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, 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
March 31, 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: May 10, 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.
28. Not applicable.
Consolidated Statements of
Financial Condition
NATIONAL MORTGAGE ACCEPTANCE
CORPORATION
March 31, 2000 December 31, 1999
(unaudited)
ASSETS
Cash $ 18,522 $ 19,308
Trading securities, at fair 86,760 151,645
value
Loans receivable from 7,410,044 8,484,012
affiliates
Accrued interest receivable
from affiliates 208,407 477,226
Other assets 162,074 104,713
TOTAL ASSETS $ 7,885,807 $ 9,236,904
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Bonds payable $ 7,410,044 $ 8,484,012
Accrued interest payable 208,407 477,226
Other liabilities, 48,878 38,714
principally to affiliates
TOTAL 7,667,329 8,999,952
LIABILITIES
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 33,518 51,992
218,478 236,952
SHAREHOLDERS' EQUITY
TOTAL
LIABILITIES AND
$ 7,885,807 $ 9,236,904
SHAREHOLDERS' EQUITY
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
March
31,
2000 1999
(unaudited)
REVENUES
Interest on loans $ 208,407 $ 277,418
Other interest 2,022 4,592
Management fees 14,788 18,744
Net unrealized (11,949) (4,449)
securities trading losses
213,268 296,305
COSTS AND EXPENSES
Interest on bonds 208,407 277,418
Management fees 14,788 18,744
Other 13,195 4,201
236,390 300,363
NET LOSS
BEFORE INCOME TAXES (23,122) (4,058)
INCOME TAX BENEFIT (4,648) (815)
NET LOSS (18,474) (3,243)
RETAINED EARNINGS AT
BEGINNING OF PERIOD 51,992 53,494
RETAINED EARNINGS AT
END OF PERIOD $ 33,518 $ 50,251
LOSS PER SHARE $ (7.71) $ (1.35)
The accompanying notes
are an integral part of
these financial
statements.
APPENDIX A (3/4)
Consolidated Statements of Cash
Flows
NATIONAL MORTGAGE ACCEPTANCE
CORPORATION
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
(unaudited)
Cash flows from operating
activities:
Net loss $ (18,474) $ (3,243)
Adjustments to reconcile net
income to net cash provided
by
operating activities:
Trading securities 64,885 (42)
Cash and related investments
restricted - Series 1985-A
Working capital reserve 0 240
Accrued interest receivable
from affiliates 268,819 347,228
Decrease in accrued (268,819) (347,228)
interest payable
Other assets (57,361) 1,379
Other liabilities,
principally
to affiliates 10,164 1,555
Total adjustments 17,688 3,132
Net cash used for
operating activities (786) (111)
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 decrease in cash (786) (111)
Cash at beginning of period 19,308 11,289
Cash at end of period $ 18,522 $ 11,178
The accompanying notes are an
integral part of these financial
statements.
APPENDIX A (4/4)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NATIONAL MORTGAGE ACCEPTANCE CORPORATION
March 31, 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 three months ended March 31, 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
indicative of results for a full year.
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
March 31, 2000
During the quarter ended March 31, 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 (3) month period ending,
March 31, 2000, NMAC revenues were $213,268 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 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.
(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
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, 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 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.
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 Sheet for December 31, 1999.
NMSC is a wholly owned subsidiary of NMAC.
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, mortgage-
backed certificates as to which Federal National
Mortgage Association guarantees the timely payment
of interest at the pass-through rate and the
timely payment of principal, and other securities
as dictated in NMSC's Articles of Incorporation.
NMSC has no salaried employees and its officers
and directors also hold offices in NMAC. There
was no business activity in NMSC in 1999.
As of March 31, 2000, NMAC's assets were
$7,885,807 including $95,281 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.
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 18,522
<SECURITIES> 86,760
<RECEIVABLES> 7,410,044
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<CURRENT-LIABILITIES> 257,285
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0
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<COMMON> 184,960
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