December 9, 2002
BGCT's church-bond unit will cease operations
___By Ken Camp
___Texas Baptist Communications
___The board of directors of Texas Baptist Financial Services, a bond company created to assist churches related to the Baptist General Convention of Texas, voted on Nov. 25 to cease operations of the not-for-profit corporation.
___"We are disappointed that it was necessary for Texas Baptist Financial Services to cease operations after six years of helping Baptist churches in Texas grow and expand through our church bond program," said Rogers Pope of Longview, chairman of the board. "The economy, record low interest rates, a changing banking environment and a reduced market for our services have necessitated this move."
___Texas Baptist Financial Services was created to provide Texas Baptist churches affordable fixed-rate permanent financing to buy land and build or renovate their facilities. In six years, the corporation helped 19 churches secure financing totaling more than $32 million.
___But fixed-rate permanent financing at 7 percent lost its appeal to churches when banks began offering below-prime rate loans, said Ivan Potter, president of Texas Baptist Financial Services.
___"Banks have become more lenient in their lending, seeking out church loans. They have an overabundance of cash, with money they are eager to lend," he said. "Rates have been so low so long that we couldn't compete. The timing was all wrong."
___The Baptist Church Loan Corp. provided an initial infusion of capital to start Texas Baptist Financial Services, with the understanding that the bond company would become a self-supporting entity.
___However, Texas Baptist Financial Services continued to need support from the loan corporation, along with some additional non-Cooperative Program funds made available through the BGCT.
___Texas Baptist Financial Services has no outstanding obligations, and assets that remain after dissolution will be turned over to the BGCT, Pope said. Ongoing relationships at the conclusion of a church bond program passes to trust companies, and all programs involving the corporation have been completed.
___Verne Hargrave Jr., a certified public accountant with the Pickens, Snodgrass and Koch Co., conducted audits of Texas Baptist Financial Services the last three years and will conduct a final audit to close out the books on the corporation.
___The accounting firm issued an "unqualified" and "clean" opinion each year, indicating that bookkeeping records of the corporation were in accordance with generally accepted accounting practices and there were no adverse opinions, he said.
___The only question ever raised was whether the corporation could "continue as a going concern," Hargrave said. "There were never any 'reportable conditions.' They just didn't have the revenue ... . It was economics, pure and simple."
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