SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number
- ------------------------- ----------------------
December 31, 1996 33-13668
Holco Mortgage Acceptance Corporation-I
--------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-2733561
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
P.O. Box 926, South Bend, IN 46634-0926
- ---------------------------------------- ----------
(Address of principal executive offices) (ZipCode)
Registrant's telephone number, including area code:(219) 287-7861
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange on
Title of Each Class which Registered
- ---------------------------------------- -------------------------
Series "C" Collateralized Mortgage Bonds American Stock Exchange
Common Stock American Stock Exchange
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 _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.__X___
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 20, 1997: $563,750
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of March 20, 1997: 5363,750 Shares of Common Stock
DOCUMENTS INCORPORATED BY REFERENCE
The contents of the Prospectus of the registrant ("Prospectus") dated June 22,
1987, as filed pursuant to Rule 424(b) under the Securities Act of 1933 are
incorporated by reference into this Form 10-K with respect to the information
contained in Items 1, 2, 5, 10, 11 and 12, as set forth therein.
<PAGE>
Part I
Item 1. Business.
The business background, objectives and intentions of Holco Mortgage Acceptance
Corporation-I (the "Corporation"), are set forth in the Prospectus and are
incorporated herein by this reference. The offering of the Corporation's common
stock (the "Common Stock") and three series of bonds (the "Bonds") closed on
August 26, 1987, at which time the proceeds of the offering were used, and the
Corporation commenced business activities, as contemplated in the Prospectus.
The Common Stock is also referred to as "Pass-Through Equity Residual
Certificates" or "PERCs". See also Items 5, 6, 7 and 8 hereof incorporated
herein by this reference.
The Corporation was formed in 1987 to engage solely in the business of investing
in Multifamily GNMA Certificates. The Corporation has obtained the proceeds for
such investments by issuing the Common Stock and Bonds. Therefore, a
presentation concerning industry segments is not applicable. The Corporation has
no employees.
Item 2. Properties.
A list of the Corporation's Multifamily GNMA Certificates is set forth in the
Prospectus and is incorporated herein by this reference.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the Registrant is a
party or to which any of its property is subject.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth quarter
of the calendar year ended December 31, 1996.
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Up until October 31, 1996, the principal United States market for the
Corporation's Common Stock was the American Stock Exchange. In October of 1996,
the American Stock Exchange notified the corporation that it intended to de-list
the stock effective October 31, 1996. This decision was based upon the fact that
the remaining assets of the corporation no longer met AMEX's minimum standards.
However, Holco still has approximately $8.0 million in mortgage assets in the
fund andthese assets continue to provide cash flow as described below. The
corporation is cognizant of the fact that it is necessary to provide a trading
forum for the stock and are in the process of producing financial projections to
assist in establishing a market maker. As soon as this is completed,
stockholders will be notified of their options for trading stock.
The quarterly high and low market information for the Common Stock and dividends
paid by the Corporation are as follows:
Market Prices
--------------------
High Low Dividends
- --------------------------------------------------------------------------------
03/01/95 ....................... 2.75 2.00 0.02
06/01/95 ....................... 2.44 1.88 0.01
09/01/95 ....................... 2.31 1.88 0.01
12/01/95 ....................... 1.94 0.69 0.01
03/01/96 ....................... 0.88 0.56 0.01
06/01/96 ....................... 0.94 0.62 0.01
09/01/96 ....................... 0.84 0.53 0.01
12/01/96 ....................... 0.94 0.50 0.01
As of March 20, 1996, there were approximately 800 record holders of Common
Stock. The company pays cash dividends from available cash after paying all
expenses.
<PAGE>
Item 6. Selected Financial Data.
For years ended December 31, 1996, 1995, 1994, 1993, and 1992:
<TABLE>
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenues ........... $ 862,036 $ 934,349 $ 1,322,248 $ 1,655,939 $ 2,293,203
Total Expense ............ 839,847 884,530 1,189,373 1,542,072 2,204,226
Net Income ............... 22,189 49,819 132,875 113,867 88,977
Net Income allocated per
share of Common Stock .04 .09 0.24 0.20 0.16
GNMA Certificates, at cost 9,403,269 9,492,787 9,510,433 15,287,563 16,433,221
Total Assets ............. 9,579,277 9,665,218 9,701,799 16,793,408 16,834,947
Collateralized Mortgage
Obligation Bonds ......... 8,816,000 8,900,000 8,977,000 15,552,662 15,647,740
Cash dividends declared
per share
of Common Stock ......... 0.04 0.05 0.96 0.14 1.29
</TABLE>
The above selected financial data should be read in conjunction with the
financial statements and related notes set forth in Item 8.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Corporation's results of operations depend 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 the 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 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 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 does 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 are secured by Multifamily GNMA Certificates which pay interest at
specified rates, and because payments on the Bonds are 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 reinvestment earnings thereon, will at all times exceed the
aggregate of the amount due as payments of principal of and interest on the
Bonds and operating expenses of the Corporation.
The Corporation's revenue has decreased over the past three years as a result of
the scheduled principal and prepayments of principal on the GNMA certificates.
<PAGE>
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
expenses 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 and interest payments on the Multi- family GNMA Certificates, together
with reinvestment earnings thereon, will be available in sufficient amounts to
meet interest income shortfalls and to make required principal payments onthe
Bonds. In addition, the amortization of issuance costs of the Bonds reduces the
Corporation's ratio of earnings to fixed charges but will not affect the amount
of cash available to meet fixed charges.
Item 8. Financial Statements and Supplementary Data.
See Index to Financial Statements and Financial Statement Schedule on Page F-1
of this Form 10-K.
Item 9.Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.
The Corporation is not aware of any such disagreements.
Part III
Item 10. Directors and Executive Officers of the Registrant.
Information relating to the management of the Corporation and persons entitled
to exercise management discretion over the Corporation's affairs is set forth in
the Prospectus and is incorporated herein by this reference.
Item 11. Management Compensation.
Information relating to management compensation is set forth in the Prospectus
and incorporated herein by this reference. See also Item 8 hereof incorporated
herein by this reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of March 20, 1997, no person owned of record or was known to own beneficially
more than 5% of the outstanding Common Stock of the Corporation. Also, no
director or officer of the Corporation owned any of the outstanding Common Stock
of the Corporation as of March 20, 1997.
Item 13. Certain Relationships and Related Transactions.
The Corporation paid HC Mortgage Company a non-recurring mortgage commitment fee
of $700,000 and pays an on-going management fee. See Note 5 - "Fees to
Affiliate" on page F-9 of the attached financial statements.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
a. The following documents are filed as part of this Form 10-K and
incorporated herein by this reference:
1. The financial statements and financial statement schedule listed on the
Index to Financial Statements and on page F-1.
2. The exhibits listed on the Index to Exhibits on page E-1.
b. No reports on Form 8-K were filed during the fourth quarter of the calendar
year ended December 31, 1996.
<PAGE>
ITEM 14(a) - EXHIBIT INDEX
3 The Certificate of Incorporation and Bylaws of the Registrant are set forth
as Exhibits 3.1 and 3.2, respectively, to Amendment No 1 to the
Registrant's Registration Statement on Form S-11 dated April 22, 1987
(Registration No. 33-13668), and are incorporated herein by reference.
4.1 A specimen of the certificate representing Pass-Through Equity Residual
Certificates of the Registrant is set forth as Exhibit 4.1 to
Post-Effective Amendment No. 1 to the Registrant's Registration Statement
on Form S-11 dated September 10, 1987 (Registration No. 33-13668), and is
incorporated herein by reference.
4.2 Specimens of the Series A, B and C Collateralized Mortgage Obligation Bonds
are set forth as Exhibit 4.2 to Post-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form S-11 dated September 10, 1987
(Registration No. 33-33168), and is incorporated herein by reference.
4.3 The Trust Indenture is set forth as Exhibit 4.3 to Post-Effective Amendment
No. 1 to the Registrant's Registration Statement on Form S-11 dated
September 10, 1987 (Registration No. 33-33168), and is incorporated herein
by reference.
4.4 A Form of Guaranty Agreement between the servicer and GNMA with respect to
Project Loan Securities under the GNMA-I Program is set forth as Exhibit
4.4 to Post-Effective Amendment No. 1 to the Registrant's Registration
Statement on Form S-11 dated April 22, 1987 (Registration No. 33-13668),
and is incorporated herein by reference.
10 The Form of Multifamily GNMA Certificate evidencing the Registrant's
beneficial ownership interest in each of the Mortgages is set forth as
Exhibit 10.1 to Amendment No. 1 to the Registrant's Registration Statement
on Form S-11 dated April 22, 1987 (Registration No. 33-13668), and is
incorporated herein by reference.
13 Annual report to security holders
27 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
A DELAWARE CORPORATION
(Registrant)
By: /s/ John T. Phair
John T. Phair
Vice President, Treasurer
and a Director
Date: March 27, 1997
By: /s/ Kevin C. Horton
Kevin C. Horton
Vice President, Secretary
and a Director
Date: March 27, 1997
By: /s/ Kevin J. Butler
Kevin J. Butler
Director
Date: March 27, 1997
HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
FINANCIAL REPORT
DECEMBER 31, 1996
<PAGE>
C O N T E N T S
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITOR
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance sheets
Statements of income
Statements of stockholders' equity
Statements of cash flows
Notes to financial statements
- --------------------------------------------------------------------------------
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
South Bend, Indiana
We have audited the accompanying balance sheets of Holco Mortgage Acceptance
Corporation-I as of December 31, 1996 and 1995, and the related statements of
income, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1996. 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 Holco Mortgage Acceptance
Corporation-I as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ McGLADREY & PULLEN, LLP
South Bend, Indiana
January 10, 1997
<PAGE>
HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
1996 1995
-----------------------
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS, including amounts
held by trustee 1996 $92,144; 1995 $87,334 .............................. $ 92,144 $ 87,334
INTEREST RECEIVABLE ....................................................... 72,293 72,938
GNMA CERTIFICATES, at amortized cost ...................................... 9,403,269 9,492,787
COLLATERALIZED MORTGAGE OBLIGATION Bond Offering
COSTS, net of accumulated amortization 1996
$1,039,951; 1995 $1,039,363 ............................................. 11,571 12,159
------------------------
$9,579,277 $9,665,218
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Collateralized mortgage obligation bonds ................................ $8,816,000 $8,900,000
Accounts payable ........................................................ 38,756 39,023
Interest payable ........................................................ 137,565 138,878
------------------------
8,992,321 9,077,901
------------------------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized
700,000 shares; issued and outstanding
563,750 shares ....................................................... 5,638 5,638
Additional paid-in capital .............................................. 2,862,878 2,862,878
Retained earnings (deficit) ............................................. (2,281,560) (2,281,199)
------------------------
586,956 587,317
------------------------
$9,579,277 $9,665,218
========================
</TABLE>
See Notes to Financial Statements
<PAGE>
HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
STATEMENTS OF INCOME
Years Ended December 31, 1996, 1995, and 1994
1996 1995 1994
- ---------------------------------------------------------------------
Revenues, interest income:
GNMA certificates ............ $860,346 $932,051 $1,297,737
Funds held by trustee ........ 1,690 2,298 24,511
--------------------------------
862,036 934,349 1,322,248
--------------------------------
Expenses:
Interest expense ............. 830,119 854,802 1,161,125
Management fees, related party 6,168 26,168 24,688
Other, net ................... 3,560 3,560 3,560
--------------------------------
839,847 884,530 1,189,373
--------------------------------
Net income ........ $ 22,189 $ 49,819 $ 132,875
================================
Net income per share $ .04 $ .09 $ .24
================================
See Notes to Financial Statements.
<PAGE>
HOLCO MORTGAGE ACCEPTANCE
CORPORATION-I
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1996, 1995, and 1994
Retained
Common Additional Earnings
Stock Paid-In (Deficit) Total
- --------------------------------------------------------------------------------
Balance, December 31, 1993 $ 5,638 $2,862,878 $ (1,894,503) $ 974,013
Net income ............ -- -- 132,875 132,875
Dividends declared .... -- -- (541,201) (541,201)
--------------------------------------------------
Balance, December 31, 1994 5,638 2,862,878 (2,302,829) 565,687
Net income ............ -- -- 49,819 49,819
Dividends declared .... -- -- (28,189) (28,189)
--------------------------------------------------
Balance, December 31, 1995 5,638 2,862,878 (2,281,199) 587,317
Net income ............ -- -- 22,189 22,189
Dividends declared .... -- -- (22,550) (22,550)
-------------------------------------------------
Balance, December 31, 1996 $ 5,638 $2,862,878 $ (2,281,560) $ 586,956
=================================================
See Notes to Financial Statements.
<PAGE>
HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1995, AND 1994
<TABLE>
1996 1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income $ 22,189 $ 49,819 $ 132,875
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Amortization of GNMA certificate
discount (1,788) (65,617) (153,858)
Amortization of collateralized mortgage
obligation bond discount, net -- -- 18,274
Amortization of collateralized mortgage
obligation bond offering costs 588 17,669 50,663
Change in assets and liabilities:
Decrease (increase) in interest receivable 645 (371) 45,716
Increase (decrease) in:
Accounts payable (267) 20,000 (15,428)
Interest payable (1,313) (1,211) (92,193)
------------------------------
Net cash provided by (used in) operating activities 20,054 20,289 (13,951)
------------------------------
Cash Flows From Investing Activities
Principal receipts on GNMA certificates 91,306 83,263 5,930,988
------------------------------
Cash Flows From Financing Activities
Redemption of collateralized mortgage obligation
bonds (84,000) (77,000) (6,593,936)
Dividends paid (22,550) (28,189) (541,201)
------------------------------
Net cash (used in) financing activities (106,550) (105,189) (7,135,137)
------------------------------
Increase (decrease) in cash and cash equivalents 4,810 (1,637) (1,218,100)
Cash and cash equivalents, beginning 87,334 88,971 1,307,071
------------------------------
Cash and cash equivalents, ending $ 92,144 $ 87,334 $ 88,971
==============================
</TABLE>
See Notes to Financial Statements.
<PAGE>
HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization, Use of Estimates, and Significant Accounting Policies
Organization:
Holco Mortgage Acceptance Corporation-I, a Delaware corporation, (the "Company")
was formed on April 3, 1987 to invest in Multifamily GNMA Certificates, by
acquiring fully modified pass-through certificates representing beneficial
ownership in multifamily housing project mortgage loans issued by the Federal
Housing Administration ("FHA") under Section 223(f) of the National Housing Act.
These Certificates are guaranteed by the Government National Mortgage
Association ("GNMA"), and are backed by the full faith and credit of the United
States. The Company obtained proceeds for the acquisition of the GNMA Certi-
ficates by issuing its common stock and three series of Bonds. The Company's
sole activities consist of providing monthly interest payments to the bond
holders; repaying the principal of the bonds at either redemption or maturity;
and providing distributions to common stockholders ("PERC" holders) which are
expected to provide them with repayment of their investment plus a return
thereon.
Use of estimates:
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 as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The
Company estimated prepayments of GNMA Certificates and corresponding
redemptions of collateralized mortgage obligation bonds at the time of issuance.
These estimates were used to determine the constant effective yield necessary to
apply the interest method of amortization for the collateralized mortgage
obligation bond offering costs, collateralized mortgage obligation bond
discount, and GNMA certificate market discount.
It was anticipated that all remaining GNMA Certificates would be prepaid and
there would be a corresponding redemption of the then outstanding collateralized
mortgage obligation bonds during the year ending December 31, 1996. Management
has now estimated that the future payments of the remaining GNMA Certificates
will be in accordance with their scheduled maturity with corresponding monthly
redemptions of the collateralized mortgage obligation bonds sufficient, at a
minimum, to assure the bonds which remain outstanding are fully secured by the
Multifamily GNMA Certificates and the other collateral held by the trustee.
Actual payments could differ from those estimates and such differences could
occur in the near term.
With this change in estimate, management has decided to straight-line the
remaining unamortized collateralized mortgage obligation bond offering costs and
GNMA certificate market discount over the remaining term of the GNMA
certificates. The effect of this change is not deemed to have an material effect
on the financial statements taken as a whole.
Significant accounting policies:
Basis of accounting:
The accompanying financial statements are prepared in accordance with generally
accepted accounting principles, including the use of the accrual method of
accounting.
Cash equivalents:
For purposes of the statement of cash flows, the Company considers corporate
trust accounts held by the trustee to be cash equivalents.
Collateralized mortgage obligation bond offering costs, collateralized mortgage
obligation bond discount, and GNMA certificate market discount:
Collateralized mortgage obligation bond offering costs include underwriting
commissions and other expenses associated with the offering. The collateralized
mortgage obligation bond offering costs and collateralized mortgage obligation
bond discount are being amortized over the expected life of the related bonds
and are included in interest expense. The GNMA certificate market discount
is being amortized over the expected life of the GNMA Certificates and is
included in interest income.
<PAGE>
Note 2. Income Tax Status
The Company elected to be treated as a real estate mortgage investment conduit
("REMIC") which has been authorized under the Tax Reform Act of 1986. The
sections of the federal income tax laws applicable to REMICs provide that in
lieu of corporate income taxes, the PERC holders separately account for their
pro rata share of the Company's items of income, deductions, losses, and
credits.
Note 3. Cash Distributions to PERC Holders
PERC holders receive quarterly cash distributions consisting of the cash flows
of the Company, if any, remaining after debt service on the bonds and payment of
operating expenses.
Note 4. GNMA Certificates
The GNMA Certificates consist of three Multifamily GNMA Certificates as of
December 31, 1996 and 1995. The GNMA Certificates have been assigned to a trust
for the purpose of securing the collateralized mortgage obligation bonds. The
Certificates are payable in aggregate monthly installments of approxi- mately
$79,000 as of December 31, 1996 and 1995, including interest at 9% to 9.25% per
annum with stated maturity dates varying between December 2021 and January 2022.
The GNMA Certificates are held for payment of principal and interest on the
collateralized mortgage obligation bonds and, accordingly, are reflected on the
accompanying balance sheets at amortized cost.
The principal balances and unamortized market discount on the GNMA Certificates
as of December 31, 1996 and 1995 are as follows:
1996 1995
------------------------
Principal balances .................... $9,447,694 $9,539,000
Unamortized discount .................. 44,425 46,213
------------------------
$9,403,269 $9,492,787
========================
It is anticipated that the aggregate maturities of the GNMA Certificates will be
in accordance with their scheduled maturity for the years ending December 31,
1997 through 2001 as follows: 1997 $100,041; 1998 $109,474; 1999 $119,796; 2000
$131,092; and 2001 $143,452.
Note 5. Related Party Transactions
Purchase of GNMA Certificates:
The proceeds from sale of the Bonds and the PERCs were used by the Company to
purchase Multifamily GNMA Certificates from HC Mortgage Company, Inc. ("HC
Mortgage"), an affiliate of the Company, and to pay the costs of the offering.
Fees to affiliate:
The Company pays to HC Mortgage a monthly management fee which will be
subsequently reduced in proportion to the reduction in cash flow occurring when
any GNMA Certificate is prepaid, disposed of, or fully amortized. The management
fee paid is intended to cover accounting fees, legal fees, trustee fees, and
independent directors' fees of the Company. Affiliates of the Company will not
be required to pay expenses of the Company in the event that expenses exceed the
management fee. However, the affiliates may elect to pay the excess of expenses
incurred over the management fee received and treat such excess as an operating
expense loan. The amount of operating expense loans included in accounts payable
in the accompanying balance sheets at both December 31, 1996 and 1995 is
$36,000. The management fee, including excess expense reimbursement, for the
years ended December 31, 1996, 1995, and 1994 was $6,168, $26,168, and $24,688
respectively.
<PAGE>
Note 6. Collateralized Mortgage Obligation Bonds
The collateralized mortgage obligation bonds were issued in the aggregate
principal amount of $45,335,000 as follows:
Bonds
Original Outstanding
Principal Interest Stated December 31,
Amount Rate Maturity* 1996
---------------------------------------------------
Class:
A Bonds $18,060,000 9.200 9/1/95 $ --
B Bonds 16,000,000 9.000 2/1/22 --
C Bonds 11,275,000 9.375 2/1/22 8,816,000
----------- ----------
$45,335,000 $8,816,000
=========== ==========
* Assuming no prepayments on the GNMA Certificates.
Interest is payable monthly on the first business day of each month. Interest
payments are made for interest accrued to the beginning of the calendar month
preceding the month of the payment date.
The bonds will bear interest at rates described above and will be subject to
prepayment or redemption. Interest will cease accruing on each bond at the
beginning of the calendar month immediately preceding the month of the bond's
final payment or redemption.
Principal and interest payments received on the Company's Multifamily GNMA
Certificates are being applied to pay principal and interest on the bonds with
sufficient monthly redemptions, at a minimum, to assure the bonds which remain
outstanding are fully secured by the Multifamily GNMA Certificates and the other
collateral held by the trustee.
Based upon the scheduled repayments of the GNMA Certificates, it is anticipated
that the collateralized mortgage obligation bonds will be redeemed during years
ending December 31, 1997 through 2001 as follows: 1997 $93,000; 1998 $101,000;
1999 $112,000; 2000 $122,000; and 2001 $135,000.
Note 7. Disclosures about Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash and cash equivalents:
The carrying amount approximates fair value because of the short maturity of
those instruments.
GNMA Certificates:
The fair values of the GNMA Certificates are estimated based on quoted market
prices received by the trustee.
The estimated fair values of the Company's financial instruments as of December
31, 1996 and 1995 are as follows:
1996 1995
-------------------------------------------------
Carrying Carrying
Value Fair Value Value Fair Value
-------------------------------------------------
Cash and cash equivalents $ 92,144 $ 92,144 $ 87,334 $ 87,334
GNMA Certificates ....... 9,403,269 9,914,000 9,492,787 10,066,000
Collateralized Mortgage Obligation Bonds:
The fair value of the Company's collateralized mortgage obligation bonds is not
practicable to determine because future cash flows are uncertain and difficult
to predict.
<PAGE>
Note 8. Cash Flows Information
Supplemental information relative to the statements of cash flows for the years
ended December 31, 1996, 1995, and 1994 is as follows:
1996 1995 1994
------------------------------
Supplemental disclosures of cash
flow information ....................... $830,844 $838,344 $1,184,381
==============================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FOR THE DECEMBER
31, 1996 FORM 10-K OF HOLCO MORTGAGE ACCEPTANCE CORPORATION-I AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 92
<SECURITIES> 9,403
<RECEIVABLES> 72
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 164
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,579
<CURRENT-LIABILITIES> 176
<BONDS> 8,816
0
0
<COMMON> 6
<OTHER-SE> 581
<TOTAL-LIABILITY-AND-EQUITY> 9,579
<SALES> 0
<TOTAL-REVENUES> 862
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 830
<INCOME-PRETAX> 22
<INCOME-TAX> 0
<INCOME-CONTINUING> 22
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
