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 33-2-8491
THE MORTGAGE BANCFUND OF America II, L.P., a California Limited Partnership
(exact name of registrant as specified in its charter)
California 33-036995
(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: 71,307
The Mortgage Bancfund of America II, L.P.
(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 II, L.P. 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.
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 which was disposed of
during 1996. No other real property is owned by the Partnership.
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 71,307 limited partnership units outstanding
which had been sold in prior years to approximately 512 limited partners.
c) No distributions were paid in fiscal 1997.
Item 6: Selected Financial Data
1995 1996 1997
Total Income $ 63,012 $ 282,629 $ 68,002
Net Income(Loss) (896,405) (70,278) (338,022)
Net Income(loss) per LP Unit (12.57) (.99) (4.74)
Total Assets 1,785,274 597,121 239,149
Total Liabilities $ 1,181,716 $ 63,641 $ 43,891
Distributions paid 0 0 0
Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Overview:
The Partnership's management continues to collect the accounts receivable on
the Partnership books. ll outstanding loan balances were realized in 1997.
In 1996 the Partnership concluded a development of single family housing
addition acquired through foreclosure. Projections of addiotional cash
generated 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 $2.73 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 foe
December 31, 1997. As discussed above, book value per Pertnership unit
outsatanding is down to $2.73; a 96% decline in value. Management is operating
in a liquidation mode to sell all remaining assets and return whatever
investment remains to the limited partners.
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
Although the origional prospectus allows the general partners to collect fees
under certain conditions, management has elected not to collect any of those
fees and has not for the past four years.
The corporate general partner does continue to be reimbursed for actual out of
expenses incurred to manage the partnership.
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 II, L.P.
(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 II, L.P.
(a California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS Dec 31, 1996 Dec 31, 1997
Cash 26,124 174,169
Loans receivable (Note 1) 552,018 0
Accounts receivable (Note 2) 18,979 64,980
Total Assets 597,121 239,149
LIABILITIES & PARTNER'S EQUITY
Liabilities
Accounts payable 0 0
Due to affiliates 63,841 43,891
Total liabilities 63,841 43,891
Partner's equity 533,280 195,258
Total liabilities & partner's equity 597,121 239,149
Book value per limited partner
unit outstanding 7.48 2.73
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 62,747 63,012 462,204 37,507
Loan Fees 1,132 0 0 0
Other Income 2,401 0 220,425 30,495
Total Income 66,280 63,012 682,629 68,002
COSTS & EXPENSES:
Cost of loans 37,592 41,050 225,941 16,856
Real estate owned expenses 1,092,659 28,162 0 0
General & Admin costs 209,884 85,512 126,966 127,150
Provision for loan Losses 364,135 804,693 0 262,018
Loss on Disposal of Assets 0 0 400,000 0
Total costs & expenses 1,704,270 959,417 752,907 406,024
Net Loss (1,637,990) (896.405) (70,278) (338,022)
Net loss per partnership
unit outstanding (22.97) (12.57) (.99) (4.74)
Partnership units outstanding 71,307 71,307 71,307 71,307
THE MORTGAGE BANCFUND OF AMERICA II, L.P.
(a California Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNER'S EQUITY
(Unaudited)
General Limited
Partner Partner Total
Balance, December 31, 1995 (169,656) 773,214 603,558
Allocation of net loss (3,514) (66,764) (70,278)
Balance, December 31, 1996 (173,170) 706,450 533,280
Allocation of net loss (16,901) (321,121) (338,022)
Balance, December 31, 1997 (190,071) 385,329 195,258
STATEMENTS OF CASH FLOW
For the Twelve Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES: Dec.31,95 Dec.31,96 Dec.31,97
Net (loss) (896,405) (70,278) (338,022)
Loss on Disposal of real estate owned 0 400,000 0
Adjustments to reconcile net income to cash
provided by operating activiteis:
Decrease (icrease in accrued interestrec. (7,411) 13,084 0
(Decrease) increase in accounts payable (81,152) (123,517) 0
(Increase) in accounts receivable 878 102,041 (46,001)
(Increase) Dec. in due to general partner 130,290 (91,480) (19,950)
Increase in provision for loan losses 804,693 0 0
NET CASH PROVIDED (USED) IN OPR.ACTIVITIES (49,107) 229,850 (403,973)
CASH FLOW FROM INVESTING ACTIVITIES:
Net change in loan receivable 276,202 (303,893) 552,018
Proceeds from Disposal of real estate owned 0 100,000 0
Net change in other real estate owned (226,203) 0 0
NET CASH PROVIDED BY INVESTING ACTIVITIES 49,999 (203,893) 552,018
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable 0 0 0
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 0 0 0
NET INCREASE (DECREASE) IN CASH 892 25,957 148,045
Cash, Beginning of period (725) 167 26,045
Cash, End of period 167 26,124 174,169
MORTGAGE BANCFUND OF AMERICA II, L.P.
(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.
Accounting Policy
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 902,877
Change in other real estate owned (1,402,877)
Net loss on disposal of real estate (400,000)
