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, 1999
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.
2402 MICHELSON, SUITE 255, IRVINE, CA 92612-1323
(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, 1999
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 has
stopped this decline, however, the effects will be felt for at least the
next several years in lower rental rates and property values in general.
Rents and values have rebounded, but are still substantially below those of
the late 1980s and early 1990's.
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 which was
disposed of during 1996. No other real property is owned by the
Partnership.
Item 3: Legal Proceedings
At December 31, 1999 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 1999.
b) At December 31, 1999 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 1999.
Item 6: Selected Financial Data
1997 1998 1999
Total Income $ 27,203 $ 243,652 $ 13,622
Net Income(Loss) (110,020) 121,624 (111,247)
Net Income(loss) per LP Unit (1.26) (1.40) (1.27)
Distributions per LP Unit -0- -0- -0-
Total Assets 2,129,800 1,563,654 1,527,024
Total Liabilities $ 2,048,380 $ 1,368,578 $1,450,499
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 97% of the original $100.00 cost to a
value of $2.86 per Partnership unit outstanding. This due to losses experienced
over the past several years.
Results of Operations:
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, 1998 Dec 31, 1999
Cash 204,047 58,314
Loans receivable (Note 1) 58,118 309,093
Accounts receivable (Note 2) 0 0
Other real estate owned (Note 3) 1,178,780 1,142,858
Other assets 122,709 16,759
Total Assets 1,563,654 1,527,024
LIABILITIES & PARTNER'S EQUITY
Liabilities
Accounts payable 160,829 261,980
Notes payable (Note 4) 1,207,751 1,188,519
Total liabilities 1,368,580 1,450,499
Minority interest (165,350) (172,652)
Partner's equity 360,424 249,177
Total liabilities & partner's equity 1,563,654 1,527,024
Book value per limited partner
unit outstanding 4.14 2.86
CONSOLIDATED INCOME STATEMENTS
For the Twelve Months Ended
12/31/96 12/31/97 12/31/98 12/31/99
Unaudited Unaudited Unaudited Unaudited
REVENUES:
Interest
Loans 26,737 16,553 13,898 2,908
Investments 0 10,650 1,305 7,520
Total Interest 26,737 27,203 15,203 10,428
Other Income 157,114 0 228,449 3,194
Total Income 183,851 27,203 243,652 13,622
COSTS & EXPENSES:
Cost of loans 0 9,500 8,621 1,318
General & admin. costs 222,253 127,723 113,407 123,551
Interest Expense (69,269) 0 0 0
Loss on Disposal of Assets 879,437 0 0 0
Total costs & expenses 1,032,421 137,223 122,028 124,869
Net Loss (848,570) (110,020) 121,624 (111,247)
Net loss per partnership
unit outstanding (6.88) (9.74) (1.26) 1.27
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, 1997 (328,498) 567,298 238,800
Allocation of net loss 6,081 115,543 121,624
Balance, December 31, 1998 (322,417) 682,841 360,424
Allocation of net loss (5,682) (105,565) (111,247)
Balance, December 31, 1999 (328,099) 577,276 249,177
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Twelve Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES: Dec. 31, 1998 Dec. 31,1999
Net (loss) 121,624 (111,247)
Gain on Disposal of real estate owned (288,172) 0
Adjustments to reconcile net income to cash
provided by operating activities:
(Decrease) increase in accounts payable (11,541) 101,153
(Increase) in accounts receivable 0 0
(Decrease) increase in due to general partner 0 0
(Increase) Decrease in other assets 0 105,948
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES (178,089) 95,854
CASH FLOW FROM INVESTING ACTIVITIES:
Net change in loan receivable 60,073 (250,975)
Decrease in minority interest (7,970) (7,302)
Proceeds from Disposal of real estate owned 201,000 0
Net change in other real estate owned 0 35,922
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 253,103 (222,355)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable 0 (19,232)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 0 (19,232)
NET INCREASE (DECREASE) IN CASH 75,014 (145,733)
Cash, Beginning of period 129,033 204,047
Cash, End of period 204,047 58,314
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 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 fore-
closure was disposed of during 1996. The account also included properties
which are owned by the majority-owned limited partnership, 35% of which was
sold during 1999.
A condensed balance sheet of the majority owned partnership follows:
CONDENSED BALANCE SHEET, unaudited, at December 31, 1999:
Assets: DEC 31,1998 DEC 31, 1999
Cash and other assets 65,253 32,259
Real estate, net of depreciation 1,178,780 1,142,858
Total assets 1,244,033 1,175,117
Liabilities and Partner's Equity:
Accounts payable 30,385 18,419
Notes payable 1,195,786 1,188,519
Due to affiliates (143,165) (143,165)
Partner's equity 161,027 111,344
Total liabilities & partners equity 1,244,033 1,175,117
Note 4 - Notes Payable
Account represents debt directly owed to commercial banks by the partnership.
Funds borrowed were used to develop property acquired through foreclosure.
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 eliminated. 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
Proceeds from disposal of real estate owned Dec. 31, 1998
Change in Note Payable 668,261
Change in other real estate owned (581,089)
Proceeds from sale of real estate 201,000
Net gain on disposal of real estate 288,172
