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, 1999
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)
909 East Main Street
P.O. Box 1575
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
June 30, 1999
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, 1998, as filed March 30, 1999.
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 29,1999
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
June 30, 1999 December 31, 1998
(unaudited)
ASSETS
Cash $ 23,650 $ 11,289
Trading securities, at fair value 224,638 240,885
Restricted cash and investments -
Series 1985-A working capital reserve,
at fair value 59,203 59,046
Loans receivable from affiliates 9,863,752 11,104,810
Accrued interest receivable
from affiliates 554,836 624,646
Other assets 15,777 17,056
TOTAL ASSETS $ 10,741,856 $12,057,732
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Bonds payable $ 9,863,752 $11,104,810
Accrued interest payable 554,836 624,646
Other liabilities, principally to affiliates
84,714 89,822
TOTAL LIABILITIES 10,503,302 11,819,278
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 53,594 53,494
SHAREHOLDERS' EQUITY 238,554 238,454
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 10,741,856 $ 12,057,732
The accompanying notes are an integral part of these financial statements.
Statements of Operations and Retained Earnings
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
(unaudited) (unaudited)
REVENUES
Interest
on loans $277,418 $351,905 $554,836 $703,810
Other interest 3,050 5,550 7,642 8,565
Management fees 11,947 15,328 30,691 31,572
Net unrealized securities
trading gains 5,524 29,425 1,075 31,853
297,939 369,440 594,244 743,032
COSTS AND EXPENSES
Interest on bonds 277,418 351,905 554,836 703,810
Management fees 11,947 15,328 30,691 31,572
Other 4,391 4,061 8,592 7,114
293,756 371,294 594,119 742,496
NET INCOME/(LOSS)
BEFORE INCOME TAXES 4,183 (1,854) 125 536
INCOME TAX EXPENSE/(BENEFIT) 840 32,393 25 105
NET INCOME (LOSS) 3343 -1479 100 431
RETAINED EARNINGS AT
BEGINNING OF PERIOD 50251 51763 53494 49853
RETAINED EARNINGS AT
END OF PERIOD $ 53594 $ 50284 53594 $ 50284
EARNINGS (LOSS) PER SHARE $ 1.4 $ -0.62 0.04 $ 0.18
The accompanying notes are an integral part of these financial statements.
Statements of Cash Flows
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998
(unaudited)
Cash flows from operating activities:
Net income (loss) $ 100 $ 431
Adjustments to reconcile net
income to net cash provided by (used for)
operating activities:
Trading securities 16,247 17,446
Cash and related investments
restricted - Series 1985-A
Working capital reserve 32,611 31,442
Accrued interest receivable
from affiliates 69,810 77,739
Decrease in accrued interest payable (69,810) (77,739)
Other assets 1,279 1,674
Other liabilities, principally
to affiliates 27,660 27,079
Total adjustments 12,261 12,105
Net cash by
operating activities 12,361 12,536
Cash flows from investing activities:
Payments received on loans to
affiliates 1241058 1382025
Cash flows from financing activities:
Payments on bonds payable -1241058 -1382025
Net increase (decrease) in cash 12361 12536
Cash at beginning of period 11289 1255
Cash at end of period $ 23650 $ 13791
The accompanying notes are an integral part of these financial statements.
APPENDIX A (4/4)
NOTES TO FINANCIAL STATEMENTS
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
June 30, 1999
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, 1998. The financial
statements for the six months ended June 30, 1999, 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.
NOTE B (New Accounting Pronouncements)
FAS-130 (Reporting Comprehensive Income) is effective for fiscal years beginning
after December 15, 1997. Comprehensive income includes net income plus all
other
components of comprehensive income. The term other comprehensive income
denotes
revenues, expenses, gains, and losses that are included in comprehensive
income but
not in net income in accordance with GAAP. The Company has no components of
comprehensive income other than net income.
FAS-133 (Accounting for Derivative Instruments and Hedging Activities) was
issued
in June 1998 and is effective for fiscal periods beginning after January 1,
2000.
It establishes accounting and reporting standards for derivative instruments,
including derivative instruments that are embedded in other contracts, as well
as for hedging activities. The Company is neither owner nor counterpart to any
derivative instruments or hedging activities.
APPENDIX B
TO FORM 10-Q
Management's Discussion and Analysis of Financial Condition and Results of
Operations
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
June 30, 1999
During the quarter ended June 30, 1999, 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, 1999, NMAC revenues were
$594,244 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 Scott & Stringfellow, Inc. (formally Craigie
Incorporated ),
an affiliate of NMAC and a wholly-owned subsidiary of BB&T Corporation,
pursuant to
which Scott & Stringfellow, Inc. (S&S, Inc.) 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, S&S, Inc. 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 S&S, Inc. 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 Scott & Stringfellow, Inc. (Craigie Incorporated at time
of purchase)
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 S&S
Inc., BB&T
Corporation, purchased Life Savings Bank on March 1, 1998 which owns a fourth
affiliate
of NMAC named Life Capital Corporation. Life Capital was purchased by S&S,
Inc. and
subsequently merged into Mountain Financial Corporation effective September 30,
1998.
As of June 30, 1999, NMAC's assets were $10,741,856 including $248,288 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.
During the second quarter of 1999, NMAC's principal executive offices moved to
its
new location at 909 East Main Street, Richmond, VA .
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