Form 10-K
UNITED STATES 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
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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, 1998:
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, 1997, the Company has issued eighty-three series of
bonds totaling $343,329,000 and acquired one series of bonds totaling
approximately $1,961,000 in a 1994 merger, of which $94,940,000 still are
outstanding.
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>
1997 1996 1995
<S> <C> <C> <C>
Total Revenues $ 8,771,002 $ 10,383,391 $ 10,623,778
Net Income $ - $ - $ -
Earnings Per Share
of Common Stock $ - $ - $ -
Cash Dividends Per
Share Declared $ - $ - $ -
Total Assets $99,289,905 $105,526,490 $125,212,243
Long-term Obligations $94,940,000 $101,047,000 $119,908,000
Stockholders' Equity
at Year End $ 1,520,000 $ 1,520,000 $ 1,520,000
</TABLE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - Comparison of Years 1997, 1996 and 1995
During 1997, the Company issued one series of Mortgage Certificate-
Backed Bonds totaling $3,152,000. During 1996, the Company issued two series
of Mortgage Certificate-Backed Bonds totaling $6,224,000. During 1995, the
Company issued four series of Bonds totaling $10,925,000. Unfavorable
spreads between the interest yields on the mortgage certificates and the
Certificate-Backed Bonds have kept the Company from issuing additional series
in 1997. Total revenues, consisting mostly of interest income, for 1997,
1996 and 1995 totaled $8,771,002, $10,383,391 and $10,623,778, respectively.
As a result of lower interest rates, the Company experienced a higher
level of bond redemptions caused by the liquidation or sale of Mortgage
Certificates particularly in 1994 and again in 1996. Bond redemptions fell
dramatically in 1995 which saw interest rates increase and liquidation and
sale volumes decline. Total bonds redeemed in 1997, 1996 and 1995 were
$9,241,000, $25,085,000 and $8,035,000, respectively. These redemptions were
based on Mortgage Certificate sales and liquidations totaling $13,091,000,
$25,062,000 and $8,011,000 in 1997, 1996 and 1995, 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 Statements of Cash Flows. For 1997, there was a net
increase in cash and cash equivalents totaling approximately $97,000. Net
income was zero because of the management fee paid to B. C. Ziegler and
Company. The primary net cash receipt from investing activities totaled
$10,033,885 from an excess of amounts received from Mortgage Certificate
liquidations over the amounts invested in the purchase of new Mortgage
Certificates which serve as collateral for the one Bond series issued during
1997. The primary net disbursement from financing activities totaled
$6,183,560 which arose from an excess of cash disbursed to redeem outstanding
Bonds from previous series over cash received from the issuance of the one
Bond series during 1997.
The Company has 15,000 shares of $9.00 non-cumulative, non-voting
preferred stock outstanding. No dividends were declared or paid in 1997,
1996 or 1995. The Company may redeem any or all of the preferred stock at
any time, at a redemption price of $100 per share.
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, 1997 and 1996.
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, 1997 and 1996, 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
1997.
<PAGE>
PART III
Item 10 - Directors and Executive Officers of the Company
<TABLE>
<CAPTION>
Position
Held
Position Held Since
<S> <C> <C> <C>
Thomas S. Ross President and Director (1) 6/97
James G. Pouros Director (2) 12/92
Derek J. Pawlak Vice President (3) 4/97
Dennis A. Wallestad Treasurer and Secretary (4) 6/97
Jeffrey C. Vredenbregt Assistant Secretary (5) 12/92
</TABLE>
(1) Mr. Ross, age 44, since 1987, Vice President of B. C. Ziegler and
Company.
(2) Mr. Pouros, age 53, has also been since 1979, a member of the law
firm of O'Meara, Eckert, Pouros & Gonring.
(3) Mr. Pawlak, age 35, since 1996, Assistant Vice President of
B. C. Ziegler and Company.
(4) Mr. Wallestad, age 35, has also been, since 1997, Sr. Vice
President/CFO of B. C. Ziegler and Company.
(5) Mr. Vredenbregt, age 44, has also been, since 1993, Vice
President of B. C. Ziegler and Company, and has been Controller
since 1987 and Treasurer since 1996 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, 530 N. Silverbrook, #217, 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 $335,985 in 1997, $216,365 in 1996 and $349,925 in 1995.
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, 1997 and 1996, the Company was indebted to B. C.
Ziegler and Company in the amount of $20,023 and $10,945, respectively, for
accrued management fees.
<PAGE>
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, 1997 and 1996.
Statements of Operations for the Years Ended December 31,
1997, 1996 and 1995.
Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 1997, 1996 and 1995.
Statements of Cash Flows for the Years Ended December 31,
1997, 1996 and 1995.
Notes to Financial Statements, dated as of December 31,
1997 and 1996.
(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) 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).
(D) Nineteenth Supplemental Indenture dated as of
June 1, 1987 (incorporated by reference to
Exhibit (4.2), respectively, to Form 8-K filed
July 17, 1987, Commission file number
33-10076).
(E) Twentieth and Twenty-First Supplemental
Indentures dated as of July 1, 1987
(incorporated by reference to Exhibit (4.1)
and (4.2), respectively, to Form 8-K filed
September 15, 1987, Commission file number
33-10076).
(F) 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).
(G) 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).
(H) 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).
(I) 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).
(J) 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).
(K) 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).
(L) 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).
(M) 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).
(N) 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).
(O) 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).
(P) 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).
(Q) 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).
(R) 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).
(S) 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).
(T) 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).
(U) 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).
(V) 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).
(W) 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).
(X) 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).
(Y) 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).
(Z) 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).
(AA) 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).
(AB) 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).
(AC) 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).
(AD) 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).
(AE) 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).
(AF) 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).
(AG) 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).
(AH) 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).
(AI) Eighty First Supplemental Indenture dated as
of April 1, 1996 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed April 26,
1996, Commission file number 33-28290).
(AJ) Eighty Second Supplemental Indenture dated as
of June 1, 1996 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed June 26, 1996,
Commission file number 33-28290).
(AK) Eighty Third Supplemental Indenture dated as
of April 1, 1997 (incorporated by reference to
Exhibit (4.1) to Form 8-K filed May 21, 1997,
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).
(27) Financial Data Schedule
(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
<PAGE>
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 27th
day of March, 1998.
ZIEGLER MORTGAGE SECURITIES, INC. II
By /s/ Thomas S. Ross
Thomas S. Ross
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.
Signature Title Date
/s/ Thomas S. Ross President and Director March 27, 1998
Thomas S. Ross (Chief Executive Officer)
/s/ James G. Pouros Director March 27, 1998
James G. Pouros
/s/ D. Wallestad Treasurer and Secretary March 27, 1998
Dennis A. Wallestad (Principal Financial and
Accounting Officer)
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The following financial statements are referenced in Item 8:
Page
Report of Independent Public Accountants 14
Balance Sheets as of December 31, 1997 and 1996 15
Statements of Operations For the Years Ended
December 31, 1997, 1996 and 1995 16
Statements of Changes in Stockholders' Equity For the
Years Ended December 31, 1997, 1996 and 1995 17
Statements of Cash Flows For the Years Ended
December 31, 1997, 1996, and 1995 18
Notes to Financial Statements, dated as of
December 31, 1997 and 1996 20
Exhibit 23 Consent of Arthur Andersen LLP 27
Exhibit 27 Financial Data Schedule 28
<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, 1997 and
1996, 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, 1997. 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, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
February 6, 1998.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
ASSETS
<S> <C> <C>
Cash $ 63,542 $ 74,291
Money market investments, at cost,
which approximates market 564,243 456,228
Total cash and cash equivalents 627,785 530,519
Cash and investments held by trustee, at cost,
which approximates market 6,928,519 3,347,344
Accrued interest receivable 636,857 707,253
Mortgage Certificates, held by trustee (net of
purchase discount of $2,450,788 and $2,795,809,
respectively) 88,675,684 98,182,510
Deferred issuance costs 2,421,060 2,758,864
Total assets $99,289,905 $105,526,490
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued interest payable $ 2,791,882 $ 2,948,545
Mortgage Certificate-Backed Bonds payable 94,940,000 101,047,000
Payable to B. C. Ziegler and Company 20,023 10,945
Other liabilities 18,000 -
Total liabilities 97,769,905 104,006,490
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 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 $99,289,905 $105,526,490
</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, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Revenues:
Interest income $8,342,979 $ 9,635,812 $ 10,395,747
Gain on sale of mortgage certificates 428,023 747,579 228,031
Total revenues 8,771,002 10,383,391 10,623,778
Expenses:
Interest expense 7,875,114 9,158,478 9,764,637
Amortization of deferred issuance costs 432,363 805,971 359,513
Management fee 335,985 216,365 349,925
General and administrative 127,540 202,577 149,703
Total expenses 8,771,002 10,383,391 10,623,778
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>
<CAPTION>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
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, 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
Net income - - - - - -
Balance at
December 31, 1996 20,000 20,000 15,000 1,500,000 -
1,520,000
Net income - - - - - -
Balance at
December 31, 1997 20,000 $20,000 15,000 $1,500,000 $ -
$1,520,000
The accompanying notes to financial statements are an integral part of these
statements.
</TABLE>
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C> <S>
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 (428,023) (747,579) (228,031)
Discount accretion on
Mortgage Certificates (99,035) (113,051) (123,337)
Amortization of deferred issuance costs 432,363 805,971 359,513
Change in assets and liabilities:
Decrease (Increase) in -
Funds held by trustee (3,581,175) 859,834 (64,595)
Accrued interest receivable 70,396 148,530 (11,708)
Increase (Decrease) in -
Payable to B. C. Ziegler and Company 9,078 (56,340) (172,912)
Accrued interest payable (156,663) (768,413) 103,030
Net cash provided by (used in)
operating activities (3,753,059) 128,952 (138,040)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale and redemption of
Mortgage Certificates 13,091,443 25,062,114 8,011,228
Purchase of Mortgage Certificates (3,057,558) (6,038,041) (10,604,175)
Net cash provided by (used in)
investing activities 10,033,885 19,024,073 (2,592,947)
</TABLE>
The accompanying notes to financial statements are
an integral part of these statements.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Mortgage
Certificate-Backed Bonds $ 3,057,440 $ 6,037,280 $10,597,250
Principal payments on
Mortgage Certificate-Backed Bonds (9,241,000) (25,085,000) (8,035,000)
Net cash provided by (used in)
financing activities (6,183,560) (19,047,720) 2,562,250
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 97,266 105,305 (168,737)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 530,519 425,214 593,951
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 627,785 $ 530,519 $ 425,214
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid during the year $ 8,031,776 $ 9,926,891 $ 9,661,607
Income taxes paid during the year $ - $ - $ -
</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, 1997 AND 1996
(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, 1997 and
1996 were approximately $94,162,566 and $103,022,000, 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 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 98%
of the portfolio as of December 31, 1997) guaranteed by the Government
National Mortgage Association ("GNMA") and/or Guaranteed Mortgage
Pass-Through Certificates (comprising 2% 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, 1997, consist of the following:
<TABLE>
<CAPTION>
Outstanding
Principal
Original Amounts
Date of Stated Principal at
Series Rate Bonds Maturity Amounts 12/31/97
<C> <C> <C> <C> <C> <C>
10 8.90% 10/1/86 10/1/21 $ 8,200,000 $ 2,242,000
16 9.00% 5/1/87 1/1/22 4,500,000 2,236,000
19 9.15% 6/1/87 5/1/22 5,750,000 3,734,000
20 9.00% 7/1/87 6/1/22 5,418,000 3,428,000
21 9.00% 7/1/87 6/1/22 5,266,000 4,791,000
24 9.20% 10/1/87 2/1/22 5,237,000 1,875,000
34 9.35% 6/1/88 5/15/23 4,163,000 3,274,000
39 9.40% 8/1/88 8/15/23 5,780,000 3,739,000
40 9.50% 9/1/88 9/15/23 6,800,000 1,593,000
41 9.30% 10/1/88 10/15/23 4,655,000 3,999,000
42 9.20% 10/1/88 10/15/23 4,000,000 3,444,000
47 9.75% 5/1/89 2/15/24 3,744,000 1,683,000
49 8.45% 7/1/89 7/15/22 2,740,000 2,557,000
52 9.35% 5/1/90 5/15/20 3,000,000 180,000
55 9.00% 9/1/90 10/01/20 3,244,000 499,000
61 8.00% 9/1/91 11/15/19 3,390,000 1,089,000
62 7.25% 2/1/92 4/15/22 2,925,000 1,181,000
63 7.60% 5/1/92 5/15/22 3,400,000 1,060,000
64 7.40% 6/1/92 6/15/22 3,300,000 1,151,000
65 7.00% 1/1/93 1/15/28 3,029,000 2,926,000
66 7.00% 1/1/93 1/15/28 3,000,000 2,899,000
68 6.25% 4/1/93 5/01/23 3,000,000 2,182,000
69 6.00% 5/1/93 5/01/23 3,022,000 1,960,000
70 6.00% 3/1/94 11/15/28 3,390,000 3,289,000
71 7.00% 4/1/94 9/20/23 3,015,000 2,199,000
72 7.00% 4/1/94 10/15/23 2,897,000 2,800,000
73 7.00% 4/1/94 4/15/24 3,130,000 2,926,000
74 7.10% 5/1/94 2/15/24 3,145,000 3,034,000
75 7.10% 6/1/94 2/15/24 3,290,000 3,167,000
76 7.35% 9/1/94 9/15/29 2,535,000 2,484,000
77 8.00% 2/1/95 10/15/29 3,066,000 3,010,000
78 7.50% 4/1/95 9/15/29 2,597,000 2,558,000
79 6.75% 6/1/95 6/15/22 2,622,000 2,545,000
80 7.00% 9/1/95 7/15/23 2,640,000 2,573,000
81 7.00% 4/1/96 5/15/28 3,237,000 3,199,000
82 7.25% 6/1/96 9/15/30 2,987,000 2,966,000
83 7.00% 4/1/97 2/15/27 3,152,000 3,121,000
139,266,000 93,593,000
American Mortgage Securities, Inc.
Mortgage Certificate-Backed Bonds
5 7.35% 3/1/92 3/01/22 3,000,000 1,347,000
$142,266,000 $ 94,940,000
</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, 1997 and 1996, approximated $95,328,000 and
$101,173,000, 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, 1997 and 1996, the Company owed B. C. Ziegler and
Company $20,023 and $10,945, respectively, for accrued management fees.
(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.
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit Page
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) 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 (D) Nineteenth Supplemental Indenture dated as
of June 1, 1987 incorporated rated by
reference to Exhibit (4.2), respectively,
to Form 8-K filed June 12, 1987, Commission
file number 33-10076) *
4 (E) Twentieth and Twenty-First Supplemental
Indentures dated as of July 1, 1987
(incorporated by reference to Exhibit
(4.1) and (4.2), respectively, to
Form 8-K filed September 15, 1987,
Commission file number 33-10076) *
4 (F) 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 (G) 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 (H) 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) *
<PAGE>
Exhibit
Number Description of Exhibit Page
4 (I) 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 (J) 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 (K) 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 (L) 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 (M) 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 (N) 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 (O) 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 (P) 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 (Q) 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 (R) 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 (S) 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) *
<PAGE>
Exhibit
Number Description of Exhibit Page
4 (T) 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 (U) 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(V) 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(W) 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(X) 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(Y) 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(Z) 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(AA) 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(AB) 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(AC) 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(AD) 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) *
<PAGE>
Exhibit
Number Description of Exhibit Page
4(AE) 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(AF) 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(AG) 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(AH) 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) *
4(AI) Eighty-First Supplemental Indenture dated as
of April 1, 1996 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed April 21,
1996, Commission file number 33-28290) *
4(AJ) Eighty-Second Supplemental Indenture dated as
of June 1, 1996 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed June 26,
1996, Commission file number 33-28290) *
4(AK) Eighty-Third Supplemental Indenture dated as
of April 1, 1997 (incorporated by reference
to Exhibit (4.1) to Form 8-K filed May 21,
1997, 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
27 Financial Data Schedule 28
*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 25, 1998.
<PAGE>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from ZMSI-II
Financial Statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 627,785
<SECURITIES> 88,675,684<F3>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 99,289,905
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 94,940,000
0
1,500,000
<COMMON> 20,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 99,289,905
<SALES> 0
<TOTAL-REVENUES> 8,771,002<F2>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 895,888
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,875,114
<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>
