FORM 10-K
Securities and Exchange Commission
Washington, D. C. 20549
Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Year Ended Commission File Numbers:
December 31, 1995 2-97573; 33-12626;
and 33-19023
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1294217
(State or other Jurisdiction (I.R.S. Employer
of incorporation) Identification number)
823 East Main Street
P. O. Box 1854
Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(804) 775-7904
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past ninety (90) days.
Yes X No
Aggregate market value of voting stock held by non-affiliates of the
registrant as of March 1, 1996:
NONE
Number of shares of common stock outstanding as of March 1, 1996:
Class A: 730 shares
Class B:1,665 shares
<PAGE>
PART I
Item 1. Business
National Mortgage Acceptance Corporation ("NMAC"), was incorporated
under the laws of the Commonwealth of Virginia on October 19, 1984, as a
imited purpose finance corporation under the name "Thrift Financing
Corporation". NMAC adopted its present name in 1989. NMAC maintains its
principal executive offices at 823 East Main Street, Richmond, Virginia
23219, and its telephone number is (804) 775-7904.
Under its Restated and Amended Articles of Incorporation, NMAC's
business is limited to issuing bonds ("Bonds") principally secured by, or
with interests in, "Mortgage Collateral." Mortgage Collateral may include
mortgage loans and deed of trust loans secured by real estate and
certificates evidencing interests in pools of such mortgage and/or deed of
trust loans, which certificates may be issued or guaranteed by the
Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, and/or private
issuers. NMAC may lend the proceeds from the sale of its Bonds to
participating borrowers pursuant to loan or funding agreements through
which NMAC will obtain pledges of Mortgage Collateral to secure a related
series of Bonds. NMAC also may use the proceeds from the sale of its
Bonds to acquire Mortgage Collateral pledged to secure a series of its
Bonds. NMAC's activities in connection with such transactions may include
holding, transferring, assigning, pledging, financing, refinancing and
otherwise dealing with mortgage loans and mortgage certificates and any
activities incident to or necessary or convenient to accomplish the
foregoing purposes.
Each series of NMAC's Bonds is secured by collateral consisting
primarily of (1) Mortgage Collateral owned by NMAC and pledged to secure
that series of Bonds, (2) funding agreements with participating borrowers,
which funding agreements are secured by Mortgage Collateral, (3) a
combination of such Mortgage Collateral and funding agreements, and/or
(4) amounts deposited in the various funds and accounts created for such
series of NMAC's Bonds and investments made with such funds. Collateral for
each series of NMAC's bonds is pledged and assigned by NMAC to a trustee
on behalf of the holders of the Bonds of such series and, except for certain
insurance policies (or deposits partially or entirely in lieu of such
insurance policies), collateral for a particular series of Bonds will not
be available for payment of Bonds of any other series or for payment of any
other liabilities of NMAC. Funds held by the trustee with respect to each
series of Bonds are restricted so as to assure the payment of principal and
interest on the Bonds of such series to the extent of such funds.
With respect to any one or more series of its Bonds, NMAC may cause
an election to be filed under the Internal Revenue Code of 1986, as amended
(the "Code"), to have the segregated asset pool comprising the trust estate
for such series of Bonds treated as a real estate mortgage investment conduit
("REMIC") as defined in the Code (each such series, a "REMIC Series").
If a REMIC election is to be made with respect to the trust estate for a
series of NMAC's Bonds, the Bonds of such REMIC Series will be treated as
"regular interests" in a REMIC, as such term is defined in the Code. In
connection with one or more REMIC Series, NMAC expects that it will sell all
or substantially all of the "residual interest," as such term is defined in
the Code, in such REMIC Series to entities engaged, directly or through their
owners or affiliates, in mortgage funding, financing or origination activities.
<PAGE>
Each series of NMAC's Bonds is to be secured by separate
collateral that does not serve as security for any other series of NMAC's
Bonds. The collateral pledged to the trustee securing a series of NMAC's
Bonds is projected to produce cash flow sufficient, together with
reinvestment income thereon at an assumed annual rate and assuming timely
payment to the trustee of distributions on the Mortgage Collateral for such
series, to make principal and interest payments required to be made on the
outstanding Bonds of that series. With respect to any REMIC Series of
NMAC's Bonds, the sale by NMAC of the "residual interest" in the trust
estate for such REMIC Series will constitute a sale by NMAC of the economic
benefit of the amounts remaining in the trust estate for such REMIC Series
after payments of the Bonds of the related REMIC Series. Such amounts
will be paid to the purchasers of the residual interest of such REMIC
Series, and will not be available to creditors of NMAC or available to pay
other liabilities or obligations of NMAC.
NMAC has no salaried employees and has entered into management and
administrative services agreements with Craigie Incorporated ("Craigie", an
affiliated company), pursuant to which Craigie provides NMAC with
administrative, accounting and clerical services, office space and the use
of the registered service mark "TIMCO" for NMAC's Bonds. NMAC also enters
into management agreements with non-affiliates with respect to certain
services to be provided by NMAC with respect to REMIC Series of its Bonds.
Information as of December 31, 1995 with respect to NMAC's outstanding
bonds is included in Notes 5 and 6 of NMAC's financial statements included
herein.
Item 2. Properties
NMAC has no material physical properties.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
On January 19, 1996 in lieu of an annual meeting, a Consent Agreement
was used as a proxy to elect to NMAC's Board of Directors Allen Mead
Ferguson, John Thomas West, IV, George B. Pugh, Jr., John W. Wright and
Merlin T. Grim.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters
There is no market for NMAC common stock. All outstanding common
stock of NMAC is owned by Craigie and by the service corporation
subsidiaries of what were originally nine savings and loan associations
and savings banks. As of December 31, 1995, four of the nine savings and
loan associations and savings banks are believed to be under the managment
of Federal Banking Regulators. There has been no transfer of common stock
ownership and no dividends were paid with respect to NMAC common stock in
1995 or 1994.
Item 6. Selected Financial Data
The following data are for the fiscal years ended December 31, 1995,
December 31, 1994, December 31, 1993, December 31, 1992, and December 31,
1991.
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Statement of Operations
Revenues $3,339,636 $4,542,830 $6,853,559 $9,951,755 $12,620,093
Net Income (Loss) 12,404 (11,568) (426) (1,841) 1,537
Earnings (Loss)
Per Share 5.18 (4.83) (.18) (.77) .64
Balance Sheet
Total Assets 23,533,660 40,102,184 62,051,403 91,795,124 127,556,145
Receivables
Pursuant to
Funding
Agreements 21,242,798 37,378,026 58,480,390 87,186,100 121,958,951
Bonds Payable* 21,242,798 37,462,181 58,557,003 88,968,278 123,557,346
*Does not include Series B and Series D Bonds which are REMIC Series of
NMAC's Bonds. As of December 31, 1995, the outstanding Series B and
Series D aggregated $92,811,767. See part II, Item 7, of this Report on
Form 10-K.
</TABLE>
<TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation
NMAC was organized to facilitate the financing of long-term mortgage
loans
through issuance of its mortgage collateralized obligations. Such
financing is facilitated by NMAC entering into funding agreements secured
by Mortgage Collateral with participating borrowers and/or by NMAC
acquiring Mortgage Collateral and pledging the mortgage collateralized
funding agreements, directly owned Mortgage Collateral and/or a
combination thereof to secure its Bonds. NMAC does not have, and is not
expected to have, any significant assets other than assets pledged to
secure a specific series of its Bonds. Furthermore, to the extent NMAC
sells the "residual interest" in a REMIC Series of its Bonds, NMAC will
have sold, and will have no further interest in, the economic benefit of
the difference between the payments received on the collateral (i.e., trust
estate) for such REMIC Series of its Bonds, including reinvestment earnings
thereon, and the debt service on such REMIC Series of its Bonds.
<PAGE>
Revenues for 1995, 1994, 1993, 1992, and 1991 consist primarily of
(i) interest on loans receivable under funding agreements between NMAC
and participating borrowers for the registrant's Series 1985-A Bonds and
Series C Bonds, and (ii) administrative fees paid to NMAC with respect to
its outstanding Series 1985-A, B, C and D Bonds. The Series C Bonds were
retired in 1995. Future revenues are expected to be provided from interest
payments on funding agreements for the Series 1985-A and any subsequent
series of NMAC's Bonds, from Mortgage Collateral acquired by NMAC and
pledged to secure any subsequent series of NMAC's Bonds, and from
administrative fees relating to REMIC Series of NMAC's Bonds.
Costs and expenses incurred by NMAC during each period result primarily
from interest payable on its Series 1985-A and Series C Bonds, expenses
with respect to developing financing programs, and expenses incurred in
connection with administering outstanding Series of its Bonds. Such costs
and expenses incurred in any period, including those for any future period,
depend primarily upon the amount of NMAC's Bonds issued and outstanding
during any such period and the interest rate payable on such Bonds. NMAC
receives, from the participating borrowers in its Series A and C Bonds and
the residual interest holders with respect to its Series B and D Bonds,
administration payments and fees which have been equal to, less than or in
excess of the costs incurred by NMAC in administering such outstanding
series of Bonds. Such fees and payments received by NMAC are expected to
continue to adequately provide for the costs incurred by NMAC in
administering such Bonds on a current basis, thereby not impacting upon N
NMAC's need for liquidity in the short or long term.
With respect to NMAC's Series B and Series D Bonds, NMAC caused an
election to be made under the Code to have the trust estate for such Bonds
taxed as a REMIC, in which the Series B Bonds and Series D Bonds, as the
case may be, are "regular interests", as defined in the Code. Other than
its ongoing fees for administration of the Series B and Series D Bond
REMICs, NMAC has no future economic benefit in the segregated asset pools
comprising the Series B and Series D REMICs. The "residual interest" in each of
these series was sold by NMAC for
cash. Accordingly, neither the collateral for these REMIC Series nor the
related
Bonds are recorded as assets or liabilities, respectively, of NMAC.
The interest
income on the collateral for, and the related interest expense on, the Series B
and
Series D Bonds will be recorded only within the related REMIC and will have no
impact on NMAC's financial statements. Cash flow from the Mortgage Collateral
for NMAC's Series B and Series D Bonds is anticipated to continue to provide
cash sufficient to make required payments thereon.
Interest on NMAC's outstanding Series 1985-A and Series C Bonds was the
major source of cost and expenses for the year ended December 31, 1995, 1994,
1993, and 1992. Cash flow from payments of the loans receivable securing the
Series 1985-A Bonds is anticipated to continue to provide cash sufficient to
make
all required payments on the Series 1985-A. Consequently, NMAC anticipates
that it will have no additional cash requirements with respect to any of its
outstanding Bonds. Future net income of NMAC is expected to vary in direct
relation to the issuance of one or more series of its Bonds in a given year.
With respect to future series of NMAC's Bonds secured by funding
agreements, the participating borrowers will be obligated to pay costs of
issuance with respect to the related series of Bonds and to pay ongoing Bond
administration expenses with respect to the related series of NMAC's Bonds,
including ongoing fees to NMAC for services rendered by NMAC in connection
with the related series of Bonds. With respect to future REMIC Series of
Bonds issued by NMAC, purchasers of the "residual interest" in each such
REMIC Series will be obligated to pay administration expenses rendered under
the related residual interest agreements. The purchase price of such
residual interests is expected to be sufficient to pay costs of issuance
of such REMIC Series with respect to outstanding and future series of
NMAC's Bonds not paid from Bond proceeds. NMAC believes that payments on
the collateral securing each series of its Bonds, whether now outstanding
or to be issued in the future, will be sufficient to meet all required
payments of principal and interest on each such series of Bonds.
Furthermore, fees paid to NMAC by participating borrowers and by purchasers
of the "residual interest" in a REMIC Series of NMAC's Bonds, together with
NMAC's interest in any Mortgage Collateral owned by it and pledged to
secure a series of Bonds are expected to be sufficient to provide for all
ongoing costs and expenses. NMAC therefore anticipates that it will have
no additional
<PAGE>
cash or liquidity requirements with respect to its obligations under any
outstanding series of its Bonds in either the short or long term. NMAC
also anticipates that the debt service requirements for any additional
series of its Bonds will be satisfied by the collateral securing such
series of Bonds.
To provide for administration and other management support, NMAC has
entered into agreements with Craigie and others. Payments under these
agreements are not expected to exceed the amounts received by NMAC as
ongoing fees paid to it by participating borrowers under their funding
agreements and/or purchasers of the residual interest in any REMIC Series
of NMAC's Bonds.
NMAC has established a Series 1985-A Working Capital Reserve, which
reserve is funded by Series 1985-A participating borrowers from amounts
otherwise distributable to them under the terms of their funding
agreements. The Series 1985-A Working Capital Reserve is available solely
to pay any fees, charges, taxes, assessments, impositions or other
expenses of NMAC, other than Bond administration expenses of NMAC, in
connection with the Series 1985-A Bonds or related funding agreements.
NMAC is empowered, in its sole discretion, to expend amounts on behalf of,
and release amounts to, the Series 1985-A participating borrowers from this
working capital reserve. The Series 1985-A Working Capital Reserve is not
available to pay expenses of NMAC or claims other than with respect to the
Series 1985-A Bonds, is not pledged to secure the Series 1985-A Bonds and
will not be pledged to secure any other series of NMAC's Bonds. NMAC does
not anticipate establishing working capital reserves with respect to
future series of its Bonds.
As of December 31, 1995, NMAC's assets were $23,533,660, including
$243,878 in unrestricted cashand marketable securities. This balance, plus
interest earnings from the investment thereof, is available to pay NMAC's
annual operating expenses, and, if and to the extent necessary, amounts
in connection with the outstanding Bonds of NMAC.
Item 8. Financial Statements and Supplementary Data
The response to this item is submitted in Appendix A.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The persons set forth below are the directors and executive officers of
NMAC as of December 31, 1995:
Current
Name Age Title
John Thomas West, IV 49 Secretary, Treasurer and Director
George B. Pugh, Jr. 46 Director
John W. Wright 46 Director and Vice President
Merlin T. Grim 40 Director
Randall B. Saufley 34 Vice President
Allen Mead Ferguson, 58, elected Director in 1989, President in 1989
and was elected Chief Executive Officer of Craigie Incorporated in 1995,
and was formerly Chief Operating Officer since 1989 and Executive Vice
President since 1980.
John Thomas West, IV, 49, Secretary, Treasurer and Director since 1984,
was elected Executive Vice President in 1990, has been Secretary since
1974, and was formerly Senior Vice President since 1984, of Craigie
Incorporated.
George B. Pugh, Jr., 49, a Director since 1984, has been Executive Vice
President and Managing Director of Craigie Incorporated since 1980.
John W. Wright, 46, elected Director in 1989 and Vice President since
1984, was elected Senior Vice President of Craigie Incorporated in 1992,
and was formerly Vice President since 1984. Mr. Wright formerly served as
Vice President of Investors Mortgage Insurance Company, Boston,
Massachusetts.
Merlin T. Grim, 40, elected Director in 1995 was elected Senior Vice
President of Craigie Incorporated in 1993.
Randall B. Saufley, 34, elected Vice President in 1995, was elected
Vice President of Craigie Incorporated in 1994.
All of the foregoing directors of NMAC, were reelected at the annual meeting
of the shareholders and officers at the Board of Directors meeting,
held as of January 19, 1996, to serve until their successors are elected
and shall qualify.
<PAGE>
Item 11. Executive Compensation
NMAC has no salaried employees and does not compensate its directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management
NMAC has two Classes of its Common Stock. NMAC's Class A and Class B
Common Stock are identical except that Class A Common Stock is voting but
not entitled to dividends and Class B Common Stock is non-voting but has
the right to receive dividends.
The following table sets forth certain information regarding the
beneficial ownership of each class of NMAC's Common Stock by each entity
that owns 5% or more of such Common Stock:
<PAGE>
Class of Stock,
Amount of Name and Address
Name and Address Beneficial Ownership of Affiliated
of Beneficial Owner and Percent of Class(1) Financial Institution(1)
Class A % Class B %
Craigie Incorporated 370 50.5 333 20.0 --
Richmond, Virginia
Colonial Service Corp. 40 5.5 148 8.9 Atlantic Permanent
Norfolk, Virginia Federal Savings Bank, F.S.B.
Norfolk, Virginia
(See Note (2))
Jefferson Funding 40 5.5 148 8.9 Jefferson Savings and
Corporation Loan Association
Warrenton, Virginia Warrenton, Virginia
(See Note (5))
Investors Svc. Corp. 40 5.5 148 8.9 Investors Savings Bank
Richmond, Virginia Richmond, Virginia
(See Note (2))
Pioneer Fin. Svc. Inc. 40 5.5 148 8.9 Pioneer Federal
Richmond, Virginia Savings and Loan
Association
Hopewell, Virginia
(See Note (4))
Roanoke Valley Service 40 5.5 148 8.9 CorEast Federal
Corporation Savings Bank, F.S.B.
Roanoke, Virginia Roanoke, Virginia
(See Note (2))
Security Financial Svc. 40 5.5 148 8.9 Security Federal
Corporation Savings and Loan
Richmond, Virginia Association
Richmond,Virginia
(See Note (2))
<PAGE>
Class of Stock,
Amount of Name and Address
Name and Address Beneficial Ownership of Affiliated
of Beneficial Owner and Percent of Class(1) Financial Institution(1)
Class A % Class B %
Southern Service Corp. 40 5.5 148 8.9 Virginia Federal
Richmond, Virginia Savings and Loan
Association
Richmond, Virginia
(See Note (3))
Southside Service Corp. 40 5.5 148 8.9 Virginia First
Petersburg, Virginia Savings Bank, F.S.B.
Petersburg, Virginia
The First Colony Svc. 40 5.5 148 8.9 Life Federal Savings
Corporation Bank, F.S.B.
Norfolk, Virginia Norfolk, Virginia
_______________
NOTES:
(1) None of the financial institutions are affiliates of each other, and
none insures or guarantees payment of principal or interest on NMAC's
Bonds, any funding agreement or any Mortgage Collateral.
(2) To the best of knowledge this institution is now under the management
of Federal Banking Regulators.
(3) In December, 1988 the Virginia Federal Savings and Loan Association was
purchased by MNC Financial Corporation of Baltimore, Maryland and
subsequently purchased by Crestar Bank, Richmond, Virginia.
(4) In August, 1994, Pioneer Federal Savings and Loan was purchased by
Signet Banking Corporation, Richmond, Virginia.
(5) In January, 1995, Jefferson Savings & Loan Association was purchased by
Crestar Bank, Richmond, Virginia.
Item 13. Certain Relationships and Related Transactions
During the year ended December 31, 1995, NMAC incurred general and
administrative expenses in connection with the management agreements
described in Item 1 with Craigie Incorporated amounting to $40,000.
Directors Allen Mead Ferguson, John Thomas West, IV, George B.Pugh, Jr.,
John W. Wright, and Merlin T. Grim of NMAC are all shareholders and
officers of Craigie Incorporated.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1)(2) The response to this portion of Item 14 is submitted in
Appendix A.
(3) See Exhibit Index immediately preceding Exhibits.
(b) No reports on Form 8-K were filed during the last quarter of the
fiscal year ended December 31, 1995.
(c) See Exhibits and Exhibit Index.
(d) Financial Statements Schedules - Included at (a)(2).
Supplemental information furnished with reports filed pursuant to
Section 15(d) of the Act by registrants which have not registered
securities pursuant to Section 12 of the Act.
NMAC has not sent an annual report or proxy material to its security
holders and does not intend to distribute such information.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, NMAC has duly caused this report to be signed on
its behalf by the undersigned there and to duly authorize.
NATIONAL MORTGAGE ACCEPTANCE
CORPORATION
By: _____________________________
Allen Mead Ferguson, Chairman of the
Board of Directors
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report is cosigned below by the following persons on
behalf of NMAC and in the capacities and on the dates indicated.
Date:
March 20, 1996 By: _____________________________
Allen Mead Ferguson, President,
Chairman of the Board, and Director
(Chief Executive Officer)
March 20, 1996 By: _____________________________
John Thomas West, IV
Secretary, Treasurer and Director
(Principal Financial Officer &
Principal Accounting Officer)
March 20, 1996 By: _____________________________
George B. Pugh, Jr., Director
March 20, 1996 By: _____________________________
John W. Wright
Vice President and Director
March 20, 1996 By: _____________________________
Merlin T. Grim, Director
<PAGE>
APPENDIX A
Item 15(a) (1) and (2)
(a) The following documents are filed as part of this report:
(1) Financial Statements:
Report of KPMG Peat Marwick LLP, Independent Auditors
Balance Sheets at December 31, 1995 and 1994
Statements of Operations and Retained Earnings for the years
ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993.
Notes to Financial Statements
All schedules are omitted because they are not applicable or the
required information is shown in the financial statements or the notes
thereto.
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
National Mortgage Acceptance Corporation:
We have audited the accompanying balance sheets of National Mortgage
Acceptance Corporation as of December 31, 1995 and 1994, and the related
statements of operations and retained earnings and cash flows for each of
the years in the three years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of National Mortgage
Acceptance Corporation as of December 31, 1995 and 1994, and the results
of its operations and its cash flows for each of the years in the three
years then ended in conformity with generally accepted accounting
principles.
Effective January 1, 1994, the Company changed its method of accounting for
investments to adopt the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities.
Richmond, Virginia
March 15, 1996
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Balance Sheets
December 31, 1995 and 1994
Years ended December 31,
1995 1994
Assets
Cash 8,586 7,174
Trading securities, at fair
value 235,292 222,491
Restricted cash and
investments
- Series 1985-A
working capital reserve,
at fair value (note 4) 828,314 785,442
Loans receivable from
affiliates,
estimated fair value of
$22,948,000 in 1995
(note 3) 21,242,798 37,378,026
Accrued interest receivable
from affiliates 1,194,907 1,676,889
Other assets 23,763 32,162
23,533,660 40,102,184
Liabilities and
Shareholders' Equity
Liabilities:
Bonds payable, estimated
fair value of $21,986,000
in 1995(note 5) 21,242,798 37,462,181
Accrued interest payable
(note 5) 1,194,907 1,592,734
Other liabilities,
principally to
affiliates (note 3) 864,405 828,123
Total liabilities 23,302,110 39,883,038
Shareholders' equity:
Common stock; $1 par value:
Class A (without right
to dividend) - authorized
7,500 shares,issued and
outstanding 730 shares 730 730
Class B (nonvoting)
- authorized 7,500 shares,
issued and outstanding
1,665 shares 1,665 1,665
Paid-in capital 182,565 182,565
Retained earnings 46,590 34,186
Total shareholders' equity 231,550 219,146
23,533,660 40,102,184
See accompanying notes to financial statements.
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Statements of Operations and Retained Earnings
Years ended December 31, 1995, 1994 and 1993
Years ended December 31,
1995 1994 1993
Revenues:
Interest income on loans
to affiliates $ 3,217,819 4,419,373 6,711,685
Other interest income 12,618 14,332 13,877
Management fees
from affiliates (note 8) 98,680 119,663 127,997
Net trading securities gains
(losses) 10,519 -10,538 -
Total revenues 3,339,636 4,542,830 6,853,559
Expenses:
Interest on bonds 3,217,819 4,419,373 6,711,685
Management fees (note 8) 98,680 119,663 127,997
Other 10,733 14,762 14,903
Total expenses 3,327,232 4,553,798 6,854,585
Income (loss) before income taxes 12,404 -10,968 -1,026
Income tax expense
(benefit) (note 7) - 600 -600
Net income (loss) 12,404 -11,568 -426
Retained earnings at
beginning of year 34,186 45,754 46,180
Retained earnings at end of year $ 46,590 34,186 45,754
Income (loss) per share $ 5.18 -4.83 -0.18
See accompanying notes to financial statements.
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
Years ended December 31,
1995 1994 1993
Cash flows from operating activities:
Net income (loss) $ 12,404 -11,568 -426
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Increase in trading securities -12,801 -57,150 -
(Increase) decrease in restricted
cash and investments - working
capital reserve -42,872 -39,925 67,828
Decrease in accrued interest
receivable from affiliates 481,982 872,099 960,036
(Increase) decrease in other assets 8,399 -46 12,508
Increase (decrease) in accrued
interest payable -397,827 -879,641 745,529
Interest added to Class A-4 and C-5
bonds payable 445,692 405,751 2,185,010
Increase (decrease) in other
liabilities, principally
to affiliates 36,282 36,812 -77,549
Net cash provided by
operating activities 531,259 326,332 3,892,936
Cash flows provided by
investing activities:
Payments received on loans
to affiliates 16,135,228 21,102,364 28,705,710
Proceeds from sale of marketable
securities 70,000
Purchases of marketable securities -50,104
Net cash provided by
investing activities 16,135,228 21,102,364 28,725,606
Cash flows used for financing
activities - payments on
bonds payable -16,665,075 -21,500,573 -32,596,285
Net increase (decrease) in cash 1,412 -71,877 22,257
Cash at beginning of year 7,174 79,051 56,794
Cash at end of year $ 8,586 7,174 79,051
Supplemental disclosure
of cash flow information:
Cash paid during the
year for interest $ 3,615,646 4,893,263 3,781,146
Cash paid for income taxes 1,718 - -
See accompanying notes to financial statements.
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Notes to Financial Statements
December 31, 1995 and 1994
(1) Organization
National Mortgage Acceptance Corporation ("NMAC" or the "Company"),
formerly Thrift Financing Corporation, is a limited purpose finance
subsidiary of Craigie Incorporated ("Craigie") which owns 51% of the
Class A common stock and 20% of the Class B common stock. The remaining
Class A and C
lass B common stock is owned by subsidiaries of institutions involved
in the thrift industry. NMAC was organized on October 19, 1984 for the
purpose of providing access to certain capital markets for qualified
financial institutions and their affiliates. NMAC acts as a conduit for
such institutions by the issuance of its Thrift Industry Mortgage
Collateralized Obligation Bonds and other series of Bonds (Bonds).
The issues are structured so that collection of principal and interest
from loans receivable from affiliates, including the effects of prepayments
thereon, equal the amount of principal and interest due on the related
bonds. NMAC generally obtains bond offering fees at the bond issuance date
and administrative fees, as defined, for each offering over the period the
Bonds remain outstanding.
Collateralized Mortgage Obligation (CMO) Issuances
When issued as a CMO, each series of Bonds is secured by the mortgage
collateral and related funding agreements or promissory notes entered into
by the participating thrift institutions or their finance subsidiaries.
Each series of Bonds is specifically collateralized by mortgage-backed
securities. Such collateral was initially pledged to NMAC which in turn
pledged the collateral to an independent trustee.
As principal and interest are received by the trustee, the bonds
payable and the funding agreements/notes receivable are concurrently
reduced, as defined within each individual series supplement to the bond
indenture and funding agreement, respectively. Principal and interest are
payable semiannually or quarterly.
As of December 31, 1995, NMAC had issued two collateralized mortgage
obligations (Series 1985-A and Series C), lending the proceeds therefrom to
finance subsidiaries of institutions that are affiliated with certain
shareholders of NMAC. Only Series 1985-A was outstanding at December 31,
1995.
Real Estate Mortgage Investment Conduit (REMIC) Issuance
For Bonds issued after January 1, 1987 and for which an election was
made for "real estate mortgage investment conduit" status under the
Internal Revenue Code of 1986, as amended, NMAC simultaneously issued a
series of its Bonds and purchased mortgage collateral. The collateral
is segregated into an asset pool comprising the trust estate for that
series of Bonds. The Bonds of such series are considered "regular
interests" in such a REMIC. The trust assets serve as the sole
collateral for the repayment of such series of Bonds. The REMIC also
issues residual interest certificates, whereby the holder's cash
investment entitles it to receive excess cash flow from the trust estate
for such series of Bonds, defined as the excess of the payments of
principal and interest on the collateral for that series of Bonds, and
reinvestment earnings thereon, over bond principal and interest costs
and related expenses. As of December 31, 1995, NMAC had issued two
series of Bonds (Series B and Series D) under the REMIC structure.
<PAGE>
(2) Summary of Significant Accounting Policies
Investment Securities
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities (Statement No. 115), on January 1, 1994. Under
Statement No. 115, the Company classifies all of its investment
securities and restricted cash and investments in the Series 1985-A
working capital reserve (working capital reserve securities) as trading.
Trading securities are bought and held principally for the purpose of
selling them in the near term. Restatement of prior year financial
statements is not permitted under Statement No. 115.
Trading securities and working capital reserve securities are recorded
at fair value based on quoted market prices. Gains and losses on trading
securities are included in earnings. Realized and unrealized gains and
losses on working capital reserve securities are recorded as an adjustment
to interest rebates payable (see notes 3 and 4).
Realized gains and losses are determined using the specific
identification method.
Loans Receivable and Bonds Payable
The issuance of Bonds is treated as a financing unless the transaction
qualifies as a sale of assets under generally accepted accounting
principles. To date, the Bonds issued under the CMO structure have been
accounted for as financings while the Bonds issued as a REMIC structure
have qualified for sale treatment. No gain or loss, exclusive of bond
offering fees in excess of related expenses, resulted from the sales. Due
to the reduction of the loans receivable and bonds payable as a function of
payments of the underlying collateral, the ultimate timing of the
maturities of the respective loans and bonds is not readily determinable.
The estimated fair value of loans receivable is determined based on quoted
market prices for the underlying collateral. The estimated fair value of
bonds payable is determined based on quoted market prices for the bonds.
Interest Income and Expense
Interest income, net of rebates (see note 3), and interest expense are
recorded as accrued.
<PAGE>
Bond Issuance Costs
Costs related to the issuance of a specific series of Bonds are
charged to the entities participating in the offering. Ongoing costs
related to registration statements and related prospectus material,
prepared in anticipation of future offerings, are expensed as incurred.
No such costs were incurred from 1993 through 1995.
Earnings Per Share
Earnings per share are computed by dividing net income or loss by the
weighted average number of shares of Class A and Class B common stock
(2,395 for 1995, 1994 and 1993) outstanding during the period.
Income Taxes
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. No cumulative
effect of the change in accounting for income taxes was recorded because
it was not material to the Company's financial statements. Under the
asset and liability method of Statement No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss
and tax credit carryforwards.
Reclassifications
Certain reclassifications have been made in the prior years financial
statements in order to conform with 1995 presentations.
(3) Loans Receivable
Loans receivable on the Series 1985-A Bonds are expected to mature in
varying amounts prior to the year 2016. The loan agreements, as amended,
generally provide for interest to be paid at a rate equal to the lesser
of the highest bond interest rate or the weighted bond interest rate plus
20 basis points per annum. The resulting effective rates of interest on
the loans (equal to the lesser of 11.25% or the weighted average rate on
the debt plus 20 basis points) were 11.25% in 1995, 1994 and 1993.
Interest rebates payable and accumulated earnings from restricted cash and
investments are included in other liabilities and aggregated approximately
$828,000 and $785,000 as of December 31, 1995 and 1994, respectively.
The timing of payment of such rebates is at the discretion of the
management of NMAC.
<PAGE>
The loan receivable on the Series C Bonds was repaid during 1995 when
the Series C Bonds were redeemed by the Company. Prior to 1995, the loan
agreement carried an interest rate equal to the weighted bond interest rate
on the corresponding bonds. Interest rates on this loan receivable were
8.25% and 7.74% for 1994 and 1993, respectively.
The funding agreements for the Series 1985-A and Series C Bonds are
collateralized by mortgage-backed securities and by certain debt service
funds owned by the participating financial institution subsidiaries.
Those funds and the collections on the mortgage-backed securities are
held by the bond trustee until the respective semiannual or quarterly
payment dates, at which time they are distributed as payments on the
Bonds. Excess funds (rebates) on the Series 1985-A Bonds, if any, are
available for return to the participating thrift institution subsidiaries.
Loans receivable of $11,905,753 at December 31, 1995 are from
affiliates which were originally seized by the Resolution Trust
Corporation and subsequently believed to be under the management of federal
banking regulators. The Company believes it will realize these receivables
through cash flows received from the underlying mortgage collateral.
(4) Restricted Cash and Investments
Restricted cash and investments represent interest rebates which have
been invested in U.S. government agency obligations, mortgage backed
obligations, corporate obligations, cash and cash equivalents and are
restricted to repaying the interest rebates payable and the income earned
on these funds.
(5) Bonds Payable
Series 1985-A Bonds payable had aggregate effective rates of interest
of approximately 11.25% during 1995, 1994 and 1993, respectively.
The Series C Bonds were retired during 1995. The Series C Bonds had
aggregate effective rates of interest of approximately 8.5%, 8.25% and
7.74% during 1995, 1994 and 1993, respectively. Each series is
collateralized by the respective loans receivable (together with
collateral thereon) and consist of the following as of December 31, 1995
and 1994:
<CAPTION>
Stated Principal balance
Interest maturity December 31,
Class Rate date 1995 1994
Series 1985-A:
A-4 11.25 % January 1, 2016 $ 21,242,798 21,242,798
Series C:
C-3 8.50 October 20, 2015 - 4,696,475
C-4 6.2125* October 20, 2015 - 1,565,436
C-5 9.50 July 20, 2018 - 4,611,791
--------------------------------
- 10,873,702
--------------------------------
$ 21,242,798 37,462,181
* Floating interest rate based on London interbank offered quotations
for three-month Eurodollar deposits.
The Series 1985-A Bonds are due serially for each Class and require
the payment of interest semiannually.
<PAGE>
The current stated principal value of the collateral (FHLMC
participation certificates) plus the cash and investments in the various
debt service funds for the Series 1985-A aggregate approximately
$26,113,000 as of December 31, 1995. These assets are held by the trustee
and, although not assets of NMAC, are pledged, together with interest
income thereon, as collateral for the Bonds.
(6) REMIC Issuances
NMAC has issued two REMIC series, aggregating $333,067,000 (Series B
Bonds) and $300,500,000 (Series D Bonds) at issuance. Concurrent with
the issuance of these bonds, NMAC sold the entire residual interest in
the respective segregated asset pool comprising the trust estate. A
portion of the Series B residual interest was purchased by affiliates of
certain shareholders.
As of December 31, 1995 and 1994, the following Bonds, which are not
recorded as liabilities of NMAC, were outstanding:
Stated Principal balance
Interest maturity December 31,
Class rate date 1995 1994
Series B:
B-3 8.55% May 20, 2018 $ 33,168,824 40,313,744
B-4 9.1 May 20, 2018 8,087,721 8,087,721
$ 41,256,545 48,401,465
<PAGE>
The offering consisted of Class B-2 Bonds (Standard Bonds), which were
retired during 1994, Class B-3 Bonds (the Planned Amortization Class Bonds)
and Class B-4 Bonds (the Compound Interest Bonds).
Stated Principal balance
Interest maturity December 31,
Class rate date 1995 1994
<C> <C> <C> <C> <C>
Series D:
D-2 6.71% May 01, 2016 189,945 3,835,493
D-4 7.125 May 01, 2016 280,212 5,658,262
D-5 6.9625 May 01, 2016 85,065 1,717,687
D-6 9.75 November 01, 2017 51,000,000 51,000,000
$ 51,555,222 62,211,442
The offering consists of Class D-4 and D-6 Bonds (Standard Bonds) and
Class D-2 and D-5 Bonds (the Floating Rate Bonds). The floating interest
rates are based on the London interbank offered quotations for three-month
Eurodollar deposits.
The current stated principal value of the collateral (FHLMC
participation certificates for Series B and GNMA certificates for Series D)
aggregates approximately $44,334,000 and $56,261,000, respectively, as of
December 31, 1995. Such collateral, together with interest income thereon,
is only available to repay the specific bond series.
(7) Income Taxes
As discussed in note 2, the Company adopted Statement No. 109 as of
January 1, 1993. No cumulative effect of change in accounting for income
taxes was recorded because it was not material to the Company's financial
statements.
<PAGE>
The components of income tax expense (benefit) for 1995, 1994 and
1993 were as follows:
December 31,
1995 1994 1993
Federal - current $ - - -
State - current - - -
Federal - deferred - 420 -420
State - deferred - 180 -180
Income tax expense
(benefit) $ - 600 -600
The actual income tax expense (benefit) for 1995, 1994 and 1993
differs from the "expected" income tax benefit (computed by
applying the statutory U.S. federal corporate income tax rate of
35% to "income (loss) before income taxes" as follows:
Years ended December 31,
1995 1994 1993
Income tax expense (benefit)
at statutory rate $ 4,340 -3,839 -359
Effect of surtax exemption -2,480 2,194 205
State tax expense (benefit),
net of federal expense (benefit) 630 -563 -154
Change in valuation allowance -2,490 2,820 -
Other - -12 -292
Actual income tax expense
(benefit) $ - 600 -600
The significant components of the net deferred tax asset at December
31, 1995 and 1994 were as follows:
December 31,
1995 1994
Deferred tax asset - net operating loss carryforward $ 330 2,820
Less valuation allowance 330 2,820
Net deferred tax asset $ - -
Management has determined that the ability of the Company to realize
any deferred tax assets will depend on future earnings. Since future
earnings cannot be assured, a valuation allowance has been established
in 1995 and 1994.
<PAGE>
(8) Related Party Transactions
Under the terms of its management contract, Craigie provides office
space and equipment and certain managerial, administrative, financial and
other services to NMAC. Management fees are charged to NMAC and ultimately
to the borrowers as an ongoing cost determined at the date of the bond
offering.
Management fees are computed as a percentage of the outstanding bonds.
Management fees paid to Craigie were approximately $40,000, $56,000 and
$71,500 during 1995, 1994 and 1993, respectively.
Craigie acts as co-managing underwriter for all of the Bond offerings
and is the counterparty to all securities transactions entered into by
the Company.
<PAGE>
EXHIBIT INDEX
3.1 Restated Articles of Incorporation of Thrift Financing Corporation
("TFC") (since June 2, 1989 National Mortgage Acceptance Corporation and
hereinafter referred to as "NMAC"), previously filed as Exhibit 3.1 to
NMAC's, Registration Statement on Form S-11, Registration No. 2-97573, and
incorporated by reference.
3.2 Articles of Amendment to NMAC's Restated Articles of Incorporation,
previously filed as Exhibit 3.2 to NMAC's Registration Statement on
Form S-11, Registration No. 2-97573, and incorporated by reference.
3.3 Bylaws of NMAC, previously filed as Exhibit 3.4 to NMAC's Registration
Statement on Form S-11, Registration No. 2-97573, and incorporated by
reference.
3.4 Articles of Amendment dated June 1, 1989 to Restated Articles of
Incorporation previously filed as Exhibit 3.5 to NMAC's Post-Effective
Amendment No. 1 on Form S-3 to S-11 Registration No. 33-19023 and
incorporated by reference.
4.1 Indenture dated as of May 1, 1985 ("Indenture") between NMAC and Texas
Commerce Bank National Association as trustee ("Trustee"), previously filed
as Exhibit 4.1 to Amendment No. 1 to NMAC's Registration Statement on
Form S-11, Registration No. 2-97573 and incorporated by reference.
4.2 General Supplement relating to Subsequent Series dated as of
January 1, 1987, previously filed as Exhibit to NMAC's Form 8-K filed on
February 10, 1985, and incorporated by reference.
4.3 Series Supplement to the Indenture, dated as of July 1, 1985, relating
to Series 1985-A Bonds, previously filed as Exhibit 4 to NMAC's Form 8-K
filed on July 23, 1985, and incorporated by reference.
4.4 Series Supplement to the Indenture, dated as of January 20, 1987,
relating to Series B Bonds, previously filed as Exhibit 4.3 to NMAC's
Form 8-K filed on February 10, 1987, and incorporated by reference.
4.5 Series Supplement to the Indenture, dated as of March 20, 1987,
relating to Series C Bonds, previously filed as Exhibit 4.3 to NMAC's
Form 8-K filed on April 8, 1987, and incorporated by reference.
4.6 Series Supplement to the Indenture, dated as of October 30, 1987,
relating to Series D Bonds, previously filed as Exhibit 4.3 to NMAC's form
8-K filed on November 12, 1987, and incorporated by reference.
4.7 Form of Second General Supplement to Indenture relating to Subsequent
Series previously filed as Exhibit 4.4 to NMAC's Post-Effective Amendment
No. 1 on Form S-3 to S-11 Registration No. 33-19023 and incorporated by
reference.
11.1 See Appendix A.
12.1 Statement re computation of ratios.
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31,
1995 1994 1993 1992 1991
Earnings:
Income (Loss)
before
income taxes 12,404 -10,968 -1,026 -2,301 1,927
Fixed charges 3,217,819 4,419,373 6,711,685 9,784,956 12,426,892
--------- --------- --------- --------- ----------
3,230,223 4,408,405 6,710,659 9,782,655 12,431,819
Fixed charges:
Interest expense 3,217,819 4,419,373 6,711,685 9,784,956 12,429,892
Ratio of
earnings to
fixed charges 1.004 0.998 1.000 1.000 1.000
</TABLE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 8586
<SECURITIES> 1063606
<RECEIVABLES> 22437705
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23763
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23533660
<CURRENT-LIABILITIES> 2059312
<BONDS> 21242798
0
0
<COMMON> 184960
<OTHER-SE> 41652
<TOTAL-LIABILITY-AND-EQUITY> 23533660
<SALES> 0
<TOTAL-REVENUES> 3339636
<CGS> 0
<TOTAL-COSTS> 3327232
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3217819
<INCOME-PRETAX> 12404
<INCOME-TAX> 0
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