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, 1997
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
P.O. Box 1854
Richmond, Virginia
(Address of principal executive offices)
23218
(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, 1997
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, 1996, as filed March 26, 1997.
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: ____________________________
Randall B. Saufley
Secretary/Treasurer
Principal financial officer
and duly authorized officer
Date: November 10, 1997
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, 1997 December 31, 1996
(unaudited)
ASSETS
Cash 1,784 3,229
Trading securities, at market value 241,572 236,711
Restricted cash and investments -
Series 1985-A working capital reserv 55,685 53,665
Loans receivable from affiliates 13,894,203 17,328,606
Accrued interest receivable
from affiliates 390,774 974,734
Other assets 13,289 20,751
TOTAL ASSETS 14,597,307 18,617,696
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Bonds payable 13,894,203 17,328,606
Accrued interest payable 390,774 974,734
Other liabilities, principally to a 78,075 86,016
TOTAL LIABILITIES 14,363,052 18,389,356
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 49,295 43,380
SHAREHOLDERS' EQUIT 234,255 228,340
TOTAL LIABILITIES AND
SHAREHOLDERS' 14,597,307 18,617,696
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,
1997 1996 1997 1996
(unaudited) (unaudited)
REVENUES
Interest on loans $390,774 $487,367 1,266,058 $ 1,583,847
Other interest 2,858 3,578 8,818 11,643
Management fees 16,250 19,476 49,478 60,146
Net unrealized
securities trading
gains 2,136 3,345 6,632 (1,740)
412,018 513,766 1,330,986 1,653,896
COSTS AND EXPENSES
Interest on bonds 390,774 487,367 1,266,058 1,583,847
Management fees 16,250 19,476 49,478 60,146
Other 3,062 3,075 9,535 8,948
410,086 509,918 1,325,071 1,652,941
NET INCOME (LOSS)
BEFORE INCOME TAXES 1,932 3,848 5,915 955
INCOME TAX EXPENSE
(BENEFIT) 0 0 0 0
NET INCOME (LOSS) 1,932 3,848 5,915 955
RETAINED EARNINGS AT
BEGINNING OF PERIOD 47,363 43,697 43,380 46,590
RETAINED EARNINGS AT
END OF PERIOD $ 49,295 $ 47,545 $ 49,295 $ 47,545
EARNINGS (LOSS) PER
SHARE $ 0.81 $ 1.61 $ 2.47 $ 0.40
The accompanying notes are an integral part of these financial
statements.
Statements of Cash Flows
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Nine Months Ending
September 30, 1997 September 30, 1996
(unaudited)
Cash flows from operating
activities:
Net income (loss) $ 5,915 $ 955
Adjustments to reconcile net
income to net cash provided
by (use operating activities:
Net unrealized securitie (6,632) (1,740)
Cash and related investments
restricted - Series 1985-A
Working capital reserve (2,020) 54,891
Accrued interest receivable
from affiliates 583,960 707,540
Decrease in accrued interest
payable (583,960) (707,540)
Trading securities 1,771 (984)
Other assets 7,462 5,014
Other liabilities, principally
to affiliates (7,941) (65,760)
Total adjustments (7,360) (8,579)
Net cash provided used for
operating activities (1,445) (7,624)
Cash flows from investing activities:
Payments received on loans to
affiliates 3,434,403 3,914,192
Cash flows from financing activities:
Payments on bonds payable (3,434,403) (3,914,192)
Net decrease in cash (1,445) (7,624)
Cash at beginning of period 3,229 8,586
Cash at end of period $ 1,784 $ 962
NOTES TO FINANCIAL STATEMENTS
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
September 30, 1997
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, 1996. The financial statements
for the nine months ended September 30, 1997, 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, 1997
During the third quarter ended September 30, 1997, 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 nine(9) month period ending September 30, 1997,
NMAC revenues were $1,330,986 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 two outstanding Bonds Series;
Series 1985-A Bonds, (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.
NMAC has caused an election to be made under the Internal
Revenue Code of 1986, as amended (the "Code"), to have the
Trust Estate for the Series D Bonds taxed as a separate real
estate mortgage investment conduit (a "REMIC"), in which the
Series D Bonds are "regular interests," as defined in the
Code, with respect to the REMIC. Other than its on-going
fees for administration of the Series D Bond REMIC, NMAC has
no future economic benefit in the segregated asset pool
comprising of the Series D Bond REMIC. The "residual
interest" in the Series D Bond REMICs was sold by NMAC for
cash in 1987. Accordingly, neither the collateral for the
Series D Bonds nor the 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 D Bonds will be recorded only within the Series D
Bond REMIC. Neither the interest income nor the related
interest expense on REMIC 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 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 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 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 Asset Investors, Inc.
(formerly Financial Asset Management Corporation and M.D.C.
Consulting, Inc.). Amounts due Asset Investors, Inc. 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 November 12, 1996 Craigie Incorporated purchased 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, 1997, NMAC's assets were $14,597,307
including $243,356 in unrestricted cash and trading securities.
This cash and security 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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