Prospectus/Offering Circular

Reviewing the Southern District Church Extension Fund’s Prospectus/Offering Circular is an important step for anyone considering an investment with us. This document provides a comprehensive overview of our mission, financial products, and how your investment helps strengthen congregations across the Southern District LCMS. By examining our Prospectus/Offering Circular, you’ll gain detailed insights into how your funds are utilized to support church growth, the types of loans we offer to congregations, and the terms of our investment opportunities. Transparency is key to our mission, and this resource allows potential investors to make informed decisions with confidence.

PLEASE READ THE BELOW OFFERING CIRCULAR BEFORE INVESTING

WE ARE NOT F.D.I.C INSURED

• Prospectus/Offering Circular

Forward-Looking Statements

This Prospectus contains forward-looking information and statements. Such forward-looking information may be indicated by words such as “intends,” “will,” “may be,” “estimates,” “predicts,” “expects,” “believes,” or “anticipates.” Actual results could differ significantly from those described in the forward-looking statements as a result, in part, of the risk factors set forth in this Prospectus and for other reasons presently unknown.

The Legal Stuff –  APPLICATION OF PROCEEDS

The proceeds received or retained by the Fund upon the issuance of its investment obligations will be used, or continue to be used, whichever the case, for loans specified to District staff or member congregations for housing loans as well as planning and financing capital expansion projects, particularly the construction and/or remodeling of churches and other church facilities in Louisiana, Mississippi, Alabama, and the northwestern portion of Florida. While the fiscal soundness of the Fund is always the first priority, direct grants/financial assistance to member congregations and agencies may be made from profits. Such proceeds may be invested in interest-bearing obligations pending utilization and are not necessarily earmarked for any particular construction program. Such proceeds shall be available for the Fund’s construction/grant assistance programs. The projects listed below are planned over the next several years. However, funding of those projects is subject to the completion of the plan for each project and available resources:

Fund loans are interest-bearing loans secured by title, first mortgage, or, in specific instances, second mortgage or pledge/assignment of note for the property for which loans are advanced to congregations. Interest rates on these loans vary and are sometimes guided by rates prevailing in the commercial money markets.

FUNDS ASSIGNMENT PROCEDURE

As assets are invested in the Fund, the proper investor is credited, and conditions of the investment are noted. As approved building progresses, these funds are paid as designated by the authorities within the borrowing congregation. While the Fund may have borrowed the funds from the Lutheran Church Extension Fund and acknowledged it as its debt, the same funds are again loaned to the congregation, and the congregation acknowledges this as a debt to the Fund. This is a pass-through type of loan arrangement. Not all the required funds are sometimes borrowed from the Lutheran Church Extension Fund, so the source of a particular congregational loan comes from both the Lutheran Church Extension Fund and the Fund.

The investments solicited from congregations and their members are credited to the respective investor, and a detailed record is kept of transactions. These funds form part of the total resources of the Fund. As notes and debentures mature, the investor may renew them or withdraw the funds. The funds generated through gifts and returns on investments are used for operating expenses of the Fund and increasing the capital fund of the Fund.

APPLICATION FOR LOANS TO THE DISTRICT CHURCH EXTENSION FUND

When congregations evaluate their needs and find that they need funds for building a church or school, providing for rostered worker primary housing, major equipment, or capital improvement, they can apply to the Fund for a loan. They must present their growth, financial history, and their future potential. Their plan must be documented to support their request. If the Fund’s Board of Directors finds that the loan request is well thought out and worthy of its support, and if enough funds are available for lending, they will encourage the congregation to proceed with the loan. The money is paid out to the congregation against a maximum loan amount, as the Building Committee or the congregation calls for the money during the building process. Loans to congregations are generally amortized over a twenty-year period, with a balloon payment after 3 years. Security for major loans to congregations is usually a first mortgage on the church property and a first mortgage on the church for rostered workers’ primary housing loans.

Factors considered by the Board in determining eligibility for direct loans to congregations will include (1) the congregation’s outstanding indebtedness per member, (2) the loan amount requested compared to the value of the real property security, (3) prior and projected financial performance of the congregations, (4) the anticipated revenues available to the congregation compared to debt requirements and (5) the amount of contributions previously remitted to the Southern District of the Lutheran Church-Missouri Synod. In addition, the Board considers the status of the congregation’s program for providing investment support for the Fund. Investment support will be provided through new investments by members of the congregation in the Fund investment obligations. The Board has adopted an incentive plan whereby a congregation may request, in writing, a cash rebate on their loan. Rebates are based in accordance with the amount of investment support furnished by the members of a congregation compared to the balance of the loan as follows:

Upon request, a 1% cash rebate is provided supporting investments on a deposit equaling 100% of the balance of the loan for the prior 12 months, calculated monthly, and the loan is current for each of the 12 months preceding the request.

Requests to renew participation must be submitted annually. It is the Fund’s policy to require the normal protections afforded commercial lenders on loans to congregations, including the issuance of fire and extended coverage insurance. In 2023, the insurance on the properties securing two loans, including a loan to our Executive Director, became uninsured. One borrower has since obtained insurance and the property securing the loan to our Executive Director is expected to be sold shortly and the loan paid off. All loans to congregations made by the Fund are subject to the provision that if a congregation ceases to remain a member of the Southern District of the Lutheran Church-Missouri Synod, then the full unpaid balance of the loan, at the Fund’s option, shall become immediately due and payable.

UNCOLLECTIBLE LOAN RESERVE

We evaluate our loans for risk and collectability using a risk rating system based on objective operational and ministerial values as well as reputation factors in a risk value analysis. Past company history has shown that the default rate for loans has been low. The risk rating system applies a risk value analysis by various categories to each loan, which, in the aggregate, results in the reserve amount. For the year ended June 30, 2024, the Reserve for Uncollectible Loans amounted to $82,003.00. We have established a reserve in this amount for uncollectible loans.

BUSINESS CONTINUITY AND DISASTER RECOVERY

The Fund’s policy is to respond to a significant business disruption by safeguarding employees’ lives and the Fund’s property, making a financial and operational assessment, quickly recovering and resuming operations, protecting all of the Fund’s books and records, communicating effectively with our employees and clients, and allowing our clients to transact business.

Significant business disruptions can vary in their scope and severity. In a disruption, the Fund will transfer its operations to a local site when needed and to recover and resume business. In a disruption affecting the Fund’s business district, city, or region, the Fund will transfer its operations to a site outside of the affected area and recover and resume business.

All customer and critical electronic data is maintained on a remote server in a secure offsite location operated by a third-party vendor with redundant data facilities. We can access all of our data remotely. Original notes are maintained in a secure location. All data, hardware, and software necessary to restore the system are kept in a secure, offsite location.

Our policy is to implement procedures designed to ensure the protection of proprietary and nonpublic personal information stored on electronic systems and to protect the Fund in the event of a cybersecurity attack.

LITIGATION

At the present time, there are no suits, actions, or other legal proceedings or claims pending against the Fund. The Fund is proceeding forward in its continuing efforts to comply with the securities, insurance, and banking laws of the various states throughout the Southern District. These efforts include appropriate registration of its Investment certificates where required and compliance with other procedures for notification and/or disclosure. As a part of these efforts and by virtue of the requirements of these securities, insurance, and banking laws, it may become necessary in various states for the Fund to offer its investors the right to immediate return of their investment money. However, in the opinion of the management of the Fund, any such return of investment money, if any, will not materially affect the operation of the Fund or its ability to continue with the work that it has been performing.

LEGAL MATTERS

Legal matters in connection with the securities offered hereby will be passed upon for the Fund by Liskow & Lewis, Hancock Whitney Center, 701 Poydras Street, Suite 5000, New Orleans, Louisiana 70139.

INDEPENDENT AUDITORS

The audit report for the Fund has been prepared by Pepperman, Emboulas, Schwartz, and Todaro, Certified Public Accountants, 1815 Clearview Parkway, Metairie, Louisiana 70001.