SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ____________________
Commission File Number 33-31682
CAPITOL REVOLVING HOME EQUITY LOAN TRUST 1996-1
(Issuer in respect of the Capitol Revolving Home Equity Loan Asset Backed
Certificates, Series 1996-1)
---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-0897004
---------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8401 Connecticut Avenue
Chevy Chase, Maryland 20815
---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 986-7000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant has (1) 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
--- ---
The registrant has no voting stock or class of common stock outstanding
as of the date of this report.
<PAGE>
INTRODUCTORY NOTE
Chevy Chase Bank, F.S.B. (the "Originator") is the originator, seller and
servicer under the Pooling and Servicing Agreement (the "Agreement"), dated as
of September 1, 1996, by and between the Originator and the Chase Manhattan
Bank, as trustee, providing for the issuance of the Capitol Revolving Home
Equity Loan Asset Backed Certificates, Series 1996-1, (the "Certificates"), and
is the originator of the Capitol Revolving Home Equity Loan Trust 1996- 1 (the
"Registrant"). The Certificates do not represent obligations of, or any interest
in, the Originator. The Originator has made application for an exemption from
certain reporting requirements. Pursuant to a letter from the Commission's
Office of Chief Counsel, Division of Corporation Finance, dated February 6, 1991
granting the Originator's application, the Originator is not required to respond
to various items of Form 10-K. Such items are designated herein as "Not
Applicable."
PART I
Item 1. Business
Not Applicable.
Item 2. Properties
Not Applicable.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
-2-
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Certificates representing investors' interests in the Trust are
represented by a single Certificate which is registered in the name of Cede &
Co., the nominee of the Depository Trust Company.
To the best knowledge of the Registrant, there is no established public
trading market for the Certificates.
Item 6. Selected Financial Data
Not Applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Not Applicable.
Item 8. Financial Statements and Supplementary Data
Not Applicable.
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
Not Applicable.
Item 11. Executive Compensation
Not Applicable.
-3-
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The Certificates representing investors' interests in the Trust are
represented by a single Certificate which is registered in the name of Cede &
Co., the nominee of the Depository Trust Company ("DTC"), and an investor
holding an interest in the Trust is not entitled to receive a Certificate
representing such interest except in certain limited circumstances. Accordingly,
Cede & Co., is the primary holder of record of the Certificates, which it held
on behalf of 4 brokers, dealers, banks and other direct participants in the DTC
system at December 31, 1997. Such direct participants may hold Certificates for
their own accounts or for the accounts of their customers. At December 31, 1997,
based on information furnished to the Originator by DTC, the following direct
DTC participants held positions in Certificates representing interests in the
Trust equal to or exceeding 5% of the total face amount of the Certificate
outstanding on that date:
Aggregate Amount of Percent of
Name Certificates Held Class
- ------------------------------ ------------------- ----------
Bankers Trust Company $50,000,000 41.5%
Citibank, N.A. $37,460,000 31.1%
Swiss American Securities, Inc. $30,000,000 24.9%
The address of each of the above participants is:
c/o The Depository Trust Company
Issuer Services
C/O ADP Proxy Services
Edgewood, NY 11717
Item 13. Certain Relationships and Related Transactions
None.
-4-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this Report:
(i) Management's Report on the Effectiveness of the Internal Control
Structure Relative to the Servicing of Home Equity Loans dated
November 18, 1997 together with the Report of Independent Public
Accountants.
(ii) Annual Report to Certificateholders for the year ended December 31,
1997.
No proxy soliciting material has been or is expected to be distributed by
the Trust.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CAPITOL REVOLVING HOME EQUITY LOAN TRUST 1996-1
By: Chevy Chase Bank, F.S.B.
Originator of the Trust and Servicer
Date: March 26, 1998 By: Stephen R. Halpin, Jr.
______________ ________________________________
Stephen R. Halpin, Jr.
Executive Vice President and
Chief Financial Officer
-6-
<PAGE>
EXHIBIT 14(a)(i)
-7-
<PAGE>
EXHIBIT 14(a)(ii)
-8-
<PAGE>
MANAGEMENT'S REPORT ON THE EFFECTIVENESS OF THE INTERNAL
CONTROL STRUCTURE RELATIVE TO THE SERVICING OF
HOME EQUITY LOANS
The management of the Bank is responsible for establishing and maintaining the
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of control procedures. The objectives of an internal control structure are
to provide management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and
recorded properly to permit the preparation of financial statements in
accordance with generally accepted accounting principles.
We have performed an evaluation of the effectiveness of the Bank's internal
control structure based on the criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO") relative to the servicing of home equity loans
owned by the Chevy Chase Capitol Home Equity Loan Trusts Series 1990-1, 1992-1,
1993-1, 1994-1, 1995-1 and 1996-1 (collectively referred to as the "Trusts"
herein) as of September 30, 1997, and we have determined that the Bank
maintained an effective internal control structure over financial reporting
relative to the servicing of home equity loans owned by the Trusts as of
September 30, 1997.
However, there are inherent limitations in the effectiveness of any internal
control structure, including the possibility of human error and the
circumvention or overriding of controls. Accordingly, even an effective internal
control structure can provide only reasonable assurance with respect to
reliability of financial statements and safeguarding and management of assets.
Furthermore, the effectiveness of any internal control structure can change with
changes in circumstances.
John N. Sousane Russell J. McAtee
- ---------------- ---------------------
John N. Sousane Russell J. McAtee
Vice President Senior Vice President
George P. Clancy Stephen R. Halpin, Jr.
- ---------------- ----------------------
George P. Clancy Stephen R. Halpin, Jr.
Executive Vice President Executive Vice President
Chief Financial Officer
November 18, 1997
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Chevy Chase Bank, F.S.B.:
We have examined management's assertion, included in the accompanying
Management's Report on the Effectiveness of the Internal Control Structure
Relative to the Servicing of Home Equity Loans, that Chevy Chase Bank,
F.S.B.(the "Bank") maintained an effective internal control structure over
financial reporting relative to the servicing of home equity loans owned by the
Chevy Chase Capitol Home Equity Loan Trusts Series 1990-1, 1992-1, 1993-1,
1994-1, 1995-1 and 1996-1 (collectively referred to as the "Trusts" herein) as
of September 30, 1997.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
obtaining an understanding of the internal control structure over financial
reporting, testing, and evaluating the design and operating effectiveness of the
internal control structure, and such other procedures as we considered necessary
in the circumstances. We believe that our examination provides a reasonable
basis for our opinion.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projections of any
evaluation of the internal control structure over financial reporting to future
periods are subject to the risk that the internal control structure may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, management's assertion that the Bank maintained an effective
internal control structure over financial reporting relative to the servicing of
home equity loans owned by the Chevy Chase Capitol Home Equity Trusts as of
September 30, 1997, is fairly stated, in all material respects, based upon
criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
This report is intended solely for the information and use of the board of
directors and management of the Bank, Chase Manhattan Bank, Capital Markets
Assurance Corporation and AMBAC Indemnity Corporation and should not be used for
any other purpose.
Arthur Andersen LLP
-------------------
Washington, D.C.
November 18, 1997
<PAGE>
Yearly Certificateholders' Statement (K)
CAPITOL REVOLVING HOME EQUITY LOAN TRUST 1996-1
Under subsection 5.3(b) of the Pooling and Servicing Agreement dated as of
September 1, 1996 by and between Chevy Chase Bank, F.S.B., a federally chartered
savings bank, as Transferor and Servicer, and The Chase Manhattan Bank, as
Trustee and Custodial Agent (hereinafter as such agreement may have been, or may
from time to time be, amended, supplemented or otherwise modified, the Pooling
and Servicing Agreement"), Chevy Chase Bank, F.S.B., as the Servicer, is
required to prepare certain information each year regarding current
distributions on the Certificates and the performance of the Capitol Revolving
Home Loan Trust 1996-1 (the "Trust") during the related Collection Period. The
information that is required to be prepared with respect to the distribution to
Holders (the "Certificateholders") of the Certificates for the calendar year
ended December 31, 1997 is set forth below. Certain of the information is
presented on the basis of an original principal amount of $1,000 per
Certificate, as the case may be. Capitalized terms used and not otherwise
defined herein have the meanings assigned them in the Pooling and Servicing
Agreement.
A. Information Regarding the Current Year Distribution to Certificateholders
(Per $1,000 Original Principal Amount of a Certificate).
1. The Investor Certificate distribution amount............$222.27
2. The amount of Investor Certificate Interest included in
such distribution, the related Investor Certificate
Rate and the portion
thereof attributable to collections in
respect of the Mortgage Loans...........................$52.4118
........................................................$52.4118
3. The amount, if any, of any Unpaid Investor
Certificate Interest Shortfall included in
such distribution (and the amount of interest
thereon)................................................$0.00
......................................................$0.00
4. The amount, if any, of the remaining Unpaid
Investor Certificate Interest Shortfall
giving effect to such distribution......................$0.00
<PAGE>
5. The amount, if any, of principal included in
such distribution, separately stating the
components thereof (including the portion
thereof attributable to collections in respect of
the Mortgage Loans).....................................$154.32
6. The amount, if any, of the reimbursement of
previous Investor Loss Reduction Amount
included such distribution..............................$0.00
7. The Accelerated Principal Distribution
Amount, if any..........................................$15.54
8. The amount, if any, of the aggregate
unreimbursed Investor Loss Reduction
Amounts after giving effect to such distribution........$0.00
9. The Certificate Insurance Draw Amount, if any...........$0.00
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be duly
executed this 20th day of March, 1998
CHEVY CHASE BANK, F.S.B.
as Servicer
By: Carol Thomas
_____________________________
Carol Thomas
Vice President
