance of borrowings from financial institutions from $109.8 million for the three months ended March 31, 2012 to $103.5 million for the three months ended March 31, 2013. This decrease is due to regular monthly principal payments the Company made on its borrowings as well as $2.8 million in additional principal payments the Company made over the last twelve months. Interest expense on notes payable decreased by $92 thousand due to the decline in our investor notes payable balances from $59.6 million at March 31, 2012 to $50.5 million at March 31, 2013.

The $9.1 million decline in the total amount of our investor notes outstanding at March 31, 2013, as compared to March 31, 2012, was primarily due to the Company discontinuing the sale of its Class A Notes by its officers and employees for a period of five months in 2012 until the Company received a no-objections letter from FINRA which permitted it to resume the sale of its Class A Notes. As a result of suitability standards imposed by FINRA and adopted by the Company in its Class A Notes Prospectus, the Company has experienced a decrease in the total amount of investor notes that are issued and outstanding at March 31, 2013. As the Company and its wholly-owned subsidiary, MP Securities, transitions the marketing and sale of its investor notes to MP Securities, the Company expects to increase its outstanding investor notes in 2013.

For the three month period ended March 31, 2013, net interest income was $1.21 million as compared to $1.23 million for the quarter ending on March 31, 2012, resulting in a $19 thousand net decrease in net interest income. Net interest income after provision for loan losses increased by $77 thousand for the quarter ended March 31, 2013 over the three months ended March 31, 2012. During the first quarter of 2012, we increased specific reserves on one of our collateral dependent loans which resulted in $104 thousand of provisions for loan losses. While we also increased specific reserves on one of our collateral dependent loans during the first quarter of 2013, the decrease in our gross loan portfolio led to a decrease in general reserves which offset these provisions. The decrease in provisions for loan losses overcame the slight decrease in net interest income to provide an increase in net interest income after provision for loan losses.

We had other income of $20 thousand in the first quarter of 2013 primarily due to $12 thousand in servicing fee income we earned on two loans participations we sold but on which we retained servicing rights. We also earned $5 thousand in concessions income from the sale of mutual funds by our wholly-owned broker dealer, MP Securities. As we did not earn any concessions income during the three months ended March 31, 2012, other income increased by $4 thousand from the prior year.

Our non-interest operating expenses for the three months ended March 31, 2013 increased by $25 thousand over the same period ended March 31, 2012, an increase of 2%. This increase is due almost entirely to a 25% increase in salaries and benefits expense. Since the end of March 2012, we have hired two additional employees to assist in the growth of our lending and note sales departments, increasing our total employees from 18 to 20. In addition, one employee was hired at the end of the first quarter in 2012. Our marketing expenses were decreased from the prior year, when we engaged in a marketing research project for which we spent $19 thousand during the first quarter of 2012. Office operations expenses decreased from the prior year mainly as a result of a $51 thousand in loan expenses in 2012 related to the management of our impaired loans. This is primarily related to a large decrease in expenses associated with the management of our loan portfolio. These expenses have declined mainly due to the decrease in impaired loans from the prior year, from $23.1 million to $16.9 million. These loans often require additional appraisals, insurance and other fees that we pay on the borrower’s behalf. Only $4 thousand in loan expenses were incurred during the first quarter of 2013. We also incurred a $24 thousand decrease in legal and accounting expenses, as a portion of the legal expenses we incurred during the first quarter of 2012 were related to the preparation for the beginning of operations for MP Securities.

Our earnings depend largely upon the difference between the income we receive from interest-earning assets, which consist principally of mortgage loan investments and interest-earning accounts with other financial institutions, and the interest paid on our debt securities and credit facility borrowings. This difference is net interest income. Net interest margin is net interest income expressed as a percentage of average total interest-earning assets.

The following table provides information, for the periods indicated, on the average amounts outstanding for the major categories of interest-earning assets and interest-bearing liabilities, the amount of interest earned or paid, the yields and rates on major categories of interest-earning assets and interest-bearing liabilities, and the net interest margin:

	Average Balances and Rates/Yields
	For the Three Months Ended March 31,
	(Dollars in Thousands)

	2013							2012
	Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate

Assets:
Interest-earning accounts with other financial institutions	$	10,458	$	24		0.94	%	$	12,894	$	35		1.09	%
Interest-earning loans [1]		146,055		2,369		6.58	%		153,143		2,515		6.60	%
Total interest-earning assets		156,513		2,393		6.20	%		166,037		2,550		6.18	%

Non-interest-earning assets		8,462		--		--			12,904		--		--
Total Assets		164,975		2,393		5.88	%		178,941		2,550		5.83	%

Liabilities:
Public offering notes – Class A		39,450		407		4.18	%		46,771		474		4.07	%
Public offering notes – Alpha Class		2,036		24		4.78	%		4,323		61		5.68	%
Special offering notes		9,314		99		4.29	%		7,721		87		4.53	%
International notes		327		3		3.61	%		191		2		4.57	%
Subordinated notes		13		*		4.28	%		6		*		5.45	%
Secured notes		56		*		2.49	%		--		--		--
Borrowings from financial institutions		103,496		644		2.53	%		109,811		691		2.53	%

Total interest-bearing liabilities	$	154,692	$	1,177		3.09	%	$	168,823	$	1,315		3.13	%

Net interest income			$	1,216						$	1,235
Net interest margin [2]						2.99	%						2.77	%

[1] Loans are net of deferred fees but gross of the allowance for loan losses
[2] Net interest margin is equal to net interest income as a percentage of average total assets. * Represents amounts less than $0.5 thousand.

Average interest-earning assets decreased to $156.5 million during the three months ended March 31, 2013, from $166.0 million during the same period in 2012, a decrease of $9.5 million or 6%. The average yield on these assets increased to 6.20% for the three months ended March 31, 2013 from 6.18% for the three months ended March 31, 2012. This average yield increase is related to the lower average balance in interest-earning accounts with other financial institutions. These assets earn less than 1% and they comprise a smaller portion of interest-earning assets compared to the prior year. Interest earning accounts held with other financial institutions decreased to $10.5 million at March 31, 2013 as compared to $12.9 million at March 31, 2012, a decrease of 19%.

The yield on interest-earning loans for the three months ended March 31, 2013 decreased to 6.58% from 6.60%. This is mainly the result of a decrease in the weighted average interest rate of the loan portfolio from 6.44% to 6.38%. Despite the decrease in loan yield and the decrease in rates on interest-earning accounts with other financial institutions, the lower relative balance of interest-earning accounts with other financial institutions as compared to total interest-earning assets led to a slight increase in yield on interest-earning assets. In addition, non-interest earning assets decreased from $12.9 million for the three months ended March 31, 2012 to $8.5 million at March 31, 2013. This decrease is a result of a decline in the average balance of collateral dependent loans from $14.4 million for the first quarter of 2012 to $9.1 million for the first quarter of 2013. Because of the decrease in non-interest earning assets, yield on assets increased from 5.83% for the three months ended March 31, 2012 to 5.88% for the three months ended March 31, 2013.

Average interest-bearing liabilities, consisting of notes payable and borrowings from financial institutions, decreased to $154.7 million during the three months ended March 31, 2013, from $168.8 million during the same period in 2012. The average rate paid on these liabilities decreased to 3.09% for the three months ended March 31, 2013, from 3.13% for the same period in 2012. This decrease is due primarily to a decrease in the rates paid on our special offering notes and our international notes, as older notes with higher interest rates matured and were replaced by notes with lower interest rates.

Rate/Volume Analysis of Net Interest Income

	Three months Ended March 31, 2013 vs. 2012
	Increase (Decrease) Due to Change in
	Volume			Rate			Total
	(Dollars in Thousands)

Increase (Decrease) in Interest Income:
Interest-earning account with other financial institutions	$	(6	)	$	(5	)	$	(11	)
Total loans		(177	)		31			(146	)
		(183	)		26			(157	)

Increase (Decrease) in Interest Expense:
Public offering notes – Class A		(75	)		8			(67	)
Public offering notes – Alpha Class		(28	)		(9	)		(37	)
Special offering notes		17			(5	)		12
International notes		1			--			1
Subordinated notes		--			--			--
Secured notes		--			--			--
Other		(39	)		(8	)		(47	)
		(124	)		(14	)		(138	)
Change in net interest income	$	(59	)	$	40		$	(19	)

							Comparison
Assets:	2013			2012			$ Difference			% Difference
	(Unaudited)			(Audited)
Cash	$	9,782		$	10,068		$	(286	)		(3	%)
Loans receivable, net of allowance for loan losses of $3,012 and $4,005 as of March 31, 2013 and December 31, 2012, respectively		147,931			152,428			(4,497	)		(3	%)
Accrued interest receivable		656			672			(16	)		(2	%)
Property and equipment, net		184			216			(32	)		(15	%)
Debt issuance costs		76			95			(19	)		(20	%)
Foreclosed assets		4,379			2,914			1,465			50	%
Other assets		403			252			151			60	%
Total assets	$	163,411		$	166,645		$	( 3,234	)		(2	%)
Liabilities and members’ equity
Liabilities:
Borrowings from financial institutions	$	102,657		$	103,833		$	(1,176	)		(1	%)
Notes payable		50,527			52,564			(2,037	)		(4	%)
Accrued interest payable		22			7			15			214	%
Other liabilities		598			693			(95	)		(14	%)
Total liabilities		153,804			157,097			(3,239	)		(2	%)
Members' Equity:
Series A preferred units		11,715			11,715			--			--
Class A common units		1,509			1,509			--			--
Accumulated deficit		(3,617	)		(3,676	)		59			2	%
Total members' equity		9,607			9,548			59			1	%
Total liabilities and members' equity	$	163,411		$	166,645		$	(3,234	)		(2	%)

General. Total assets decreased by $3.2 million, or 2%, between December 31, 2012 and March 31, 2013. This decrease was due to the payoff of several loans, as well as large principal paydowns made by borrowers on other loans we held. A portion of these proceeds were used to originate or purchase loans receivable, but $1.2 million was used to pay down our borrowings from financial institutions and $2.0 was used for notes payable that matured during the quarter. Our loans receivable, net of allowance for loan losses, decreased by $4.5 million, or 3%, over this period. Approximately $1.5 million of this decrease was due to the charge-off of two impaired loans as we entered into a Deed in Lieu of Foreclosure agreement with one of our borrowers.

During the three month period ended March 31, 2013, gross loans receivable decreased by $5.3 millon, or 3%. This decrease is due to the net paydown of $3.1 million of loan principal on our mortgage loan investments, which is a result of $6.6 million of loan principal paydowns offset by $875.0 thousand of loan purchases and $2.7 million of loan originations. The net paydown of loan principal is mainly a result of early pay-offs of existing loans and non-renewals of maturing loans. In many cases, these non-renewals occur because a loan has fallen outside of our lending policy and cannot be refinanced by us. Additionally, the loan balance on our total mortgage loan investments has decreased as we have transferred $1.5 million to foreclosed assets.

Our portfolio consists entirely of loans made to evangelical churches and ministries. Approximately 99.9% of these loans are secured by real estate, while one loan that represents less than 0.1% of our portfolio is unsecured. Our performing loan portfolio yielded a weighted average interest rate of 6.38% at March 31, 2013, and 6.43% at December 31, 2012.

Non-performing Assets. Non-performing assets consist of non-accrual loans, troubled debt restructurings, and four foreclosed assets, which are real estate properties. Non-accrual loans include any loan that becomes 90 days or more past due and any other loan where management assesses full collectability of principal and interest to be in question. Once a loan is put on non-accrual status, the balance of any accrued interest is immediately reversed. Loans past due 90 days or more will not return to accrual status until they become current. Troubled debt restructurings will not return to accrual status until they perform according to their modified payment terms without exception for at least six months.

Some non-accrual loans are considered collateral dependent. These are defined as loans where there is a significant possibility that repayment of principal will involve the sale or operation of collateral securing the loan. For collateral dependent loans, any payment of interest we receive is recorded against principal. As a result, interest income is not recognized until the loan is no longer considered impaired. For non-accrual loans that are not considered collateral dependent, we do not accrue interest income, but we recognize income on a cash basis. We had ten nonaccrual loans as of March 31, 2013, down from eleven at December 31, 2012. In June 2011, the Company completed foreclosure proceedings on a loan participation interest it acquired from ECCU. Prior to this foreclosure sale, we had never foreclosed on or taken a charge-off on a mortgage loan investment we acquired. Since that time, we acquired two properties in February 2012 in partial satisfaction of one of our mortgage loan investments, and we acquired one property in September 2012 and another in March 2013 pursuant to Deed in Lieu of Foreclosure Agreements we entered into with two of our borrowers.

Non-performing Assets
($ in thousands)

	March 31, 2013		December 31, 2012

Non-Performing Loans:1

Collateral Dependent:

Delinquencies over 90-Days	$	2,611	$	2,611
Troubled Debt Restructurings2		5,789		8,469

Total Collateral Dependent Loans		8,400		11,080

Non-Collateral Dependent:

Delinquencies over 90-Days		--		--
Other Impaired loans		--		--
Troubled Debt Restructurings		8,552		7,479

Total Non-Collateral Dependent Loans		8,552		7,479

Loans 90 Days past due and still accruing		--		--

Total Non-Performing Loans		16,952		18,559
Foreclosed Assets		4,379		2,914

Total Non-performing Assets	$	21,331	$	21,473

1 These loans are presented at the balance of unpaid principal less interest payments recorded against principal.
2 Includes $696 thousand and $814 thousand of restructured loans that were over 90 days delinquent as of March 31, 2013 and December 31, 2012, respectively.

At March 31, 2013, we had ten restructured loans that were on non-accrual status. One of these loans was over 90 days delinquent. In addition, we had one non-restructured loan that was over 90 days past due. We also had one restructured loan that has performed according to terms for twelve months and has been put on accrual status; however, it is still considered non-performing. As discussed in Note 3 of Item 1, Financial Statements, in May 2012 we sold two non-performing loans to a third party for $2.4 million. Both loans were considered collateral dependent. In September 2012, we executed a Deed in Lieu of Foreclosure Agreement with a borrower related to the collateral underlying an impaired loan and transferred the loan balance of $959 thousand into foreclosed assets. In March 2013, we executed another Deed in Lieu of Foreclosure Agreement with a borrower related to the collateral underlying two impaired loans and transferred the net loan balance of $1.5 million into foreclosed assets. As of March 31, 2013, we had five foreclosed properties valued at $4.4 million, net of a $136 thousand valuation allowance against two of the properties.

At December 31, 2012, we had eleven restructured loans that were on non-accrual status. One of these loans was over 90 days delinquent. We had one non-restructured loan that was over 90 days past due. As of December 31, 2012, we held four foreclosed real properties in the net amount of $2.9 million, net of a $136 thousand valuation allowance against two of the properties.

In addition, we include additional general reserves for our loans that are collateralized by a junior lien or that are unsecured. In order to more accurately determine the potential impact these factors have on our portfolio, we segregate our loans into pools based on risk rating when we perform our analysis. Risk factors are weighted differently depending upon the quality of the loans in the pool. In general, risk factors are given a higher weighting for lower quality loans, which results in greater general reserves related to these loans. We evaluate these factors on a quarterly basis to ensure that we have adequately addressed the risk inherent in our loan portfolio.

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

Finally, our allowance for loan losses includes reserves related to troubled debt restructurings. These reserves are calculated as the difference in the net present value of payment streams between a troubled debt restructuring at its modified terms as compared to its original terms, discounted at the original interest rate on the loan. These reserves are recorded at the time of the restructuring. The change in the present value of cash flows attributable to the passage of time is reported as interest income.

The process of providing adequate allowance for loan losses involves discretion on the part of management, and as such, losses may differ from current estimates. We have attempted to maintain the allowance at a level which compensates for losses that may arise from unknown conditions. At March 31, 2013 and December 31, 2012, the allowance for loan losses was $3.0 million and $4.0 million, respectively. This represented 2.0% of our gross loans receivable at March 31, 2013 and 2.5% of our gross loans receivable at December 31, 2012.

	Allowance for Loan Losses
	as of and for the
	Three months ended						Year Ended
	March 31,						December 31,
	2013			2012			2012
Balances:	($ in thousands)
Average total loans
outstanding during period	$	155,510		$	169,057		$	163,042
Total loans outstanding
at end of the period	$	152,051		$	167,829		$	157,396
Allowance for loan losses:
Balance at the beginning of period	$	4,005		$	4,127		$	4,127
Provision charged to expense		8			104			(9	)
Charge-offs
Wholly-Owned First		978			--			35
Wholly-Owned Junior		--			--			--
Participation First		--			12			12
Participation Junior		--			--			--
Total		978			12			47
Recoveries
Wholly-Owned First		--			--			--
Wholly-Owned Junior		--			--			--
Participation First		--			--			--
Participation Junior		--			--			--
Total		--			--			--
Net loan charge-offs
(recoveries)		978			12			47
Accretion of allowance related to restructured loans		23			13			66

Balance	$	3,012		$	4,206		$	4,005

Ratios:
Net loan charge-offs to average total loans		0.63	%		0.00	%		0.03	%
Provision for loan losses to average total loans1		0.01	%		0.06	%		0.00	%
Allowance for loan losses to total loans at the end of the period		1.98	%		2.51	%		2.54	%
Allowance for loan losses to non-performing loans		17.77	%		18.99	%		21.58	%
Net loan charge-offs to allowance for
loan losses at the end of the period		32.47	%		0.29	%		1.17	%
Net loan charge-offs to Provision for loan losses1		12225.00	%		11.54	%		(522.22	)%

Borrowings from Financial Institutions. At March 31, 2013, we had $102.7 million in borrowings from financial institutions. This is a decrease of $1.2 million from December 31, 2012. This decrease is the result of regular monthly payments made on both the MU Credit Facility and the Wescorp Credit Facility Extension, as well as $310.0 thousand of additional paydowns made to ensure compliance with the minimum collateralization ratio on these borrowings.

Notes Payable. Our investor notes payable consist of debt securities sold under several registered national offerings as well as notes sold in private placements. These investor notes had a balance of $50.5 million at March 31, 2013, which was a decrease of $2.0 million from December 31, 2012. While we are now able to sell Class A Notes through MP Securities, these note sales are subject to certain suitability requirements imposed by FINRA rules and terms of our Class A Notes Prospectus that restrict the ability of some of our current investors to renew or make investments in our Class A Notes. As a result of implementing these changes in our selling procedures, the balance of our Class A Notes has decreased by $1.4 million since December 31, 2012. In order to maintain our investor note sales, we have increased sales efforts for our special note offerings, secured investment certificates and have initiated a $40.0 million offering of our Series 1 Subordinated Capital Notes. In addition, through our wholly-owned broker dealer, MP Securities, we have begun to earn fee revenue by offering mutual funds to our investors.

Members’ Equity. Total members’ equity was $9.6 million at March 31, 2013, which represents an increase of $59 thousand from $9.5 million at December 31, 2012. Our $143 thousand in net income during the first three months of the year is offset partially by $84 thousand of expenses related to our Series A Preferred Units, which require quarterly dividend payments and a payment of 10% of our annual net income after dividends, for which we accrue quarterly. We did not repurchase or sell any ownership units during the three months ended March 31, 2013.

Maintenance of adequate liquidity requires that sufficient resources be available at all times to meet cash flow requirements of the Company. Desired liquidity may be achieved from both assets and liabilities. Cash, investments in interest-bearing time deposits in other financial institutions, maturing loans, payments of principal and interest on loans and potential loan sales are sources of asset liquidity. Sales of investor notes and access to credit lines also serve as sources of additional liquidity. The Company reviews its liquidity position on a regular basis based upon its current position and expected trends of loans and investor notes. Management believes that the Company maintains adequate sources of liquidity to meet its liquidity needs.

Historically, we have relied on the sale of our debt securities to finance our mortgage loan investments. We have increased our marketing efforts related to the sale of privately placed special offering notes and our 2012 Secured Investment Certificates pursuant to a Rule 506 offering and we believe that the sale of these notes will enable the Company to meet its liquidity needs for the near future. The Company filed a new Registration Statement with the SEC to register $75 million of its Class A Notes that was deemed effective as of October 11, 2012. We also filed a Loan and Standby Agent Agreement pursuant to a Rule 506 offering to sell $40.0 million of Subordinated Capital Notes. By offering the Class A Notes and privately placed Subordinated Capital Notes and Secured Investment Certificates under the Company’s Rule 506 offerings, the Company expects to increase its investment in mortgage loans and thereby generate increased interest income. We also plan on selling participations in a portion of those mortgage loan investments. The cash gained from these sales will be used to originate additional loan investments or to fund operating activities.

Historically, we have been successful in generating reinvestments by our debt security holders when the notes that they hold mature. During the three months ended March 31, 2013, our investors renewed their debt securities investments at a 38% rate. This rate was 80% during the first quarter of 2012 and has decreased primarily because of suitability requirements imposed on investors in our Class A Notes by FINRA rules and the terms of the Company’s Class A Notes Prospectus. We have initiated efforts to address the challenges imposed by FINRA’s suitability rules, by offering other securities products to our investors, locating new investors for our Class A Notes and expand the products and services that MP Securities will be able to offer to our investors.

The net decrease in cash during the three months ended March 31, 2013 was $286 thousand, as compared to a net increase of $1.4 million for the three months ended March 31, 2012, a decrease of $1.7 million. Net cash used by operating activities totaled $50 thousand for the three months ended March 31, 2013, as compared to net cash provided by operating activities of $120 thousand for the same period in 2012. This decrease in net cash provided by operating activities is attributable primarily to a decrease in net interest income, an increase in operating expenses and the paydown of other liabilities.

Net cash provided by investing activities totaled $3.1 million during the three months ended March 31, 2013, as compared to $2.4 million provided during the three months ended March 31, 2012, an increase in cash of $733 thousand. This increase is primarily related to the a decline in loans purchased. While we originated $2.6 million more in loans during the first quarter of 2013, we purchased $4.4 million fewer in loans as compared to the first quarter of 2012.

Net cash used by financing activities totaled $3.3 million for the three month period ended March 31, 2013, an increase in cash used of $2.3 million from $1.0 million used in financing activities during the three months ended March 31, 2012. This difference is primarily attributable to an increase in paydowns on our notes payable.

Our management, including our Chief Executive Officer and Chief Financial Officer, supervised and participated in an evaluation of our disclosure controls and procedures as of March 31, 2013. After evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) as of the end of the period covered by this quarterly report, our Chief Executive Officer and Chief Financial Officer have concluded that as of the evaluation date, our disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this quarterly report was being prepared.

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

Exhibit No.	Description of Exhibit

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)
31.2	Certification of Acting Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)
32.1	Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101*	The following information from Ministry Partners Investment Company, LLC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and three months ended March 31, 2013 and 2012; (ii) Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012; (iii) Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012; and (iv) Notes to Consolidated Financial Statements.
* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.

2014	$	3,417
2015		3,519
2016		3,602
2017		3,700
2018		3,795
Thereafter		84,624
	$	102,657

SEC Registered Public Offerings	Amount		Weighted Average Interest Rate
Class A Offering	$	39,100		4.20	%
National Alpha Offering		1,476		5.07	%
Private Offerings
Special Offering		9,360		4.75	%
Special Subordinated Notes		153		3.21	%
Secured Notes		56		2.49	%
International Offering		382		3.47	%

Total	$	50,527		4.32	%

2014	$	23,215
2015		10,295
2016		8,232
2017		5,537
2018		2,983
Thereafter		265
	$	50,527

	Contract Amount at:
	March 31, 2013		December 31, 2012
Undisbursed loans	$	18	$	425
Standby letter of credit	$	1,873	$	1,873

	Three months ended March 31, 2013			Year Ended December 31, 2012

Balance, beginning of period	$	4,005		$	4,127
Provisions for loan loss		8			(9	)
Chargeoffs		(978	)		(47	)
Accretion of allowance related to restrusctured loans		(23	)		(66	)

Balance, end of period	$	3,012		$	4,005

Loans on Nonaccrual Status (by class)
As of March 31, 2013

Church loans:
Wholly-Owned First	$	10,680
Wholly-Owned Junior		3,220
Participation First		2,831
Participation Junior		-

Total	$	16,731


	Allowance for Losses on Foreclosed Assets For the periods ended March 31 and December 31,
	2013		2012
Balance, beginning	$	136	$	--
Provision for losses		--		136
Charge-offs:		--		--
Recoveries		--		--
Balance, ending	$	136	$	136


	Foreclosed Asset Expenses For the three months ended March 31,
	2013			2012
Net loss (gain) on sale of real estate	$	--		$	--
Provision for losses		--			--
Operating expenses, net of rental income		(4	)		(17	)
Balance, end of period	$	(4	)	$	(17	)

		MINISTRY PARTNERS INVESTMENT
		COMPANY, LLC


	(Registrant)	By: /s/ Susan B. Reilly
		Susan B. Reilly,
		Chief Financial Officer