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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)
August 31, 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
eight month periods ended August 31, 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
eight month periods ended August 31, 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 eight month
periods ended August 31, 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 eight month period
ended August 31, 1999 was 9.63% as compared to 11.53% for the eight month period
ended August 31, 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 eight month periods. First, the cost of the Servicer's
funds was lower in the 1999 eight 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.
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
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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 eight month periods ended August 31, 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 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
eight month period ended August 31, 1999 would have been 9.52% as compared to
9.63%, (2) the eight month period ended August 31, 1998 would have been 11.41%
as compared to 11.53% 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 eight month period ended August 31, 1999 was $528,127,000 as compared to
$533,636,000 for the eight month period ended August 31, 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 as insurance companies have begun to extend financing
terms to insureds. At August 31, 1999, the outstanding principal balance of
Receivables was $536,100,637.81. 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.
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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
/s/ C. LEONARD O'CONNELL
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By: Name: C. Leonard O'Connell
Title: Senior Vice President, Treasurer
and Chief Financial Officer
Date: September 27, 1999
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EXHIBIT INDEX
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 8/31/99
<TABLE>
<CAPTION>
AGGREGATE RECEIVABLES BALANCE NUMBER OF ACCTS PERCENT OF AGGREGATE PERCENT OF
NUMBER OF RECEIVABLES AGGREGATE
ACCTS BALANCE RECEIVABLES
BALANCE
<S> <C> <C> <C> <C>
1. 5,000 or less 22,669 65.72% $39,079,361.25 6.96%
2. 5,000 - 10,000 4,713 13.66% 33,359,703.72 5.94%
3. 10,000 - 25,000 3,902 11.31% 60,913,360.55 10.85%
4. 25,000 - 50,000 1,553 4.50% 54,149,110.62 9.65%
5. 50,000 - 75,000 565 1.64% 34,212,426.11 6.09%
6. 75,000 - 100,000 285 0.83% 24,320,997.17 4.33%
7. 100,000 - 250,000 487 1.41% 76,297,493.16 13.59%
8. 250,000 - 500,000 184 0.53% 64,384,659.90 11.47%
9. 500,000 - 1,000,000 80 0.23% 55,247,438.01 9.84%
10. 1,000,000 - 5,000,000 48 0.14% 87,099,834.34 15.52%
11. Over 5,000,000 5 0.01% 32,270,120.38 5.75%
Total: 34,491 $561,334,505.21 (1)
</TABLE>
(1) Includes $9,871,353.49 of loan commitments.
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AFCO COMPOSITION OF RECEIVABLES BY REMAINING INSTALLMENT
TERM - IDENTIFIED PORTFOLIO AS OF 8/31/99
<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 13,023 37.76% $66,032,631.01 11.76%
04 to 06 Months 12,565 36.43% 176,376,971.52 31.42%
07 to 09 Months 8,396 24.34% 198,331,958.08 35.33%
10 to 12 Months 283 0.82% 40,277,574.05 7.18%
13 to 18 Months 94 0.27% 20,004,061.92 3.56%
More than 18 Months 130 0.38% 60,311,308.63 10.74%
Total: 34,491 $561,334,505.21 (1)
</TABLE>
(1) Includes $9,871,353.49 of loan commitments.
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AFCO GEOGRAPHIC CONCENTRATION - IDENTIFIED PORTFOLIO
AS OF 8/31/99
STATES AGGREGATE PERCENTAGE OF
RECEIVABLES AGGREGATE
BALANCE RECEIVABLES
BALANCE
CALIFORNIA $130,850,721.50 23.31%
TEXAS 71,351,334.37 12.71%
NEW YORK 43,849,856.37 7.81%
FLORIDA 33,151,845.23 5.91%
PENNSYLVANIA 29,968,455.23 5.34%
NEW JERSEY 23,785,154.45 4.24%
OHIO 16,181,215.80 2.88%
ILLINOIS 15,997,168.07 2.85%
WASHINGTON 15,139,331.21 2.70%
MASSACHUSETTS 14,900,451.28 2.65%
VIRGINIA 12,271,565.36 2.19%
LOUISIANA 10,892,419.33 1.94%
UTAH 9,910,008.16 1.77%
GEORGIA 9,186,321.63 1.64%
KENTUCKY 8,255,356.47 1.47%
MISSOURI 8,051,654.16 1.43%
MICHIGAN 7,924,334.79 1.41%
COLORADO 7,689,917.68 1.37%
NORTH CAROLINA 7,271,750.14 1.30%
TENNESSEE 6,804,941.44 1.21%
INDIANA 6,616,140.45 1.18%
CONNECTICUT 5,903,577.92 1.05%
OREGON 5,847,610.93 1.04%
ALASKA 5,414,717.75 0.96%
ALABAMA 4,939,131.36 0.88%
MISSISSIPPI 4,923,924.07 0.88%
OKLAHOMA 4,549,900.74 0.81%
WEST VIRGINIA 4,287,963.92 0.76%
MARYLAND 4,261,606.10 0.76%
WISCONSIN 4,158,666.15 0.74%
ARIZONA 3,998,703.41 0.71%
NEVADA 3,726,611.81 0.66%
MINNESOTA 3,436,000.23 0.61%
ARKANSAS 3,180,038.60 0.57%
SOUTH CAROLINA 3,108,822.25 0.55%
HAWAII 3,040,348.89 0.54%
IDAHO 2,071,944.32 0.37%
NEW HAMPSHIRE 1,189,051.89 0.21%
MAINE 801,507.14 0.14%
NEBRASKA 647,049.84 0.12%
MONTANA 569,643.28 0.10%
IOWA 400,207.30 0.07%
WYOMING 329,971.66 0.06%
RHODE ISLAND 298,209.35 0.05%
SOUTH DAKOTA 145,893.63 0.03%
NEW MEXICO 27,564.62 0.00%
VIRGIN ISLANDS 19,367.76 0.00%
DELAWARE 5,335.20 0.00%
KANSAS 1,191.97 0.00%
Total: $561,334,505.21 (1)
(1) Includes $9,871,353.49 of loan commitments.
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LOAN LOSS EXPERIENCE (1)
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
EIGHT MONTHS TWELVE MONTHS
ENDED AUGUST 31, ENDED DECEMBER 31,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average Month Principal Balance (2) $528,127 $533,636 $536,913 $562,229
Gross Charge Offs 1,815 1,913 3,010 1,002
Recoveries 823 534 804 102
Net Charge Offs 992 1,379 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 AUGUST 31, 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 0.50% 1.01% 1.25% 1.17%
90-270 days 0.63% 0.95% 0.91% 0.93%
Over 270 days (1) 0.00% 0.00% 0.00% 0.00%
----- ----- ----- -----
Total 1.13% 1.96% 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>
EIGHT MONTHS TWELVE MONTHS
ENDED AUGUST 31, ENDED DECEMBER 31,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average Month Principal Balance (1) $528,127 $533,636 $536,913 $562,229
Interest & Fee Income 33,910 41,029 60,676 63,462
Average Revenue Yield on Outstanding 9.63%(2) 11.53 (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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