<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period ended June 30, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______________
to _______________
Commission file number 0-19391
NAB ASSET CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 76-0332956
------------------------ ----------------------
(State of Incorporation) (I.R.S. Employer
Identification Number)
5520 LBJ Freeway, Suite 200, Dallas, TX 77057
--------------------------------------- ---------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (214) 701-6956
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
----- -----
As of June 30, 1996, there were 5,091,300 shares of common stock, $.10 par
value per share, of the registrant outstanding.
1
<PAGE> 2
Part I--Financial Information.
Item 1. Financial Statements
NAB ASSET CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 1, 1996 THROUGH JUNE 30, 1996
On June 5, 1996, the Company completed a merger with and into
CPS Investing Corp. ("CPS Sub"), a wholly-owned subsidiary of Consumer
Portfolio Services, Inc. ("CPS"). In the merger, the shareholders of the
Company ("NAB") received on a pro rata basis (i) an aggregate cash distribution
of $15.3 million ($3.64 per share), (ii) an undivided interest in a liquidating
trust which holds $3.0 million in cash and all of the net non-cash assets of
NAB (having a net book value of approximately $3.7 million as of June 5, 1996),
and (iii) 62% of the outstanding shares of the new combined company ("New
NAB"), which had a net asset value of $7.5 million as of the merger date. The
merger was approved at a special meeting of the shareholders held on June 5,
1996. This transaction is being accounted for by New NAB as a reclassification
and distribution with respect to the common stock followed by the issuance of
the new common stock to the CPS Sub. As a result, no gain or loss was
recognized by NAB in the merger. This transaction is discussed in further
detail in Item 2 of this report.
For the purposes of clarity in this report, financial information has
been presented separately for NAB and New NAB, with balances shown at June 5
and June 30, 1996 and activity for the quarter divided between the periods
before and after the merger.
2
<PAGE> 3
NAB ASSET CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
New NAB NAB
June 30, June 5, NAB
1996 1996 December 31,
Assets (unaudited) (unaudited) 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash in banks $ 4,523 $ 3,615 $ 202
Interest-bearing demand deposits 3 3 -
U.S. treasury bills - - 1,759
---------- ---------- ----------
Total cash and cash equivalents 4,526 3,618 1,961
Investments in mortgage-backed
securities, available-for-sale - - 14,997
Loans to MPS (note 5) 2,999
Loans - - 130
Loans classified as in-substance foreclosures - - 1,201
Real estate - - 3,183
Investment in limited partnerships (note 2) - - 724
Other assets 136 24 524
---------- ---------- ----------
Total assets $ 7,661 $ 3,642 $ 22,720
========== ========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Accrued ad valorem taxes - - 24
Accrued legal and professional fees - - 78
Accrued merger related expenses - - 500
Other accounts payable and accrued expenses 175 118 142
---------- ---------- ----------
Total liabilities 175 118 744
---------- ---------- ----------
Shareholders' equity (note 1):
Common stock of Old NAB: $.01 par value;
20,000,000 authorized shares; 4,208,835 shares
issued and outstanding at June 5, 1996 and
December 31, 1995 - 42 42
Common stock of New NAB: $.10 par value,
30,000,000 authorized shares, 5,091,300 issued
and outstanding at June 30, 1996 509
Additional paid-in capital 7,217 3,684 25,567
Accumulated deficit (240) (202) (3,669)
Unrealized gains (losses) on securities
available-for-sale - - 70
Unearned compensation - - (34)
---------- ---------- ----------
Total shareholders' equity 7,486 3,524 21,976
---------- ---------- ----------
Total liabilities and shareholders' equity $ 7,661 $ 3,642 $ 22,720
========== ========== ==========
Book value per share $ 1.47 $ 0.84 $ 5.22
========== ========== ==========
Weighted average number of common and common
equivalent shares 5,091,300 4,208,835 4,208,835
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
NAB ASSET CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Periods June 6, 1996 Through June 30, 1996, April 1, 1996
through June 5, 1996 and the Three Months Ended June 30, 1995
(in thousands, except per share data)
<TABLE>
<CAPTION>
New NAB NAB
For the Period For the Period
June 6, 1996 April 1, 1996 NAB
Through Through Three Months Ended
June 30, 1996 June 5, 1996 June 30, 1995
-------------- -------------- ------------------
<S> <C> <C> <C>
Operating revenues:
Gain on sale of assets $ $ 1,883 $ 345
Income from operating assets - 3 18
Interest income on loans 10 3 86
Management fees - 284 563
Gain on sale of general partners
interest in limited partnerships - 1,066 -
Equity in limited partnerships - 90 7
---------- --------- ----------
Total operating revenues 10 3,329 1,019
---------- --------- ----------
Direct operating expenses:
Loan collection expenses - 41 3
Real estate and other repossessed
asset expenses:
Ad valorem taxes - 16 34
Operating expenses - 1 9
---------- --------- ----------
Total direct operating expense - 58 46
---------- --------- ----------
Operating income 10 3,271 973
Provision for losses - 25 -
---------- --------- ----------
Operating income after
provision for losses 10 3,246 973
---------- --------- ----------
Other income:
Interest income on interest-bearing
deposits and mortgage-backed
securities - 202 235
Loss on sale of mortgage-backed
securities - (125) -
---------- --------- ----------
Total other income - 77 235
---------- --------- ----------
General and administrative expenses:
Employee salaries and benefits 27 318 561
Occupancy expense - 33 29
Directors fees - 10 11
Legal and accounting fees - 23 63
Insurance expense - 65 51
Stock transfer and registrar fees - 5 7
Interest expense - - 5
NAB liquidating trust expense - 173 -
Other expenses 21 120 112
---------- --------- ----------
Total general and
administrative expenses 48 747 839
---------- --------- ----------
Net income (loss) $ (38) $ 2,576 $ 369
========== ========= ==========
Net income (loss) per share $ (0.01) $ 0.61 $ 0.09
========== ========= ==========
Weighted average number of common
and common equivalent shares
outstanding 5,091,300 4,208,835 4,208,835
========== ========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
NAB ASSET CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Periods June 6, 1996 through June 30, 1996, January 1 1996
through June 5, 1996 and the Six Months Ended June 30, 1995
(in thousands, except per share data)
<TABLE>
<CAPTION>
New NAB NAB
For the Period For the Period
June 6, 1996 January 1, 1996 NAB
Through Through Six Months Ended
June 30, 1996 June 5, 1996 June 30, 1995
-------------- --------------- ----------------
<S> <C> <C> <C>
Operating revenues:
Gain on sale of assets $ - $ 1,907 $ 1,155
Income from operating assets - 12 33
Revenue from increase in carrying 10 8
value of account receivable - 780 -
Interest income on loans - - 339
Management fees - 759 1,117
Gain on sale of general partner's 0
interest in limited partnerships - 1,066 -
Equity in limited partnerships - 128 17
---------- ---------- ----------
Total operating revenues 10 4,660 2,661
---------- ---------- ----------
Direct operating expenses:
Loan collection expenses - 52 1
Real estate and other repossessed
asset expenses:
Ad valorem taxes - 32 68
Operating expenses - 3 18
---------- ---------- ----------
Total direct operating expenses - 87 87
---------- ---------- ----------
Operating income 10 4,573 2,574
Provision for losses - 25 -
---------- ---------- ----------
Operating income after
provision for losses 10 4,548 2,574
---------- ---------- ----------
Other income:
Interest income on interest-bearing
deposits and mortgage-backed
securities - 498 423
Loss on sale of mortgage-backed
securities - (125) -
---------- ---------- ----------
Total other income - 373 423
---------- ---------- ----------
General and administrative expenses:
Employee salaries and benefits 27 802 1,019
Occupancy expense - 65 59
Directors fees - 20 25
Legal and accounting fees - 44 118
Insurance expense - 121 103
Stock transfer and registrar fees - 13 19
Interest expense - - 98
NAB liquidating trust expense - 173 -
Other expenses 21 216 275
---------- ---------- ----------
Total general and
administrative expenses $ 48 $ 1,454 1,716
---------- ---------- ----------
Net income (loss) $ (38) $ 3,467 $ 1,281
========== ========== ==========
Net income (loss) per share $ (0.01) $ 0.82 $ 0.30
========== ========== ==========
Weighted average number of common
and common equivalent shares
outstanding 5,091,300 4,208,835 4,208,835
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
NAB ASSET CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Period June 6, 1996 Through June 30, 1996 and the
Three Months Ended June 30, 1995
for the Period January 1, 1996 Through June 5, 1996, the Period
April 1, 1996 through June 5, 1996 and the Six Months Ended June 30, 1995
(in thousands, except share data)
<TABLE>
<CAPTION>
Unrealized
Gains (Losses)
Common Stock Additional on Securities
------------------- Paid-in Accumulated Available-for- Unearned
Shares Amount Capital Deficit Sale (note 2) Compensation Total
---------- ------ ---------- ----------- --------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 4,208,835 $ 42 $25,567 $(3,213) $ (520) $(97) $ 21,779
Amortization of unearned compensation - - - - - 16 16
Unrealized gains on securities
available-for-sale - - - - 179 - 179
Net income - - - 912 - - 912
--------- ---- ------- ------- ------ ---- --------
Balance, March 31, 1995 4,208,835 42 25,567 (2,301) (341) (81) 22,886
--------- ---- ------- ------- ------ ---- --------
Amortization of unearned
compensation - - - - - 16 16
Unrealized gains on securities
available-for-sale - - - - 364 - 364
Net income - - - 369 - - 369
--------- ---- ------- ------- ------ ---- --------
Balance, June 30, 1995 4,208,835 42 25,567 (1,932) 23 (65) 23,635
--------- ---- ------- ------- ------ ---- --------
Amortization of unearned compensation - - - - - 31 31
Unrealized gains on securities
available-for-sale - - - - 47 - 47
Net loss - - - (1,737) - - (1,737)
--------- ---- ------- ------- ------ ---- --------
Balance, December 31, 1995 4,208,835 42 25,567 (3,669) 70 (34) 21,976
--------- ---- ------- ------- ------ ---- --------
Amortization of unearned compensation - - - - - 15 15
Unrealized loss on securities
available-for-sale - - - - (116) - (116)
Net income - - - 891 - - 891
--------- ---- ------- ------- ------ ---- --------
Balance, March 31, 1996 4,208,835 42 25,567 (2,778) (46) (19) 22,766
--------- ---- ------- ------- ------ ---- --------
Amortization of unearned compensation - - - - - 19 19
Unrealized gains on securities
available-for-sale - - - - 46 - 46
Refund of small shareholder program - - 22 - - - 22
Transfer to NAB liquidating trust - - (6,585) - - - (6,585)
Distributions - - (15,320) - - - (15,320)
Net income - - - 2,576 - - 2,576
--------- ---- ------- ------- ------ ---- --------
Balance, June 5, 1996 4,208,835 42 3,684 (202) - - 3,524
--------- ---- ------- ------- ------ ---- --------
Surrender of old stock in merger
(note 1) (4,208,835) (42) (42) - - -
Issuance of new stock in merger-62%
to Shareholders of NAB (note 1) 3,156,594 316 (316) - - -
Contribution of Capital by CPS in
Merger 38% of Common Stock to
CPS (note 1) 1,934,706 193 3,807 - - - 4,000
Net loss - - - (38) - - (38)
--------- ---- ------- ------- ------ ---- --------
Balance, June 30, 1996 5,091,300 $509 $7,217 $ (240) $ - $ - $ 7,486
========= ==== ====== ======= ====== ==== ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
NAB ASSET CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods June 6, 1996 Through June 30, 1996,
April 1, 1996 Through June 5, 1996,
and the Three Months Ended June 30, 1995
(in thousands)
<TABLE>
<CAPTION>
New NAB NAB NAB
For the Period For the Period Three Months
June 6, 1996 April 1, 1996 Ended
Through June 30, 1996 Through June 5, 1996 June 30, 1995
--------------------- -------------------- -------------
<S> <C> <C> <C>
Cash flows from (used by) operating activities:
Net income (loss) $ (38) $ 2,576 $ 369
Adjustments to reconcile net income to
net cash from (used by) operating activities:
Provision for losses - 25 -
Depreciation and amortization - 35 43
Increase in carrying value of account receivable - - -
Equity in limited partnerships - (90) (7)
Net (increase) decrease in other assets (112) 302 200
Net increase (decrease) in accounts payable
and accrued expenses 57 (24) 64
------- -------- -------
Net cash from (used by) operating activities (93) 2,824 669
------- -------- -------
Cash flows from (used by) investing activities:
Collections applied against loan balances - 746 552
Collections applied against real estate and
other repossessed asset balances - 450 361
Purchases of mortgage-backed securities - - (1,259)
Principal repayment of mortgage-backed securities - 407 125
Loan to Mortgage Portfolio Services (note 5) (2,999) - -
Proceeds from sale of mortgage-backed securities - 14,265 -
Proceeds from sale of general partner's interest
in limited partnerships - 404 -
Distributions received from investment in
limited partnerships - 266 383
Investment in limited partnerships - - (56)
Proceeds from the sale of fixed assets - 68 -
------- -------- -------
Net cash from (used by) investing activities (2,999) 16,606 106
------- -------- -------
Cash flows from (used by) financing activities:
Contribution of capital by CPS in merger 4,000 - -
Liquidating distribution - (15,320) -
Payment to liquidating trust - (2,979) -
Refund of small shareholder program - 22 -
Proceeds from short-term borrowings - - 571
Repayment of short-term borrowing - - (1,001)
------- -------- -------
Net cash from (used by) financing activities 4,000 (18,277) (430)
------- -------- -------
Net increase (decrease) in cash and cash equivalents 908 1,153 345
Cash and cash equivalents at beginning of period 3,618 2,465 102
------- -------- -------
Cash and cash equivalents at end of period $ 4,526 $ 3,618 $ 447
======= ======== =======
Supplemental disclosure of
noncash activities:
Cash paid for interest $ - $ - $ 5
======= ======== =======
Transfer to liquidating trust:
Loans $ - $ 129 $ -
In-substance foreclosed loans - 454 -
Real estate - 2,733 -
Other assets - 781 -
Other liabilities - (493) -
------- -------- -------
Net noncash transfers to liquidating trust $ - $ 3,604 $ -
======= ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
NAB ASSET CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods June 6, 1996 Through June 30, 1996,
January 1, 1996 Through June 5, 1996,
and the Six Months Ended June 30, 1995
(in thousands)
<TABLE>
<CAPTION>
New NAB NAB
For the Period For the Period NAB
June 6, 1996 January 1, 1996 Six Months Ended
Through June 30, 1996 Through June 5, 1996 June 30, 1995
--------------------- -------------------- ----------------
<S> <C> <C> <C>
Cash flows from (used by) operating activities
Net income (loss) $ (38) $ 3,467 $ 1,281
Adjustments to reconcile net income to
net cash from (used by) operating activities:
Provision for losses - 25 -
Depreciation and amortization - 75 84
Increase in carrying value of account receivable - (780) -
Equity in limited partnerships - (128) (17)
Net (increase) decrease in other assets (113) 364 113
Net increase (decrease) in accounts payable
and accrued expenses 58 (133) 5
-------- -------- --------
Net cash from (used by) operating expenses (93) 2,890 1,466
-------- -------- --------
Cash flows from (used by) investing activities:
Collections applied against loan balances - 748 8,064
Collections applied against real estate and
other repossessed asset balances - 450 361
Purchases of mortgage-backed securities - - (3,735)
Principal repayment of mortgage-backed securities - 661 302
Loan to Mortgage Portfolio Services (note 5) (2,999) - -
Proceeds from sale of mortgage-backed securities - 14,265 -
Proceeds from sale of general partner's interest
in limited partnerships - 404 -
Distributions received from investment in
limited partnerships - 448 783
Investment in limited partnerships - - (184)
Proceeds from the sale of fixed assets - 68 -
Advances on loans - - (48)
-------- -------- --------
Net cash from (used by) investing activities (2,999) 17,044 5,543
-------- -------- --------
Cash flows from (used by) financing activities:
Contribution of capital by CPS in merger 4,000 - -
Liquidating distribution - (15,320) -
Payment to liquidating trust - (2,979) -
Refund of small shareholder program - 22 -
Proceeds from short-term borrowings - - 2,137
Repayment of short-term borrowings - - (8,824)
-------- -------- --------
Net cash from (used by) financing activities 4,000 (18,277) (6,687)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 908 1,657 322
Cash and cash equivalents at beginning of period 3,618 1,961 125
-------- -------- --------
Cash and cash equivalents at end of period $ 4,526 $ 3,618 $ 447
======== ======== ========
Supplemental disclosure of
noncash activities:
Cash paid for interest $ - $ - $ 98
======== ======== ========
Transfer to liquidating trust:
Loans $ - $ 129 $ -
In-substance foreclosed loans - 454 -
Real estate - 2,733 -
Other assets - 781 -
Other liabilities - (493) -
-------- -------- --------
Net noncash transfers to liquidating trust $ - $ 3,604 $ -
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 9
NAB ASSET CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 1, 1996 THROUGH JUNE 30, 1996
NOTES TO THE FINANCIAL STATEMENTS
(1) GENERAL
NAB Asset Corporation, a Texas corporation ("NAB"), was organized on
March 13, 1991, by National Asset Bank (a bank in liquidation) (the "Bank") as
a wholly-owned subsidiary of the Bank for the purpose of acquiring
substantially all of the assets of the Bank through a series of transactions
and agreements intended to effect the final liquidation of the Bank. On July
17, 1991, the shareholders of the Bank approved such transactions and the
Acquisition Agreement and Plan of Reorganization (the "Acquisition Agreement").
As a result, NAB acquired substantially all of the assets of the Bank in
consideration for the issuance by NAB to the Bank of 4,146,266 shares
(including the payment for 5,431 fractional shares) of NAB's common stock, $.01
par value (the "Common Stock"), and the assumption of all the Bank's
liabilities. Immediately following such acquisition, the Bank distributed the
shares of Common Stock received by it to the holders of the Bank's common
stock, $.01 par value (the "Bank Common Stock"), on the basis of one share of
Common Stock for each ten shares of the Bank Common Stock held of record as of
the close of business on July 17, 1991. Because NAB was formed for the purpose
of effecting the acquisition of substantially all of the Bank's assets, NAB had
only limited business operations prior to such acquisition.
On June 5, 1996, pursuant to a Plan and Agreement of Merger dated
February 7, 1996, CPS Investing Corp. ("CPS Sub"), a wholly owned subsidiary of
Consumer Portfolio Services, Inc. ("CPS") was merged with and into NAB. In the
merger, the shareholders of NAB received on a pro rata basis (i) an aggregate
cash distribution of $15.3 million ($3.64 per share), (ii) an undivided
interest in a liquidating trust, and (iii) 62% of the outstanding shares of
common stock, $.10 par value (the "New Common Stock") of the new combined
company ("New NAB") which had a net asset value of $7.5 million as of the
merger date. The merger was approved at a special meeting of the shareholders
held on June 5, 1996. The liquidating trust received approximately $3.0
million in cash, subject to certain contingencies, and all of the non-cash
assets of NAB with a net book value at June 5, 1996 of $3.7 million. This
transaction is being accounted for by New NAB as a reclassification and
distribution with respect to the Common Stock followed by the issuance of the
New Common Stock to CPS. As a result, no gain or loss was recognized by NAB in
connection with the merger.
In an effort to protect New NAB's large net operating loss
carryforwards, the New Common Stock issued to the shareholders of NAB and CPS
in the merger generally restrict the acquisition of 5% or more of the
outstanding shares of common stock of New NAB so as to prevent the occurrence
of an ownership change under the Federal income tax laws. This restriction will
not prevent the acquisition of New Common Stock directly from New NAB.
9
<PAGE> 10
In the opinion of management, all adjustments (consisting of normal,
recurring accruals) considered necessary for fair presentation have been
included in the unaudited consolidated financial statements for the periods
ended June 5 and June 30, 1996 and June 30, 1995. Operating results for the
periods ended June 5 and 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996.
(2) INVESTMENT IN PARTNERSHIPS
On June 5, 1996 immediately prior to the merger and liquidating trust
transfer described in Note (1), pursuant to the Partnership Sale Agreement
dated February 7, 1996 by and among NAB and certain of its subsidiaries and
Michael A. Hrebenar and Richard A. Durham, former officers of NAB,
(collectively, the "Purchaser"), NAB sold to the Purchaser its general partner
interest in four limited partnerships and certain tangible assets used in the
collection of loans (carried at $68,000 book value) for $1.538 million in cash.
NAB's investment in these partnerships was carried at a book value of $404,000
at March 31, 1996. This sale resulted in a gain of $1.066 million, and the
proceeds have been included in the cash distribution to shareholders described
in Note (1). This transaction is described in more detail in Management's
Discussion and Analysis of Operations--NAB--General, Partnership Sale.
(3) FEDERAL INCOME TAXES
Neither NAB nor New NAB has recorded a Federal income tax expense or
benefit for the three-month period ended June 30, 1996. At December 31, 1995,
for Federal income tax purposes, NAB had regular tax and alternative minimum
tax net operating loss carryforwards of approximately $180 million, which will
expire beginning in 2001 if not utilized to offset future taxable or
alternative minimum taxable income.
(4) CERTAIN TRANSACTIONS AND RELATED PARTIES
In November 1991, Emil Nakfoor, a director of NAB, was retained by the
Board of Directors on a consulting basis to assist the management of NAB with
certain projects. Mr. Nakfoor received $11,250 for his service during the
three months ended June 30, 1996 and 1995.
(5) SUBSEQUENT EVENTS
INVESTMENT IN MORTGAGE PORTFOLIO SERVICES, INC. New NAB acquired 80
percent of the voting common stock of Mortgage Portfolio Services, Inc. ("MPS")
for a purchase price of $300,000 from CPS on July 10, 1996. The remaining
common stock of MPS is owned by its management. New NAB also acquired $2.25
million of MPS preferred stock through conversion of debt to equity and
contributed approximately $249,000 to the capital of MPS. The MPS preferred
stock acquired by New NAB provides for cumulative dividends at a rate of 10%
per annum and has a liquidation preference over the MPS common stock equal to
the purchase price of the MPS preferred stock plus any accrued and unpaid
dividends.
10
<PAGE> 11
MPS is a mortgage banking company with headquarters in Dallas that
specializes in the purchase, origination and servicing of residential mortgage
loans that do not meet traditional secondary market guidelines due to credit or
employment history of the borrower, debt-to-income ratios, or the nature of
the collateral. MPS began funding mortgages in May and closed $1.35 million in
loans through June 30, 1996.
At June 30, 1996, New NAB had advanced $2,499,000 to MPS in
anticipation of acquiring 80% of the voting common stock of MPS, $2,250,000 of
preferred stock and making a $249,000 contribution of the paid-in capital of
MPS. This advance was made under two interest-bearing notes which were
exchanged for the preferred stock and the contribution to paid-in capital on
July 10, 1996. An additional $500,000 had been advanced at June 30, 1996 under
a $2 million warehouse line of credit provided by New NAB to MPS. This line of
credit is secured by mortgage loans held for sale by MPS and bears interest at
the prime rate as published in the Wall Street Journal plus 1/2% per year.
Availability of this warehouse line is discretionary on the part of New NAB,
depending on its cash investment alternatives. MPS has obtained a firm
commitment for an additional $10 million warehouse line of credit from Guaranty
Federal Bank, FSB.
SUMMARIZED FINANCIAL DATA FOR MPS AT JUNE 30, 1996 AND
FROM MAY 13, 1996 (INCEPTION DATE) THROUGH JUNE 30, 1996
(INCLUDING PRE-INCEPTION COSTS):
<TABLE>
<S> <C>
Assets $2,817,395
Liabilities 3,046,763
Equity (229,368)
Total Revenue 10,185
Total Expenses 235,100
----------
Net Income $ (224,924)
==========
</TABLE>
INVESTMENT IN CARS USA, INC. New NAB acquired preferred stock and 80
percent of the voting common stock of CARS USA, Inc. ("CARS") on July 10, 1996
for an aggregate purchase price of $500,000. The CARS preferred stock acquired
by New NAB provides for cumulative dividends at a rate of 6 percent per annum
and has a liquidation preference over the CARS common stock equal to the
purchase price of the CARS preferred stock plus any accrued and unpaid
dividends. New NAB also entered into a ten-year $1 million subordinated note
agreement with CARS that bears interest at an annual rate of 10 percent. CARS
has additional financing available through an $800,000 flooring arrangement for
the purchase of used automobiles from CPS.
CARS is a newly-formed company that will acquire and operate
franchised automobile dealerships for both new and used vehicles. CARS will
utilize the extensive experience of its executive team in sub-prime automobile
lending to serve the dealerships in reaching a broad market of purchasers. On
July 31, 1996, CARS completed negotiations for the purchase of its first
dealership.
11
<PAGE> 12
SUMMARIZED FINANCIAL DATA FOR CARS AT JULY 10, 1996
(INCLUDING PRE-INCEPTION COSTS):
<TABLE>
<S> <C>
Assets $1,670,000
Liabilities 1,120,216
Equity 550,000
</TABLE>
CARS had not begun operations at July 10, 1996, and therefore there
was no revenue received through that date, and the only expenses incurred were
organization costs totaling approximately $170,000.
12
<PAGE> 13
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion is intended to assist in understanding of the
Company's financial position as of June 30, 1996, and results of operations for
the periods April 1 through June 5, 1996 and from June 6 through June 30, 1996
compared to the quarter ended June 30, 1995. To clarify events described
herein, separate Management Discussions and Analysis of Financial Condition and
Results of Operations for the Company before the merger, that is before June 6,
1996 ("NAB") and for the surviving corporation after the merger ("New NAB")
will be presented. The notes to the Company's consolidated financial
statements included in this report, the Proxy Statement and Prospectus dated
April 23, 1996, as well as the Company's annual Report on Form 10-K for the
year ended December 31, 1995 and the notes thereto, should be read in
conjunction with this discussion.
NAB
GENERAL
NAB collected on or sold the remainder of the assets acquired by NAB
from National Asset Bank (a bank in liquidation) (the "Bank") in July 1991
("Bank Assets") during the period from April 1 through June 5, 1996 such that
the assets at June 5, 1995 consisted primarily of cash.
On June 5, 1996, NAB consummated the merger of CPS Sub with and into
NAB, after approval at the annual meeting of shareholders of NAB held June 5,
1996. Under the terms of the merger, (i) each outstanding share of NAB's
Common Stock was converted into the right to receive .75 of a share of common
stock of New NAB ("New Common Stock"); $3.64 per share in cash, and a unit in
the liquidating trust (discussed below); and (ii) each outstanding share of CPS
Sub common stock was converted into 1,934.706 shares of New Common Stock. The
shares of New Common Stock issued to NAB's shareholders represent 62% of the
outstanding shares of New Common Stock and the shares to be issued to CPS
represent 38% of the outstanding shares.
CPS Sub was a newly formed entity that had $4 million in cash and no
liabilities as of the date of the merger so that New NAB was initially
capitalized with $7.5 million in cash (plus $118,000 necessary to satisfy
certain retained liabilities) and is no longer subject to the various
restrictions previously existing in NAB's articles of incorporation that limited
its operations.
LIQUIDATING TRUST. Immediately prior to the merger, all of NAB's
remaining net non-cash assets plus $2,979,000 cash were transferred to a
liquidating trust for the benefit of shareholders of NAB as of the effective
time of the merger. The objective of the trust is to liquidate or otherwise
realize on those assets within one year. The assets transferred primarily
consisted of one large loan, the guarantor of which is currently in bankruptcy,
and four larger pieces of undeveloped real estate in Texas and Louisiana which
together have a book value of approximately $4.1 million. In addition, certain
liabilities totaling $443,000 were transferred to the trust. The liquidating
trust had net assets at June 5, 1996 of $6,627,000 or $1.57 per share of NAB
common stock. The interests in the liquidating trust are non-transferable and
no distributions are expected to be made therefrom until after December 31,
1996.
13
<PAGE> 14
PARTNERSHIP SALE. Immediately prior to the merger and the transfer of
assets to the liquidating trust, pursuant to the Partnership Sale Agreement
dated February 7, 1996 by and among NAB, certain of its subsidiaries and the
Purchaser, NAB transferred on June 5, 1996, for $1,538,000 subject to
adjustment, its general partner interest in four limited partnerships and
certain tangible assets used in the collection of loans. The partnerships held
an aggregate of $19,300,000 in non-performing or other loans and $5,700,000 in
real estate as of December 31, 1995. The partnership interests ranged from 2%
to 20% and provided NAB with the right to receive 20% of distributions from the
partnerships once certain payouts were received by the limited partners. The
Purchaser assumed NAB's obligations with respect to managing the partnerships
and with respect to the bonus pools established by NAB related to each
partnership for the benefit of employees of NAB.
The partnership sale was consummated immediately prior to the
effective time of the merger and the proceeds from the sale were included in
NAB's cash and cash equivalents available for distribution to shareholders of
NAB. NAB recognized a gain of $1,066,000 from the sale of this partnership
interest.
RESULTS OF OPERATIONS
Results of operations for the period April 1 to June 5, 1996 reflected
the continued sale and disposition of the Bank Assets and the management and
collection of loans and related assets of new partnerships created by NAB
during 1992, 1993, and 1994.
For the period April 1 to June 5, 1996, NAB reported net income of
$2,576,000 or $.61 per share, compared to net income of $369,000, or $.09 per
share, for the three months ended June 30, 1995. Operating income for the
period April 1 to June 5, 1996, was $3,271,000 and other income, consisting of
interest on GNMA and Freddie Mac whole pool obligations and the loss on the
sale of such securities, was $77,000. Operating income for the three months
ended June 30, 1995, was $973,000 and other income was $235,000. Operating
income for the period April 1 to June 5, 1996 consisted primarily of $284,000
in management fees, $1,883,000 gain on sale of assets, and $1,066,000 from gain
on sale of partnership interests, compared to $563,000, $345,000, and zero,
respectively, for the three months ended June 30, 1995.
Gain on sale of assets for the period April 1 to June 5, 1996 was
$1,883,000 and was primarily attributable to the settlement of one in-substance
foreclosed loan, the guarantor of which is currently in bankruptcy, and the
sale of two parcels of real estate. NAB recorded a gain of $1,791,500 from the
settlement of the in-substance foreclosed loan after receiving $2,462,500 and a
loan with a book value of $454,000. The gain on sale of assets for the three
months ended June 30, 1995, was $345,000 and was primarily attributable to the
settlement of two of NAB's larger loans having a combined book value at the
time of settlement of approximately $7.3 million.
14
<PAGE> 15
Interest income for the period April 1 to June 5, 1996 was $3,000,
compared to $86,000 for the three months ended June 30, 1995. The decline in
interest income for the 1996 period as compared to the three months ended June
30, 1995 is attributable to the final settlement of NAB's largest loan, secured
by a hotel in Austin, Texas and the settlement of two smaller loans during
1995.
During the period April 1 to June 5, 1996, NAB recorded $284,000 in
management fees, compared to $563,000 for the three months ended June 30, 1995.
Management fees, charged on a basis of cost plus 10%, were received for
managing certain loans in limited partnerships in which subsidiaries of NAB had
an investment and acted as the general partner. These partnership interests
were sold on June 5, 1995, as described above. The decrease in management fees
was attributable to decreased activity in the partnerships in anticipation of
the sale.
Collections on loans and loans classified as in-substance foreclosures
by NAB for the period April 1 to June 5, 1996, were approximately $2,490,000,
of which $746,000 was applied against the book value of the loans and loans
classified as in-substance foreclosures, $3,000 was interest income collected
on performing loans, $1,740,000 was collected in excess of the book value of
the assets sold and $1,000 was collected from operating assets. Collections on
loans and loans classified as in-substance foreclosures by NAB for three months
ended June 30, 1995, were approximately $689,000, of which $552,000 was applied
against the book value of the loans and loans classified as in-substance
foreclosures, $99,000 was interest income collected on performing loans,
$29,000 was collected in excess of the book value of the assets sold and $9,000
was collected from operating assets. During the period April 1 to June 5,
1996, NAB completed a settlement of its largest in- substance foreclosed loan
which had a book value of $1,125,000. The terms of the settlement included the
receipt by NAB of approximately $2,462,000 and a loan with a book value of
$454,000. The remaining loans and in-substance foreclosed loans with a book
value of approximately $583,000 were transferred to the NAB Liquidating Trust,
pursuant to the Plan and Agreement of Merger dated February 7, 1996, that was
approved by the shareholders on June 5, 1996.
Collections on real estate and other repossessed assets for the period
April 1 to June 5, 1996 were approximately $595,000, of which $450,000 was
applied against the book value of real estate, $143,000 was collected in excess
of the book value of the assets sold and $2,000 was collected from operating
assets. Collections on real estate and other repossessed assets for the three
months ended June 30, 1995 were approximately $686,000, of which $361,000 was
applied against the book value of real estate, $316,000 was collected in excess
of the book value of the assets sold and $9,000 was collected from operating
assets. The collections on real estate and other repossessed assets during the
period April 1 to June 5, 1996 were primarily attributable to the sale of two
parcels of real estate. The remaining real estate and other repossessed assets
with a book value of approximately $3,514,000 were transferred to the NAB
Liquidating Trust, pursuant to the Plan and Agreement of Merger dated February
7, 1996, that was approved by the shareholders on June 5, 1996.
15
<PAGE> 16
Direct operating expenses of NAB for the period April 1 to June 5,
1996 were approximately $58,000, compared to $46,000 for the three months
ended June 30, 1995. The increase in operating expenses reflects activity
related to the settlements and dispositions referred to above.
General and administrative expenses for the period April 1 to June 5,
1996 were approximately $747,000 compared to $839,000 for the three months ended
June 30, 1995. The decrease in general and administrative expenses is
primarily attributable to a decrease in employee salaries and benefits of
$243,000 offset by NAB liquidating trust expenses of $173,000.
Included in general and administrative expenses for the period April 1
to June 5, 1996, was approximately $258,000 in employee expenses, relating to
services provided to NAB's partnership interests that were reimbursed through
the payment of management fees compared to $511,000 for the three months ended
June 30, 1995. The decrease in employee expenses relating to services provided
to NAB's partnership interests is attributable to reduced employee and overhead
costs charged to the partnerships and to staff reductions in anticipation of
the merger with CPS Sub and sale of NAB's general partner interests in the
partnerships prior to the merger.
LIQUIDITY AND CAPITAL RESOURCES
As of June 5, 1996, NAB had approximately $3,618,000 in cash and
equivalents and no investments in whole pool GNMA and Freddie Mac obligations
(mortgage-backed securities). Such amounts represented an increase in cash and
cash equivalents of $2,657,000 from December 31, 1995 and a decrease in GNMA
and Freddie MAC obligations of $14,997,000. NAB liquidated its GNMA and
Freddie Mac holdings during this period April 1 to June 5, 1996 at a loss of
approximately $125,000. At June 5, 1996 and December 31, 1995, NAB had no
outstanding borrowings.
As noted above, on June 5, 1996, NAB consummated the merger of CPS Sub
with and into NAB. Under the terms of the merger, the shareholders of NAB
received on a pro rata basis (i) an amount of cash equal to $15,320,000 or
$3.64 per share, (ii) an undivided interest in a liquidating trust into which
the assets of NAB not converted into cash prior to the merger were transferred
for liquidation (with a book value of $1.57 per share) and (iii) 62% of the
outstanding shares of New NAB, which had at the time of the merger a new asset
value of approximately $7.5 million ($1.10 book value per share, based on 62%
ownership distributed among the NAB shares outstanding of 4,208,835).
NAB also entered into an agreement to sell NAB's general partner
interests in certain limited partnerships, together with certain tangible
assets used in the collection of loans, to its former management for
approximately $1,568,000, subject to adjustment, which resulted in a gain of
$1,066,000. The proceeds from this sale were included in the cash distribution
to shareholders in connection with the merger, which totaled $15,320,000 for
the 4,208,835 shares of Common Stock of NAB ($3.64 per share).
16
<PAGE> 17
From July 17, 1991 (inception) through June 5, 1996 NAB made cash
distributions with respect to the Common Stock aggregating $5.00 per share,
excluding the merger transaction discussed herein.
NEW NAB
GENERAL
New NAB began its operations on June 6, 1996 after the consummation of
the merger of CPS Sub with and into NAB. Under the terms of the merger, which
is described above, New NAB was initially capitalized with approximately $7.5
million in cash and approximately $118,000 to cover certain existing
liabilities of NAB, as well as $24,000 in various prepaid expenses.
In connection with the merger, the board of directors of NAB was
reconstituted to consist of Charles E. Bradley, Sr., Michael W. Caton, Charles
E. Bradley, Jr., Emil A. Nakfoor and Robert A. Bettigole. Charles E. Bradley,
Sr. will serve as Chairman and Chief Executive Officer and Michael W. Caton
will serve as President and Chief Operating Officer.
Charles E. Bradley, Sr. has been the Chairman of the Board of CPS, a
publicly-held, nationwide sub-prime auto lender, since its formation in March,
1991. Mr. Bradley was a founder of Stanwich Partners, Inc., a Connecticut
investment firm which acquires controlling interests in companies in
conjunction with the existing operating management of such companies, and has
been President and director of Reunion Industries, Inc., a publicly held
company which manufactures precision plastic products and provides engineered
plastics services. Mr. Bradley is also currently a director of
DeVlieg-Bullard, Inc., Chatwins Group, Inc., Texon Energy Corp., General
Housewares Corp., Zydeco Exploration, Inc., Sanitas, Inc., and Triangle
Corporation, all of which are publicly-held corporations or are required to
file periodic reports under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
Michael W. Caton has twenty-eight years of experience in banking and
finance, and was the organizing founder of Crescent Bank and Trust Company,
where he was the President and Chief Executive Officer from its inception in
1988 through 1995. He previously served as President and CEO of Timberbank, a
registered investment advisory firm, and held senior executive positions at
First National Bank of Atlanta and Security Pacific National Bank.
At December 31, 1995, NAB had regular tax and alternative minimum tax
net operating loss carryforwards ("NOLs") of approximately $180 million, which
will expire beginning in 2001 if not utilized to offset future taxable or
alternative minimum taxable income. These NOLs, to the extent of the balance
remaining at the time of the merger, can be used under certain circumstances by
New NAB to offset future income tax liabilities. In an effort to protect these
NOLs, the Restated Articles of Incorporation of New NAB impose a transfer
restriction on the New Common Stock that, generally, restricts the ability of a
person or entity to accumulate 5% or more of the outstanding shares of common
stock of New NAB so as to prevent the occurrence of an ownership change under
the Federal income tax laws (Section 382 of the Internal Revenue Code of 1986,
as amended). Pursuant to Section 382, changes in the direct or indirect
ownership of corporations having tax losses can result in the application of
limitations on the use of such losses. The transfer restriction does not
prevent the acquisition of New Common Stock directly from New NAB. It is the
intention of New NAB's reconstituted Board of Directors that New NAB will seek
to identify opportunities for the investment of its available funds so as to
maximize the return to shareholders from such cash and New NAB's significant
NOLs.
17
<PAGE> 18
New NAB will seek to acquire businesses that are consistent with the
core business of CPS, its major shareholder, in automobile financing and loan
servicing. Several such alternatives have been considered by the New NAB Board
of Directors and pursued by New NAB. Two such investments were selected,
reviewed and approved during the second quarter of 1996: Mortgage Portfolio
Services, Inc. and CARS USA, both of which are considered by management to
represent excellent opportunities for New NAB to develop business units that
are focused on consumer needs for housing, automobiles, and related financial
services.
1. INVESTMENT IN MORTGAGE PORTFOLIO SERVICES, INC.
Mortgage Portfolio Services, Inc. ("MPS") is a mortgage banking
company based in Dallas, Texas that specializes in the purchase, origination
and servicing of residential mortgage loans that do not meet traditional
secondary market guidelines due to credit or employment history of the
borrower, debt-to-income ratios, or the nature or the collateral. MPS began
funding mortgages in May and has closed $1.35 million in loans through June 30,
1996. The president of MPS has fifteen years experience as the president of
two mortgage banking companies, with twenty-five years in the industry.
New NAB acquired 80 percent of the voting common stock of MPS from CPS
for a purchase price of $300,000 on July 10, 1996. The remaining common stock
of MPS is owned by its management. New NAB also acquired $2.25 million of MPS
preferred stock through conversion of debt to equity and contributed
approximately $249,000 to the capital of MPS. The MPS preferred stock acquired
by New NAB provides for cumulative dividends at a rate of 10% per annum and has
a liquidation preference over the MPS common stock equal to the purchase price
of the MPS preferred stock plus any accrued and unpaid dividends.
New NAB also entered into an agreement to fund MPS loan originations
through a $2,000,000 line of credit secured by mortgage loans held for sale by
MPS, bearing interest at the prime rate as published in the Wall Street Journal
plus 1/2% per year. There were $500,000 of funds advanced to MPS under this
line of credit at June 30, 1995. Availability of this warehouse line is
discretionary on the part of New NAB, depending on its cash investment
alternatives. MPS has obtained a firm commitment for an additional $10 million
warehouse line of credit from Guaranty Federal Bank, FSB.
2. INVESTMENT IN CARS USA, INC.
New NAB also acquired preferred stock and 80 percent of the voting
common stock of CARS USA, Inc. ("CARS") for an aggregate purchase price of
$500,000 on July 10, 1996. The CARS preferred stock acquired by New NAB for
$400,000 provides for cumulative dividends at a rate of 6 percent per annum and
has a liquidation preference over the CARS common stock equal to the purchase
price of the CARS preferred stock plus any accrued and unpaid dividends. New
NAB also entered into an agreement to loan CARS $1 million in the form of a
ten-year subordinated note that bears interest at an annual rate of 10 percent.
18
<PAGE> 19
CARS is a newly formed company that will acquire and operate
franchised automobile dealerships for both new and used vehicles. CARS will
utilize the extensive experience of its executive team in sub-prime automobile
lending to serve the dealerships in reaching a broad market or purchasers. On
July 31, 1996, CARS completed negotiations for the purchase of its first
dealership, which it began operating at the end of July, 1996.
Although it is the current intention of management and the Board that
New NAB pursue new opportunities in the financial services sector, there can be
no assurance as to the type of transaction that may be pursued, the timing of
any such transactions or the potential profitability of any such transactions.
The activities of New NAB are significantly different from those of NAB, and
therefore the results of operations of New NAB will not be comparable to the
results of operations of NAB for periods prior to the merger.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, New NAB had approximately $4.5 million in cash and
cash equivalents. As discussed above, New NAB was initially capitalized with
$7.5 million in cash (plus $118,000 necessary to satisfy certain retained
liabilities).
As of June 30, 1996, New NAB had advanced $2,499,000 to MPS in
anticipation of acquiring 80% of the voting common stock of MPS, $2,250,000 of
preferred stock and making a $249,000 contribution to the paid-in capital of
MPS. This advance was made under an interest-bearing note which was exchanged
for the preferred stock and the contribution to paid-in capital on July 10,
1996.
New NAB also entered into an agreement to fund MPS loan originations
through a $2,000,000 line of credit secured by mortgage loans held for sale by
MPS, bearing interest at the prime rate as published in the Wall Street Journal
plus 1/2% per year. There was $500,000 outstanding under this line of credit at
June 30, 1996. Availability of this warehouse line is discretionary on the
part of New NAB, depending on its cash investment alternatives. As of the end
of July, 1996, MPS had obtained a firm commitment for an additional $10 million
warehouse line of credit from Guaranty Federal Bank, FSB.
On July 10, 1996, New NAB invested $100,000 in the common stock and
$400,000 in preferred stock of CARS. Also on July 10, 1996, New NAB advanced
$1,000,000 to CARS under a ten-year subordinated note agreement being interest
at an annual rate of 10 percent. New NAB does not intend to advance additional
funds, in excess of the total $1.5 million investment, to CARS.
19
<PAGE> 20
As of July 26, 1996, New NAB had approximately $2.9 million in liquid
assets invested primarily in short-term interest bearing deposits. New NAB
will seek to establish or acquire new business, which opportunities may require
additional financing through the issuance of debt or equity. Because of the
limitations imposed on New NAB with respect to the amount of stock that may be
transferred without triggering a change of control that would limit its ability
to fully utilize its NOLs (discussed further above), it is likely that such
financing would be in the form of either debt or non-convertible preferred
stock. Such financing might also be effected through equity issuance by
subsidiaries to be formed by New NAB or through joint ventures and special
purpose entities. There can be no assurance that such financings will be
completed.
20
<PAGE> 21
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(b) Reports on Form 8-K
On June 20, 1996, New NAB filed a Current Report on
Form 8-K, reporting under Item 2 the completion of the merger
with CPS Sub on June 5, 1996.
(c) Exhibit 27 -- Financial Data Schedule
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 13(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.
Dated: August 9, 1996
NAB ASSET CORPORATION
By: /s/ CHARLES BRADLEY, SR.
----------------------------------
Charles Bradley, Sr.
Chairman and Chief
Executive Officer
By: /s/ MICHAEL W. CATON
----------------------------------
Michael W. Caton
President and Chief
Operating Officer
(Principal Financial Officer)
22
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-21-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 4,526
<SECURITIES> 0
<RECEIVABLES> 2,999
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,661
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,661
<CURRENT-LIABILITIES> 175
<BONDS> 0
0
0
<COMMON> 509
<OTHER-SE> 6,977
<TOTAL-LIABILITY-AND-EQUITY> 7,661
<SALES> 0
<TOTAL-REVENUES> 5,043
<CGS> 0
<TOTAL-COSTS> 87
<OTHER-EXPENSES> 1,502
<LOSS-PROVISION> 25
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,429
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,429
<EPS-PRIMARY> .82
<EPS-DILUTED> .82
</TABLE>