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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, 1999
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 nine month
periods ended September 30, 1999 and 1998, respectively, and the years ended
December 31, 1998 and 1997, respectively. 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 nine
month periods ended September 30, 1999 and 1998, respectively, and the years
ended December 31, 1998 and 1997, respectively. 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 nine month
periods ended September 30, 1999 and 1998, respectively, and the years ended
December 31, 1998 and 1997, respectively. Capitalized but undefined terms used
herein have the meanings set forth in the Prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Annualized Portfolio Yield for the nine month period ended
September 30, 1999 was 9.45% as compared to 11.44% for the nine month period
ended September 30, 1998, and was 11.30% and 11.29% for the years ended December
31, 1998 and 1997, respectively. There are two primary reasons for the decrease
between the comparative nine month periods. First, the cost of the Servicer's
funds was lower in the 1999 nine month period, and the Servicer has passed its
lower costs on to its customers. Second, the Servicer's increased marketing
focus on larger loans, together with increased competition from insurance
companies in extending financing terms for small and medium loans, have resulted
in a greater concentration of larger loans, generally at comparatively lower
rates, in the portfolio.
Net charge offs, as an annualized percentage of the average outstanding
principal balance of loans in the Identified Portfolio, increased to 0.41% for
the year ended December 31, 1998 from 0.16% for the year 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 year 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 year ended December 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.
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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 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 resulted in increased risk of nonpayment; and
higher levels of borrower bankruptcies.
In the accompanying table "Originators' Portfolio Yield/Identified
Portfolio", the Average Month Outstanding Principal Balance Receivables for the
nine month periods ended September 30, 1999 and 1998, respectively, and the year
ended December 31, 1998 do not include amounts held on deposit during such
periods 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, June, September and
December 1998 and January through July and September 1999 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 (1) the
nine month period ended September 30, 1999 would have been 9.35% as compared to
9.45%, (2) the nine month period ended September 30, 1998 would have been 11.32%
as compared to 11.44% and (3) the year ended December 31, 1998 would have been
11.20% as compared to 11.30% set forth in the accompanying "Originators'
Portfolio Yield/Identified Portfolio" table.
The Average Month Outstanding Principal Balance Receivables for the
nine month period ended September 30, 1999 was $534,464,000 as compared to
$535,104,000 for the nine month period ended September 30, 1998, and
$536,913,000 and $562,229,000 for the years ended December 31, 1998 and 1997,
respectively. The decrease has resulted primarily from a reduction in the
overall market for premium finance loans since the establishment of the Trust,
as insurance companies have begun to extend financing terms to insureds. At
September 30, 1999, the outstanding principal balance of Receivables was
$519,028,206.44. At such date, no amounts were held in the Excess Funding
Account.
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.
Reference is made to the disclosure as to year 2000 matters contained
in periodic reports filed by Mellon Financial Corporation pursuant to the
Securities Exchange Act of 1934.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit No.
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19.1 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: /s/ C. LEONARD O'CONNELL
-------------------------------------
Name: C. Leonard O'Connell
Title: Senior Vice President, Treasurer
and Chief Financial Officer
Date: November 11, 1999
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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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Exhibit 19.1
AFCO AGGREGATE RECEIVABLES BALANCE BY AMOUNT - IDENTIFIED PORTFOLIO
AS OF 9/30/99
<TABLE>
<CAPTION>
AGGREGATE RECEIVABLES BALANCE NUMBER OF ACCTS PERCENT OF AGGREGATE PERCENT OF
NUMBER OF RECEIVABLE AGGREGATE
ACCTS BALANCE RECEIVABLE
BALANCE
<S> <C> <C> <C> <C>
1. 5,000 or less 22,376 66.09% $38,255,731.05 7.13%
2. 5,000 - 10,000 4,564 13.48% 32,235,262.80 6.01%
3. 10,000 - 25,000 3,824 11.29% 59,867,257.86 11.16%
4. 25,000 - 50,000 1,499 4.43% 52,499,820.68 9.79%
5. 50,000 - 75,000 552 1.63% 33,530,045.69 6.25%
6. 75,000 - 100,000 261 0.77% 22,582,479.05 4.21%
7. 100,000 - 250,000 466 1.38% 71,791,819.07 13.38%
8. 250,000 - 500,000 185 0.55% 62,026,864.04 11.56%
9. 500,000 - 1,000,000 82 0.24% 56,047,566.08 10.45%
10. 1,000,000 - 5,000,000 42 0.12% 75,650,928.50 14.10%
11. Over 5,000,000 5 0.01% 31,891,966.22 5.95%
Total: 33,856 $536,379,741.04 (1)
</TABLE>
(1) Includes $3,027,638.14 of loan commitments.
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<PAGE> 2
AFCO COMPOSITION OF RECEIVABLES BY REMAINING INSTALLMENT
TERM - IDENTIFIED PORTFOLIO AS OF 9/30/99
<TABLE>
<CAPTION>
REMAINING INSTALLMENT TERM NUMBER OF ACCTS PERCENT AGGREGATE PERCENT OF
OF NUMBER OF RECEIVABLES AGGREGATE
ACCTS BALANCE RECEIVABLES
BALANCE
<S> <C> <C> <C> <C>
03 Months or Less 13,549 40.02% $69,386,212.43 12.94%
04 to 06 Months 11,940 35.27% 182,503,950.17 34.03%
07 to 09 Months 7,908 23.36% 173,431,975.16 32.33%
10 to 12 Months 238 0.70% 30,599,398.47 5.70%
13 to 18 Months 97 0.29% 21,261,746.53 3.96%
More than 18 Months 124 0.37% 59,196,458.28 11.04%
Total: 33,856 $536,379,741.04 (1)
</TABLE>
(1) Includes $3,027,638.14 of loan commitments.
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AFCO GEOGRAPHIC CONCENTRATION - IDENTIFIED PORTFOLIO
AS OF 9/30/99
<TABLE>
<CAPTION>
STATES AGGREGATE PERCENTAGE OF
RECEIVABLES AGGREGATE RECEIVABLES
BALANCE BALANCE
<S> <C> <C>
CALIFORNIA $118,716,263.10 22.13%
TEXAS 67,458,250.01 12.58%
NEW YORK 40,800,129.80 7.61%
FLORIDA 30,502,881.78 5.69%
PENNSYLVANIA 27,991,985.40 5.22%
NEW JERSEY 21,335,008.65 3.98%
OHIO 16,831,039.22 3.14%
LOUISIANA 16,417,859.67 3.06%
WASHINGTON 15,348,669.80 2.86%
MASSACHUSETTS 14,308,781.23 2.67%
ILLINOIS 13,639,495.08 2.54%
VIRGINIA 12,200,260.77 2.27%
UTAH 9,814,528.67 1.83%
GEORGIA 9,707,622.47 1.81%
KENTUCKY 8,210,493.34 1.53%
COLORADO 8,175,766.81 1.52%
MICHIGAN 7,955,431.98 1.48%
MISSOURI 7,742,827.67 1.44%
TENNESSEE 7,047,030.42 1.31%
NORTH CAROLINA 6,598,398.69 1.23%
OREGON 6,120,526.16 1.14%
CONNECTICUT 6,113,816.79 1.14%
INDIANA 5,190,836.76 0.97%
ALASKA 4,974,716.15 0.93%
MISSISSIPPI 4,659,821.50 0.87%
OKLAHOMA 4,504,949.77 0.84%
WEST VIRGINIA 4,385,350.92 0.82%
ALABAMA 4,291,875.64 0.80%
MARYLAND 4,282,978.95 0.80%
ARIZONA 3,843,278.97 0.72%
WISCONSIN 3,788,137.46 0.71%
SOUTH CAROLINA 3,721,458.62 0.69%
NEVADA 3,536,670.93 0.66%
MINNESOTA 3,113,948.46 0.58%
IDAHO 2,969,485.65 0.55%
ARKANSAS 2,903,671.20 0.54%
HAWAII 2,760,511.35 0.51%
NEW HAMPSHIRE 1,187,244.76 0.22%
MAINE 698,951.69 0.13%
NEBRASKA 656,757.02 0.12%
MONTANA 566,841.50 0.11%
IOWA 418,926.47 0.08%
WYOMING 323,034.84 0.06%
RHODE ISLAND 230,843.93 0.04%
SOUTH DAKOTA 215,286.35 0.04%
BRITISH COLUMBIA 79,789.52 0.01%
NEW MEXICO 23,609.93 0.00%
VIRGIN ISLANDS 9,683.88 0.00%
DELAWARE 2,667.60 0.00%
KANSAS 1,343.71 0.00%
Total: $536,379,741.04 (1)
</TABLE>
(1) Includes $3,027,638.14 of loan commitments.
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LOAN LOSS EXPERIENCE (1)
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average Month Principal Balance (2) $534,464 $535,104 $536,913 $562,229
Gross Charge Offs 2,103 2,111 3,010 1,002
Recoveries 892 620 804 102
Net Charge Offs 1,211 1,491 2,206 900
Net Charge Offs as a Percentage of Average
Aggregate Outstanding Principal Balance 0.28% (3) 0.39% (3) 0.41% 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) Based on the average beginning of the month balances.
(3) Calculated on an annualized basis.
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LOAN DELINQUENCY EXPERIENCE FOLLOWING CANCELLATION
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Number of days a loan remains overdue
after cancellation of the related insurance
policy
31-89 days 0.59% 0.87% 1.25% 1.17%
90-270 days 0.64% 1.07% 0.91% 0.93%
Over 270 days (1) 0.00% 0.00% 0.00% 0.00%
----- ----- ----- -----
Total 1.23% 1.94% 2.16% 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>
NINE MONTHS TWELVE MONTHS
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average Month Principal Balance (1) $534,464 $535,104 $536,913 $562,229
Interest & Fee Income 37,893 45,918 60,676 63,462
Average Revenue Yield on Outstanding 9.45%(2) 11.44 (2) 11.30% 11.29%
Principal Balance Receivables
</TABLE>
(1) Based on the average beginning of the month balances.
(2) Calculated on an annualized basis.
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