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: March 31, 1998
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
<PAGE>
Part I: FINANCIAL INFORMATION
March 31, 1998
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, 1997, as filed March 27,
1998.
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: May 7, 1998
<PAGE>
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.
<PAGE>
Statements of Financial Condition
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
March 31, 1998 December 31, 1997
(unaudited)
ASSETS
Cash 844 1,255
Trading securities, at fair value 250,985 245,564
Restricted cash and investments -
Series 1985-A working capital
reserve, at fair value 57,159 56,457
Loans receivable from affiliates 12,512,178 13,894,203
Accrued interest receivable
from affiliates 351,905 781,549
Other assets 13,778 19,246
TOTAL ASSETS 13,186,849 14,998,274
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Bonds payable 12,512,178 13,894,203
Accrued interest payable 351,905 781,549
Other liabilities, principally
to affiliates 86,043 87,709
TOTAL LIABILITIES 12,950,126 14,763,461
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 51,763 49,853
SHAREHOLDERS' EQUITY 236,723 234,813
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY 13,186,849 14,998,274
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statements of Operations and Retained Earnings
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Three Months Ended
March 31, March 31,
1998 1997
(unaudited)
REVENUES
Interest on loans $ 351,905 $ 437,642
Other interest 3,015 2,584
Management fees 16,244 16,244
Net unrealized securities
trading gains 2,428 2,755
373,592 459,225
COSTS AND EXPENSES
Interest on bonds 351,905 437,642
Management fees 16,244 16,244
Other 3,053 3,312
371,202 457,198
NET INCOME
BEFORE INCOME TAXES 2,390 2,027
INCOME TAX EXPENSE 480 0
NET INCOME (LOSS) 1,910 2,027
RETAINED EARNINGS AT
BEGINNING OF PERIOD 49,853 43,380
RETAINED EARNINGS AT
END OF PERIOD $ 51,763 $ 45,407
EARNINGS (LOSS) PER SHARE $ 0.80 $ 0.85
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statements of Cash Flows
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
(unaudited)
Cash flows from
operating activities:
Net income (loss) $ 1,910 $ 2,027
Adjustments to reconcile
net income to net cash
provided by (used for)
operating activities:
Trading securities (5,421) (5,286)
Cash and related
investments restricted
- Series 1985-A
Working capital
reserve (702) (557)
Accrued interest
receivable from
affiliates 429,644 537,092
Decrease in accrued
interest payable (429,644) (537,092)
Other assets 5,468 7,968
Other liabilities,
principally to
affiliates (1,666) (2,160)
Total adjustments (2,321) (35)
Net cash provided by
(used for)operating
activities (411) 1,992
Cash flows from investing
activities:
Payments received on
loans to affiliates 1,382,025 1,768,003
Cash flows from financing
activities:
Payments on bonds payable (1,382,025) (1,768,003)
Net increase (decrease)
in cash (411) 1,992
Cash at beginning of period 1,255 3,229
Cash at end of period $ 844 $ 5,221
The accompanying notes are an integral part of these financial
statements.
<PAGE>
APPENDIX A (4/4)
NOTES TO FINANCIAL STATEMENTS
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
March 31, 1998
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, 1997. The financial statements for
the three months ended March 31, 1998, 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.
<PAGE>
APPENDIX B
TO FORM 10-Q
Management's Discussion and Analysis of Financial Condition
and Results of Operations
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
March 31, 1998
During the first quarter ended March 31, 1998, 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 three(3) month period ending March 31, 1998,
NMAC revenues were $373,592 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.
<PAGE>
NMAC has no salaried employees and has entered into
management and administrative service agreements with Craigie
Incorporated ("Craigie"), an affiliate of NMAC and a wholly-
owned subsidiary of BB&T Corporation, 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. In addition, the parent company of Craigie
Incorporated, BB&T Corporation, purchased Life Federal Saving
Bank on March 1, 1998 which owns a fourth affiliate of NMAC
named Life Capital.
<PAGE>
As of March 31, 1998, NMAC's assets were $13,186,849
including $251,829 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.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-30-1998
<CASH> 844
<SECURITIES> 308,144
<RECEIVABLES> 12,512,178
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 365,683
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,186,849
<CURRENT-LIABILITIES> 437,948
<BONDS> 12,512,178
0
0
<COMMON> 184,960
<OTHER-SE> 51,763
<TOTAL-LIABILITY-AND-EQUITY> 13,186,849
<SALES> 0
<TOTAL-REVENUES> 373,592
<CGS> 0
<TOTAL-COSTS> 371,202
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,390
<INCOME-TAX> 480
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,910
<EPS-PRIMARY> .80
<EPS-DILUTED> 0
</TABLE>
