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, 1996 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, 1997:
NONE
Number of shares of common stock outstanding as of March 1,
1997:
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 limited 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, 1996 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 17, 1997, 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, 1996, four
of the nine savings and loan associations and savings banks are
believed to be under the management 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 1996 or
1995.
Item 6. Selected Financial Data
The following data are for the years ended December 31, 1996,
1995, 1994, 1993, and 1992.
Year Ended December 31,
1996 1995 1994 1993 1992
Statement of
Operations Data
Revenues $ 2,164,745 $3,339,636 $4,542,830 $6,853,559 $9,951,755
Net Income (Loss) (3,210) 12,404 (11,568) (426) (1,841)
Earnings (Loss) (1.34) 5.18 (4.83) (.18) (.77)
Per Share
Balance Sheet
Total Assets $18,617,696 $23,533,660 $40,102,184 $62,051,403 $91,795,124
Receivables 17,328,606 21,242,798 37,378,026 58,480,390 87,186,100
Pursuant to
Funding Agreements
Bonds Payable* 17,328,606 21,242,798 37,462,181 58,557,003 88,968,278
*Does not include Series B and Series D Bonds which are REMIC
Series of NMACs Bonds. As of December 31, 1996, the outstanding
Series D aggregated $40,964,679. Series B was retired during
1996. See part II, Item 7, of this Report on Form 10-K.
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 1996, 1995, 1994, 1993, and 1992 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,
and D Bonds. The Series B Bonds and the Series C Bonds were
retired in 1996 and 1995, respectively. Future revenues are
expected to be provided from interest payments on funding
agreements for the Series 1985-A and the 1985 Series D 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 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 Bonds and the residual interest holders
with respect to its Series 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 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 (or were in the case of the Series
B Bonds) "regular interests", as defined in the Code. Other than
its ongoing fees for administration of the Series D Bond REMICs,
NMAC has no future economic benefit in the segregated asset pools
comprising the 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 D Bonds will be recorded only within the
related REMIC and will have no impact on NMAC's financial
statements. As previously notes, the Series B Bonds were retired
in 1996.
Interest on NMAC's outstanding Series 1985-A and Series C Bonds
was the major source of cost and expenses for the years ending
December 31, 1996, 1995, 1994, and 1993. 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 Bonds. Similarly, cash flow
from the Mortgage Collateral for NMAC's Series D Bonds is
anticipated to continue to provide cash sufficient to make required
payments thereon. 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
<PAGE>
"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 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. In 1996,
$806,635.57 was released to participating borrowers from the
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, 1996, NMAC's assets were $18,617,696,
including $239,940 in unrestricted cash and 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, 1996:
Current
Name Age Title
Allen Mead Ferguson 59 President, Chairman of the
Board and Director
John Thomas West, IV 50 Secretary, Treasurer and
Director
George B. Pugh, Jr. 47 Director
John W. Wright 47 Director and Vice President
Merlin T. Grim 41 Director
Randall B. Saufley 35 Vice President
Allen Mead Ferguson, 59, elected Chairman in 1997, a Director
since 1989, and was elected Chief Executive Officer of Craigie
Incorporated in 1995, and was formerly Chief Operating Officer
and President since 1989 and Executive Vice President since 1980.
John Thomas West, IV, 50, elected President and Chief
Operating Officer in 1997, a Director since 1984, was elected
Executive Vice President in 1990, and was formerly Secretary,
Treasurer and Senior Vice President since 1984, of Craigie
Incorporated.
George B. Pugh, Jr., 47, a Director since 1984, has been
Executive Vice President and Managing Director of Craigie
Incorporated since 1980.
John W. Wright, 47, elected Executive Vice President in 1997,
a Director in 1989, 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, 41, elected Secretary in 1997, Director and
Treasurer in 1995 and was elected Senior Vice President of
Craigie Incorporated in 1993.
Randall B. Saufley, 35, elected Vice President and Controller
in 1995, was elected Assistant 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 17, 1997 to serve until
their successors are elected and shall qualify.
Item 11. Executive Compensation
NMAC has no salaried employees and does not compensate its
directors.
<PAGE>
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:
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 (4))
Investors Service Corp. 40 5.5 148 8.9 Investors Savings Bank
Richmond, Virginia Richmond, Virginia
(See Note (2))
Pioneer Financial 40 5.5 148 8.9 Pioneer Federal
Services, Inc. Savings and Loan
Richmond, Virginia Association
Hopewell, Virginia
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 40 5.5 148 8.9 Security Federal
Service Corporation Savings and Loan
Richmond, Virginia Association
Richmond,Virginia
(See Note (2))
Southern Service 40 5.5 148 8.9 Virginia Federal
Corporation Savings and Loan
Richmond, Virginia Association
Richmond, Virginia
(See Note (3))
<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 %
Southside Service Corp. 40 5.5 148 8.9 Virginia First
Petersburg, Virginia Savings Bank, F.S.B.
Petersburg, Virginia
The First Colony Service 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) The financial institutions are under the Management of the
Federal Deposit Insurance Corporation (FDIC).
(3) In December, 1988 the Virginia Federal Savings and Loan
Association was purchased by MNC Financial Corporation of
Baltimore, Maryland, subsequently purchased by Crestar Bank,
Richmond, Virginia.
(4) 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, 1996, NMAC incurred
general and administrative expenses in connection with the
management agreements described in Item 1 with Craigie
Incorporated amounting to approximately $28,000. 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, 1996.
(c) See Exhibits and Exhibit Index.
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, 1997 By:_____________________________
Allen Mead Ferguson, President,
Chairman of the Board, and Director
(Chief Executive Officer)
March 20, 1997 By:_____________________________
John Thomas West, IV
Secretary, Treasurer and Director
(Principal Financial Officer &
Principal Accounting Officer)
March 20, 1997 By:_____________________________
George B. Pugh, Jr., Director
March 20, 1997 By:_____________________________
John W. Wright
Vice President and Director
March 20, 1997 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, 1996 and 1995
Statements of Operations and Retained Earnings for
the years ended December 31, 1996, 1995 and 1994
Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994.
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, 1996 and 1995,
and the related statements of operations and retained earnings
and cash flows for each of the years in the three-year period
ended December 31, 1996. These financial statements are the
responsibility of the Companys 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,
1996 and 1995, and the results of its operations and its cash
flows for each of the years in the three-year period ended
December 31, 1996 in conformity with generally accepted
accounting principles.
Richmond, Virginia
March 21, 1997
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Balance Sheets
December 31, 1996 and 1995
Assets 1996 1995
Cash $ 3,229 8,586
Trading Securities, at fair value 236,711 235,292
Restricted cash & investments -
Series 1985-A working capital
reserve, at fair value (note 4) 53,665 828,314
Loans receivable from affiliates,
estimated fair value of
$18,260,019 in 1996 and
$22,948,000 in 1995 (note 3) 17,328,606 21,242,798
Accrued interest receivable from
affiliates 974,734 1,194,907
Other assets 20,751 23,763
_____________ _____________
$ 18,617,696 23,533,660
Liabilities and Shareholders' Equity
Liabilities:
Bonds payable, estimated fair value
of $18,260,019 in 1996 and
$21,986,000 in 1995 (note 5) $ 17,328,606 21,242,798
Accrued interest payable (note 5) 974,734 1,194,907
Other liabilities, principally
to affiliates (note 3) 86,016 864,405
_____________ _____________
Total liabilities 18,389,356 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 (nonvoting)-authorized
7,500 shares, issued and outstanding
1,665 shares 1,665 1,665
Paid in capital 182,565 182,565
Retained earnings 43,380 46,590
_____________ _____________
Total shareholders' equity 228,340 231,550
_____________ _____________
$ 18,617,696 23,533,660
*See accompanying notes to financial statements
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Statements of Operations and Retained Earnings
Years Ended December 31, 1996, 1995, and 1994
Years Ended December 31,
1996 1995 1994
Revenues:
Interest income on loans to affiliates $ 2,071,214 3,217,819 4,419,373
Other interest income 14,686 12,618 14,332
Management fees from affiliates(note 8) 84,910 98,680 119,663
Net trading securities gains (losses) (6,065) 10,519 (10,538)
______________________________________
Total revenues 2,164,745 3,339,636 4,542,830
Expenses:
Interest on bonds 2,071,214 3,217,819 4,419,373
Management fees (note 8) 84,910 98,680 119,663
Other 11,831 10,733 14,762
______________________________________
Total expenses 2,167,955 3,327,232 4,553,798
Income (loss) before income taxes (3,210) 12,404 (11,568)
Income tax expense (note 7) - - -
______________________________________
Net income (loss) (3,210) 12,404 (11,568)
Retained earnings at beginnig of year 46,590 34,186 45,754
Retained earnings at end of year $ 43,380 46,590 34,186
Income (loss) per share $ (1.34) 5.18 (4.83)
*See accompanying notes to financial statements
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
Years Ended December 31,
1996 1995 1994
Cash flows from operating activities:
Net income (loss) $ (3,210) 12,404 (11,568)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Increase in trading securities (1,419) (12,801) (57,150)
(Increase) decrease in restricted
cash and investments - working
capital reserve 774,649 (42,872) (39,925)
Decrease in accrued interest receiv-
able from affiliates 220,173 481,982 872,099
(Increase) decrease in other assets 3,012 8,399 (46)
Decrease in accrued interest payable (220,173) (397,827) (879,641)
Interest added to Class A-4 and C-5
bonds payable - 445,692 405,751
Increase (decrease) in other liabil-
ities, principally to affiliates (778,389) 36,282 36,812
Net cash provided by (used in) operating (5,357) 531,259 326,332
activites
Cash flows provided by investing activities
payments received on loans to affiliates 3,914,192 16,135,228 21,102,364
Cash flows used in financing activities -
payments on bonds payable (3,914,192) (16,665,075) (21,500,573)
Net increase (decrease) in cash (5,357) 1,412 (71,877)
Cash at beginning of year 8,586 7,174 79,051
Cash at end of year $ 3,229 8,586 7,174
Supplemental disclosures of cash flow
information:
Cash paid during the year for interest $ 2,291,387 3,615,646 4,893,263
Cash paid for income taxes - 1,718 -
*See accompanying notes to financial statements
<PAGE>
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Notes to Financial Statements
(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
Class 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, 1996, NMAC had issued two collateralized
mortgage obligations (Series 1985-A and Series C), lending
the proceeds therefrom to finance subsidiaries of entities
that are affiliated with certain shareholders of NMAC and
Craigie. Only Series 1985-A was outstanding at December 31,
1996.
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 holders 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.
<PAGE>
(1)Continued
As of December 31, 1996, NMAC had issued two series of Bonds
(Series B and Series D) under the REMIC structure.
(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.
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>
(2) Continued
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 1994 through 1996.
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 1996, 1995 and 1994)
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 Companys 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.
(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 1996, 1995 and 1994. Interest rebates payable and
accumulated earnings from restricted cash and investments
are included in other liabilities and aggregated
approximately $53,665 and $828,000 as of December 31, 1996
and 1995, respectively. The timing of payment of such
rebates is at the discretion of the management of NMAC.
The funding agreements for the Series 1985-A 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 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.
<PAGE>
(3) Continued
Loans receivable of $9,686,237 at December 31, 1996 are from
wholly-owned limited-purpose finance subsidiaries of Craigie
(the Finance Subsidiaries). The Finance Subsidiaries were
formed by certain depository institutions to facilitate the
issuance of CMOs through the Company. Since the issuance of
the CMOs, these depository institutions fell under the
receivership of the Resolution Trust Corporation (RTC). The
RTC was succeeded by the FDIC as receiver on January 1,
1996. All of the Finance Subsidiaries outstanding stock
was acquired by Craigie on November 12, 1996 from the FDIC.
(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.
During the fourth quarter of 1996, the Company sold
restricted investments of $715,213. The sales proceeds were
used to pay interest rebates payable to affiliates.
(5) Bonds Payable
Series 1985-A Bonds payable had aggregate effective rates of
interest of approximately 11.25% during 1996, 1995 and 1994.
The Series 1985-A Bonds are collateralized by the respective
loans receivable (together with collateral thereon) and
consist of the following as of December 31, 1996 and 1995:
Principal balance
Interest Stated December 31,
Class rate maturity date 1996 1995
Series 1985-A:
A-4 11.25% January 1, 2016 $17,328,606 21,242,798
The Series 1985-A Bonds require the payment of interest
semiannually.
The 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 $21,051,000 and $26,113,000 as of
December 31, 1996 and 1995, respectively. 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.
<PAGE>
(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. The Series B Bonds were
retired during 1996.
As of December 31, 1996 and 1995, the following Bonds, which
are not recorded as liabilities of NMAC, were outstanding:
Principal balance
Interest Stated December 31,
Class rate maturity date 1996 1995
Series B:
B-3 8.55% May 20, 2018 $ - 33,168,824
B-4 9.10 May 20, 2018 - 8,087,721
--------------------------
$ - 41,256,545
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).
Principal balance
Interest Stated December 31,
Class rate maturity date 1996 1995
Series D:
D-2 6.7125% May 1, 2016 $ - 189,945
D-4 7.125 May 1, 2016 - 280,212
D-5 6.9625 May 1, 2016 - 85,065
D-6 9.75 November 1, 2017 40,964,679 51,000,000
--------------------------
$ 40,964,679 51,555,222
The offering consisted of Class D-4, which were retired
during 1996, and D-6 Bonds (Standard Bonds) and Class D-2
and D-5 Bonds (the Floating Rate Bonds), which were also
retired during 1996. The floating interest rates were based
on the London interbank offered quotations for three-month
Eurodollar deposits.
The stated principal value of the collateral for Series D,
(GNMA certificates) aggregates approximately $43,715,000 as
of December 31, 1996. Such collateral, together with
interest income thereon, is only available to repay the
specific bond series.
<PAGE>
(7) Income Taxes
The components of income tax expense for 1996, 1995 and 1994
were as follows:
December 31,
1996 1995 1994
Federal - current $ - - -
State - current - - -
Federal - deferred - - 420
State - deferred - - 180
--------------------------------
Income tax expense $ - - 600
The actual income tax expense for 1996, 1995 and 1994
differs from the "expected" income tax expense (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,
1996 1995 1994
Income tax expense (benefit) at
statutory rate $ (1,124) 4,340 (3,829)
Effect of graduated income tax
rates 642 (2,480) 2,194
State tax expense (benefit), net
of federal expense (benefit) (163) 630 (563)
Change in valuation allowance 645 (2,490) 2,820
Other - - (12)
--------------------------------
Actual income tax expense $ - - 600
The net deferred tax asset at December 31, 1996 and 1995 was
as follows:
December 31,
1996 1995
Deferred tax asset - net operating loss
carryforward $ 975 330
Less valuation allowance (975) (330)
--------------------------------
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 1996 and 1995.
<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 $28,000, $40,000 and $56,000 during 1996,
1995 and 1994, 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,
1996 1995 1994 1993 1992
Earnings:
Income (Loss) before
income taxes $ (3,210) 12,404 (10,968) (1,026) (2,301)
Fixed charges 2,071,214 3,217,819 4,419,373 6,711,685 9,784,956
$2,068,004 3,230,223 4,408,405 6,710,659 9,782,655
Fixed charges:
Interest expense$ 2,071,214 3,217,819 4,419,373 6,711,685 9,784,956
Ratio of earnings to fixed
charges 0.998 1.004 0.998 1.000 1.000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,229
<SECURITIES> 236,711
<RECEIVABLES> 18,303,340
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 74,416
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,617,696
<CURRENT-LIABILITIES> 1,060,750
<BONDS> 17,328,606
0
0
<COMMON> 184,960
<OTHER-SE> 43,380
<TOTAL-LIABILITY-AND-EQUITY> 18,847,123
<SALES> 0
<TOTAL-REVENUES> 2,164,745
<CGS> 0
<TOTAL-COSTS> 2,167,955
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,210)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,210)
<EPS-PRIMARY> (1.34)
<EPS-DILUTED> 0
</TABLE>
