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Frequently
Asked Questions |
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Questions
01. What are First Mortgage Church
Bonds?
02. What are the current interest
rates and maturities?
03. How long can money be invested
in a Church Bond?
04. When is the amount invested
paid back to the bondholder?
05. How is the interest paid?
06. Is the interest earned on
Church Bonds taxable?
07. How do interest yields on
Church Bonds compare to yields associated with other fixed income
investments?
08. How is my investment secured?
09. What criteria are used in
approving a Church Bond issue?
10. In what amounts can Church
Bonds be purchased?
11. Can I invest in Church Bonds
in my Individual Retirement Account (IRA)?
12. How does a Church repay
principal and interest on its bond issue?
13. Can the Church call the
bonds before maturity?
14. What is “Book Entry”
form of registration?
15. What happens when the Church
Bond matures or is called in early and prepaid?
16. Which Church denominations
issue Church Bonds?
17. Does an investor pay a commission
when purchasing a Church Bond?
18. Can I sell my Church Bond?
19. Are Church Bonds rated?
20. Are there any risks associated
with investing in Church Bonds?
21. Where
can Church Bonds be purchased?
Answers
01. What are First Mortgage Church Bonds?
First Mortgage Church Bonds constitute a promise to pay principal
and interest payments at a specified interest rate for a specific
period of time, and are secured by a First Mortgage lien on the
property of the issuing Church.
02. What are the current interest rates
and maturities?
Currently, Church Bonds underwritten by Great Nation offer an interest
rate of 4.75% for six-month maturities to 8.75% for ten- to twenty-year
maturities.
03. How long can money be invested in a
Church Bond?
Most Church Bond issues are established with serial maturities.
With a serial maturity, the issuer, in this case the Church, will
make periodic principal and interest payments over the life of the
bond issue. In most cases, bond maturities range in six-month periods
from six months to twenty years.
04. When is the amount invested paid back
to the bondholder?
Usually, the amount invested is paid back to the bondholder at the
stated maturity date. However, the bond may be called and prepaid,
or paid off early, by the Church prior to the maturity date. At
that time the bondholder receives the entire principal amount originally
invested, plus interest accrued up to the call date.
05. How is the interest paid?
With Simple Interest Bonds, an independent Corporate Trustee and
Paying Agent, or “Trustee” issues the bondholder a check
every three months. With Compound Interest Bonds, the interest is
computed, or “compounded” each six months, and added
to the principal value of the bond and paid to the investor at maturity
or when the bond is called and prepaid, whichever occurs first.
06. Is the interest earned on Church Bonds
taxable?
Yes, interest earned on Church Bonds is taxable as interest income,
like a Certificate of Deposit (CD) or a Corporate Bond. The Trustee
issues a 1099 to the bondholder each year.
07. How do interest yields on Church Bonds
compare to yields associated with
other fixed income investments?
Generally, but not always, Church Bond interest yields are higher
than those yields associated with other types of bonds or returns
on traditional savings instruments such as money market funds or
CDs.
08. How is my investment secured?
First Mortgage Church Bonds are secured by a First Mortgage lien
on the Church property. More detailed information concerning security
for the payment of bonds and risk factors are contained in the prospectus.
09. What criteria are used in approving
a Church Bond issue?
Through many years of experience, and literally hundreds of Church
Bond issues, Great Nation has developed what we believe to be conservative
requirements for a sound Church Bond issue. We use criteria such
as, and certainly not limited to, minimum per-member giving ratios,
past history of growth, and a favorable percentage of Church equity
to proposed debt. Great Nation also utilizes a proprietary state-of–the-art
computer model unparalleled in the Church Bond industry, in order
to calculate and analyze various financial ratios and cash flows
to obtain an accurate picture of an individual Church’s financial
health prior to underwriting a Church Bond issue.
10. In what amounts can Church Bonds be
purchased?
Most bonds are normally available in multiples of $250.
11. Can I invest in Church Bonds in my
Individual Retirement Account (IRA)?
Yes, you can invest in Church Bonds in an IRA. IRA rollovers are
accepted, in most cases.
12. How does a Church repay principal
and interest on its bond issue?
Churches deposit a portion of its weekly or monthly income into
its sinking fund account with the Trustee. This account is established
to ensure an orderly payment of principal and interest to the bondholders.
The Church is under contract, made in advance of the bond issue,
that payment of principal and interest on its bond issue will be
made prior to other operating expenses being paid.
13. Can the Church call the bonds before
maturity?
Yes, the Church may call and prepay, or pay the bonds off early,
prior to maturity. However, it is under no obligation to do so.
14. What is “Book Entry” form
of registration?
Most bonds are purchased in “Book Entry” form of registration
in order to relieve the bondholder from the responsibility of holding
the registered bond certificate. Principal and interest payments
are automatically sent to the bondholder by the Trustee. However,
a bondholder may elect to have the bond held in “Certificate”
or “Registered Form.” However, the bondholder must return
the Registered bond certificate to the Trustee prior to having their
original investment returned to them. Most bondholders elect the
“Book Entry” form of registration.
15. What happens when the Church Bond
matures or is called in early and
prepaid?
At maturity, Book Entry bonds will automatically be paid to the
bondholder. Registered or Certificate bonds must be presented, usually
by mail, to the Trustee. At that time, the Trustee Bank will remit
a check to the registered owner of the bond for the face value of
the bond plus any interest due. The Trustee notifies the registered
bond owner in advance of the bonds being called in early and prepaid.
16. Which Church denominations issue Church
Bonds?
Great Nation will only underwrite a bond issue for Churches dedicated
to strengthening the moral foundation of America, and promoting
Christian spiritual principles. Once this is determined, the Church’s
credit quality determines which bond issues are underwritten and
offered to our investors.
17. Does an investor pay a commission
when purchasing a Church Bond?
The investor pays no commission when purchasing Church Bonds. Therefore,
100% of an investor’s money goes to work immediately upon
purchasing a bond. Great Nation is paid an underwriting fee by the
issuing Church.
18. Can I sell my Church Bond?
Neither the Church nor the Trustee is under any obligation to retire
a bond prior to its stated maturity date. Therefore, a formal secondary
market does not exist. However, Great Nation may act a broker, matching
buyers with sellers, and receives a commission for completing the
transaction.
19. Are Church Bonds rated?
Due to the issue amount of most of Great Nation’s underwritings,
it is not cost-justified for the Church to incur the expense of
a rating service such as Moody’s or Standard & Poors.
Non-rated securities are not appropriate for all investors. However,
the lack of a rating generally translates into a more attractive
yield for those investors who are comfortable purchasing non-rated
securities.
20. Are there any risks associated with
investing in Church Bonds?
As with any debt security, the possibility always exists that an
issuer, in this case a Church, might encounter financial difficulties.
In the event that the Church fails to make timely principal and
or interest payments, the Trustee if necessary, could foreclose
and sell the mortgaged Church facilities in order to satisfy the
mortgage debt. Church property is a “special use” facility,
therefore there can be no assurance that the Trustee could sell
the property at a price sufficient to recover the bondholder’s
entire investment. In order to understand these and other risks
associated with investing in Church Bonds, please review the prospectus
completely before investing or sending money. Church Bonds are not
deposits or obligations of any bank, are not guaranteed by any bank,
and are not insured by the FDIC or any other government agency.
As always, remember that past performance is no guarantee of future
results. Church Bonds are sold by prospectus only, subject to availability.
21. Where can Church Bonds be purchased?
Church Bonds underwritten by Great Nation can be purchased by giving
me a call at 1-800-468-3007, or in the Little Rock/Benton area at
316-3100. I am ready to assist you with any of your investment decisions.
As always, orders to buy Church Bonds or any other security are
not solicited and will not be accepted in any state where sales
are not authorized or permitted.
Get
Started Now!
If you have questions at any time, please don't
hesitate to contact us at:
GREAT NATION INVESTMENT
CORPORATION
Attn: Martin Northern Vice President and
Branch Manager
P. O. Box 1302
Benton, AR 72018-1302
Phone: (501) 316-3100 * (800) 468-3007
Fax: (501) 316-3110
Email: martin@martinnorthern.com
Great Nation is right for you! Our
professionals are standing by ready to serve. Meanwhile, we look
forward to becoming your financial partner in growing God's Kingdom…one
Church at a time…
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