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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)
March 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
Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
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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
three month periods ended March 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
three month periods ended March 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 three month
periods ended March 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 three month period
ended March 31, 1999 was 10.00% as compared to 11.52% for the three month period
ended March 31, 1998, and was 11.30% and 11.29% for the years ended December 31,
1998 and 1997, respectively. There are two reasons for the decrease between the
comparative three month periods. First, the cost of the Servicer's funds has
declined over the past twelve months, 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 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 Month Outstanding Principal Balance
Receivables for the three month periods ended March 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 in January, February and March 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 three month period ended March 31, 1999 would have been 9.82%
as compared to 10.00%, (2) the three month period ended March 31, 1998 would
have been 11.44% as compared to 11.52% 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 three month period ended March 31, 1999 was $528,903,000 as compared to
$540,888,000 for the three month period ended March 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 March 31, 1999, the outstanding principal balance of
Receivables was $492,534,912.02. At such date, the aggregate of $45,000,000.00
was 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
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: /s/ C. Leonard O'Connell
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Name: C. Leonard O'Connell
Title: Senior Vice President, Treasurer
and Chief Financial Officer
Date: May 19, 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 3/31/99
<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 25,867 68.38% $41,810,687.25 8.22%
2. 5,000 - 10,000 4,812 12.72% 34,259,814.91 6.74%
3. 10,000 - 25,000 3,938 10.41% 61,398,514.10 12.08%
4. 25,000 - 50,000 1,616 4.27% 55,956,652.76 11.01%
5. 50,000 - 75,000 569 1.50% 34,514,391.16 6.79%
6. 75,000 - 100,000 284 0.75% 24,381,451.38 4.80%
7. 100,000 - 250,000 472 1.25% 71,549,558.89 14.07%
8. 250,000 - 500,000 164 0.43% 56,865,384.89 11.18%
9. 500,000 - 1,000,000 67 0.18% 44,339,407.24 8.72%
10. 1,000,000 - 5,000,000 37 0.10% 71,245,803.05 14.01%
11. Over 5,000,000 2 0.01% 12,089,353.00 2.38%
Total: 37,828 $508,411,018.63 (1)
</TABLE>
(1) Includes $1,993,691.81 of loan commitments.
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AFCO COMPOSITION OF RECEIVABLES BY REMAINING INSTALLMENT TERM
- IDENTIFIED PORTFOLIO AS OF 3/31/99
<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 15,395 40.70% $65,231,839.20 12.83%
04 to 06 Months 12,151 32.12% 147,023,438.28 28.92%
07 to 09 Months 9,845 26.03% 194,578,019.22 38.27%
10 to 12 Months 223 0.59% 36,069,797.43 7.09%
13 to 18 Months 102 0.27% 17,537,571.80 3.45%
More than 18 Months 112 0.30% 47,970,352.70 9.44%
Total: 37,828 $508,411,018.63 (1)
</TABLE>
(1) Includes $1,993,691.81 of loan commitments.
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AFCO GEOGRAPHIC CONCENTRATION - IDENTIFIED PORTFOLIO
AS OF 3/31/99
<TABLE>
<CAPTION>
STATES AGGREGATE PERCENTAGE OF
RECEIVABLES AGGREGATE
BALANCE RECEIVABLES
BALANCE
<S> <C> <C>
CALIFORNIA $108,024,882.30 21.25%
TEXAS 71,850,355.33 14.13%
NEW YORK 43,272,527.60 8.51%
FLORIDA 32,820,409.32 6.46%
NEW JERSEY 27,661,750.36 5.44%
PENNSYLVANIA 25,188,811.53 4.95%
MASSACHUSETTS 17,852,231.17 3.51%
WASHINGTON 14,855,694.02 2.92%
ILLINOIS 13,018,642.44 2.56%
OHIO 11,843,856.78 2.33%
INDIANA 11,416,543.68 2.25%
GEORGIA 10,218,993.96 2.01%
MICHIGAN 10,191,432.50 2.00%
COLORADO 8,628,608.89 1.70%
TENNESSEE 8,478,037.77 1.67%
LOUISIANA 7,515,393.76 1.48%
MISSOURI 7,088,270.32 1.39%
OREGON 6,160,193.09 1.21%
ALASKA 5,885,933.12 1.16%
CONNECTICUT 5,632,073.11 1.11%
NORTH CAROLINA 5,549,249.63 1.09%
MISSISSIPPI 5,156,452.01 1.01%
MARYLAND 4,475,023.05 0.88%
VIRGINIA 4,180,998.44 0.82%
WEST VIRGINIA 3,946,519.78 0.78%
KENTUCKY 3,927,567.66 0.77%
OKLAHOMA 3,900,288.19 0.77%
MINNESOTA 3,831,078.82 0.75%
ALABAMA 3,794,476.59 0.75%
ARIZONA 3,750,149.81 0.74%
ARKANSAS 3,217,648.29 0.63%
SOUTH CAROLINA 2,995,948.94 0.59%
WISCONSIN 2,369,294.33 0.47%
NEVADA 1,874,552.60 0.37%
HAWAII 1,648,407.01 0.32%
MAINE 1,237,591.10 0.24%
NEW HAMPSHIRE 851,839.47 0.17%
IOWA 737,039.66 0.14%
IDAHO 655,218.31 0.13%
UTAH 652,011.89 0.13%
RHODE ISLAND 527,061.19 0.10%
WYOMING 458,867.69 0.09%
NEBRASKA 458,753.48 0.09%
MONTANA 390,354.01 0.08%
SOUTH DAKOTA 145,561.06 0.03%
VIRGIN ISLANDS 67,302.97 0.01%
KANSAS 4,179.24 0.00%
BRITISH COLUMBIA 2,942.36 0.00%
Total: $508,411,018.63 (1)
</TABLE>
(1) Includes $1,993,691.81 of loan commitments.
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LOAN LOSS EXPERIENCE (1)
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31, ENDED DECEMBER 31,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average Month Principal Balance (2) $528,903 $540,888 $536,913 $562,229
Gross Charge Offs 713 651 3,010 1,002
Recoveries 236 116 804 102
Net Charge Offs 477 535 2,206 900
Net Charge Offs as a Percentage of Average
Aggregate Outstanding Principal Balance 0.36% (3) 0.40% (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 MARCH 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 0.85% 1.06% 1.25% 1.17%
90-270 days 0.82% 0.84% 0.91% 0.93%
Over 270 days (1) 0.00% 0.00% 0.00% 0.00%
---- ---- ---- ----
Total 1.67% 1.90% 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>
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31, ENDED DECEMBER 31,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average Month Principal Balance (1) $528,903 $540,888 $536,913 $562,229
Interest & Fee Income 13,223 15,576 60,676 63,462
Average Revenue Yield on Outstanding 10.00% (2) 11.52% (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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