Shepherd of the Lake Lutheran Church

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• Shepherd of the Lake Lutheran Church
• Financial State of the State
• January, 2009

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Its Time for SOLLC to Move Forward

• Missional focus on moving forward
• Stewardship focus that is year round
• Maintain and realign key staff for missional
  focus
• Greater effectiveness of membership gifts

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Agenda

• A financial look back at recent years
• A financial look forward to 2009
• The problems created from the past and the
  challenges ahead
• Potential options and solutions
• A few things to remember
• 2008 numbers are not final
• 2009 Budget is still very preliminary
• These numbers shown today will not exactly match
  what you will see at the annual meeting in two
  weeks.

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Looking Back - Offerings
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Looking Back - Expenses
2008 increased over 2007 due mainly to personnel
costs (increasing hours for part time people vs.
adding new people) of salary and benefits.
2008 is estimated
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Looking Back - Cash Flows
Since 2007, SOLLC has used 2 loans to borrow
721,000 to operate.
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Looking Forward - Pledges
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Looking Forward - Expenses

• Goal is to hold expenses flat in total. A
  challenge when utilities, health insurance and
  other costs have risen.
• Expenses are our biggest challenge BUT ALSO what
  we have the most control over. We may have to
  cut further as we go through 2009 if other
  assumptions in the model lag behind.
• Doing More with Less We need to retool and
  reengineer processes in 2009 (faster/better/smarte
  r/cheaper).
• Where can we cut costs while still maintaining or
  improving the quality of the ministry/mission?
• 2008 numbers are not final and 2009 budget
  numbers are very preliminary

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Looking Forward - Cash Flows

• For 2009, we are targeting a cash increase in
  giving of 150,000 (to about 2,060,000) based on
  preliminary pledge results.
• We expect to keep cash expenses at or below 2008
  levels.
• Based on these preliminary assumptions today,
  SOLLC is projected to borrow about 400,000 in
  2009 to finance its operations.

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Today
We are now forced to deal with problems created
from our past We have operating loans totally
721,000 that need to be paid back (some starting
in February 2009) while proactively working
towards managing and dealing with future
challenges. Working towards a balanced budget in
two years.
I
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SOLLC Has Options

• We are taking a strong look at every expense to
  see if it can be eliminated or delayed until a
  future date. We will take deeper cuts throughout
  the year, if deemed necessary.
• We are considering opportunities to increase
  revenue through giving, rental income,
  fundraisers or other means
• We are considering refinancing our mortgage and
  operating debt. Our banking relationships are
  strong and they have continued to reiterate their
  interest in working with us.
• We own land that has significant value. We will
  consider ways in which we can extract some of
  that value through a financial structure that
  meets the mission of all parties involved.

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Possible Solution

• We complete a refinancing with Thrivent (lender
  on our main mortgage) and borrow an additional
  700,000 (or more) above our current mortgage.
• Our monthly debt service costs would not
  materially change. In fact, we believe the new
  rate may be lower than the previously blended
  (mortgage and operating line) interest rates
  currently in place.
• These proceeds would pay off our operating loans
  of 721,000 and free up our land to potentially
  be used as collateral for future borrowing needs.
• This allows us to draw on a new line of credit
  with a banking partner on an as-needed basis over
  the next few years until our budget is balanced.

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Possible Solution

• Benefits
• Loan rates and terms with our banking partners
  are favorable due to strong relationships with
  these organizations.
• This would result in a new mortgage balance with
  Thrivent that is only about 250,000 larger than
  our original loan amount.
• We do not sell land at this time.
• Risks
• If we are unsuccessful in increasing giving and
  future borrowings materially exceed expectations,
  we will be forced to sell the land to pay off our
  lenders.

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This is your church

• We ask that you
• Continue to pray for the leadership of this
  church.
• Consider ways where you might personally impact
  the ministry and mission of SOLLC.
• Show up to the annual meeting, Sunday, January 25
  at 1230.
• Give as you are able.

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SOLLC Finance Committee

• Pastor Peter Strommen
• Sue Leibnitz
• Kermit Mahlum
• Patrice Sturm
• Jon Taxdahl
• Ken Unruh