# LCMS Convention Workbook_St. Louis Missouri_2023_S80
# Machine transcription, uncorrected — CHI Digital Archive (demonstration)

80

OFFICER, BOARD, AND COMMISSION REPORTS

LCEF achieved operating income totaling $2.1 million for the
period ending Dec. 31, 2022, a decrease from $3.5 million the prior
year. The decline is the result of a contraction in net interest income
as loans lag repricing to the increase in cost of funds. Net interest
income will improve going forward as annually adjustable loans reprice to the increase in the cost of funds. The operating income goal
for the end of the year is $5.4 million. Net loss for the period ended
Dec. 31, 2022, totaled $8.7 million compared to net income of $7.5
million the prior year. The decline is the result of unrealized losses
on the investment portfolio. The net income goal for the end of the
year is $9.5 million. LCEF’s capital ratio as of Dec. 31, 2022, was
10.51 percent compared to 12.62 percent a year ago. The capital-toasset goal for the end of the year is 10.91 percent.

The remedies included the following:
•

A total of 258 loans with an outstanding principal balance of
$400.3 million were approved for some form of relief

•

A total of $8.5 million in foregone principal and/or principal
and interest payments (P&I) due from the borrowers

•

30 COVID-19 lines of credit totaling $3.5 million

•

11 COVID-19 term loans totaling $695,000

As of June 30, 2021, all loans that requested and received partial
or total payment deferral have reached the expiration of the initial
period for which the relief was granted. The total outstanding balance of those loans was $400.3 million, with the following results:
•

A total of 186 loans totaling $244.3 million in outstanding
balances agreed to return to regular P&I payments.

•

A total of 72 loans totaling $156 million in outstanding balances requested extended relief for an additional 90 days.

Of the loans approved for extended relief beyond the initial 90day period, 47 loans totaling $91.5 million in outstanding balances
agreed to return to regular P&I payments, and 25 loans totaling
$64.5 million were unable to return to regular payments of P&I.

Loans
LCEF supported ministry expansion by closing over $1.4 billion
of loans over the past four years. LCEF continues to track loans in
three categories: congregation lending, national lending (institutions, agencies, and RSOs), and rostered church worker lending.
It should be noted that congregation lending, which is still strong,
continues to decline as an overall percentage of the portfolio.
For fiscal 2022, congregation lending totaled $896.1 million, or
64 percent, of the total loan portfolio. Ten years ago, congregation
lending accounted for 76 percent of the total loan portfolio. During the same period, national lending went from 14 percent of the
portfolio to over 25 percent, with over $352 million in total loans
at the end of 2022. Likewise, rostered church worker lending has
continued to balloon from 4 percent of the portfolio a decade ago
to now over 12 percent of the portfolio and over $174 million in
total loans.
After enjoying years of loan growth (2017–20), the pandemic brought tightening and a slowdown of lending for fiscal years
2021–22, as repayments significantly outpaced new lending. LCEF
is happy to report that that trend is quickly reversing as the church
is getting back to work expanding its footprint around the globe.

COVID Response and Support
Lessons learned following the 2008–09 financial crisis compelled LCEF to respond to the economic threats of the pandemic
quickly and proactively. The initial remedies made available to
LCEF borrowers included modification of existing loans to provide partial or total deferral of monthly payments, freeing up cash
resources for the borrower’s use to meet other obligations. In other
cases, LCEF made lines of credit or term notes available with expedited underwriting.
2023 Convention Workbook

The 25 loans needing support beyond the second round of relief
over the following months all returned to regular payments of P&I.
LCEF, its borrowers, and the church survived the pandemic with
little harm to ministry programs and finances. An initiative-taking
approach on the part of LCEF in reaching out to its borrowing base
coupled with efforts of the federal government to support payrolls
and the conservative nature of most LCMS ministries allowed the
church to move forward from the pandemic poised for continued
ministry in the future.

Strategic Plan
Prior to the pandemic, the LCEF Board of Directors was undertaking strategic conversations with the goal of moving LCEF
beyond the successes of the past. The board members believe they,
and the organization, have a role and responsibility to help grow the
church. The board believes that is accomplished through the objectives and duties of the church extension fund within the Synod. Yet
those “financial resources and related services” must never become
static and stagnant. LCEF must be dynamic and responsive to the
needs and opportunities before the church as it engages the world
with the Gospel. The strategic plan establishes a three-year vision:
Be the trusted partner in providing solutions that inspire ministry,
innovation, and growth.
The primary focus of the strategic plan is five three-year objectives and 24 initiatives that prioritize and establish the future
work and direction of LCEF. To ensure the future success of growth
initiatives that move LCEF beyond where we are today, we must
strengthen our core and prepare the organization for the innovation
and change required to successfully implement growth initiatives
that provide improved solutions, moving LCEF beyond our current
model to a place where we help grow the church through expanded
and improved “financial resources and related services.” That work
is underway.
The three-year objectives set the overall direction for the work
outlined in this plan. These five objectives receive prioritization
of resources and efforts as they enable us to achieve our strategic
and growth initiatives well beyond the duration of this plan. Each