In February, the Elders and Trustees learned of Roy and Sue Nichols’ bequest to Covenant of nearly $3M to pay down the outstanding building mortgage.   

The current loan balance is ~$3M at an interest rate of 3.65%.

A balloon payment of $2.6M is due at the end of the loan term – Dec. 2026.

• In addition to the option to pay down the mortgage immediately, given the very favorable interest rate climate, was there a path forward to both pay down the loan and take advantage of interest rates? 

A committee was formed to consider options and make recommendations to the Session.

The committee members were: Rebecca Boone, David Mann, Karen Lynn, Vicki Cape, Bob Ludwig, Roland Walker and David Kling.

• The committee recommended specific options to the Session focused on the strategy to invest the funds while rates are advantageous, paying off the mortgage balloon payment when it is due, and using the investment proceeds to finance a playground renovation to the glory of God and in honor of Roy and Sue Nichols. 

• During its deliberations of the committee’s recommended options, Session priorities were 1) safety of the funds, 2) liquidity to ensure loan payments are made on time, 3) paying off the loan balance by Dec. 2026, 4) making a sizeable return to honor the legacy of the Nichol’s Family with the playground renovation.

• In June, all 6 elders and the pastor arrived at unanimous consensus on the following investment strategy for the Nichols’ bequest:     

• $450K is in a Money Market (@ ~5.1%) at Covenant’s bank to pay the monthly mortgage payments
• $750K is in 3 CDs (@ ~5.3%) of $250K each at 3 different banks, fully insured by the FDIC
• The remaining ~ $1.8M is held in US Treasury Securities (@ ~4.7%)

US Treasury securities are secured by the Federal Government.

• The balloon payment of $2.6M will be paid off by December 2026
• This strategy was implemented at no cost to Covenant by our Eagle Creek investment advisor
• This strategy is expected to generate an estimated $150K in interest income for the playground renovation!

The Trustees are grateful for this meaningful bequest that moves Covenant’s mission forward!