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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 333-11961
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
(Exact name of registrant as specified in its charter)
NEW YORK 13-5647901
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No. of
servicer of registrant)
525 Washington Boulevard
Jersey City, NJ 07310
(Address of principal executive offices (Zip Code)
of servicer of registrant)
Telephone number of servicer of registrant, including area code: 201-876-6601
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by a 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__
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The Registrant estimates that as of March 1, 1998, the aggregate market value of
shares of the Registrant's Common Stock held by non-affiliates of the Registrant
was $0.
As of March 1, 1998, the Registrant had outstanding -0- shares of its Common
Stock, par value $ _____ per share.
No documents have been incorporated by reference in this Form 10-K.
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TABLE OF CONTENTS
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PART I
Page
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Item 1. Business 1
Item 2. Properties 1
Item 3. Legal Proceedings 1
Item 4. Submission of Matters to a Vote of Security Holders 1
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 1
Item 6. Selected Financial Data 1
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 2
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 2
Item 8. Financial Statements and Supplementary Data 2
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 2
PART III
Item 10. Directors and Executive Officers of the Registrant 2
Item 11 Executive Compensation 2
Item 12. Security Ownership of Certain Beneficial Owners and Management 2
Item 13. Certain Relationships and Related Transactions 2
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K 3
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This Annual Report on Form 10-K is filed by AFCO Credit Corporation
("AFCO Credit"), as Servicer of the Mellon Bank Premium Finance Loan Master
Trust (the "Trust"), on behalf of the Trust, pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended.
The Trust was formed pursuant to a Pooling and Servicing Agreement
dated as of December 1, 1996 among Mellon Bank, N.A. ("Mellon Bank"), as
transferor, AFCO Credit and AFCO Acceptance Corporation ("AFCO Acceptance"), as
servicer, Premium Financing Specialists, Inc. and Premium Financing Specialists
of California, Inc. as back-up servicer, and The First National Bank of Chicago,
as trustee. The Trust was formed for the purpose of acquiring certain trust
assets and issuing certificates under the Pooling and Servicing Agreement and
one or more supplements thereto. The property of the Trust includes a portfolio
of receivables arising under selected premium finance agreements originated by
either AFCO Credit or AFCO Acceptance to finance the payment of premiums and
related sums on insurance policies. The receivables are transferred by AFCO
Credit or AFCO Acceptance to Mellon Bank, and by Mellon Bank to the Trust.
On December 19, 1996, the Trust issued $440,000,000 of Class A Floating
Rate Asset Backed Certificates, Series 1996-1 and $25,000,000 Class B Floating
Rate Asset Backed Certificates, Series 1996-1 (together, the "Certificates").
PART I
ITEM 1. BUSINESS
Omitted.
ITEM 2. PROPERTIES
Omitted.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is one holder of record of each Class of Certificates.
To the knowledge of the Trust, there is an over the counter
public trading market for the Certificates, although the
frequency of transactions varies substantially over time.
ITEM 6. SELECTED FINANCIAL DATA
Omitted.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Omitted.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Omitted.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted.
ITEM 11. EXECUTIVE COMPENSATION
Omitted.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
A nominee of The Depository Trust Company is the sole record
owner of each Class of Certificates. As of December 3l, 1997,
based on a review of public filings with the Securities and
Exchange Commission, no person was known to be the beneficial
owner of more than 5% of the total principal amount of either
Class of Certificates outstanding on that date.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
-2-
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a) Listed below are the documents filed as a part of this report:
Exhibit Number
20.1 Annual Certificateholders Report
20.2 Annual Servicer's Certificate
20.3 Report of Independent Certified Public Accountants
20.4 Annual Aggregate Certificateholders Statement
(b) Reports on Form 8-K:
On each of the following dates, the Trust filed a Form 8-K
with the Commission reporting information under Items 5 and 7:
January 15, 1997
February 14, 1997
March 14, 1997
April 11, 1997
May 14, 1997
June 12, 1997
July 16, 1997
August 14, 1997
September 15, 1997
October 2, 1997
October 15, 1997
October 28, 1997
November 17, 1997
December 2, 1997
December 15, 1997
(c) Omitted.
(d) Omitted.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, AFCO Credit Corporation, on behalf of the Trust, has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
By AFCO CREDIT CORPORATION
By /s/ FREDERICK B. OLLETT, III
------------------------------------
Name: Frederick B. Ollett, III
Title: Vice President and
Chief Financial Officer
Date: March 27, 1998
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EXHIBIT INDEX
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Exhibit Page
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20.1 Annual Certificateholders Report 6
20.2 Annual Servicer's Certificate 7
20.3 Report of Independent Certified Public Accountants 8
20.4 Annual Aggregate Certificateholders Statement 9
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Exhibit 20.1
March 24, 1998
ANNUAL DISTRIBUTION SUMMARY
AFCO CREDIT CORPORATION
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
ANNUAL PERIOD ENDING
DECEMBER 31, 1997
ANNUAL HOLDERS' DISTRIBUTION SUMMARY
Pursuant to Section 5.2, Servicer does hereby declare to the Trustee the
following distributions for the calendar year 1997 as set forth below:
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Interest Payments
A. Pursuant to subsection 4.11(g);
1. Amount distributed to the Class A Holders $ 25,480,170.83
2. Amount distributed to the Class B Holders $ 1,500,382.82
3. Amount distributed to the Collateral Interest Holder $ 2,126,845.28
Principal Payments
B. Pursuant to subsection 4.11(h)(i);
1. Amount Distributed to the Class A Holders $ 0
2. Amount distributed to the Class B Holders $ 0
3. Amount distributed to the Collateral Interest Holder $ 0
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AFCO CREDIT CORPORATION, as Servicer
By /s/ Frederick B. Ollett, III
---------------------------------------
Name: Frederick B. Ollett, III
Title: Vice President & Chief Financial Officer
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Exhibit 20.2
SERVICERS' CERTIFICATE
AFCO CREDIT CORPORATION
AFCO ACCEPTANCE CORPORATION
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
The undersigned, a duly authorized representative of AFCO
Credit Corporation and AFCO Acceptance Corporation (jointly "AFCO"), as
Servicer, pursuant to Section 3.5 of the Pooling and Servicing Agreement dated
as of December 1, 1996 (as may be amended and supplemented from time to time,
the "Agreement"), among Mellon Bank, NA, as Transferor, AFCO Credit Corporation,
as Servicer, AFCO Acceptance Corporation, as Servicer, Premium Financing
Specialists, Inc., as Back-up Servicer, Premium Financing Specialists of
California, Inc., as Back-up Servicer and The First National Bank of Chicago, as
Trustee, does hereby certify that:
1. AFCO is, as of the date hereof, Servicer under the Agreement.
Capitalized terms used in this Certificate have their
respective meanings as set forth in the Agreement.
2. The undersigned is a Servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this
Certificate to Trustee.
3. A review of the activities of Servicer during the fiscal year
ended December 31, 1997, and of its performance under the
Agreement was conducted under my supervision.
4. Based on such review, Servicer has, to the best of my
knowledge, performed in all material respects its obligations
under the Agreement throughout such year and no default in the
performance of such obligations has occurred or is continuing.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this 24th day of March, 1998.
AFCO CREDIT CORPORATION, as Servicer
By /s/ Frederick B. Ollett, III
---------------------------------------
Name: Frederick B. Ollett, III
Title: Vice President & Chief Financial Officer
AFCO ACCEPTANCE CORPORATION, as
Servicer
By /s/ Frederick B. Ollett, III
---------------------------------------
Name: Frederick B. Ollett, III
Title: Vice President & Chief Financial Officer
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Exhibit 20.3
[Letterhead of KPMG Peat Marwick LLP]
Independent Accountants' Report
Mellon Bank Premium Finance Loan Master Trust
c/o The First National Bank of Chicago, as Trustee
AFCO Credit Corporation, as Servicer
AFCO Acceptance Corporation, as Servicer
We have examined the accompanying assertion made by management on AFCO Credit
Corporation's and AFCO Acceptance Corporation's (jointly "AFCO") compliance, as
Servicer, with Sections 4.2, 4.3, 4.5 and 8.8, of the Pooling and Servicing
Agreement for the Mellon Bank Premium Finance Loan Master Trust and Sections
4.7(a)(i) and 4.8 of the Supplement (Series 1996-1), both dated December 1, 1996
(collectively, the "Agreement") for the year ended December 31, 1997. Management
is responsible for AFCO's compliance with the aforementioned sections of the
Agreement. Our responsibility is to express an opinion on management's assertion
about AFCO's compliance based upon our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about AFCO's compliance with the
aforementioned sections of the Agreement and performing such other procedures as
we considered necessary in the circumstances. We believe that our examination
provides a reasonable basis for our opinion. Our examination does not provide a
legal determination on AFCO's compliance with the Agreement.
In our opinion, management's assertion that AFCO was materially in compliance
with the aforementioned sections of the Agreement for the year ended December
31, 1997, is fairly stated, in all material respects.
This report is intended solely for the information of the addressees listed
above.
/s/ KPMG Peat Marwick LLP
------------------------------
March 24, 1998
New York, New York
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[Letterhead of AFCO Credit Corporation and AFCO Acceptance Corporation]
Management Report on AFCO Credit Corporation's and
AFCO Acceptance Corporation's Compliance, as Servicer, with
the Servicing Requirements of the Pooling and Servicing Agreement
Management of AFCO Credit Corporation and AFCO Acceptance Corporation (jointly,
"AFCO"), as Servicer, is responsible for compliance with the servicing
requirements in Sections 4.2, 4.3, 4.5, and 8.8 of the Pooling and Servicing
Agreement for the Mellon Bank Premium Finance Loan Master Trust and Sections
4.7(a)(i) and 4.8 of the Supplement (Series 1996-1), both dated as of December
2, 1996 (collectively, the "Agreement").
Management has performed an evaluation of AFCO's compliance with the
aforementioned sections of the Agreement for the year ended December 31, 1997.
Based upon this evaluation, management believes that, for the year ended
December 31, 1997, AFCO, as Servicer, was materially in compliance with the
aforementioned sections of the Agreement.
/s/ Michael M. Nisbet /s/ Frederick B. Ollett, III
- ---------------------------- -----------------------------
Michael M. Nisbet Frederick B. Ollett, III
Chairman and Chief Executive Officer Vice President & Chief
Financial Officer
March 24, 1998
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Exhibit 20.4
[AFCO LOGO] INSURANCE
PREMIUM
FINANCE
March 24, 1998
ANNUAL AGGREGATE CERTIFICATEHOLDERS STATEMENT
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST SERIES 1996-1
ANNUAL PERIOD ENDING
DECEMBER 31, 1997
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1. Investor Interest as of December 31, 1997:
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Class A $440,000,000.00
Class B $25,000,000.00
Collateral Interest Holder $35,000,000.00
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Total Investor Interest $500,000,000.00
2. 3-Month LIBOR as per reset dates:
March 13, 1997 5.56250%
June 12, 1997 5.81250%
September 11, 1997 5.71875%
December 11, 1997 5.93750%
3. Determination of Certificate Rates:
a) Class A: 3-Month LIBOR plus 11 basis points
b) Class B: 3-Month LIBOR plus 32 basis points
c) Class C: As per Loan Agreement
4. Servicing Fee Rate 0.50000%
5. Receivable Balances as of December 31, 1997:
Aggregate Receivables $545,937,490.31
Finance Charge Receivables $13,942,551.01
Principal Receivables $531,994,939.30
6. Annual Servicers' Fee $2,500,000.00
7. 1997 Aggregate Investor Default Amount $810,547.52
8. Floating Investor Interest as of December 31, 1997 90.12608%
9. Transferor Interest as of December 31, 1997 $31,994,939.30
10. 1997 Aggregate Collections:
a) Principal Receivables $1,474,545,716.49
b) Finance Charge Receivables $55,387,409.15
c) Principal and Finance Charge Receivables $1,529,933,125.64
d) Late Charges $8,075,007.10
e) Total Collections $1,538,008,132.74
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11. Delinquencies as of December 31, 1997:
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a) 30 days delinquent $2,872,509.65
b) 60 days delinquent $3,328,083.08
c) 90 days delinquent $1,719,152.40
d) 120 + days delinquent $3,216,136.91
e) Total 30 + days delinquent $11,135,882.04
12. 1997 Aggregate Default Amount $900,286.72
13. AFCO is Servicer? Yes
14. 1997 Aggregate Allocation and Application of Collections:
a) Class A Available Funds $49,725,948.86
b) Class A Optimal Interest $25,899,576.39
c) Class A Monthly Interest $25,899,576.39
d) Class A Deficiency Amount $0.00
e) Class A Additional Interest $0.00
f) Class A Servicing Fee $2,199,999.96
g) Unpaid Class A Servicing from prior periods $0.00
h) Class A Investor Default Amount $713,281.81
i) Class A contribution to Excess Spread $20,913,090.70
j) Class B Available Funds $2,825,338.05
k) Class B Optimal Interest $1,524,796.01
l) Class B Monthly Interest $1,524,796.01
m) Class B Deficiency Amount $0.00
n) Class B Additional Interest $0.00
o) Class B Servicing Fee $125,000.04
p) Unpaid Class B Servicing from prior periods $0.00
q) Class B contribution to Excess Spread $1,175,542.00
r) Collateral Available Funds $3,955,473.21
s) Collateral Servicing Fee (if NOT AFCO) $0.00
t) Collateral Interest contribution to Excess $3,955,473.21
Spread
u) Total Excess Spread $26,044,105.91
v) Class A Required Amount $0.00
w) Unreimbursed Class A Investor Charge-offs $0.00
x) Class B Required Amount $40,527.39
(includes Class B Investor Default Amount)
y) Unreimbursed Class B Investor Charge-offs $0.00
z) Collateral Monthly Interest $2,147,293.00
aa) Collateral Interest Servicing Fee(if AFCO) $174,999.96
ab) Collateral Interest Default Amount $56,738.33
ac) Unreimbursed Collateral Interest Charge-offs $0.00
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ad) Reserve Account Funding Date month 48
ae) Reserve Fund Cap 0.50%
af) Required Reserve Account Amount $0.00
ag) Reserve Account Balance $0.00
ah) Payable under the Loan Agreement $0.00
ai) Class A Shortfall Amount $0.00
aj) Class B Shortfall Amount $0.00
ak) Excess Finance Charge Collections $23,624,547.23
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AFCO CREDIT CORPORATION, as Servicer
By
-----------------------------------
Name: Frederick B. Ollett, III
Title: Vice President
& Chief Financial Officer
3
