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: June 30,1998
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
June 30,1998
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 - Inform-
ation 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: July 31, 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 Regist-
ration Statement on Form S-11, Registration No. 2-97573 and incor-
porated 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>
Appendix A (1/4)
Statements of Financial Condition
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
June 30, 1998 December 31, 1997
(unaudited)
ASSETS
Cash $ 13,791 $ 1,255
Trading securities, at fair
value 228,118 245,564
Restricted cash & investments-
Series 1985-A working
capital reserve, at fair value 57,783 56,457
Loans receivable from affiliates 12,512,178 13,894,203
Accrued interest receivable
from affiliates 703,810 781,549
Other Assets 17,572 19,246
------------ ------------
TOTAL ASSETS $13,533,252 $14,998,274
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Bonds payable $12,512,178 $13,894,203
Accrued interest payable 703,810 781,549
Other liabilities, principally
to affiliates 82,020 87,709
------------ ------------
TOTAL LIABILITIES $13,298,008 $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 50,284 49,853
------------ ------------
SHAREHOLDER EQUITY $ 235,244 $ 234,813
TOTAL LIABILITIES AND
SHAREHOLDER EQUITY $13,533,252 $14,998,274
The accompanying notes are an integral part of these financial state-
ments.
<PAGE>
Appendix A (2/4)
Statements of Operations and Retained Earnings
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(unaudited) (unaudited)
REVENUES
Interest on loans $351,905 $437,642 $703,810 $875,284
Other interest 5,550 3,376 8,565 5,960
Management fees 15,328 16,984 31,572 33,228
Net unrealized securites
trading gains (3,343) 1,741 (915) 4,496
-------- -------- -------- --------
369,440 459,743 743,032 918,968
COSTS AND EXPENSES
Interest on bonds 351,905 437,642 703,810 875,284
Management fees 15,328 16,984 31,572 33,228
Other 4,061 3,161 7,114 6,473
-------- -------- -------- --------
371,294 457,787 742,496 914,985
NET INCOME BEFORE
INCOME TAXES (1,854) 1,956 536 3,983
INCOME TAX EXPENSE (375) 0 105 0
NET INCOME (LOSS) (1,479) 1,956 431 3,983
RETAINED EARNINGS AT
BEGINNING OF PERIOD 51,763 45,407 49,853 43,380
RETAINED EARNINGS AT
END OF PERIOD 50,284 47,363 50,284 47,363
-------- -------- -------- --------
-------- -------- -------- --------
EARNINGS (LOSS) PER SHARE $ (0.62) $ 0.82 $ 0.18 $ 1.66
The accompanying notes are an integral part of these financial state-
ments.
<PAGE>
APPENDIX A (3/4)
Statement of Cash Flows
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Six Months Ended
June 30, 1998 June 30, 1997
(unaudited)
Cash flows from operating activities:
Net income (loss) $ 431 $ 3,983
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities:
Trading securities 17,446 85
Cash & related investments
restricted - Series 1985-A
Working capital reserve (1,326) (1,279)
Accrued interest receivable from
affiliates 77,739 99,450
Decrease in accrued interest
payable (77,739) (99,450)
Other assets 1,674 2,234
Other liabilities, principally to
affiliates (5,689) (5,955)
------------- -------------
Total adjustments 12,105 (4,915)
Net cash provided by (used for)
operating activities 12,536 (932)
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 12,536 (932)
Cash at beginning of period 1,255 3,229
------------- -------------
Cash at end of period 13,791 2,297
The accompanying notes are an integral part of these financial
statements.
<PAGE>
APPENDIX A (4/4)
NOTES TO FINANCIAL STATEMENTS
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
June 30,1998
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 six months ended
June 30, 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
June 30, 1998
During the quarter ended June 30, 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 six (6) month period ending, June 30, 1998, NMAC
revenues were $743,032 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.
Chase Bank of Texas, N.A., 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.
Effective June 30, 1998, Atlantic Financing and Security Federal
were merged into Mountain Financial Corporation. In addition, the
parent company of Craigie Incorporated, BB&T Corporation, purchased
Life Savings Bank on March 1, 1998 which owns a fourth affiliate
of NMAC named Life Capital Corporation.
<PAGE>
As of June 30, 1998, NMAC's assets were $13,533,252 including
$241,909 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 13,791
<SECURITIES> 285,901
<RECEIVABLES> 12,512,178
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 721,382
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,533,252
<CURRENT-LIABILITIES> 785,830
<BONDS> 12,512,178
0
0
<COMMON> 184,960
<OTHER-SE> 50,284
<TOTAL-LIABILITY-AND-EQUITY> 13,533,252
<SALES> 0
<TOTAL-REVENUES> 369,440
<CGS> 0
<TOTAL-COSTS> 371,294
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,854)
<INCOME-TAX> (375)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,479)
<EPS-PRIMARY> (.62)
<EPS-DILUTED> 0
</TABLE>
