FORM 10-Q
Securities and Exchange Commission
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: September 30, 1996
Commission File Numbers: 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, Richmond, Virginia
(Address of principal executive offices)
23219
(Zip Code)
(804) 775-7904
(Registrant's telephone number, including area code)
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 shorter period of
time that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common
stock, as of the latest practicable date.
Class A Common Stock: 730 shares
Class B Common Stock: 1,665 shares
Part I: FINANCIAL INFORMATION
September 30, 1996
Item 1. Financial Statements
Attached as Appendix A.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Attached as Appendix B.
Part II: OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults on Senior Securities - None
Item 4. Submission of Matters to Vote of Security Holders - Information
regarding election of directors by the registrant's voting shareholders
previously reported in registrant's report on Form 10-K for its year ending
December 31, 1995, as filed March 28, 1996.
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly
authorized.
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
(Registrant)
By: _______________________________________
John Thomas West, IV
Secretary/Treasurer
Principal financial officer and
duly authorized officer
Date: August 7, 1996
EXHIBIT INDEX
2. Not Applicable.
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. Not applicable. Information in Appendix A.
15. Not applicable.
18. Not applicable.
19. Not applicable.
20. Not applicable.
23. Not applicable.
24. Not applicable.
25. Not applicable.
28. Not applicable.
Statements of Financial Condition
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
September 30, 1996 December 31, 1995
(unaudited)
ASSETS
Cash 962 8,586
Trading securities, at market value 238,016 235,292
Restricted cash and investments -
Series 1985-A working capital
reserve at market value 773,423 828,314
Loans receivable from affiliates 17,328,606 21,242,798
Accrued interest receivable
from affiliates 487,367 1,194,907
Other assets 18,749 23,763
TOTAL ASSETS 18,847,123 23,533,660
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Bonds payable 17,328,606 21,242,798
Accrued interest payable 487,367 1,194,907
Other liabilities, principally to 798,645 864,405
TOTAL LIABILITIES 18,614,618 23,302,110
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 (non-voting)-- authorized
7,500 shares, issued and outstanding
1,665 shares 1,665 1,665
Paid-in capital 182,565 182,565
Retained earnings 47,545 46,590
SHAREHOLDERS' EQUITY 232,505 231,550
TOTAL LIABILITIES AND
SHAREHOLDERS' 18,847,123 23,533,660
The accompanying notes are an integral part of these financial statements.
Statements of Operations and Retained Earnings
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
(unaudited) (unaudited)
REVENUES
Interest on loans $487,367 $810,898 $1,583,847 $2,574,462
Other interest 3,578 3,580 11,643 9,328
Management fees 19,476 22,813 60,146 73,803
Net unrealized
securities 3,345 2,653 (1,740) 8,195
513,766 839,944 1,653,896 2,665,788
COSTS AND EXPENSES
Interest on bonds 487,367 810,898 1,583,847 2,574,462
Management fees 19,476 22,813 60,146 73,803
Other 3,075 2,586 8,948 8,174
509,918 836,297 1,652,941 2,656,439
NET INCOME
BEFORE INCOME
TAXES 3,848 3,647 955 9,349
INCOME TAX
EXPENSE 0 738 0 1,883
NET INCOME 3,848 2,909 955 7,466
RETAINED EARNINGS AT
BEGINNING OF
PERIOD 43,697 38,373 46,590 34,186
RETAINED EARNINGS AT
END OF PERIOD $47,545 $41,282 $47,545 $41,652
EARNINGS
PER SHARE $1.61 $1.21 $0.40 $3.12
The accompanying notes are an integral part of
these financial statement.
Statements of Cash Flows
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Nine Months Ended Nine Months Ended
September 30, 1996 September 30, 1995
(unaudited)
Cash flows from operating activities:
Net income $ 955 $ 7,466
Adjustments to reconcile net
income to net cash provided
by (used for) operating activities:
Net unrealized securities trading
gains (1,740) (8,195)
Cash and related investments
restricted - Series 1985-A
Working capital reserve 54,891 (30,590)
Accrued interest receivable
from affiliates 707,540 914,181
Decrease in accrued interest
payable (707,540) (920,321)
Interest added to Class A-4
and C-5 bonds payable 0 112,699
Trading securities (984) 934
Other assets 5,014 13,315
Other liabilities, principally
to affiliates (65,760) 13,421
Total adjustments (8,579) 95,444
Net cash provided by (used for)
operating activities (7,624) 102,910
Cash flows from investing activities:
Payments received on loans to
affiliates 3,914,192 6,491,920
Cash flows from financing activities:
Payments on bonds payable (3,914,192) (6,598,479)
Net decrease in cash (7,624) (3,649)
Cash at beginning of period 8,586 7,174
Cash at end of period $ 962 $ 3,525
The accompanying notes are an integral part of
these financial statement.
APPENDIX A (4/4)
NOTES TO FINANCIAL STATEMENTS
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
September 30, 1996
NOTE A (Unaudited)
These financial statements should be read in conjunction with the
financial statements and notes thereto in National Mortgage Acceptance
Corporation's ("NMAC") Annual Report for the year
ended December 31, 1995.
The financial statements for the nine months ended September 30, 1996,
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of operations, financial
position, and cash flows for the interim periods. These amounts are not
necessarily indicative of results for a full year.
APPENDIX B
TO FORM 10-Q
Management's Discussion and Analysis of Financial Condition
and Results of Operations
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
September 30, 1996
During the second quarter ended September 30, 1996, National Mortgage
Acceptance Corporation ("NMAC") did not issue any new series of its TIMCO
(Thrift Industry Mortgage Collateralized Obligation) or Mortgage
Collateralized Obligation Bonds.
During the month period ending September 30, 1996, NMAC revenues were
$1,653,896 which consisted primarily of i) interest on loans receivable under
funding agreements between NMAC and the participating borrowers for
NMAC's TIMCO Bonds, Series 1985-A (FHLMC Certificates) (the "Series
1985-A Bonds ) and ii) Management Fees received for the on-going
administration of three outstanding Bonds Series (Series 1985-A Bonds,
Series BBonds (FHLMC Certificates), and Series D Bonds
(GNMA Certificates). Future revenues are expected to be
provided from interest payments on funding
agreements for the Series A Bonds, from one or more
subsequent series of NMAC's Bonds, when and if issued, from mortgage
collateral acquired by NMAC and pledged to secure any subsequent series
of NMAC's Bonds, and from amounts received in excess of costs incurred
by NMAC in the issuance of subsequent series of NMAC's Bonds. At this
time, management does not intend to issue any new series of bonds.
NMAC has caused an election to be made under the Internal Revenue Code
of 1986, as amended (the "Code"), to have the Trust Estates for the Series B
Bonds and the Series D Bonds taxed as separate real estate mortgage
investment conduits (each, a "REMIC"), in which the Series B Bonds
and the Series D Bonds are "regular interests," as defined in the Code,
with respect to the related REMIC. Other than its on-going fees for
administration of the Series B and the Series D Bond REMICs, NMAC has
no future economic benefit in the segregated asset pool comprising either
the Series B Bond REMIC or the Series D Bond REMIC. The "residual
interest" in each of the Series B Bond and Series D Bond REMICs was
sold by NMAC for cash in 1987. Accordingly, neither the collateral
for the Series B Bonds or the Series D Bonds nor the Series B Bonds or
Series D 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 Bonds will be recorded only within the Series B Bond
REMIC and the interest income on the collateral for, and the related
interest expense on, the Series D Bonds will be recorded only within the
Series D Bond REMIC. Neither the interest income nor the related
interest expense on either of these REMIC Series will have an impact
on NMAC's financial statements.
Interest on NMAC's outstanding Series 1985-A Bonds was the major
source of costs and expenses for the period. Cash flow from payments
on the loans receivable securing the Series 1985-A Bonds are anticipated
to provide cash sufficient to make all required payments on the related
1985-A Bonds. Consequently, NMAC anticipates that it will have no
additional cash requirements with respect to any of its outstanding Bonds.
NMAC believes sufficient liquidity and capital resources exist to
pay all amounts due on the Series 1985-A Bonds and all other expenses
of NMAC. Furthermore, because each Series of Bonds is secured by
collateral paying interest at specified or determinable maximum rates and
payments on each Series of Bonds are designed not to exceed payments
received on the collateral for the related Series, inflationary
pressures have not affected, and are not expected to affect, significantly
the ability of NMAC to meet its obligations as they become due.
NMAC has no salaried employees and has entered into management
and administrative service agreements with Craigie Incorporated
("Craigie"), an affiliate of NMAC, pursuant to which Craigie provides
NMAC with administrative, accounting and clerical services, office
space and the use of the service mark "TIMCO" for the registrant's Bonds.
Under these agreements, Craigie receives fees from NMAC in connection
with each funding agreement
executed between NMAC and the participating
borrowers and with respect to the residual interests with respect to the
registrant's Series B and Series D Bonds. Fees paid to NMAC by
participating borrowers with respect to its Series A Bonds and the
holders of the residual interest with respect to its Series B
and Series D Bonds are expected by NMAC to be sufficient to provide
for all on-going costs and expenses with respect to the outstanding
Series of its Bonds. NMAC therefore anticipates that it will have no
additional cash or liquidity requirements with respect to its
obligations under any outstanding Series of its Bonds. Payments under
the management and administrative services agreements between NMAC
and Craigie are not expected to exceed the amount received by
NMAC as on-going fees paid to it by participating borrowers under
their funding agreements and/or holders of the residual interest
with respect to the Series B REMIC and the series D REMIC Bonds.
Texas Commerce Bank National Association, trustee for all
outstanding Series of NMAC's Bonds, also holds funds in expense
reserve accounts established under the Series Supplements for
certain of NMAC's outstanding Bonds to provide for future
expenses of the Trustee with respect to the related Series Supplement
if other funds are insufficient therefore. Such amounts are held
under the respective Series Supplements and are not recorded in the
financial statements for NMAC.
The Series 1985-A Working Capital Reserve, established by NMAC
with respect to its Series 1985-A Bonds, is funded by the Series
1985-A participating borrowers from their funding agreements. These
amounts are available solely to pay any fees, charges, taxes, assessments,
impositions or other expenses of NMAC, other than bond administration
expenses, in connection with the Series 1985-A Bonds. The Series
1985-A Working Capital Reserve is not available to pay expenses or
claims of NMAC other than with respect to the Series 1985-A Bonds, is
not pledged to secure the Series 1985-A Bonds and is not pledged
to secure any other Series of NMAC's Bonds.
With respect to certain of its administration duties for the
Series D REMIC, NMAC has contracted with Financial Asset
Management Corporation ("FAMC") (formerly M.D.C. Consulting, Inc.).
Amounts due FAMC for services rendered are paid from amounts received by
NMAC for administrative services from holders of the Series D REMIC
residual interest and are less than the gross amount payable by such
holders to NMAC.
On September 19, 1996, Craigie Incorported agreed to purchase from
the Federal Deposit Insurance Corporation ("FDIC") the stock of three of
the affiliates who participated in the Series 1985-A Bonds. The affiliates
were Atlantic Financing Corporation, Security Federal Financing Corporation
and Mountain Financial Corporation.
As of September 30, 1996, NMAC's assets were $ 18,847,123 including
$ 238,978 in unrestricted cash and trading securities. This cash 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.
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