<PAGE> 1
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) DECEMBER 15, 1998
-----------------
FIRST USA BANK, NATIONAL ASSOCIATION
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(Exact name of registrant as specified in its charter)
(AS SERVICER ON BEHALF OF FIRST USA CREDIT CARD MASTER TRUST)
LAWS OF THE UNITED STATES 333-24227 76-0039224
------------------------- --------- ----------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification Number)
201 NORTH WALNUT STREET, WILMINGTON, DELAWARE 19801
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(Address of principal executive offices) (Zip Code)
302/594-4117
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Registrant's telephone number, including area code
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
<PAGE> 2
Items 1-4. Not Applicable
Item 5. Other Events
On December 15, 1998, the Registrant made available to
prospective investors a series term sheet setting forth a
description of the collateral pool and the proposed structure
of $650,000,000 aggregate principal amount of Class A %
Asset Backed Certificates, Series 1998-9 and $44,828,000
aggregate principal amount of Class B % Asset Backed
Certificates, Series 1998-9, each of the First USA Credit Card
Master Trust. The series term sheet is attached hereto as
Exhibit 99.01.
Item 6. Not Applicable.
Item 7. Financial Statements and Exhibits
The following exhibit is filed as part of this report:
Exhibit 99.01 Series Term Sheet dated December 15, 1998, with respect
to the proposed issuance of the Class A % Asset Backed
Certificates and the Class B % Asset Backed Certificates of
the First USA Credit Card Master Trust, Series 1998-9.
<PAGE> 3
SIGNATURE
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.
FIRST USA BANK, NATIONAL ASSOCIATION
As Servicer
By: /s/ Tracie H. Klein
-------------------------------------
Name: Tracie H. Klein
Title: Vice President
Date: December 15, 1998
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<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
99.01 Series 1998-9 Term Sheet dated December 15, 1998 5
<PAGE> 1
SUBJECT TO REVISION
SERIES TERM SHEET DATED DECEMBER 15, 1998
$694,828,000
FIRST USA CREDIT CARD MASTER TRUST
$650,000,000 CLASS A % ASSET BACKED CERTIFICATES, SERIES 1998-9
$44,828,000 CLASS B % ASSET BACKED CERTIFICATES, SERIES 1998-9
FIRST USA BANK, N.A.
TRANSFEROR AND SERVICER
------------------
THESE SECURITIES ARE INTERESTS IN FIRST USA CREDIT CARD MASTER TRUST AND
ARE BACKED ONLY BY THE ASSETS OF THE TRUST. NEITHER THESE SECURITIES NOR THE
ASSETS OF THE TRUST ARE OBLIGATIONS OF FIRST USA BANK, N.A. OR ANY AFFILIATE
THEREOF, OR OBLIGATIONS INSURED BY THE FDIC.
THIS SERIES TERM SHEET CONTAINS STRUCTURAL AND COLLATERAL INFORMATION ABOUT
THESE SECURITIES; HOWEVER, THIS SERIES TERM SHEET DOES NOT CONTAIN COMPLETE
INFORMATION ABOUT THESE SECURITIES. THE INFORMATION PROVIDED HEREIN IS
PRELIMINARY AND WILL BE SUPERSEDED BY THE INFORMATION CONTAINED IN THE
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. ADDITIONAL INFORMATION WILL BE
CONTAINED IN THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. PURCHASERS ARE URGED
TO READ BOTH THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
THIS SERIES TERM SHEET SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SALES OF THESE SECURITIES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS SERIES TERM SHEET OR THE
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------
SALOMON SMITH BARNEY FIRST CHICAGO CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
LEHMAN BROTHERS
<PAGE> 2
SUMMARY OF TERMS
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
Transferor: First USA Bank, National Association -- "First USA" or
the "Bank"
Servicer: First USA
Trustee: The Bank of New York (Delaware)
Pricing Date:
Closing Date:
Clearance and Settlement: DTC/Cedel/Euroclear
Trust Assets: receivables originated in VISA(R) and MasterCard(R)
accounts, including recoveries on charged-off
receivables
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Series Structure: Amount % of Total Series
Class A $650,000,000 87.0%
Class B $ 44,828,000 6.0%
Excess Collateral $ 52,299,000 7.0%
Annual Servicing Fee: 1.5% if First USA is
Servicer, or 2.0%
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------- --------------------
<S> <C> <C>
Anticipated Ratings:*
(Moody's / S&P / Fitch IBCA) Aaa/AAA/AAA A2/A/A
Credit Enhancement: subordination of Class B subordination of the
and the excess collateral excess collateral
Interest Rate: ___% p.a. ___% p.a.
Interest Accrual Method: 30 / 360 30 / 360
Interest Payment Dates: monthly (18th) monthly (18th)
First Interest Payment Date: January 19, 1999 January 19, 1999
Scheduled Payment Date: January 20, 2004 January 20, 2004
Commencement of Accumulation Period (subject
to adjustment): December 31, 2002 December 31, 2002
Stated Series Termination Date: September 18, 2006 September 18, 2006
Application for Exchange Listing: Luxembourg Luxembourg
CUSIP Number: -- --
ISIN Number: -- --
Common Code: -- --
</TABLE>
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* It is a condition to issuance that one of these ratings be obtained.
2
<PAGE> 3
STRUCTURAL SUMMARY
This summary briefly describes certain major structural components of Series
1998-9. To fully understand the terms of Series 1998-9 you will need to read
both the prospectus supplement and the prospectus in their entirety. This Series
Term Sheet will be superseded in its entirety by the information appearing in
the prospectus supplement, the prospectus and the Series 1998-9 Supplement to
the Pooling and Servicing Agreement (as amended, the "Pooling and Servicing
Agreement") between First USA Bank, N.A. (the "Bank"), as transferor (in such
capacity, the "Transferor") and servicer (in such capacity, the "Servicer"), and
The Bank of New York (Delaware), as trustee (the "Trustee").
THE SERIES 1998-9 CERTIFICATES
Your certificates represent the right to a portion of collections on the
underlying Trust assets. Your certificates will also be allocated a portion of
net losses on receivables, if any. Any collections of finance charges allocated
to your series will be used to make interest payments, to pay a portion of the
fees of First USA as servicer and to cover net losses allocated to your series.
Any remaining collections of finance charges allocated to your series will be
applied for the benefit of the holder of the excess collateral. Any principal
collections allocated to your series in excess of the amount owed to
certificates of your series on any distribution date will be shared with other
series of certificates issued by First USA Credit Card Master Trust, retained in
a trust account or returned to First USA. In no case will you receive more than
the principal and interest owed to you under the terms described in the
supplement and the prospectus.
Your certificates feature credit enhancement by means of the subordination of
other interests, which is intended to protect you from net losses and shortfalls
in cash flow. Credit enhancement for your series is for your series' benefit
only. Credit enhancement is provided to Class A by the following:
- subordination of Class B; and
- subordination of the excess collateral.
Credit enhancement is provided to Class B by the following:
- subordination of the excess collateral.
The effect of subordination is that the more subordinated interests will absorb
any net losses allocated to Series 1998-9, and make up any shortfalls in cash
flow, before the more senior interests are affected. On the closing date the
excess collateral will be $52,299,000, or 7.0% of the initial Class A invested
amount, the initial Class B invested amount and the initial excess collateral
amount. If the cash flow and any subordinated interest do not cover all net
losses allocated to Series 1998-9, your payments of interest and principal will
be reduced and you may suffer a loss of principal.
FIRST USA CREDIT CARD MASTER TRUST
Your series is one of thirty-five series issued by First USA Credit Card Master
Trust which are expected to remain outstanding as of the closing date. First USA
Credit Card Master Trust is maintained by the trustee, for the benefit of:
- certificateholders of Series 1998-9;
- certificateholders of other series issued by First USA Credit Card
Master Trust;
- providers of credit enhancements for Series 1998-9 and other series
issued by First USA Credit Card Master Trust; and
- First USA.
Each series has a claim to a fixed dollar amount of First USA Credit Card Master
Trust's assets, regardless of the total amount of receivables in the Trust at
any time. First USA holds the remaining claim to First USA Credit Card Master
Trust's assets, which fluctuates with the total amount of receivables in the
Trust. First USA, as the holder of that amount, has the right to purchase the
outstanding Series 1998-9 certificates at any time when the outstanding amount
of the Series 1998-9 certificateholders' interest in the First USA Credit Card
Master Trust is less than or equal to 5% of the original amount of that
interest. The purchase price for these outstanding Series 1998-9 certificates
will be equal to the outstanding amount plus accrued and unpaid interest on the
certificates
3
<PAGE> 4
through the last day of the period on which the repurchase occurs.
SCHEDULED PRINCIPAL PAYMENTS AND POTENTIAL LATER PAYMENTS
First USA Credit Card Master Trust expects to pay the entire principal amount of
Class A and the entire principal amount of Class B in one payment on January 20,
2004. In order to accumulate the funds to pay Class A and Class B on their
scheduled payment date, the Trust will accumulate principal collections in a
principal funding account. The Trust will deposit funds into the principal
funding account on each "transfer date." The Trust will deposit funds into the
principal funding account during a "controlled accumulation period." The length
of the controlled accumulation period may be as long as twelve months, but will
be shortened if First USA expects that a shorter period will suffice for the
accumulation of the Class A, Class B and excess collateral payment amounts. The
accumulation period is expected to end on January 20, 2004, when the funds on
deposit in the principal funding account will be paid to Class A first, then to
Class B and then to the excess collateral.
If Class A is not fully repaid on the scheduled payment date, Class A will begin
to amortize by means of monthly payments of all principal collections allocated
to Series 1998-9 until it is fully repaid.
After Class A is fully repaid the Trust will use principal collections allocated
to Series 1998-9 to repay Class B. If Class B is not fully repaid on the
scheduled payment date, Class B will begin to amortize by means of monthly
payments of all monthly principal collections allocated to Series 1998-9 after
Class A is fully repaid.
Prior to the commencement of an accumulation or amortization period for Series
1998-9, principal collections will be paid to First USA, retained in a trust
account or shared with other series that are amortizing or in an accumulation
period.
MINIMUM YIELD ON THE RECEIVABLES; POSSIBLE EARLY PRINCIPAL REPAYMENT OF SERIES
1998-9
Class A or Class B may be repaid earlier than its scheduled principal payment
date if collections on the underlying receivables, together with other amounts
available for payment to securityholders, are too low. The minimum amount that
must be available for payment to Series 1998-9 in any month, referred to as the
"base rate," is the sum of the Class A interest rate, the Class B interest rate
and the excess collateral minimum interest rate, plus 2.0%. If the average Trust
portfolio yield, net of losses allocated to your series, for any three
consecutive months is less than the average base rate for the same three
consecutive months, a "pay out event" will occur with respect to Series 1998-9
and the Trust will commence a rapid amortization of Series 1998-9, and holders
of Series 1998-9 certificates will receive principal payments earlier than the
scheduled principal payment date.
Series 1998-9 is also subject to several other pay out events, which could cause
Series 1998-9 to amortize. If Series 1998-9 begins to amortize, Class A will
receive monthly payments of principal until it is fully repaid; Class B will
then receive monthly payments of principal until it is fully repaid. In that
event, your certificates may be repaid prior to the scheduled payment date.
The final payment of principal and interest will be made no later than September
18, 2006, which is the stated series termination date.
TAX STATUS OF CLASS A AND CLASS B
Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to First USA, is
of the opinion that under existing law the Class A and Class B certificates will
be characterized as debt for U.S. federal income tax purposes.
The Transferor, the Servicer, the holders of the Class A certificates and the
Class B certificates and the owners of such certificates will treat the Class A
certificates and the Class B certificates as debt for Federal, state, local and
foreign income and franchise tax purposes.
ERISA CONSIDERATIONS
The underwriters anticipate that both the Class A and the Class B certificates
will meet the criteria for treatment as "publicly-offered securities." If so,
subject to important considerations described in the supplement and in the
prospectus, both the Class A and the Class B certificates will be eligible for
purchase by persons investing assets of employee benefit plans or individual
retirement accounts.
4
<PAGE> 5
MAILING ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
The mailing address of First USA Bank, N.A., is 201 North Walnut Street,
Wilmington, Delaware, 19801 and the telephone number is (302) 594-4000.
5
<PAGE> 6
RECENT DEVELOPMENTS
The Bank converted to a national bank charter on July 1, 1998 and is now
named "First USA Bank, National Association". Concurrently with this charter
conversion, all consumer VISA and MasterCard credit card accounts previously
held by other bank subsidiaries of BANK ONE CORPORATION ("BANK ONE") were
consolidated in the Bank, which also replaced Bank One, N.A. as seller/servicer
for the Banc One Credit Card Master Trust and for Banc One Funding Corporation,
two other BANK ONE credit card securitization vehicles. As a result of the
merger of First USA, Inc. with and into BANK ONE on June 27, 1997, the Bank is
now an indirect wholly-owned subsidiary of BANK ONE. The Bank added receivables
in certain accounts originated by the Bank, Bank One, N.A., Bank One, Arizona,
NA and other affiliates of the Bank to the Trust on July 6, 1998. On September
30, 1998 the Bank purchased the credit card portfolio of Chevy Chase Bank,
F.S.B. ("Chevy Chase"). On November 16, 1998, the Bank acquired accounts
formerly owned by First National Bank of Commerce ("First Commerce") as a result
of a merger between First Commerce and Bank One, Louisiana, N.A. and the
transfer by Bank One, Louisiana, N.A. to the Bank of substantially all of such
accounts. Most recently, the Bank has entered into an agreement to purchase a
portfolio of VISA and MasterCard credit card loans from General Electric Capital
Corporation. The portfolio includes approximately $2.2 billion in managed credit
card loans. The Bank has not added to the Trust receivables in any of the
accounts acquired from Chevy Chase or First Commerce. A substantial portion of
each such portfolio is currently subject to securitization through other credit
card master trusts. However, the Bank may, from time to time, add to the Trust
additional receivables arising in accounts originated by affiliates of the Bank
or purchased by the Bank. Each such addition to the Trust of receivables in
accounts originated by the Bank and affiliates of the Bank or purchased by the
Bank is subject to certain restrictions on additions of Accounts in the Pooling
and Servicing Agreement, including satisfaction of the Rating Agency Condition.
MERGER OF PARENT CORPORATION
Effective October 2, 1998, BANK ONE, the parent corporation of the Bank,
merged with and into First Chicago NBD Corporation, a Delaware corporation.
Immediately prior to such merger, BANC ONE CORPORATION, an Ohio corporation
("BANC ONE"), also merged with and into BANK ONE, which had been a subsidiary of
BANC ONE prior to such merger. BANK ONE is a bank holding company headquartered
in Chicago, Illinois and registered under the Bank Holding Company Act of 1956,
as amended.
Through its banking subsidiaries, BANK ONE provides domestic retail
banking, worldwide corporate and institutional banking, and trust and investment
management services. At October 2, 1998, BANK ONE operated banking offices in
Arizona, Colorado, Delaware, Florida, Illinois, Indiana, Kentucky, Louisiana,
Michigan, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. BANK ONE
also owns nonbank subsidiaries that engage in businesses related to banking and
finance, including credit card and merchant processing, consumer and education
finance, mortgage lending and servicing, insurance, venture capital, investment
and merchant banking, trust, brokerage, investment management, leasing community
development and data processing.
BANK ONE's executive offices are located at One First National Plaza,
Chicago, Illinois 60670, and its telephone number is (312) 732-4000.
INDUSTRY LITIGATION
In October 1998, the United States Department of Justice (the "DOJ") filed
an antitrust lawsuit in federal court in Manhattan against VISA U.S.A., Inc.
("VISA") and MasterCard International Incorporated ("MasterCard International")
alleging that the two credit card associations restrain competition and limit
consumer choice. The DOJ in such lawsuit challenges, among other things, the
control of both VISA and MasterCard International by the same set of banks as
well as the rules adopted by the two associations prohibiting members from
offering credit cards of competitors. In public statements, both VISA and
MasterCard International have contested the DOJ's allegations. The Bank is
unable to predict what the effect of such lawsuit may ultimately be on the
Bank's credit card business. A final adverse decision against VISA and
MasterCard International, or a similar settlement with the DOJ by the two
associations, could result in changes in the current associations and may result
in adverse consequences for members of the two associations, such as the Bank.
6
<PAGE> 7
FIRST USA'S CREDIT CARD PORTFOLIO
The following tables set forth the delinquency and loss experience for each
of the periods shown for the portfolio of VISA and MasterCard credit card
accounts serviced by the Bank, including accounts originated by the affiliates
of the Bank whose consumer credit card operations were consolidated in the Bank
on July 1, 1998 (the "Bank Portfolio"). The tables in this Series Term Sheet
that present information with respect to the Bank Portfolio include accounts
originated by affiliates of the Bank for all periods shown and accounts
purchased by the Bank from Chevy Chase only for September 30, 1998, the date of
such purchase. In 1997 the Bank changed its charge-off policy to align it with
that of BANK ONE. For the Trust, this change in charge-off policy was
implemented over the course of a six month period which began in July 1997 and
ended in December 1997. The Bank will now generally charge off an account
immediately prior to the end of the sixth billing cycle after having become
contractually past due. Its prior policy was to charge off accounts immediately
prior to the end of the seventh billing cycle after having become contractually
past due. Receivables Delinquent 95 or more days and Net Losses in the following
tables have been restated to reflect this change in charge-off policy for each
of the periods shown.
As of the close of business on October 31, 1998 the Receivables in the
Trust Portfolio (including the Receivables in the additional Accounts added to
the Trust on November 4, 1998 and December 4, 1998) represented approximately
72.7% of the Bank Portfolio. Because the Trust Portfolio represents only a
portion of the Bank Portfolio, the actual delinquency and loss experience with
respect to the Receivables in the Trust Portfolio may be different from that set
forth below. There can be no assurance that the delinquency and loss experience
for the Trust Portfolio will be similar to the historical experience set forth
below because, among other things, economic and financial conditions affecting
the ability of cardholders to make payments may be different from those that
have prevailed during the periods reflected below.
DELINQUENCY EXPERIENCE
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, (1)
AS OF -----------------------------------------------------
SEPTEMBER 30, 1998 1997 1996
------------------------- ------------------------- -------------------------
PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Receivables Outstanding(2).............. $45,296,441 100.00% $38,365,291 100.00% $32,152,788 100.00%
=========== ====== =========== ====== =========== ======
Receivables Delinquent:
35-64 days............................ $ 560,595 1.24% $ 640,045 1.67% $ 559,006 1.74%
65-94 days............................ 382,077 0.84 418,035 1.09 384,729 1.20
95 or more days(3).................... 926,399 2.05 856,142 2.23 711,170 2.21
----------- ------ ----------- ------ ----------- ------
Total............................... $ 1,869,071 4.13% $ 1,914,222 4.99% $ 1,654,905 5.15%
=========== ====== =========== ====== =========== ======
<CAPTION>
AS OF DECEMBER 31, (1)
-------------------------
1995
-------------------------
PERCENTAGE
OF TOTAL
RECEIVABLES RECEIVABLES
----------- -----------
<S> <C> <C>
Receivables Outstanding(2).............. $27,080,267 100.00%
=========== ======
Receivables Delinquent:
35-64 days............................ $ 363,541 1.34%
65-94 days............................ 219,439 0.81
95 or more days(3).................... 373,744 1.38
----------- ------
Total............................... $ 956,724 3.53%
=========== ======
</TABLE>
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(1) The information set forth in the table above is stated on a basis
consistent with the Bank's current fiscal year. The Bank changed its fiscal
year end from June 30 to December 31 in connection with the merger of First
USA, Inc. with and into BANK ONE.
(2) The Receivables Outstanding on the accounts consist of all amounts due from
cardholders as posted to the accounts.
(3) The amount of Receivables Delinquent 95 or more days for each of the
periods shown is stated on a basis consistent with the Bank's current
policy of charging off an account immediately prior to the end of the sixth
billing cycle after having become contractually past due. Its prior policy,
which applied during the periods shown above, was to charge off accounts
immediately prior to the end of the seventh billing cycle after having
become contractually past due.
7
<PAGE> 8
LOSS EXPERIENCE
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31, (1)
SEPTEMBER 30, ----------------------------------------
1998 1997 1996 1995
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(2).......... $38,694,129 $34,719,927 $ 28,991,843 $21,434,452
Gross Charge-Offs(3)........................ $ 1,802,631 $ 2,129,877 $ 1,555,319 $ 758,440
Gross Charge-Offs as a percentage of Average
Receivables Outstanding(4)................ 6.23% 6.13% 5.36% 3.54%
Recoveries(5)............................... $ 187,993 $ 199,041 $ 116,602 $ 68,114
Net Losses(5)............................... $ 1,614,638 $ 1,930,836 $ 1,438,717 $ 690,326
Net Losses as a percentage of Average
Receivables Outstanding(4)................ 5.58% 5.56% 4.96% 3.22%
</TABLE>
- ------------
(1) The information set forth in the table above is stated on a basis
consistent with the Bank's current fiscal year. The Bank changed its fiscal
year end from June 30 to December 31 in connection with the merger of First
USA, Inc. with and into BANK ONE.
(2) Average Receivables Outstanding is the average daily receivables during the
periods indicated.
(3) Gross Charge-Offs are principal charge-offs before recoveries and do not
include the amount of any reductions in Average Receivables Outstanding due
to fraud, returned goods or customer disputes.
(4) Annualized.
(5) Recoveries are included in the Trust as of July 1, 1996. Net Losses for
each of the periods shown are stated on a basis consistent with the Bank's
current policy of charging off an account immediately prior to the end of
the sixth billing cycle after having become contractually past due. Its
prior policy, which applied during the periods shown above, was to charge
off accounts immediately prior to the end of the seventh billing cycle
after having become contractually past due.
SUMMARY OF MONTHLY PAYMENT RATES
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Bank Portfolio during any month in the periods shown and
the average cardholder monthly payment rates for all months during the periods
shown, in each case calculated as a percentage of total opening monthly account
balances during the periods shown. Payment rates shown in the table are based on
amounts which would be deemed payments of principal Receivables and finance
charge Receivables with respect to the Accounts.
CARDHOLDER MONTHLY PAYMENT RATES
BANK PORTFOLIO
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31, (1)
SEPTEMBER 30, -----------------------------
1998 1997 1996 1995
------------- ----- ----- -----
<S> <C> <C> <C> <C>
Lowest Month...................................... 13.20% 11.73% 10.75% 10.58%
Highest Month..................................... 15.46% 14.54% 11.84% 11.77%
Monthly Average................................... 14.47% 12.96% 11.39% 11.24%
</TABLE>
RECEIVABLE YIELD CONSIDERATIONS
The portfolio yield on the Bank Portfolio for each of the three years
contained in the period ended December 31, 1997 and for the nine months ended
September 30, 1998 is set forth in the table below. The portfolio yields in the
table are calculated on an accrual basis. The portfolio yield on Receivables
included in the Trust is calculated on a cash basis. Portfolio yields calculated
on an accrual basis may differ from portfolio yields calculated on a cash basis
due to (a) a lag between when finance charges and fees are charged to cardholder
accounts and when such finance charges and fees are collected and (b) finance
charges and fees that are not ultimately collected from the cardholder. However,
during the three years contained in the period ended December 31, 1997 and for
the nine months ended September 30, 1998, portfolio yield on an accrual basis
approximated portfolio yield on a cash basis. Portfolio yield on both an accrual
and a cash basis will also be
8
<PAGE> 9
affected by numerous factors, including changes in the periodic rates,
variations in the rate of payments and new borrowings on the Accounts, the
amount of the annual membership fees and other charges, changes in the
delinquency and loss rates on the Receivables and the percentage of cardholders
who pay their balances in full each month and do not incur periodic finance
charges, which may in turn be caused by a variety of factors, including seasonal
variations, the availability of other sources of credit and general economic
conditions. Interchange allocated to the Trust with respect to the Receivables
may vary from the amounts included in the table below because Interchange will
be included in the Trust on an estimated basis by initially treating 1.3% of
collections on the Receivables, other than collections with respect to periodic
finance charges, annual membership fees and other charges, as "Discount
Receivables".
PORTFOLIO YIELD
BANK PORTFOLIO
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPT. 30, --------------------------------
1998 1997 1996 1995
---------- ------ ------ ------
<S> <C> <C> <C> <C>
Average account monthly accrued fees and
charges(1)(2).................................. $39.36 $36.81 $32.51 $26.86
Average account balance(3)....................... $2,709 $2,691 $2,382 $1,996
Portfolio yield from fees and charges(1)(4)...... 17.44% 16.41% 16.38% 16.15%
</TABLE>
- ------------
(1) Fees and charges are comprised of Periodic Finance Charges, Interchange,
Annual Membership Fees and Other Charges.
(2) Average account monthly accrued fees and charges are presented net of
adjustments made pursuant to the Bank's normal servicing procedures,
including removal of incorrect or disputed Periodic Finance Charges, and
include Interchange.
(3) Average account balance includes Purchases, Cash Advances and accrued and
unpaid Periodic Finance Charges, Annual Membership Fees and Other Charges
and is calculated based on the average of the month end balances for
accounts with balances.
(4) Annualized.
The increase in portfolio yield for the years ended December 31, 1996 and
December 31, 1997 and for the nine months ended September 30, 1998 reflects
changes in the overall pricing distribution of the Bank Portfolio. The actual
portfolio yield with respect to the Receivables in the Trust Portfolio may be
different from that set forth above.
THE RECEIVABLES
The Receivables in the Accounts selected from the Bank Portfolio included
in the Trust on the basis of criteria set forth in the Pooling and Servicing
Agreement (the "Trust Portfolio") (including the additional Accounts added to
the Trust on November 4, 1998 and December 4, 1998), as of the close of business
on October 31, 1998, consisted of $32,178,230,399 of principal Receivables and
$1,036,023,322 of finance charge Receivables. On the Closing Date, the
Transferor will deposit $ into the Finance Charge Account, which will
be applied as collections of finance charge Receivables received during the
initial Monthly Period and allocated to Series 1998-9. The Accounts, including
such additional Accounts added or to be added, had an average principal
Receivable balance of $1,351 (including accounts with a zero balance) and an
average credit limit of $8,412. The percentage of the aggregate total Receivable
balance to the aggregate total credit limit was 16.6%.
As of October 31, 1998, cardholders whose Accounts are included in the
Trust Portfolio, including such additional Accounts, had billing addresses in 50
states, the District of Columbia and other United States territories and
possessions. As of October 31, 1998, 71% of the Accounts, including such
additional Accounts, were premium accounts and 29% were standard accounts, and
the aggregate principal Receivable balances of
9
<PAGE> 10
premium accounts and standard accounts, as a percentage of the aggregate total
principal Receivables, were 83% and 17%, respectively.
The following tables summarize the Trust Portfolio (including the
additional Accounts added to the Trust on November 4, 1998 and December 4, 1998)
by various criteria as of the close of the business on October 31, 1998. Because
the future composition of the Trust Portfolio may change over time, these tables
are not necessarily indicative of the composition of the Trust Portfolio at any
subsequent time.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE OF
NUMBER OF NUMBER AMOUNT OF TOTAL
ACCOUNT BALANCE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- --------------- ---------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Credit Balance...................... 338,612 1.4% $ (61,100,633) (0.2%)
No Balance.......................... 11,790,522 49.5 -- --
$0.01 to $2,000.00.................. 6,460,923 27.1 3,932,599,422 11.8
$2,000.01 to $5,000.00.............. 2,882,742 12.1 9,998,818,633 30.1
$5,000.01 to $10,000.00............. 1,849,772 7.9 12,835,453,151 38.7
$10,000.01 or More.................. 487,959 2.0 6,508,483,148 19.6
---------- ----- --------------- -----
TOTAL.......................... 23,810,530 100.0% $33,214,253,721 100.0%
========== ===== =============== =====
</TABLE>
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE OF
NUMBER OF NUMBER AMOUNT OF TOTAL
ACCOUNT BALANCE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- --------------- ---------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
$0.00 to $2,000..................... 2,373,630 10.0% $ 742,029,655 2.2%
$2,000.01 to $5,000.00.............. 5,273,928 22.1 5,718,975,510 17.3
$5,000.01 to $10,000.00............. 8,659,518 36.4 12,395,412,687 37.3
$10,000.01 or More.................. 7,503,454 31.5 14,357,835,869 43.2
---------- ----- --------------- -----
TOTAL.......................... 23,810,530 100.0% $33,214,253,721 100.0%
========== ===== =============== =====
</TABLE>
10
<PAGE> 11
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE OF
NUMBER OF NUMBER AMOUNT OF TOTAL
PAYMENT STATUS ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- -------------- ---------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Not Delinquent...................... 23,132,122 97.1% $30,435,710,976 91.7%
Up to 34 Days....................... 400,519 1.7 1,496,430,551 4.5
35 to 64 Days....................... 102,856 0.4 431,611,367 1.3
65 to 94 Days....................... 60,255 0.3 278,287,121 0.8
95 or More Days..................... 114,778 0.5 572,213,706 1.7
---------- ----- --------------- -----
TOTAL.......................... 23,810,530 100.0% $33,214,253,721 100.0%
========== ===== =============== =====
</TABLE>
COMPOSITION OF ACCOUNTS BY AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL PERCENTAGE OF
NUMBER OF NUMBER AMOUNTS OF TOTAL
ACCOUNT AGE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- ----------- ---------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Less than or equal to 6 Months...... 3,026,313 12.7% $ 3,960,796,472 11.9%
Over 6 Months to 12 Months.......... 3,672,281 15.4 4,840,267,518 14.6
Over 12 Months to 24 Months......... 5,822,438 24.5 7,801,346,023 23.5
Over 24 Months to 36 Months......... 3,397,378 14.3 4,759,333,670 14.3
Over 36 Months to 48 Months......... 3,018,721 12.7 4,937,465,093 14.9
Over 48 Months to 60 Months......... 2,461,045 10.3 3,298,412,895 9.9
Over 60 Months...................... 2,412,354 10.1 3,616,632,050 10.9
---------- ----- --------------- -----
TOTAL.......................... 23,810,530 100.0% $33,214,253,721 100.0%
========== ===== =============== =====
</TABLE>
11
<PAGE> 12
COMPOSITION BY GEOGRAPHIC DISTRIBUTION
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF AMOUNT OF OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Alabama................................................... 275,565 1.2% $ 402,731,944 1.2%
Alaska.................................................... 49,542 0.2 91,602,902 0.3
Arizona................................................... 415,363 1.7 598,646,700 1.8
Arkansas.................................................. 188,101 0.8 257,611,044 0.8
California................................................ 2,713,847 11.3 4,316,641,427 13.0
Colorado.................................................. 446,566 1.9 600,895,979 1.8
Connecticut............................................... 349,448 1.5 501,144,299 1.5
Delaware.................................................. 79,517 0.3 97,664,747 0.3
District of Columbia...................................... 40,614 0.2 65,912,537 0.2
Florida................................................... 1,491,123 6.3 2,103,973,499 6.3
Georgia................................................... 539,741 2.3 837,933,108 2.5
Hawaii.................................................... 96,603 0.4 161,289,168 0.5
Idaho..................................................... 104,537 0.4 147,226,778 0.4
Illinois.................................................. 1,075,209 4.5 1,436,715,396 4.3
Indiana................................................... 522,614 2.2 639,180,050 1.9
Iowa...................................................... 44,333 0.2 46,913,078 0.1
Kansas.................................................... 218,002 0.9 293,508,579 0.9
Kentucky.................................................. 376,562 1.6 411,878,656 1.2
Louisiana................................................. 385,757 1.6 535,006,306 1.6
Maine..................................................... 95,482 0.4 127,061,516 0.4
Maryland.................................................. 477,994 2.0 741,116,147 2.2
Massachusetts............................................. 677,464 2.8 851,210,711 2.6
Michigan.................................................. 751,693 3.2 1,059,918,117 3.2
Minnesota................................................. 345,642 1.5 397,008,906 1.2
Mississippi............................................... 159,175 0.7 223,152,903 0.7
Missouri.................................................. 433,494 1.8 560,093,147 1.7
Montana................................................... 83,987 0.4 117,428,612 0.4
Nebraska.................................................. 145,863 0.6 163,434,420 0.5
Nevada.................................................... 174,829 0.7 303,251,216 0.9
New Hampshire............................................. 107,930 0.5 152,572,691 0.5
New Jersey................................................ 828,948 3.5 1,173,615,526 3.5
New Mexico................................................ 141,439 0.6 206,989,992 0.6
New York.................................................. 1,606,039 6.7 2,313,554,233 7.0
North Carolina............................................ 520,090 2.2 704,139,100 2.1
North Dakota.............................................. 51,854 0.2 59,645,505 0.2
Ohio...................................................... 1,334,560 5.6 1,586,993,475 4.8
Oklahoma.................................................. 354,132 1.5 473,032,922 1.4
Oregon.................................................... 343,791 1.4 482,215,469 1.5
Pennsylvania.............................................. 1,069,996 4.5 1,263,615,814 3.8
Rhode Island.............................................. 95,239 0.4 128,245,100 0.4
South Carolina............................................ 249,723 1.0 329,161,842 1.0
South Dakota.............................................. 53,968 0.2 69,541,285 0.2
Tennessee................................................. 339,672 1.4 435,648,135 1.3
Texas..................................................... 2,077,133 8.7 3,144,109,219 9.5
Utah...................................................... 193,994 0.8 227,742,559 0.7
Vermont................................................... 49,667 0.2 68,329,900 0.2
Virginia.................................................. 585,950 2.5 871,226,815 2.6
Washington................................................ 570,606 2.4 864,908,212 2.6
West Virginia............................................. 165,633 0.7 212,639,141 0.6
Wisconsin................................................. 202,533 0.9 190,000,640 0.6
Wyoming................................................... 46,318 0.2 60,863,873 0.2
Other..................................................... 62,648 0.3 105,310,381 0.3
---------- ----- --------------- -----
TOTAL............................................. 23,810,530 100.0% $33,214,253,721 100.0%
========== ===== =============== =====
</TABLE>
Since the largest number of cardholders (based on billing addresses) whose
accounts were included in the Trust as of October 31, 1998 were in California,
Texas, New York, Florida and Ohio, adverse changes in the economic conditions in
these areas could have a direct impact on the timing and amount of payments on
the Certificates.
12
