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, 2000
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, 2000
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, 1999, as filed March 31, 2000. There were no other 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: August 8, 2000
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.
26. Not applicable.
APPENDIX A (1/4)
Consolidated Statements of Financial Condition
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
June 30, 2000 December 31, 1999
(unaudited)
ASSETS
Cash $ 20,802 $19,308
Trading securities, at fair value
79,158 151,645
Loans receivable from affiliates
7,410,044 8,484,012
Accrued interest receivable
from affiliates
416,815 477,226
Other assets 165,711 104,713
TOTAL ASSETS $ 8,092,530 $ 9,236,904
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Bonds payable $ 7,410,044 $ 8,484,012
Accrued interest payable
416,815 477,226
Other liabilities, principally to affiliates
46,264 38,714
TOTAL LIABILITIES 7,873,123 8,999,952
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
34,447 51,992
SHAREHOLDERS' EQUITY
219,407 236,952
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
$8,092,530 $ 9,236,904
The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Operations and Retained Earnings
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(unaudited) (unaudited)
REVENUES
Interest on loans $ 208,408 $277,418 $416,815 $554,836
Other interest 915 3,050 2,937 7,642
Management fees 15,136 11,947 29,924 30,691
Net unrealized securities trading gains
4,559 5,524 (7,390) 1,075
229,018 297,939 442,286 594,244
COSTS AND EXPENSES
Interest on bonds 208,408 277,418 416,815 554,836
Management fees 15,136 11,947 29,924 30,691
Other 4,322 4,391 17,517 8,592
227,866 293,756 464,256 594,119
NET INCOME/(LOSS)
BEFORE INCOME TAXES 1,152 4,183 (21,970) 125
INCOME TAX EXPENSE/(BENEFIT)
223 840 (4,426) 25
NET INCOME (LOSS)
929 3,343 (17,545) 100
RETAINED EARNINGS AT
BEGINNING OF PERIOD 33,518 50,251 51,992 53,494
RETAINED EARNINGS AT
END OF PERIOD $ 34,447 $ 53,594 $ 34,447 $ 53,594
EARNINGS (LOSS) PER SHARE
$ 0.39 $ 1.40 $ (7.33)$ 0.04
The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Cash Flows
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
(unaudited)
Cash flows from operating activities:
Net income (loss) $ (17,545) $ 100
Adjustments to reconcile net
income to net cash provided by
operating activities:
Trading securities 72,487 16,247
Cash and related investments
restricted - Series 1985-A
Working capital reserve 0 (157)
Accrued interest receivable
from affiliates 60,411 69,810
Decrease in accrued interest payable
(60,411) (69,810)
Other assets
(60,998) 1,279
Other liabilities, principally
to affiliates 7,550 (5,108)
Total adjustments 19,039 12,261
Net cash provided by
operating activities 1,494 12,361
Cash flows from investing activities:
Payments received on loans to
Affiliates 1,073,968 1,241,058
Cash flows from financing activities:
Payments on bonds payable
(1,073,968) (1,241,058)
Net increase in cash 1,494 12,361
Cash at beginning of period
19,308 11,289
Cash at end of period $ 20,802 $ 23,650
The accompanying notes are an integral part of these financial statements.
APPENDIX A (4/4)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
June 30, 2000
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, 1999. The financial
statements for the six months ended June 30, 2000, 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
NOTE B (New Accounting Pronouncements)
During 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement replaces existing
pronouncements and practices with a single, integrated accounting framework
for derivatives and hedging activities requiring companies to formally
document, designate, and assess the effectiveness of transactions that
receive hedge accounting. During 1999, the FASB issued SFAS No. 137,
which deferred the effective date of SFAS No. 133 to fiscal years beginning
after June 15, 2000. Management believes there will be no material effect
on the financial statements from the adoption of the pronouncement.
APPENDIX B
TO FORM 10-Q
Management's Discussion and Analysis of Financial Condition and Results of
Operations
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
June 30, 2000
During the quarter ended June 30, 2000, 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 (6) month period ending, June 30, 2000, NMAC revenues
were $442,286 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 Bond Series: Series 1985-A Bonds, (FHLMC Certificates),
and Series D Bonds (GNMA Certificates). Future revenues are expecte
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.
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
NMAC has no salaried employees and has entered into management and
administrative service agreements with Scott & Stringfellow, Inc. (formerly
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 conneement
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
ith 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
acc
The Series 1985-A Working Capital Reserve, established by NMAC with
respect to its Series 1985-A Bonds, was funded by the Series 1985-A
participating borrowers from their funding agreements. These amounts
were 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 re
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 September 17, 1999, NMAC offered to subscribe to 1,000 shares
of the Common Stock ("Stock") of National Mortgage Securities Corporation
("NMSC") and agreed, in consideration therefor, to transfer cash in the
amount of $10,000 to NMSC. NMAC also represented that the Stock would
be held for investment and not for the purpose of distribution or resale.
NMAC transferred cash in December 1999 and recorded an investment in
subsidiary on its books. This investment is included in "Other Assets"
on the Balance
.
NMSC was formed to purchase or otherwise acquire, own, hold, pledge,
finance, transfer, assign and otherwise deal in or with mortgage assets
(including mortgage loans), mortgage-backed securities, asset-backed
securities, mortgage collateralized obligations, other interests in
real estate, and any combination of the foregoing, including, but not
limited to, (1) mortgage assets secured by senior or subordinate liens
on residential property, (2) participation interests in mortgage assets,
(3) pass-through, mo
As of June 30, 2000, NMAC's assets were $8,092,530 including
$99,960 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.
