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, 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
September 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. There were no matters
submitted to a vote of security holders during the quarter.
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - There were no reports on Form 8-K
filed during the quarter. Exhibits - See index to exhibits.
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 12, 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
September 30, 1999 December 31, 1998
(unaudited)
ASSETS
Cash $ 17,535 $ 11,289
Trading securities, at fair value
224,981 240,885
Restricted cash and investments -
Series 1985-A working capital reserve, at fair
value
59,602 59,046
Loans receivable from affiliates
8,484,012 11,104,810
Accrued interest receivable from affiliates
238,613 624,646
Other assets 20,992 17,056
TOTAL ASSETS $9,045,735 $ 12,057,732
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Bonds payable $8,484,012 $ 11,104,810
Accrued interest payable
238,613 624,646
Other liabilities, principally to affiliates
87,415 89,822
TOTAL LIABILITIES 8,810,040 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 50,735 53,494
SHAREHOLDERS' EQUITY 235,695 238,454
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
$ 9,045,735 $ 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 Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
(unaudited) (unaudited)
REVENUES
Interest on loans
$ 238,613 $ 312,323 $ 793,449 $1,016,133
Other interest
2,758 6,038 10,400 14,603
Management fees
15,250 15,250 45,941 46,822
Net unrealized securities trading gains
(2,292) 2,295 (1,217) 1,380
254,329 335,906 848,573 1,078,938
COSTS AND EXPENSES
Interest on bonds
238,613 312,323 793,449 1,016,133
Management fees
15,250 15,250 45,941 46,822
Other
4,040 4,164 12,632 11,278
257,903 331,737 852,022 1,074,233
NET LOSS
BEFORE INCOME TAXES
(3,574) 4,169 (3,449) 4,705
INCOME TAX BENEFIT
(715) 840 (690) 945
NET LOSS (2,859) 3,329 (2,759) 3,760
RETAINED EARNINGS AT
BEGINNING OF PERIOD
53,594 50,284 53,494 49,853
RETAINED EARNINGS AT
END OF PERIOD
$50,735 $53,613 $50,735 $ 53,613
LOSS PER SHARE
$(1.19) $ 1.39 $(1.15) $ 1.57
The accompanying notes are an integral part
of these financial statements.
Statements of Cash Flows
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Nine Months Ended Nine Months Ended
September 30, 1999 September 30, 1998
(unaudited)
Cash flows from operating activities:
Net income (loss) $(2,759) $3,760
Adjustments to reconcile net
income to net cash provided by
operating activities:
Trading securities 15,904 9,233
Cash and related investments
restricted - Series 1985-A
Working capital reserve (556) (1,984)
Accrued interest receivable
from affiliates 386,033 469,226
Decrease in accrued interest payable
(386,033) (469,226)
Other assets (3,936) 7,246
Other liabilities, principally
to affiliates (2,407) (7,764)
Total adjustments 9,005 6,731
Net cash provided by
operating activities 6,246 10,491
Cash flows from investing activities:
Payments received on loans to
Affiliates 2,620,798 2,789,393
Cash flows from financing activities:
Payments on bonds payable
(2,620,798) (2,789,393)
Net increase in cash 6,246 10,491
Cash at beginning of period
11,289 1,255
Cash at end of period $17,535 $ 11,746
The accompanying notes are an integral part of
these financial statements.
APPENDIX A (4/4)
NOTES TO FINANCIAL STATEMENTS
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
September 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 nine months ended September 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 necess
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
September 30, 1999
During the quarter ended September 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 nine (9) month period ending, September 30, 1999, NMAC revenues
were $848,573 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 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 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
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 conn
ent 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
spect 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
pplements 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 resp
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 comp
on, 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 September 30, 1999, NMAC's assets were $9,045,735 including $242,516
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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