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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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)
July 31, 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
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 seven month period ended July 31, 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 seven
month period ended July 31, 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 seven month period ended July 31, 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 .44% for
the seven month period ended July 31, 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 seven month period ended July 31, 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 seven
month period ended July 31, 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 and June 1998 for
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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 seven month period ended July 31, 1998 would have been 11.49% as
compared to 11.63% 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
(c) Exhibits
Exhibit No.
19.01 Updated Tables
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SIGNATURES
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
(Registrant)
By: AFCO Credit Corporation, on behalf of
Mellon Bank Premium Finance Loan
Master Trust
By: FREDERICK B. OLLETT, III
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Name: Frederick B. Ollett, III
Title: Vice President and
Chief Financial Officer
Date: September 15, 1998
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EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
19.1 Updated Tables
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Exhibit 19.1
AFCO AGGREGATE RECEIVABLES BALANCE
IDENTIFIED PORTFOLIO AS OF 7/31/98
<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 32,951 68.41% $55,715,488.92 9.55%
2. 5,000 - 10,000 6,384 13.25% 45,234,390.13 7.75%
3. 10,000 - 25,000 5,175 10.74% 80,474,656.50 13.79%
4. 25,000 - 50,000 1,916 3.98% 66,201,787.39 11.35%
5. 50,000 - 75,000 617 1.28% 37,515,000.61 6.43%
6. 75,000 - 100,000 306 0.64% 26,572,135.75 4.55%
7. 100,000 - 250,000 538 1.12% 82,440,062.57 14.13%
8. 250,000 - 500,000 168 0.35% 58,403,408.50 10.01%
9. 500,000 - 1,000,000 71 0.15% 50,645,571.66 8.68%
10. 1,000,000 - 5,000,000 35 0.07% 55,245,331.02 9.47%
11. Over 5,000,000 4 25,042,500.53 4.29%
Total: 48,165 $583,490,333.58
</TABLE>
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AFCO COMPOSITION OF RECEIVABLES BY REMAINING INSTALLMENT TERM -
IDENTIFIED PORTFOLIO AS OF 7/31/98
<TABLE>
<CAPTION>
PERCENT OF
PERCENT AGGREGATE AGGREGATE
REMAINING NUMBER OF OF NUMBER RECEIVABLES RECEIVABLES
INSTALLMENT TERM ACCTS OF ACCTS BALANCE BALANCE
<S> <C> <C> <C> <C>
03 Months or less 17,988 37.35% $ 91,237,442.06 15.64%
04 to 06 Months 17,364 36.05% 179,794,073.16 30.81%
07 to 09 Months 12,288 25.51% 220,399,903.48 37.77%
10 to 12 Months 314 0.65% 34,804,559.48 5.96%
13 to 18 Months 101 0.21% 29,708,853.48 5.09%
More than 18 Months 110 0.23% 27,545,501.92 4.72%
Total: 48,165 $583,490,333.58
</TABLE>
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AFCO GEOGRAPHIC CONCENTRATION - IDENTIFIED PORTFOLIO
AS OF 7/31/98
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AGGREGATE
RECEIVABLES RECEIVABLES
STATES BALANCE BALANCE
<S> <C> <C>
CALIFORNIA $134,990,184.06 23.13%
TEXAS 74,898,163.26 12.84%
NEW YORK 54,521,827.52 9.34%
FLORIDA 38,693,314.69 6.63%
PENNSYLVANIA 31,019,659.95 5.32%
NEW JERSEY 29,837,644.09 5.11%
WASHINGTON 16,838,644.74 2.89%
ILLINOIS 14,408,393.98 2.47%
CONNECTICUT 14,333,905.80 2.46%
GEORGIA 13,826,580.79 2.37%
OHIO 13,624,340.84 2.33%
MASSACHUSETTS 12,240,062.14 2.10%
LOUISIANA 10,170,088.60 1.74%
OREGON 9,199,755.94 1.58%
MICHIGAN 8,768,119.23 1.50%
COLORADO 8,359,681.55 1.43%
ALASKA 8,024,829.90 1.38%
NORTH CAROLINA 6,705,939.84 1.15%
SOUTH CAROLINA 6,299,581.01 1.08%
INDIANA 6,091,006.39 1.04%
MISSOURI 5,829,442.90 1.00%
VIRGINIA 5,691,017.19 0.98%
MARYLAND 5,531,946.92 0.95%
WISCONSIN 5,111,028.16 0.88%
MISSISSIPPI 4,211,630.49 0.72%
OKLAHOMA 4,096,678.96 0.70%
MINNESOTA 4,083,847.58 0.70%
ALABAMA 4,057,867.82 0.70%
WEST VIRGINIA 3,788,121.68 0.65%
ARKANSAS 3,665,737.97 0.63%
HAWAII 3,433,477.49 0.59%
KENTUCKY 3,185,387.29 0.55%
ARIZONA 3,133,785.93 0.54%
NEVADA 3,040,139.42 0.52%
TENNESSEE 2,472,068.51 0.42%
NEW HAMPSHIRE 1,719,639.32 0.29%
UTAH 1,352,999.45 0.23%
IOWA 1,247,754.80 0.21%
MAINE 1,147,877.33 0.20%
IDAHO 1,072,912.85 0.18%
MONTANA 843,579.31 0.14%
NEBRASKA 804,059.46 0.14%
RHODE ISLAND 689,632.26 0.12%
WYOMING 336,602.51 0.06%
SOUTH DAKOTA 72,649.01 0.01%
DELAWARE 11,764.71 0.00%
ONTARIO 5,364.60 0.00%
NEW MEXICO 1,354.68 0.00%
BRITISH COLUMBIA 240.66 0.00%
KANSAS -- 0.00%
Total: $583,490,333.58
</TABLE>
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LOAN LOSS EXPERIENCE (1)
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEVEN MONTHS TWELVE MONTHS
ENDED JULY 31, 1998 ENDED DECEMBER 31, 1997
------------------- -----------------------
<S> <C> <C>
Average Outstanding Principal Balance $528,821 $562,229
Gross Charge Offs 1,745 1,002
Recoveries 399 102
Net Charge Offs 1,346 900
Net Charge Offs as a Percentage of Average
Aggregate Outstanding Principal Balance 0.44%(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 JULY 31, 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 0.92% 1.17%
90-270 days 0.92% 0.93%
Over 270 days (1) 0.00% 0.00%
---- ----
Total 1.84% 2.10%
==== ====
</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>
SEVEN MONTHS ENDED TWELVE MONTHS ENDED
JULY 31, 1998 DECEMBER 31, 1997
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<S> <C> <C>
Average Outstanding Principal Balance Receivables $528,821 $562,229
Interest & Fee Income 35,880 63,462
Average Revenue Yield 11.63%(1) 11.29%
</TABLE>
(1) Calculated on an annualized basis.
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