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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
September 30, 1998
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
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(Exact name of registrant as specified in charter)
New York 333-11961 25-0659306
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258-0001
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 234-5000
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Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
The tables attached hereto as Exhibit 19.1 (the "Updated
Tables") update the tables contained on pages 37 through 41 (the "Original
Tables") of the Mellon Bank Premium Finance Loan Master Trust Prospectus, dated
December 12, 1996 (the "Prospectus"), which forms a part of the Registration
Statement on Form S-3, No. 333-11961. The "Geographic Concentration" table
appearing on pages 38 and 39 of the Prospectus has been updated to reflect the
fact that additional states became Permitted States and that address changes for
insureds have occurred. The table under the caption "Loan Loss Experience" has
been updated to set forth loss experience for the Identified Portfolio for the
year ended December 31, 1997 and for the nine month period ended September 30,
1998. The table under the caption "Loan Delinquency Experience Following
Cancellation" has been updated to add a new table to show delinquency experience
for the Identified Portfolio for the twelve month period ended December 31, 1997
and the nine month period ended September 30, 1998. The table under the caption
"Originators' Portfolio Yield" has been updated to add a new table to show
portfolio yield information for the Identified Portfolio for the twelve month
period ended December 31, 1997 and the nine month period ended September 30,
1998. Capitalized but undefined terms used herein have the meanings set forth in
the Prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Net charge offs, as an annualized percentage of the average
outstanding principal balance of loans in the Identified Portfolio, increased to
0.37% for the nine month period ended September 30, 1998 from 0.16% for the
twelve months ended December 31, 1997. This increase resulted from two factors.
First, the Servicer's policy is generally to charge off loans
if uncollected 270 days after cancellation of the related insurance policy. As a
result, in any period the annualized percentage of charge-offs is affected by
the delinquency profile of loans in the pool at the beginning of the period. A
beginning of period pool characterized by delinquencies which are relatively low
in number and/or of relatively short duration will tend to have, all other
things being equal, a relatively lower annualized percentage of charge-offs in
the period. The Identified Portfolio was initially constituted in December, 1996
with a bulk transfer of loans to the Trust. One of the requirements for the
loans to be transferred was that the loans could not at the time of transfer
have been delinquent for more than thirty days. Consequently, the Identified
Portfolio at the beginning of the twelve month period ended December 31, 1997
(approximately two weeks after the initial transfer of loans to the Trust),
contained a relatively low proportion of loans delinquent for more than thirty
days. By comparison, the delinquency profile of the loans in the Identified
Portfolio at the beginning of the nine month period ended September 30, 1998 was
not so affected by a bulk transfer of non-delinquent loans shortly prior to the
beginning of the period. As a consequence, the annualized net charge-off
percentage for the latter period increased.
The increase in the annualized net charge-off percentage also
resulted from lower originations of new loans which, when compared to
charge-offs resulting in part from higher originations in the prior period,
yielded a higher charge-off percentage; economic pressures affecting the
insurance industry, which have resulted in insurance companies being more
assertive in resisting making unearned premium refunds; the utilization of new
insurance agents and increased extended payment terms, which have resulted in
increased risk of nonpayment; and higher levels of borrower bankruptcies, which
have contributed to increased charge-offs.
In the accompanying table "Originators' Portfolio
Yield/Identified Portfolio", the Average Outstanding Principal Balance
Receivables for the nine month period ended September 30, 1998 do not include
amounts held on deposit during such period in the Excess Funding Account, and
the Interest and Fee Income does not include earnings on amounts so held on
deposit. Funds were deposited in the Excess Funding Account in January, March,
April, May,
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June and September 1998 for the purpose of maintaining the required Minimum
Transferor Interest under the Pooling and Servicing Agreement. If the amounts so
held on deposit and the earnings on such amounts had been included in the table,
the Average Revenue Yield for the nine month period ended September 30, 1998
would have been 11.32% as compared to 11.44% set forth in the accompanying
"Originators' Portfolio Yield/Identified Portfolio" table.
As of June 30, 1998, the Pooling and Servicing Agreement was
amended so as to permit the transfer to the Trust of Receivables represented by
Premium Finance Agreements financing insurance policies which included policies
written by Lloyds of London, subject to other limitations contained in the
Pooling and Servicing Agreement. The amendment also confirms the prohibition of
the transfer to the Trust of Receivables relating to any insurance carrier known
to any of the Originators or the Transferor to be subject of any insolvency,
receivership or other similar proceedings. The additional Receivables permitted
by this amendment began to be transferred to the Trust on July 1, 1998.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits
Exhibit No.
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19.1 Updated Tables
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SIGNATURES
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Pursuant to the requirements 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.
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
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(Registrant)
By: AFCO Credit Corporation, on behalf of
Mellon Bank Premium Finance Loan
Master Trust
By: FREDERICK B. OLLETT, III
---------------------------------
Name: Frederick B. Ollett, III
Title: Vice President and
Chief Financial Officer
Date: November 12, 1998
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EXHIBIT INDEX
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Exhibit Number Description
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19.1 Updated Tables
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<PAGE> 1
Exhibit 19.1
AFCO AGGREGATE RECEIVABLES BALANCE BY AMOUNT - IDENTIFIED PORTFOLIO
AS OF 9/30/98
<TABLE>
<CAPTION>
PERCENT OF
PERCENT OF AGGREGATE AGGREGATE
NUMBER OF RECEIVABLE RECEIVABLE
AGGREGATE RECEIVABLES BALANCE NUMBER OF ACCTS ACCTS BALANCE BALANCE
<S> <C> <C> <C> <C> <C>
1. 5,000 or less 32,473 70.04% $53,670,958.71 10.04%
2. 5,000 - 10,000 5,896 12.72% 41,619,516.41 7.78%
3. 10,000 - 25,000 4,682 10.10% 73,043,025.00 13.66%
4. 25,000 - 50,000 1,711 3.69% 59,559,396.66 11.14%
5. 50,000 - 75,000 564 1.22% 33,932,109.66 6.35%
6. 75,000 - 100,000 281 0.61% 24,373,710.27 4.56%
7. 100,000 - 250,000 500 1.08% 75,978,648.26 14.21%
8. 250,000 - 500,000 156 0.34% 53,860,827.73 10.07%
9. 500,000 - 1,000,000 67 0.14% 47,551,839.16 8.89%
10. 1,000,000 - 5,000,000 31 0.07% 52,491,131.18 9.82%
11. Over 5,000,000 3 0.01% 18,637,791.26 3.49%
Total: 46,364 $534,718,954.30
</TABLE>
<PAGE> 2
AFCO COMPOSITION OF RECEIVABLES BY REMAINING INSTALLMENT TERM - IDENTIFIED
PORTFOLIO AS OF 9/30/98
<TABLE>
<CAPTION>
PERCENT OF
PERCENT AGGREGATE AGGREGATE
OF NUMBER OF RECEIVABLES RECEIVABLES
REMAINING INSTALLMENT TERM NUMBER OF ACCTS ACCTS BALANCE BALANCE
<S> <C> <C> <C> <C>
03 Months or Less 18,772 40.49% $82,934,562.61 15.51%
04 to 06 Months 16,341 35.25% 184,595,430.92 34.52%
07 to 09 Months 10,757 23.20% 177,955,551.77 33.28%
10 to 12 Months 284 0.61% 21,809,888.59 4.08%
13 to 18 Months 97 0.21% 27,075,193.89 5.06%
More than 18 Months 113 0.24% 40,348,326.52 7.55%
Total: 46,364 $534,718,954.30
</TABLE>
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AFCO GEOGRAPHIC CONCENTRATION - IDENTIFIED PORTFOLIO
AS OF 9/30/98
<TABLE>
<CAPTION>
STATES AGGREGATE PERCENTAGE OF
RECEIVABLES AGGREGATE
BALANCE RECEIVABLES
BALANCE
<S> <C> <C>
CALIFORNIA $128,056,119.80 23.95%
TEXAS 72,405,091.56 13.54%
NEW YORK 49,997,255.19 9.35%
FLORIDA 34,831,426.12 6.51%
PENNSYLVANIA 26,769,122.23 5.01%
NEW JERSEY 25,318,348.33 4.73%
MASSACHUSETTS 16,432,243.06 3.07%
WASHINGTON 14,389,482.38 2.69%
ILLINOIS 13,269,799.79 2.48%
GEORGIA 12,902,509.88 2.41%
OHIO 11,526,575.20 2.16%
CONNECTICUT 11,461,914.43 2.14%
LOUISIANA 8,458,714.49 1.58%
OREGON 8,399,978.62 1.57%
MICHIGAN 7,463,415.67 1.40%
COLORADO 6,848,077.62 1.28%
ALASKA 6,656,671.54 1.24%
NORTH CAROLINA 6,271,937.84 1.17%
MISSOURI 5,838,590.28 1.09%
MARYLAND 5,039,897.20 0.94%
SOUTH CAROLINA 5,039,200.69 0.94%
INDIANA 4,978,393.11 0.93%
VIRGINIA 4,785,935.73 0.90%
WEST VIRGINIA 4,629,090.72 0.87%
MISSISSIPPI 3,862,534.78 0.72%
WISCONSIN 3,701,536.40 0.69%
OKLAHOMA 3,483,351.51 0.65%
TENNESSEE 3,474,666.08 0.65%
ARKANSAS 3,338,051.16 0.62%
MINNESOTA 3,301,489.36 0.62%
ALABAMA 3,225,992.29 0.60%
NEVADA 3,036,319.54 0.57%
HAWAII 2,875,494.07 0.54%
KENTUCKY 2,639,580.94 0.49%
ARIZONA 2,259,308.11 0.42%
NEW HAMPSHIRE 1,348,552.14 0.25%
UTAH 1,275,478.64 0.24%
MAINE 1,099,098.96 0.21%
IOWA 917,496.60 0.17%
MONTANA 749,330.32 0.14%
IDAHO 720,664.12 0.13%
NEBRASKA 564,878.85 0.11%
RHODE ISLAND 520,178.14 0.10%
WYOMING 325,768.39 0.06%
SOUTH DAKOTA 225,979.26 0.04%
DISTRICT OF COLUMBIA 2,058.48 0.00%
NEW MEXICO 1,354.68 0.00%
Total: $534,718,954.30
</TABLE>
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LOAN LOSS EXPERIENCE (1)
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -------------------
<S> <C> <C>
Average Outstanding Principal Balance $535,104 $562,229
Gross Charge Offs 2,111 1,002
Recoveries 620 102
Net Charge Offs 1,491 900
Net Charge Offs as a Percentage of Average
Aggregate Outstanding Principal Balance 0.37%(2) 0.16%
</TABLE>
(1) A loan is generally written off to the extent it is uncollected 270
days after the effective date of cancellation of the related insurance
policy.
(2) Calculated on an annualized basis.
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LOAN DELINQUENCY EXPERIENCE FOLLOWING CANCELLATION
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
1998 1997
---- ----
<S> <C> <C>
Number of days a loan remains overdue after cancellation of
the related insurance policy
31-89 days 0.87% 1.17%
90-270 days 1.07% 0.93%
Over 270 days (1) 0.00% 0.00%
----- -----
Total 1.94% 2.10%
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</TABLE>
(1) A loan is generally written off to the extent it is
uncollected 270 days after the effective date of cancellation
of the related insurance policy.
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ORIGINATORS' PORTFOLIO YIELD
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, 1998 DECEMBER 31, 1997
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<S> <C> <C>
Average Outstanding Principal Balance Receivables $535,104 $562,229
Interest & Fee Income 45,918 63,462
Average Revenue Yield 11.44%(1) 11.29%
(1) Calculated on an annualized basis.
</TABLE>
