UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 December 31, 1997
Commission file number 33-17643
THE MORTGAGE BANCFUND OF America, a California Limited Partnership
(exact name of registrant as specified in its charter)
California 33-0281356
(State or other jurisdiction of I.R.S. Employer
Incorporation or organization ) Identification No.
2 Corporate Park. Suite 106, Irvine, CA. 92606
(address of principal executive office)
(714) 253-2900
(registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: N/A
Name of Each Exchange on Which Registered: N/A
Securities registered pursuant to Section 12(g) of the Act:
Title of Class: N/A
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 reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO_______
Partnership units outstanding: 87,087
The Mortgage Bancfund of America
(a California Limited Partnership)
Index to Form 10-K
December 31, 1997
Part I
Item 1 - Business
Item 2 - Properties
Item 3 - Legal Proceedings
Item 4 - Submission of matters to a vote of security holders (partners)
Part II
Item 5 - Market for the registrant's Partnership units and related security
holder matters
Item 6 - Selected financial data
Item 7 - Management's discussion and analysis of financial condition and
results of operations
Item 8 - Financial statements and supplementary data
Item 9 - Disagreements with accountants on accounting and financial disclosure
Part III
Item 10 - Directors and executive officers of the registrant
Item 11 - Executive compensation
Item 12 - Security ownership of certain beneficial owners and management
Item 13 - Certain relationships and related transactions
Part IV
Item - 14 Exhibits, financial statement schedules and reports on Form 8-K
Signatures
PART 1
Item 1: Business
General
THE MORTGAGE BANCFUND OF AMERICA, is a California Limited Partnership
(the "Partnership") of which the general partners are Robert Y. Strom and the
Mortgage BancFund Corporation (the Corporation), a California Corporation
wholly owned by Mr. Strom. The Partnership was organized to make first and
second trust deed commercial real estate loans in the southern California area.
The Partnership currently manages one operational real estate projects which was
acquired through foreclosure.
Consolidated Operations
The attached financial statements are reported on a consolidated basis with
partnership interests which own real estate acquired through foreclosure.
State of the Economy
The southern California economy continues to be the most important factor
which affects the operations of the Partnership. Throughout 1994 and 1995
large industries announced large employee layoffs, plant closings and
relocation efforts to other states. All of this has depressed real estate
values in the local area. Management is of the opinion that the economy could
continue to decline for at least the next two to five years adversely affecting
rental rates and property values in general.
Employees
The Partnership does not directly employ personnel. The Corporate general
partner handles all the business affairs of the partnership with its
remaining full-time staff of one employee.
Item 2: Properties:
The Partnership does not own any real property other than foreclosed
properties acquired during the normal course of business. A condensed
balance sheet of these foreclosed properties is detailed in Note 3 of the
attached financial statements and is incorporated herein by reference.
Item 3: Legal Proceedings
At December 31, 1997 the Partnership was not involved in any adverse legal
proceedings.
Item 4: Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of the Partnership.
Part II
Item 5: Market for the Registrant's Partnership Units and Related Security
Holder Matters
a) There is no established trading market for these securities and no known
sales of the securities have taken
place during fiscal 1997.
b) At December 31, 1997 there were 87,087 limited partnership units outstanding
which had been sold in prior years to approximately 650 limited partners.
c) No distributions were paid in fiscal 1997.
Item 6: Selected Financial Data
1995 1996 1997
Total Income $ 147,941 $ 183,851 $ 27,203
Net Income(Loss) (599,462) (848,570) (110,020)
Net Income(loss) per LP Unit (6.88) (9.74) ( 1.26)
Distributions per LP Unit -0- -0- -0-
Total Assets 7,619,795 2,263,491 2,129,800
Total Liabilities $ 6,308,021 $ 1,914,671 $2,048,380
Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Overview:
The Partnership's management continues to primarily manage foreclosed
properties and collect the balance of the loans receivable on the Partnership
books. The Partnership concluded a development of single family housing addition
acquired through foreclosure. Projections were not realized due to
mismanagement of the budget by the development partner in the joint venture.
Liquidity and Capital Resources:
Liquidity continues to be a serious problem for the Partnership. Management
will depend upon the operations of foreclosed real estate and the ultimate
sale of that real estate to generate funds necessary to operate. There are no
plans to seek additional capital from outside sources, either debt nor equity.
The capital account has eroded by nearly 96% of the original $100.00 cost to a
value of $2.72 per Partnership unit outstanding. This due to losses experienced
over the past several years.
Results of Operations:
The Partnership continues to report poor operating results for December 31, 1997
As discussed above book value per Partnership unit outstanding is down to
$2.72 an 96% decline in value. Management is of the opinion losses will
continue as the southern California economy slowly recovers from a depression.
To date the liquidation or other types of losses on properties foreclosed on has
not resulted in a positive return for the Partnership. Management is operating
at this point in a liquidation mode in which the assets will continue to be
managed and sold as those opportunities arise.
Management will continue to manage and attempt to sell property which has been
foreclosed on and continue the collection effort on the remaining loan
receivable still on the Partnership books.
Item 8: Financial Statements and Supplementary Data
Information required by this item is included under Item 14: Exhibits,
financial statement schedules and reports on Form 8-K and is incorporated herein
by reference.
Item 9: Disagreements with Accountants on Accounting and Financial Disclosure
None.
Part III
Item 10: Directors and Executive Officers of the Registrant.
The Partnership is managed by the general partner, Robert Y. Strom and by the
corporate general partner, Mortgage BancFund Corp. Mr. Strom is the
managing officer for the corporation. Sharon Wilhelm is Vice President and
Manager of Investor Services.
Item 11: Executive Compensation
The Partnership has no salary compensation. However, the Partnership can pay
certain fees to management described as follows (it should be noted that
other than reimbursement for out of pocket expenses to operate the Partnership,
no other fees are being collected by the general partners):
(a) Loan Origination and Commitment Fee - As compensation for originating
mortgage investments the general partners receive a loan origination and
commitment fee not to exceed 2 1/2% of the maximum amount of the Partnership's
investment commitment, to be paid by the borrower.
With regard to those portions of loans sold to participants banks, pension
funds, etc.), loan origination and commitment fees retained by the Partnership
will be shared equally between the general partners and the Partnership.
(b) Mortgage Servicing Fee - The Partnership pays the general partners a
quarterly servicing fee of 1/4 of 1% per annum of the maximum amount of the
Partnership's investment commitment in mortgage loans. Due to the depressed
condition of the loan portfolio, the general partners have been waiving
collection and accrual of this fee to the benefit of the Partnership since
fiscal 1992 through fiscal 1994.
(c) Loan Extension Fee - The general partner can collect an amount equal
to 1% of the Partnership' s investment in loans for extensions of up to six
months and up to a maximum of 2 1/2% for extensions beyond six months. Loan
extension fees on loans sold to participants will be shared equally with the
Partnership.
(d) Other Fees - The Partnership agreement provides for other fees such as
property management, rent up, leasing and releasing fees, and real estate
brokerage commissions.
(e) Cash from Operations - The general partners can receive 5% of the cash
from operations until all limited partners have received, for the particular
quarter, a return on their contributions equal to the weighted average prime
rate of interest at Security Pacific National Bank for the applicable period
and, thereafter, 10% of cash from operations. For fiscal 1997 the general
partner's have not received any cash under this provision.
(f) Income and Losses Income and loss will be credited or charged to the
partners in relation to their respective Partnership interest, both for limited
partners and the general partners.
(g) Operating Expenses - The general partners will be reimbursed by the
Partnership, without limitation, for all out-of-pocket general and
administrative expenses of the Partnership, accounting and audit fees, legal
fees and expenses, postage and preparation of reports to limited partners.
Item 12: Security ownership of Certain Beneficial Owners and Management
The general partners are to own a combined total of 1% of the Partnership
including a 1% portion of income and losses.
Item 13: Certain Relationships and Related Transactions
The Partnership does not make mortgage investments with any of the general
partners or affiliates of the general partners. Other related transactions are
referred to in Item 11 above.
Part IV
Item: 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as a part of the report
1. Unaudited financial statements
a. Balance Sheets
b. Income Statements
c. Statements of Partner's Equity
d. Statements of Cash Flows
2. Financial statement schedules:
None.
(b) Reports on Form 8-K
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.
The Mortgage BancFund of America
(a California Limited Partnership)
______________________________
Robert Y./Strom
General Partner
Date:____________
Pursuant to the requirements of the 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.
By: Mortgage BancFund Corporation,
a California Corporation
General Partner of the Registrant
By:____________________________
Robert Y. Strom, President
Date:___________________________
By: _______________________________
Robert Y. Strom, General Partner,
Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer of
Registrant, and President and Director of
Mortgage BancFund Corporation
Date:___________________________
THE MORTGAGE BANCFUND OF AMERICA
(a California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS Dec 31, 1996 Dec 31, 1997
Cash 145,904 129,033
Loans receivable (Note 1) 191,567 118,191
Accounts receivable (Note 2) (6,237) 0
Other real estate owned (Note 3) 1,932,077 1,872,799
Other assets 180 9,777
Total Assets 2,263,491 2,129,800
LIABILITIES & PARTNER'S EQUITY
Liabilities
Accounts payable 234,229 172,368
Notes payable (Note 4) 1,680,442 1,876,012
Total liabilities 1,914,671 2,048,380
Minority interest 0 (157,380)
Partner's equity 348,820 238,800
Total liabilitie & partner's equity 2,263,491 2,129,800
Book value per limited partner
unit outstanding 4.01 2.72
CONSOLIDATED INCOME STATEMENTS
For the Twelve Months Ended
12/31/94 12/31/95 12/31/96 12/31/97
Unaudited Unaudited Unaudited Unaudited
REVENUES:
Interest
Loans 34,933 31,296 26,737 16,553
Investments 1,197 (6,533) 0 10,650
Total Interest 36,130 24,763 26,737 27,203
Recovery of previous losses 444,867 0 0 0
Other Income 725 123,178 157,114 0
Total Income 481,722 147,941 183,851 27,203
COSTS & EXPENSES:
Cost of loans 745,763 551,179 0 9,500
General & admin. costs 184,362 136,835 222,253 127,723
Interest Expense 50,225 59,389 (69,269) 0
Loss on Disposal of Assets 0 0 879,437 0
Total costs & expenses 980,350 747,403 1,032,421 137,223
Net Loss (498,628) (599,462) (848,570) (110,020)
Net loss per partnership
unit outstanding (5.73) (6.88) (9.74) (1.26)
Partnership units outstanding 87,087 87,087 87,087 87,087
THE MORTGAGE BANCFUND OF AMERICA
(a California Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNER'S EQUITY
(Unaudited)
General Limited
Partner Partner Total
Balance December 31, 1995 (280,568) 1,477,958 1,197,370
Allocation of net loss (42,429) (806,142) (848,570)
Balance, December 31, 1996 (322,997) 671,817 348,820
Allocation of net loss (5,501) (104,519) (110,020)
Balance, December 31, 1997 (328,498) 567,298 238,800
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Twelve Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES: Dec. 31, 1996 Dec. 31,1997
Net (loss) (848,570) (110,020)
Loss on Disposal of real estate owned 879,436 0
Adjustments to reconcile net income to cash
provided by operating activiteis:
(Decrease) increase in accounts payable (100,558) (61,861)
(Increase) in accounts receivable 156,574 (6,237)
(Decrease) increase in due to general partner (43,334) 0
(Increase) Decrease in other assets 5,912 (9,598)
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 49,460 (187,716)
CASH FLOW FROM INVESTING ACTIVITIES:
Net change in loan receivable (97,505) 73,377
Decrease in minority interest (114,384) (157,380)
Proceeds from Disposal of real estate owned 100,000 0
Net change in other real estate owned 186,131 59,278
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 74,242 (24,725)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable (1,888) 195,570
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,888) 195,570
NET INCREASE (DECREASE) IN CASH 121,814 (16,871)
Cash, Beginning of period 24,090 145,904
Cash, End of period 145,904 129,033
MORTGAGE BANCFUND OF AMERICA
(a California Limited Partnership)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Loans Receivable
Loans receivable are carried at the unpaid principal balance net of unearned
loan fees. Points and other loan fees are deferred over the life of the loan.
In management's opinion the book value of these loans is is equal to
the estimated net realizable value.
Note 2 - Accounts Receivable
This account represents funds owed to the Partnership from affiliate
partnerships, and projects which were acquired through foreclosure.
Note 3 - Other Real Estate Owned
All real estate owned by the Partnership, which was acquired through foreclosure
was disposed of during 1996. The account also included properties which are
owned by the majority - owned limited partnership.
A condensed balance sheet of the majority owned partnership follows:
CONDENSED BALANCE SHEET, unaudited, at December 31, 1997
Assets: DEC 31,1996 DEC 31, 1997
Cash and other assets 50,390 58,638
Real estate, net of depreciation 1,932,077 1,872,797
Total assets 1,982,467 1,931,453
Liabilities and Partner's Equity:
Accounts payable 224,857 41,925
Notes payable 1,680,442 1,864,047
Due to affiliates (133,389) (143,165)
Partner's equity 210,557 168,628
Total liabilities & partners equity 1,982,467 1,931,435
Note 4 - Notes Payable
Account represents debt directly owed to commercial banks by the partnership.
Funds borrowed were used to develope property acquired through forclosure.
Account also represents amounts owed by majority owned limited partnerships on
real estate owned.
Accounting Policy
The consolidated financial statements include the accounts of the partnership
and majority-controlled limited partnerships. All material intercompany
transactions, profits and balances have been aliminated. All adjustments made
to the financial statements are of normal recurring nature necessary to present
fairly the financial condition of the partnership.
Supplemental Disclosure of Cash Flows
Dec, 31, 1996
Proceeds from disposal of real estate owned 100,000
Change in Note Payable 3,956,906
Change in due to general partner & affiliate 290,663
Change in other real estate owned (5,227,006)
Net loss on disposal of real estate (879,437)
