-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QpNt5IEwiV3t5tN2euILUixANCmgYWF8vwZloXBrF7nJMM3ABa0dd+RultOh9ilC j8r8FQL0cqxpcKmXzy4PKw== 0000823063-98-000002.txt : 19980326 0000823063-98-000002.hdr.sgml : 19980326 ACCESSION NUMBER: 0000823063-98-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980325 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTGAGE BANCFUND OF AMERICA CENTRAL INDEX KEY: 0000823063 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 330281356 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-17643 FILM NUMBER: 98572760 BUSINESS ADDRESS: STREET 1: 2 CORPORATE PARK STE 106 CITY: IRVINE STATE: CA ZIP: 92714 BUSINESS PHONE: 7142532900 MAIL ADDRESS: STREET 1: 2 CORPORATE PARK STREET 2: SUITE 106 CITY: IRVINE STATE: CA ZIP: 92606-5128 10-K 1 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) -----END PRIVACY-ENHANCED MESSAGE-----