HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
ANNUAL REPORT TO STOCKHOLDERS
For the Year Ended
December 31, 1994
GENERAL
Holco Mortgage Acceptance Corporation-I (the "Corporation")
was incorporated in the State of Delaware on April 3, 1987 and
maintains its principal office at 220 West Colfax, Suite 200, South
Bend, Indiana 46601. The mailing address of the principal office
is P.O. Box 926, South Bend, IN 46624-0926. The telephone number
of the principal office is (219) 284-3789. The Corporation has no
employees. The Corporation is not aware of any pending legal
proceedings to which the Corporation may be subject, and, during
the calendar year ended on December 31, 1994, there were no matters
submitted to a vote of security holders. The Corporation has
elected to be treated as a real estate mortgage investment conduit
("REMIC") for federal income tax purposes. As a result of the
REMIC election, holders of the common stock (the "PERC holders")
are responsible for reporting their pro rata portion of the
Corporation's taxable income; they are not required to report any
cash distributions received during the year.
The Corporation was formed solely for the purpose of investing
in fully modified pass-through mortgage-backed securities
("Multifamily GNMA Certificates"), each representing an interest in
a single mortgage loan secured by a multifamily housing project and
coinsured by FHA pursuant to Section 223(f) or another section of
the National Housing Act of 1934, as amended. The full and timely
payment of principal and interest on each Multifamily GNMA
Certificate is guaranteed by the Government National Mortgage
Association ("GNMA"), which guarantee is backed by the full faith
and credit of the United States.
On August 26, 1987, the Corporation issued and sold three
classes of Bonds and one class of common stock, the net proceeds of
which were simultaneously applied to purchase 14 Multifamily GNMA
Certificates from HC Mortgage Company, Inc. The Bonds are fully
collateralized by the Corporation's portfolio of Multifamily GNMA
Certificates and are rated "AAA" by Standard & Poor's Corporation.
On the date the Multifamily GNMA Certificates were delivered
to the Trustee, such Multifamily GNMA Certificates had an aggregate
outstanding principal balance of $48,529,589, pass-through rates
ranging from 8.75% to 9.25%, a weighted average pass-through rate
of approximately 9.13%, and remaining stated maturity dates ranging
from December 2017 to January 2022. All of the Multifamily GNMA
Certificates are registered in the name of the Trustee. In 1992,
Norwest Bank Minnesota, N.A. was appointed Successor Trustee,
Transfer Agent and Registrar for the Corporation's Common Stock by
the Directors of the Corporation.
On August 19, 1987, the Corporation's common stock was
initially listed on the American Stock Exchange (symbol "HOL.A") at
a price of $5.32 per share. As of April 20, 1995, there were
approximately 900 holders of record of the Corporation's common
stock.
The quarterly high and low market prices for the Common Stock
and dividends paid by the Corporation are as follows:
---MARKET PRICES---
HIGH LOW DIVIDENDS
---- --- ---------
03/01/90 3.50 3.25 0.23
06/01/90 3.38 3.13 0.16
09/01/90 3.13 2.63 0.16
12/01/90 3.00 3.00 0.30
03/01/91 4.00 2.63 0.14
06/01/91 6.63 3.75 0.37
09/01/91 5.88 4.50 0.53
12/01/91 7.50 4.00 0.94
03/01/92 4.75 3.50 0.06
06/01/92 5.63 3.50 1.15
09/01/92 5.63 2.88 0.05
12/01/92 3.75 2.44 0.03
03/01/93 2.69 1.88 0.04
06/01/93 2.88 1.94 0.03
09/01/93 2.13 1.50 0.03
12/01/93 1.88 1.50 0.04
03/01/94 2.00 1.63 0.15
06/01/94 2.38 1.88 0.04
09/01/94 2.94 1.38 0.75
12/01/94 3.44 2.25 0.02
03/01/95 2.75 2.00 0.02
SELECTED FINANCIAL DATA
The following summary of financial data of the Corporation is
qualified in its entirety by and should be read in conjunction with
the detailed information and financial statements, including notes
thereto, appearing at pages F-1 through F-10.
<TABLE>
<CAPTION>
For the years ended December 31, 1994, 1993, 1992, 1991, and 1990:
1994 1993 1992 1991
1990
---- ---- ---- ----
----
<S> <C> <C> <C> <C>
<C>
Total Revenues 1,322,248 1,655,939 2,293,203
3,952,785 4,638,902
Total Expenses 1,189,373 1,542,072 2,204,226
3,736,461 4,300,451
Net Income 132,875 113,867 88,977
216,324 338,451
Net Income allocated per
share of Common Stock 0.24 0.20 0.16
0.38 0.60
BALANCE SHEET DATA:
GNMA Certificates,
at cost 9,510,433 15,287,563 16,433,221
25,026,864 43,219,541
Total Assets 9,701,799 16,793,408 16,834,947
25,762,068 44,463,833
Collateralized Mortgage
Obligation Bonds 8,977,000 15,552,662 15,647,740
23,803,357 41,654,960
Total Stockholders'
Equity 565,687 974,013 939,072
1,577,334 2,477,236
Cash dividends per share
of Common Stock 0.96 0.14 1.29
1.98 0.85
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
NAME AND OFFICE HELD PRINCIPAL OCCUPATION
Wallace F. Holladay President and
Director, President and sole shareholder of
Chairman of the Board The Holladay Corporation
John T. Phair General Manager of The
Director, Vice Holladay Corporation --
President/Treasurer Midwest Division
Kevin C. Horton Controller of the
Director, Vice President/ City of South Bend, IN
Secretary President of
HC Mortgage Company, Inc.
Carol A. Kalwitz Servicing Supervisor and
Director, Vice President/ Secretary of
Assistant Treasurer HC Mortgage Company, Inc.
Kevin J. Butler Partner of
Director Butler and Simeri P.C.
Attorneys at Law
Joseph V. Simeri Partner of
Director Butler and Simeri P.C.
Attorneys at Law
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Corporation's results of operations depends primarily on
the amount of interest paid on the Multifamily GNMA Certificates
securing the Bonds, the incidence of prepayments of principal made
on the mortgage loans underlying such Multifamily GNMA
Certificates, the amount of earnings from reinvestment of
distributions on such Multifamily GNMA Certificates and the amount
of the Corporation's expenses, including, among other things,
interest payments on the Bonds and the operating expenses of the
Corporation. Substantially all of the Corporation's expenses are
interest payments due on the Bonds, management fees, audit, legal,
trustee and other related expenses, state and local taxes,
reporting requirements and costs of maintaining the Corporation's
corporate qualifications. It is anticipated that scheduled
distributions of principal of and interest on the Multifamily GNMA
Certificates pledged as collateral for the Bonds, together with the
reinvestment earnings thereon, will provide sufficient funds to
make timely payment of all amounts due on the Bonds in accordance
with their terms and to pay all of the operating expenses of the
Corporation.
The Corporation's primary sources of funds with respect to the
Bonds are payments of principal of and interest on the Multifamily
GNMA Certificates pledged to secure the Bonds and reinvestment
earnings thereon. The Corporation anticipates that it will have
sufficient liquidity and capital resources to pay all amounts due
on the Bonds in accordance with their terms and all other expenses
of the Corporation. The Corporation will not have any significant
source of funds other than distributions on the Multifamily GNMA
Certificates pledged to secure the Bonds and reinvestment earnings
thereon. Virtually all of the assets and liabilities of the
Corporation are monetary in nature. Because the Bonds will be
secured by Multifamily GNMA Certificates which pay interest at
specified rates, and because payments on the Bonds will be at
specified rates of interest, inflationary pressures are not
expected to affect the ability of the Corporation to meet its
obligations as they become due.
The Corporation expects that scheduled distributions of
principal of and interest on the Multifamily GNMA Certificates
pledged to secure the Bonds, together with the reinvestment
earnings thereon, will at all times exceed the aggregate of the
amounts due as payments of principal of and interest on the Bonds
and operating expenses of the Corporation.
Because the amount of interest income that the Corporation
receives on the Multifamily GNMA Certificates, together with the
reinvestment earnings on distributions of principal of and interest
on the Multifamily GNMA Certificates, may in some periods be less
than the sum of the Corporation's interest expense on the Bonds and
operating expenses for such periods, the Corporation's ratio of
earnings to fixed charges for such periods may be less than one to
one. Any such income shortfalls will not, however, be cash flow
shortfalls because principal payments on the Multifamily GNMA
Certificates, together with reinvestment income thereon, will be
available in sufficient amounts to meet interest income shortfalls
and to make required principal payments on the Bonds. In addition,
the amortization of issuance costs of the Bonds will reduce the
Corporation's ratio of earnings to fixed charges but will not
affect the amount of cash available to meet fixed charges.
Future dividend levels are highly dependent upon the rates of
prepayments of the Mortgages underlying the Multifamily GNMA
Certificates. Initially, dividends were anticipated to be $0.52
per share a year based on the assumption that there would not be
any prepayments received on the Multifamily GNMA Certificates until
the end of the Corporation's sixth year of operations. Prepayments
totalling $37,452,274 have been received by the Corporation thus
resulting in larger than expected dividends to the stockholders.
Management anticipates future prepayments, however, the actual
timing of the prepayments is uncertain.
Each cash dividend received by the stockholders consists of a
return of principal and interest on their original investment. It
is anticipated that future dividends, barring prepayments, will
result in quarterly dividends of approximately $0.01 to $0.02 per
share.
