Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 33-92454
ZIEGLER MORTGAGE SECURITIES, INC. II
(Exact name of registrant as specified in its charter)
Wisconsin 39-1539696
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 North Main Street, West Bend, Wisconsin 53095
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 334-5521
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
INDICATE BY CHECK MARK 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 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
Aggregate market value of
voting stock held by non-affiliates
of the registrant: None
Number of shares outstanding of registrant's classes of common stock, as of
January 31, 1996:
Class Shares Outstanding
Common Stock, 20,000
$1.00 Par Value
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
FORM 10-K
ZIEGLER MORTGAGE SECURITIES, INC. II
PART I
Item 1. Business
Ziegler Mortgage Securities, Inc. II (the "Company") is a
limited purpose finance company which is owned equally by The Ziegler
Companies, Inc. and Mr. James G. Pouros. The Company was organized to
facilitate the financing of mortgage loans and does not intend to engage in
any other business activities at this time.
The Company issues bonds from time to time in series, each
of which will be secured by a separate security package consisting of GNMA
Certificates (the "GNMA Certificates") issued by the Government National
Mortgage Association ("GNMA") and/or Guaranteed Mortgage Pass-Through
Certificates (the "FNMA Certificates") issued by the Federal National Mortgage
Association ("FNMA") (collectively the "Mortgage Certificates"). The Company
does not have, nor is it expected in the future to have, any significant
assets other than the assets pledged as security for specific series of
securities issued by it.
The full and timely payment of the principal of and
interest on the GNMA Certificates is guaranteed by GNMA. The GNMA guaranty
is backed by the full faith and credit of the United States. FNMA guarantees
the payment of principal and interest on the FNMA Certificates issued by it,
but the FNMA guaranty is not backed by the full faith and credit of the United
States.
B. C. Ziegler and Company, which acts as the underwriter
for the bonds, is a wholly-owned subsidiary of The Ziegler Companies, Inc.,
owner of 50% of the outstanding common stock of the Company. B. C. Ziegler and
Company provides management and administrative services to the Company for
which, pursuant to a management agreement with the Company, it is entitled to
receive a semiannual management fee not to exceed .375% of the aggregate
outstanding principal amount of bonds on the last day of the month preceding
each semiannual payment date.
As of December 31, 1995, the Company has issued eighty
series of bonds totaling $333,953,000.
There are no paid employees of the Company.
Item 2. Properties
The Company owns no real estate and leases no office space.
Item 3. Legal Proceedings
The Company is not a party to any material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None
<PAGE>
PART II
Item 5. Market for the Company's Common Stock and Related Security Holder
Matters
There is no market for the common stock of the Company.
The Ziegler Companies, Inc. and Mr. James G. Pouros each own 50% of the
issued and outstanding shares of the Company.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Total Revenues $ 10,623,778 $ 11,144,634 $ 17,010,650
Net Income $ - $ - $ -
Earnings Per Share
of Common Stock $ - $ - $ -
Cash Dividends Per
Share Declared $ - $ - $ -
Total Assets $125,212,243 $122,392,125 $152,949,953
Long-term Obligations $119,908,000 $117,018,000 $145,809,000
Stockholders' Equity at
Year End $ 1,520,000 $ 1,520,000 $ 2,020,000
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - Comparison of Years 1995, 1994 and 1993
During 1995, the Company issued four series of Mortgage
Certificate- Backed Bonds totaling $10,925,000. During 1994, the Company
issued seven series of Bonds totaling $21,402,000. During 1993, the Company
issued five series of Bonds totaling $15,636,000. Total revenues, consisting
mostly of interest income, for 1995, 1994 and 1993 totaled $10,623,778,
$11,144,634 and $17,010,650, respectively.
As a result of lower interest rates, the Company experi-
enced a higher level of bond redemptions caused by the liquidation or sale of
Mortgage Certificates particularly in 1994 and 1993. Bond redemptions fell
dramatically in 1995 which saw liquidation and sale volumes decline. Total
bonds redeemed in 1995, 1994 and 1993 were $8,035,000, $52,154,000 and
$46,495,000, respectively. These redemptions were based on Mortgage
Certificate sales and liquidations totaling $8,011,000, $33,126,000 and
$64,363,000 in 1995, 1994 and 1993, respectively. These Mortgage Certificate
sales and liquidations and subsequent bond redemptions result in gains on sale
of mortgage certificates and offsetting increases in amortization of bond
issue costs in the Statements of Operations.
In accordance with a written management agreement,
management fees of the Company were limited to the amount which prevents the
Company from incurring a loss. It is anticipated that the Company will
continue to operate at close to a breakeven level in future years.
Liquidity and Capital Resources
The Company has no fixed assets nor any commitments
outstanding to purchase or lease any fixed assets.
Each series of bonds is structured in a manner such that
funds received from the related Mortgage Certificates are sufficient to fund
all interest and principal payments on the bonds, and all other expenses of
the Company. This can be seen in the Condensed Statements of Cash Flows. For
1995, there was a net decrease in cash and cash equivalents totaling
approximately $169,000 which was primarily caused by Company payments to B. C.
Ziegler and Company in satisfaction of previously accumulated management fees
of the Company and American Mortgage Securities, Inc. ("AMSI"). The Company
assumed the obligation to pay these amounts incurred by AMSI pursuant to the
merger of AMSI with and into the Company, as described below. Net income was
zero because of the management fee paid to B. C. Ziegler and Company. The
primary net cash disbursement from investing activities totaled $2,593,000
from an excess of amounts invested in the purchase of new Mortgage
Certificates which serve as collateral for the four Bond series issued during
1995 over the amounts received from Mortgage Certificate liquidations in that
same period. This net disbursement was funded by the primary net cash
receipt, which totaled $2,562,000, which arose from an excess of cash received
from the issuance of the four Bond series during 1995 over cash disbursed to
redeem outstanding Bonds from previous series.
The Company has 15,000 shares of $9.00 non-cumulative, non-
voting preferred stock outstanding. No dividends were declared or paid in
1995, 1994 or 1993. The Company may redeem any or all of the preferred stock
at any time, at a redemption price of $100 per share. During 1994, the
Company redeemed 5,000 shares.
Effective December 30, 1994, AMSI, another limited purpose
finance company organized to facilitate the financing of mortgage loans,
merged with and into the Company. Prior to the merger, AMSI was owned 50% by
The Ziegler Companies, Inc. and 50% by Mr. James G. Pouros. The Company
assumed all the assets and liabilities of AMSI at year end 1994. These assets
and liabilities, primarily one outstanding bond issue totaling $1,961,000
which was collateralized by a separate pool of Mortgage Certificates totaling
$1,966,000, at amortized cost, are included in the Company's Balance Sheet as
of December 31, 1995 and 1994. The merger produced no effect on the Company's
1994 operations since it was not effective until year end.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Company, together with the
related Notes to Financial Statements and Report of Independent Public
Accountants, are contained in the Financial Statements for the fiscal years
ended December 31, 1995, 1994 and 1993, included herein.
Item 9. Disagreements with Accountants on Accounting and Financial
Disclosure
There were no reports on Form 8-K reporting a change of
accountants or a disagreement with accountants on any matter of accounting
principles or practices on financial statement disclosure filed during the
fiscal year 1995.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Company
<TABLE>
<CAPTION>
Position
Position Held
Held Since
<S> <S> <C>
Eugene H. Rudnicki President and Director (1) 11/85
James G. Pouros Director (2) 12/92
Jeffrey C. Vredenbregt Vice President (3) 12/92
Lynn R. Van Horn Treasurer and Secretary (4) 5/86
</TABLE>
(1) Mr. Rudnicki, age 61, has also been since 1980, Senior Vice President-
Acquisitions of B. C. Ziegler and Company.
(2) Mr. Pouros, age 51, has also been since 1979, a member of the law firm
of O'Meara, Eckert, Pouros & Gonring.
(3) Mr. Vredenbregt, age 42, has also been, since 1993, Vice President of
B. C. Ziegler and Company, and has been Assistant Treasurer and
Controller of B. C. Ziegler and Company since May 18, 1987.
(4) Mr. Van Horn, age 42, has also been Senior Vice President-Finance of
B. C. Ziegler and Company since March 19, 1990. From March, 1985 to
March 19, 1990, Mr. Van Horn was Vice President-Finance of B. C. Ziegler
and Company.
Item 11. Executive Compensation
Since B. C. Ziegler and Company provides management and
administrative services to the Company pursuant to a management agreement with
the Company, the Company has no salaried employees. Directors, including
those who are employees of B. C. Ziegler and Company receive annual
compensation of $5,000 apiece.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The Ziegler Companies, Inc., 215 North Main Street, West
Bend, Wisconsin 53095, and Mr. James G. Pouros, 5903 Golf View Drive, West
Bend, Wisconsin 53095, each own 10,000 shares of common stock of the Company,
50% of the 20,000 outstanding shares of common stock of the Company, and each
of these owners has sole voting and dispositive powers. B. C. Ziegler and
Company, 215 North Main Street, West Bend, Wisconsin 53095, manager of the
Company and the sole underwriter of the bonds offered by the Company, is a
wholly-owned subsidiary of The Ziegler Companies, Inc. and owns 15,000 shares
of preferred stock of the Company, 100% of the 15,000 outstanding shares of
preferred stock of the Company. The preferred stock is non-voting.
Item 13. Certain Relationships and Related Transactions
B. C. Ziegler and Company, a wholly-owned subsidiary of The
Ziegler Companies, Inc. which owns 50% of the Company's outstanding stock
entered into a management agreement with the Company as of January 1, 1986.
The management agreement provides that the manager is entitled to receive a
semiannual management fee not to exceed .375% of the aggregate outstanding
principal amount of bonds issued by the Company on the last day of the month
preceding such semiannual payment date. The management fee is payable on each
semiannual payment date. As soon as possible after the end of each fiscal
year of the Company, the Company is required to advise the manager of its
preliminary calculation of its net income or loss for such fiscal year. In
the event such preliminary calculation indicates a loss, the amount of the
management fee for any such fiscal year shall be retroactively reduced to such
amount (not less than zero) as will prevent the Company from suffering a loss
(as determined by application of generally accepted accounting principles) for
such fiscal year. Any such reduction in the management fee shall be applied
to reduce any balance due, and, to the extent it exceeds any balance due,
shall be promptly refunded to the Company. The manager earned management fees
of $349,925 in 1995, $158,801 in 1994 and $179,930 in 1993.
B. C. Ziegler and Company also acts as underwriter for the
bonds issued by the Company. In its capacity as underwriter, B. C. Ziegler
and Company receives a fee for its services equal to a percentage of the bonds
offered by the Company.
As of December 31, 1995 and 1994, the Company was indebted
to B. C. Ziegler and Company in the amount of $67,285 and $97,561,
respectively, for accrued management fees. As of December 31, 1994, the
Company was also indebted to B. C. Ziegler and Company in the amount of
$142,636 which was the AMSI indebtedness to B. C. Ziegler and Company at the
time of the merger, discussed in Part II, Item 7 of this Form 10-K, of AMSI
into the Company. As of December 31, 1994, the Company had a demand note with
The Ziegler Companies, Inc. of $402,205 which was repaid in 1995.
Reference should also be made to the merger of AMSI with and into the
Company as described in Item 7 hereof.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents List
(1) Financial Statements
Report of Independent Public Accountants.
Balance Sheets as of December 31, 1995 and 1994.
Statements of Operations for the Years Ended December 31,
1995, 1994 and 1993.
Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 1995, 1994 and 1993.
Statements of Cash Flows for the Years Ended December 31,
1995, 1994 and 1993.
Notes to Financial Statements, dated as of December 31,
1995 and 1994.
(2) Financial Statement Schedules
None
(3) Exhibits
(3) Articles of Incorporation, as amended, and Bylaws of
the Company, as amended, (incorporated by reference
to Exhibits 3(a) and 3(b) to Registration Statement
on Form S-11, Commission file number 33-21324)
(4) (A) Indenture dated January 1, 1986 between the
Company and M&I First National Bank, as
Trustee, relating to Mortgage Certificate-
Backed Bonds (incorporated by reference to
Exhibit 4(a) to Registration Statement on
Form S-11, Commission file number 33-1726).
(B) Tenth Supplemental Indenture dated as of
October 1, 1986 (incorporated by reference to
Exhibit (4) to Form 8-K filed November 3,
1986, Commission file number 33-1726).
(C) Fifteenth Supplemental Indenture dated as of
April 1, 1987 (incorporated by reference to
Exhibit (4) to Form 8-K filed May 20, 1987,
Commission file number 33-1726).
(D) Sixteenth Supplemental Indenture dated as of
May 1, 1987 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed June 12,
1987, Commission file number 33-10076).
(E) Eighteenth and Nineteenth Supplemental
Indentures dated as of June 1, 1987
(incorporated by reference to Exhibit (4.1)
and (4.2), respectively, to Form 8-K filed
July 17, 1987, Commission file number
33-10076).
(F) Twentieth, Twenty-First and Twenty-Second
Supplemental Indentures dated as of July 1,
1987 (incorporated by reference to Exhibit
(4.1), (4.2) and (4.3), respectively, to Form
8-K filed September 15, 1987, Commission file
number 33-10076).
(G) Twenty-Fourth Supplemental Indenture dated as
of October 1, 1987 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed November
18, 1987, Commission file number 33-10076).
(H) Thirty-Third Supplemental Indenture dated as
of April 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 2,
1988, Commission file number 33-10076).
(I) Thirty-Fourth Supplemental Indenture dated
June 1, 1988 and Thirty-Seventh Supplemental
Indenture dated as of July 1, 1988
(incorporated by reference to Exhibit (4.1)
and (4.4), respectively, to Form 8-K filed
August 1, 1988, Commission file number
33-21324).
(J) Thirty-Ninth Supplemental Indenture dated as
of August 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed October 6,
1988, Commission file number 33-21324).
(K) Fortieth Supplemental Indenture dated as of
September 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed October 6,
1988, Commission file number 33-21324).
(L) Forty-First Supplemental Indenture dated as
of October 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed November
9, 1988, Commission file number 33-21324).
(M) Forty-Second Supplemental Indenture dated as
of October 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed November
9, 1988, Commission file number 33-21324).
(N) Forty-Fifth Supplemental Indenture dated as
of February 1, 1989 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
April 7, 1989, Commission file number
33-21324).
(O) Forty-Seventh Supplemental Indenture dated as
of May 1, 1989 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed May 30, 1989,
Commission file number 33-28290).
(P) Forty-Ninth Supplemental Indenture dated as
of July 1, 1989 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed July 27,
1989, Commission file number 33-28290).
(Q) Fifty-Second Supplemental Indenture dated as
of May 1, 1990 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed June 6, 1990,
Commission file number 33-28290).
(R) Fifty-Fifth Supplemental Indenture dated as
of September 1, 1990 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
September 13, 1990, Commission file number
33-28290).
(S) Sixtieth Supplemental Indenture dated as of
June 1, 1991 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed July 11,
1991, Commission file number 33-28290).
(T) Sixty-First Supplemental Indenture dated as
of September 1, 1991 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
October 3, 1991, Commission file number
33-28290).
(U) Sixty-Second Supplemental Indenture dated as
of February 1, 1992 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
February 26, 1992, Commission file number
33-28290).
(V) Sixty-Third Supplemental Indenture dated as
of May 1, 1992 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed June 2, 1992,
Commission file number 33-28290).
(W) Sixty-Fourth Supplemental Indenture dated as
of June 1, 1992 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed June 18,
1992, Commission file number 33-28290).
(X) Sixty-Fifth Supplemental Indenture dated as
of January 1, 1993 incorporated by reference
to Exhibit (4.1) to Form 8-K filed February
1, 1993, Commission file number 33-28290).
(Y) Sixty-Sixth Supplemental Indenture dated as
of January 1, 1993 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed February
1, 1993, Commission file number 33-28290).
(Z) Sixty-Seventh Supplemental Indenture dated as
of March 1, 1993 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed March 17,
1993, Commission file number 33-28290).
(AA) Sixty-Eighth Supplemental Indenture dated as
of April 1, 1993 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed April 23,
1993, Commission file number 33-28290).
(AB) Sixty-Ninth Supplemental Indenture dated as
of May 1, 1993 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed May 27, 1993,
Commission file number 33-28290).
(AC) Seventieth Supplemental Indenture dated as of
March 1, 1994 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed April 4,
1994, Commission file number 33-28290).
(AD) Seventy-First Supplemental Indenture dated as
of April 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 2,
1994, Commission file number 33-28290).
(AE) Seventy-Second Supplemental Indenture dated
as of April 1, 1994 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
May 2, 1994, Commission file number
33-28290).
(AF) Seventy-Third Supplemental Indenture dated as
of April 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 6,
1994, Commission file number 33-28290).
(AG) Seventy-Fourth Supplemental Indenture dated
as of May 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed June 1,
1994, Commission file number 33-28290).
(AH) Seventy-Fifth Supplemental Indenture dated as
of June 1, 1994 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed July 5, 1994,
Commission file number 33-28290).
(AI) Seventy-Sixth Supplemental Indenture dated as
of September 1, 1994 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
September 30, 1994, Commission file number
33-28290).
(AJ) Seventy-Seventh Supplemental Indenture dated
as of February 1, 1995 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
February 3, 1995, Commission file number
33-28290).
(AK) Seventy-Eighth Supplemental Indenture dated
as of April 1, 1995 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
May 1, 1995, Commission file number
33-28290).
(AL) Seventy-Ninth Supplemental Indenture dated as
of June 1, 1995 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed June 30,
1995, Commission file number 33-28290).
(AM) Eightieth Supplemental Indenture dated as of
September 1, 1995 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed September
8, 1995, Commission file number 33-28290).
(All references to Supplemental Indentures relating
to Bonds which have been redeemed in whole have been
deleted.)
(10) Form of Underwriting Agreement dated as of May 17,
1995 between the Company and B. C. Ziegler and
Company (incorporated by reference to Exhibit 1 to
Registration Statement on Form S-3, Commission file
number 33-92454).
(b) Reports on Form 8-K
None
(c) Exhibits Required by Item 601 of Regulation S-K
Included in Item (a)(3) above.
(d) Financial Statement Schedules Required by Regulation S-X
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on this 8th day of
March, 1996.
ZIEGLER MORTGAGE SECURITIES, INC. II
By /s/ Eugene H. Rudnicki
Eugene H. Rudnicki
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <S> <S>
/s/ Eugene H. Rudnicki President and Director March 8, 1996
Eugene H. Rudnicki (Chief Executive Officer)
/s/ James G. Pouros Director March 8, 1996
James G. Pouros
/s/ Lynn R. Van Horn Treasurer and Secretary March 8, 1996
Lynn R. Van Horn (Principal Financial and
Accounting Officer)
</TABLE>
INDEX TO FINANCIAL STATEMENTS
The following financial statements are referenced in Item 8:
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Public Accountants 12
Balance Sheets as of December 31, 1995 and 1994 13
Statements of Operations For the Years Ended
December 31, 1995, 1994 and 1993 14
Statements of Changes in Stockholders' Equity For the
Years Ended December 31, 1995, 1994 and 1993 15
Statements of Cash Flows For the Years Ended
December 31, 1995, 1994, and 1993 16
Notes to Financial Statements, dated as of
December 31,1995 and 1994 18
Exhibit 23 Consent of Arthur Andersen LLP 26
Exhibit 27 Financial Data Schedule 27
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Ziegler Mortgage Securities, Inc. II:
We have audited the accompanying balance sheets of ZIEGLER MORTGAGE
SECURITIES, INC. II (a Wisconsin corporation) as of December 31, 1995 and
1994, and the related statements of operations, changes in stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Ziegler Mortgage
Securities, Inc. II as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
February 2, 1996.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
ASSETS
Cash $ 83,353 $ 87,263
Money market investments, at cost which
approximates market 341,861 104,483
Demand note with The Ziegler Companies, Inc.,
at cost, which approximates market - 402,205
Total cash and cash equivalents 425,214 593,951
Cash and investments held by trustee, at cost,
which approximates market 4,207,178 4,142,583
Accrued interest receivable 855,783 844,075
Mortgage Certificates, held by trustee (net
of purchase discount of $3,425,237 and
$3,453,038, respectively) 116,345,952 113,401,638
Deferred issuance costs 3,378,116 3,409,878
Total assets $125,212,243 $122,392,125
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued interest payable $ 3,716,958 $ 3,613,928
Mortgage Certificate-Backed Bonds payable 119,908,000 117,018,000
Payable to B. C. Ziegler and Company 67,285 240,197
Total liabilities 123,692,243 120,872,125
Stockholders' Equity:
Preferred Stock, $.10 par value, non-voting,
$9.00 non-cumulative dividend, $100
redemption price;
200,000 shares authorized,
15,000 shares issued and
outstanding, respectively 1,500,000 1,500,000
Common stock, $1 par value,
56,000 shares authorized,
20,000 shares issued and outstanding 20,000 20,000
Retained earnings - -
Total stockholders' equity 1,520,000 1,520,000
Total liabilities and
stockholders' equity $125,212,243 $122,392,125
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Interest income $10,395,747 $10,129,823 $14,773,591
Gain on sale of mortgage
certificates 228,031 1,014,811 2,237,059
Total revenues 10,623,778 11,144,634 17,010,650
Expenses:
Interest expense 9,764,637 9,654,473 14,443,586
Amortization of deferred
issuance costs 359,513 1,111,631 2,138,311
Management fee 349,925 158,801 179,930
General and administrative 149,703 219,729 248,823
Total expenses 10,623,778 11,144,634 17,010,650
Income before income taxes - - -
Provision for income taxes - - -
Net income $ - $ - $ -
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
Common Stock Preferred Stock Total
Number Number Stock-
of of Retained holders'
Shares Amount Shares Amount Earnings Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1992 20,000 $20,000 20,000 $2,000,000 $ - $2,020,000
Net income - - - - - -
Balance at
December 31, 1993 20,000 20,000 20,000 2,000,000 - 2,020,000
Redemption of preferred
stock - - (5,000) (500,000) - (500,000)
Net income - - - - - -
Balance at
December 31, 1994 20,000 20,000 15,000 1,500,000 - 1,520,000
Net income - - - - - -
Balance at
December 31, 1995 20,000 $20,000 15,000 $1,500,000 $ - $1,520,000
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ - $ - $ -
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Gain on sale of Mortgage
Certificates (228,031) (1,014,811) (2,237,059)
Discount accretion on
Mortgage Certificates (123,337) (116,878) (163,050)
Amortization of deferred
issuance costs 359,513 1,111,631 2,138,311
Change in assets and
liabilities:
Decrease (Increase) in -
Funds held by trustee (64,595) 20,874,119 (16,403,461)
Accrued interest
receivable (11,708) 119,467 406,615
Receivable from
B. C. Ziegler and Company - - 24,679
Increase (Decrease) in -
Payable to B. C. Ziegler
and Company (172,912) (26,943) 124,504
Accrued interest payable 103,030 (1,430,566) (1,294,567)
Net cash provided by (used in)
operating activities (138,040) 19,516,019 (17,404,028)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired through merger - 55,249 -
Sale and redemption of Mortgage
Certificates 8,011,228 33,126,215 64,362,572
Purchase of Mortgage Certificates (10,604,175) (20,681,090) (15,208,792)
Net cash provided by (used in)
investing activities (2,592,947) 12,500,374 49,153,780
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Mortgage Certificate-
Backed Bonds 10,597,250 20,749,705 15,134,070
Principal payments on Mortgage
Certificate-Backed Bonds (8,035,000) (52,154,000) (46,495,000)
Redemption of preferred stock - (500,000) -
Net cash provided by (used in)
financing activities 2,562,250 (31,904,295) (31,360,930)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ (168,737) $ 112,098 $ 388,822
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 593,951 481,853 93,031
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 425,214 $ 593,951 $ 481,853
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid during the year $ 9,661,607 $11,085,000 $15,738,000
Income taxes paid during
the year $ - $ - $ -
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING ACTIVITIES:
Assets acquired through merger,
primarily Mortgage Certificates $ - $ 2,096,000 $ -
Liabilities assumed through
merger, primarily Mortgage
Certificate-Backed Bonds $ - $ 2,151,000 $ -
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(1) Organization -
Ziegler Mortgage Securities, Inc. II (the "Company") is a limited
purpose finance company. The Company was organized to facilitate the
financing of mortgage loans. The common stock of the Company is owned
equally by The Ziegler Companies, Inc. and James G. Pouros.
(2) Summary of Significant Accounting Policies -
Mortgage Certificates are carried at par value less unamortized purchase
discount. The purchase discount on the Mortgage Certificates is
amortized over the life of the related outstanding Mortgage Certificate-
Backed Bonds (the "Bonds") using the bonds outstanding method which
approximates the effective interest rate method. The market values of
the Mortgage Certificates at December 31, 1995 and 1994 were
approximately $124,478,000 and $112,825,000, respectively.
Deferred bond issuance costs consist of underwriting discounts and other
expenses of issuance and distribution. Such costs are amortized over
the life of the outstanding Bonds using the bonds outstanding method
which approximates the effective interest rate method.
Cash equivalents are defined as unrestricted short-term investments
maturing within three months of the date of purchase. The $402,205
demand note as of December 31, 1994 with The Ziegler Companies, Inc. is
for funds deposited with The Ziegler Companies, Inc. which have been
invested in daily reverse repurchase agreements collateralized by
securities guaranteed by the full faith and credit of the United States.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
(3) Mortgage Certificates -
The Mortgage Certificates consist of GNMA Certificates (comprising 89%
of the portfolio as of December 31, 1995) guaranteed by the Government
National Mortgage Association ("GNMA") and/or Guaranteed Mortgage
Pass-Through Certificates (comprising 11% of the portfolio) issued by
the Federal National Mortgage Association ("FNMA") (collectively the
"Mortgage Certificates"). The full and timely payment of the principal
and interest on the GNMA Certificates is guaranteed by GNMA. The GNMA
guaranty is backed by the full faith and credit of the United States
government. FNMA guarantees the payment of principal and interest on
the FNMA Certificates but the FNMA guaranty is not backed by the full
faith and credit of the United States government.
Principal and interest payments received from the Mortgage Certificates
are controlled by the trustee. These funds are utilized to meet the
semiannual interest payments on the Bonds, to reduce the outstanding
principal balance of the Bonds and to pay certain operating expenses of
the Company.
(4) Mortgage Certificate-Backed Bonds Payable -
Bonds outstanding at December 31, 1995, consist of the following:
<TABLE>
<CAPTION>
Outstanding
Principal
Original Amounts
Date of Stated Principal at
Series Rate Bonds Maturity Amounts 12/31/95
<C> <C> <C> <C> <C> <C>
10 8.90% 10/1/86 10/1/21 $ 8,200,000 $ 2,455,000
16 9.00% 5/1/87 1/1/22 4,500,000 2,284,000
18 9.15% 6/1/87 5/1/22 7,372,000 5,804,000
19 9.15% 6/1/87 5/1/22 5,750,000 3,805,000
20 9.00% 7/1/87 6/1/22 5,418,000 3,498,000
21 9.00% 7/1/87 6/1/22 5,266,000 4,881,000
22 9.10% 8/1/87 2/1/21 5,650,000 2,451,000
24 9.20% 10/1/87 2/1/22 5,237,000 4,985,000
33 9.10% 4/1/88 10/15/21 7,054,000 3,658,000
34 9.35% 6/1/88 5/15/23 4,163,000 3,325,000
39 9.40% 8/1/88 8/15/23 5,780,000 3,808,000
40 9.50% 9/1/88 9/15/23 6,800,000 3,917,000
41 9.30% 10/1/88 10/15/23 4,655,000 4,201,000
42 9.20% 10/1/88 10/15/23 4,000,000 3,610,000
45 9.45% 2/1/89 1/15/24 3,950,000 3,827,000
47 9.75% 5/1/89 2/15/24 3,744,000 1,700,000
49 8.45% 7/1/89 7/15/22 2,740,000 2,612,000
52 9.35% 5/1/90 5/15/20 3,000,000 597,000
55 9.00% 9/1/90 10/01/20 3,244,000 683,000
60 8.30% 6/1/91 6/15/24 3,326,000 3,229,000
61 8.00% 9/1/91 11/15/19 3,390,000 1,492,000
62 7.25% 2/1/92 4/15/22 2,925,000 1,545,000
63 7.60% 5/1/92 5/15/22 3,400,000 1,795,000
64 7.40% 6/1/92 6/15/22 3,300,000 1,683,000
65 7.00% 1/1/93 1/15/28 3,029,000 2,974,000
66 7.00% 1/1/93 1/15/28 3,000,000 2,948,000
67 6.40% 3/1/93 12/15/13 3,585,000 3,360,000
68 6.25% 4/1/93 5/01/23 3,000,000 2,609,000
69 6.00% 5/1/93 5/01/23 3,022,000 2,607,000
70 6.00% 3/1/94 11/15/28 3,390,000 3,350,000
71 7.00% 4/1/94 9/20/23 3,015,000 2,767,000
72 7.00% 4/1/94 10/15/23 2,897,000 2,859,000
73 7.00% 4/1/94 4/15/24 3,130,000 3,063,000
74 7.10% 5/1/94 2/15/24 3,145,000 3,104,000
75 7.10% 6/1/94 2/15/24 3,290,000 3,237,000
76 7.35% 9/1/94 9/15/29 2,535,000 2,512,000
77 8.00% 2/1/95 10/15/29 3,066,000 3,049,000
78 7.50% 4/1/95 9/15/29 2,597,000 2,597,000
79 6.75% 6/1/95 6/15/22 2,622,000 2,612,000
80 7.00% 9/1/95 7/15/23 2,640,000 2,640,000
160,827,000 118,133,000
</TABLE>
<TABLE>
<CAPTION>
American Mortgage Securities, Inc.
Mortgage Certificate-Backed Bonds
<C> <C> <C> <C> <C> <C>
5 7.35% 3/1/92 3/01/22 3,000,000 1,775,000
$163,827,000 $119,908,000
</TABLE>
The stated maturities are the dates on which Bonds will be fully paid
assuming no prepayments are received on the Mortgage Certificates which
serve as collateral for the Bonds and no Bonds are called. The stated
maturities of the Bonds will be shortened by prepayments on the Mortgage
Certificates and by any Bond calls.
The Bonds can be redeemed each month without premium under the following
circumstances:
The Company must call the Bonds, to the extent funds are
available, commencing in the twelfth month following the original
issuance of each series or commencing at such time as the
aggregate balance in the redemption fund, as defined in the
prospectus, for each series that reaches $100,000; whichever
occurs first.
The Bonds of any series may be redeemed in whole by the Company
after the third anniversary of the original issuance and,
commencing with Series 16 bonds, at any time as the outstanding
principal amount of such series is less than 10% of the aggregate
principal amount of such series originally issued.
Bondholders can present their Bonds for redemption each month
commencing with the second calendar month following the month in
which each series is originally issued. The Company will redeem
such Bonds to the extent funds are available.
The market values in the secondary bond market of the Bonds outstanding
as of December 31, 1995 and 1994, approximated $120,264,000 and
$111,150,000, respectively.
(5) Related Parties -
B. C. Ziegler and Company, a wholly-owned subsidiary of The Ziegler
Companies, Inc. which owns 50% of the Company's outstanding stock, is
the sole underwriter for the Bonds issued by the Company. In its
capacity as underwriter, B. C. Ziegler and Company received a fee for
its services equal to a percent of the Bonds offered by the Company.
B. C. Ziegler and Company provided management and administrative
services to the Company for which, pursuant to a management agreement
with the Company, they were entitled to receive a management fee not to
exceed .375% of the aggregate outstanding principal amount of bonds
issued by the Company at the last day of the month preceding each
semiannual payment date. Any calculated management fee is retroactively
reduced to such amount (not less than zero) as will prevent the Company
from suffering a loss for each fiscal year.
As of December 31, 1995 and 1994, the Company owed B. C. Ziegler and
Company $67,285 and $97,561, respectively, for accrued management fees.
As of December 31, 1994, the Company also owed B. C. Ziegler and Company
$142,636 which was AMSI indebtedness to B. C. Ziegler and Company at the
time of the merger discussed below. During 1994, the Company redeemed
5,000 shares of the preferred stock from B. C. Ziegler and Company, the
sole owner of the Company's preferred stock, for $500,000.
(6) Merger -
Effective December 30, 1994, the Company merged with American Mortgage
Securities, Inc. ("AMSI"), another limited purpose finance company
organized to facilitate the financing of mortgage loans. Prior to the
merger, AMSI was owned 50% by The Ziegler Companies, Inc. and 50% by Mr.
James G. Pouros. The Company was the surviving corporation and assumed
all the assets and liabilities of AMSI at year end 1994. These assets
and liabilities, primarily one outstanding bond issue totaling
$1,961,000 which is collateralized by a separate pool of Mortgage
Certificates totaling $1,966,000, at amortized cost, are included in the
Company's Balance Sheet as of December 31, 1994. The merger produced no
effect on the Company's 1994 operations since it was not effective until
year end.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
<C> <S> <C>
3 Articles of Incorporation, as amended, and
Bylaws of the Company, as amended, (incor-
porated by reference to Exhibits 3(a) and 3(b)
to Registration Statement on Form S-11,
Commission file number 33-21324) *
4 (A) Indenture dated January 1, 1986 between the
Company and M&I First National Bank, as
Trustee, relating to Mortgage Certificate-
Backed Bonds (incorporated by reference to
Exhibit 4(a) to Registration Statement on
Form S-11, Commission file number 33-1726) *
4 (B) Tenth Supplemental Indenture dated as of
October 1, 1986 (incorporated by reference
to Exhibit (4) to Form 8-K filed November 3,
1986, Commission file number 33-1726) *
4 (C) Fifteenth Supplemental Indenture dated as of
April 1, 1987 (incorporated by reference
to Exhibit (4) to Form 8-K filed May 20, 1987,
Commission file number 33-1726) *
4 (D) Sixteenth Supplemental Indenture dated as of
May 1, 1987 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed June 12, 1987,
Commission file number 33-10076) *
4 (E) Eighteenth and Nineteenth Supplemental
Indentures dated as of June 1, 1987
incorporated rated by reference to Exhibit
(4.1) and (4.2), respectively, to Form 8-K
filed June 12, 1987, Commission file number
33-10076) *
4 (F) Twentieth, Twenty-First and Twenty-Second
Supplemental Indentures dated as of July 1,
1987 (incorporated by reference to Exhibit
(4.1), (4.2) and (4.3), respectively, to
Form 8-K filed September 15, 1987,
Commission file number 33-10076) *
4 (G) Twenty-Fourth Supplemental Indenture dated
as of October 1, 1987 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
November 18, 1987, Commission file number
33-10076) *
4 (H) Thirty-Third Supplemental Indenture dated
as of April 1, 1988 (incorporated by
reference to Exhibit (4.1) to Form 8-K filed
May 2, 1988, Commission file number 33-10076) *
4 (I) Thirty-Fourth Supplemental Indenture dated
June 1, 1988 and Thirty-Seventh Supplemental
Indenture dated as of July 1, 1988 (incor-
porated by reference to Exhibit (4.1) and
(4.4), respectively, to Form 8-K filed
August 1, 1988, Commission file number
33-21324) *
4 (J) Thirty-Ninth Supplemental Indenture dated
August 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed October 6,
1988, Commission file number 33-21324) *
4 (K) Fortieth Supplemental Indenture dated as of
September 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed October 6,
1988, Commission file number 33-21324) *
4 (L) Forty-First Supplemental Indenture dated as
of October 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed November 9,
1988, Commission file number 33-21324) *
4 (M) Forty-Second Supplemental Indenture dated as
of October 1, 1988 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed
November 9, 1988, Commission file number
33-21324) *
4 (N) Forty-Fifth Supplemental Indenture dated as
of February 1, 1989 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed April 7,
1989, Commission file number 33-21324) *
4 (O) Forty-Seventh Supplemental Indenture dated as
of May 1, 1989 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed May 30, 1989,
Commission file number 33-28290) *
4 (P) Forty-Ninth Supplemental Indenture dated as
of July 1, 1989 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed July 27,
1989, Commission file number 33-28290) *
4 (Q) Fifty-Second Supplemental Indenture dated as
of May 1, 1990 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed June 6, 1990,
Commission file number 33-28290) *
4 (R) Fifty-Fifth Supplemental Indenture dated as
of September 1, 1990 (incorporated
by reference to Exhibit (4.1) to Form 8-K
filed September 13 1990, Commission file
number 33-28290) *
4 (S) Sixtieth Supplemental Indenture dated as
of June 1, 1991 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed July 11,
1991, Commission file number 33-28290) *
4 (T) Sixty-First Supplemental Indenture dated as
of September 1, 1991 (incorporated by
reference to Exhibit (4.1) to Form 8-K
filed November 20, 1991, Commission file
number 33-28290) *
4 (U) Sixty-Second Supplemental Indenture dated as
of February 1, 1992 (incorporated by
reference to Exhibit (4.1) to Form 8-K
filed February 26, 1992, Commission file
number 33-28290) *
4 (V) Sixty-Third Supplemental Indenture dated as
of May 1, 1992 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed June 2,
1992, Commission file number 33-28290) *
4 (W) Sixty-Fourth Supplemental Indenture dated as
of June 1, 1992 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed June 18,
1992, Commission file number 33-28290) *
4 (X) Sixty-Fifth Supplemental Indenture dated as
of January 1, 1993 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed February 1,
1993, Commission file number 33-28290) *
4 (Y) Sixty-Sixth Supplemental Indenture dated as
of January 1, 1993 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed February 1,
1993, Commission file number 33-28290) *
4 (Z) Sixty-Seventh Supplemental Indenture dated as
of March 1, 1993 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed March 17,
1993, Commission file number 33-28290) *
4(AA) Sixty-Eighth Supplemental Indenture dated as
of April 1, 1993 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed April 23,
1993, Commission file number 33-28290) *
4(AB) Sixty-Ninth Supplemental Indenture dated as
of May 1, 1993 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 27,
1993, Commission file number 33-28290) *
4(AC) Seventieth Supplemental Indenture dated as
of March 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed April 4,
1994, Commission file number 33-28290) *
4(AD) Seventy-First Supplemental Indenture dated as
of April 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 2,
1994, Commission file number 33-28290) *
4(AE) Seventy-Second Supplemental Indenture dated as
of April 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 2,
1994, Commission file number 33-28290) *
4(AF) Seventy-Third Supplemental Indenture dated as
of April 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 6,
1994, Commission file number 33-28290) *
4(AG) Seventy-Fourth Supplemental Indenture dated as
of May 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed June 1,
1994, Commission file number 33-28290) *
4(AH) Seventy-Fifth Supplemental Indenture dated as
of June 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed July 5,
1994, Commission file number 33-28290) *
4(AI) Seventy-Sixth Supplemental Indenture dated as
of September 1, 1994 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed September 30,
1994, Commission file number 33-28290) *
4(AJ) Seventy-Seventh Supplemental Indenture dated as
of February 1, 1995 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed February 3,
1995, Commission file number 33-28290) *
4(AK) Seventy-Eighth Supplemental Indenture dated as
of April 1, 1995 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 1,
1995, Commission file number 33-28290) *
4(AL) Seventy-Ninth Supplemental Indenture dated as
of June 1, 1995 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed June 30,
1995, Commission file number 33-28290) *
4(AM) Eightieth Supplemental Indenture dated as
of September 1, 1995 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed September 8,
1995, Commission file number 33-28290) *
10 Underwriting Agreement dated as of May 17,
1995 between the Company and B. C. Ziegler
and Company (incorporation by reference to
Exhibit 1 to Registration Statement on Form
S-3, Commission file number 33-92454) *
23 Consent of Arthur Andersen LLP
27 Financial Data Schedule
</TABLE>
*Incorporated by reference
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K into the Company's
previously filed Registration Statement File No. 33-92454 on Form S-3.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
March 13, 1996.
<PAGE>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Ziegler
Mortgage Securities, Inc. II financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 425,214
<SECURITIES> 116,345,952<F3>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 125,212,243
<CURRENT-LIABILITIES> 0
<BONDS> 119,908,000
0
1,500,000
<COMMON> 20,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 125,212,243
<SALES> 0
<TOTAL-REVENUES> 10,623,778<F2>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 859,141
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,764,637
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F3>GNMA mortgage certificates net of purchase discounts and held by a trustee.
<F1>Registrant has an unclassified balance sheet.
<F2>Revenues consist primarily of interest income.
</FN>
</TABLE>
