<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) SEPTEMBER 2, 1998
-----------------
FIRST USA BANK, NATIONAL ASSOCIATION
- --------------------------------------------------------------------------------
(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 September 2, 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 $500,000,000 aggregate principal amount of Class A Floating
Rate Asset Backed Certificates, Series 1998-7 and $45,180,000
aggregate principal amount of Class B Floating Rate Asset
Backed Certificates, Series 1998-7, 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 September 2, 1998, with respect to the
proposed issuance of the Class A Floating Rate Asset Backed
Certificates and the Class B Floating Rate Asset Backed
Certificates of the First USA Credit Card Master Trust, Series
1998-7.
<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
----------------------------
Tracie H. Klein
Vice President
Date: September 2, 1998
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<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
99.01 Series 1998-7 Term Sheet 5
Dated September 2, 1998
<PAGE> 1
SUBJECT TO REVISION
SERIES TERM SHEET DATED SEPTEMBER 2, 1998
$545,180,000
FIRST USA CREDIT CARD MASTER TRUST
$500,000,000 CLASS A FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1998-7
$45,180,000 CLASS B FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1998-7
FIRST USA BANK, N.A.
TRANSFEROR AND SERVICER
------------------
THE OFFERED CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST ONLY AND WILL NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF FIRST USA BANK, N.A. OR ANY
AFFILIATE THEREOF. AN OFFERED CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE
OFFERED CERTIFICATES NOR THE UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
THIS SERIES TERM SHEET CONTAINS STRUCTURAL AND COLLATERAL INFORMATION ABOUT THE
OFFERED CERTIFICATES; HOWEVER, THIS SERIES TERM SHEET DOES NOT CONTAIN COMPLETE
INFORMATION ABOUT THE OFFERED CERTIFICATES. 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 THE OFFERED CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
------------------
BANC ONE CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
LEHMAN BROTHERS
SALOMON SMITH BARNEY
<PAGE> 2
SUMMARY OF TERMS
This Series Term Sheet will be superseded in its entirety by the
information appearing in the Prospectus Supplement, the Prospectus and the
Series 1998-7 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").
Type of Securities............ Class A Floating Rate Asset Backed
Certificates, Series 1998-7 (the "Class A
Certificates") and Class B Floating Rate
Asset Backed Certificates, Series 1998-7
(the "Class B Certificates" and, together
with the Class A Certificates, the "Offered
Certificates").
Trust Assets.................. The property of the First USA Credit Card
Master Trust (the "Trust") includes and will
include receivables (the "Receivables")
arising under certain VISA(R) and
MasterCard(R)* revolving credit card
accounts (the "Accounts") selected by the
Transferor from a portfolio of VISA and
MasterCard accounts owned by the Transferor,
all monies due or to become due in payment
of the Receivables, all proceeds of the
Receivables and all monies on deposit in
certain bank accounts of the Trust (other
than certain investment earnings on such
amounts), Recoveries and any enhancement
issued with respect to any series issued
from time to time by the Trust (each, a
"Series") which will consist of one or more
classes of certificates. The benefits of any
enhancement issued with respect to any other
Series will not be available for the benefit
of the holders of the Certificates and the
holders of the certificates of other Series
will not be entitled to the benefits of any
enhancement for this Series.
Trustee....................... The Bank of New York (Delaware).
Certificateholders'
Interest...................... Each of the Offered Certificates represents an
undivided interest in the Trust. The Trust's
assets will be allocated among the Class A
Certificateholders (the "Class A
Certificateholders' Interest"), the Class B
Certificateholders (the "Class B
Certificateholders' Interest," and together
with the Class A Certificateholders'
Interest, the "Investor Interest"), the
Excess Collateral Holders (the "Excess
Collateral Holders' Interest"), the holders
of other Series previously issued or issued
at some future time pursuant to the Pooling
and Servicing Agreement and the applicable
series supplements to the Pooling and
Servicing Agreement (each, a "Supplement")
and the Transferor (the "Transferor
Interest"), as described below.
- ---------------
* VISA(R) and MasterCard(R) are registered trademarks of Visa USA Incorporated
and MasterCard International Incorporated, respectively.
2
<PAGE> 3
The aggregate principal amount of the Class A
Certificateholders' Interest and the Class B
Certificateholders' Interest will, except as
otherwise provided herein, remain fixed at
$500,000,000 (the "Class A Invested Amount")
and $45,180,000 (the "Class B Invested
Amount"), respectively. The principal amount
of the Transferor Interest will fluctuate as
the amount of Receivables in the Trust
changes from time to time.
The "Excess Collateral Amount" in the initial
amount of $57,230,000 (which amount
represents 9.5% of the sum of the initial
Class A Invested Amount, the initial Class B
Invested Amount and the initial Excess
Collateral Amount) constitutes enhancement
for the Offered Certificates. Allocations
will be made to the Excess Collateral Amount
and the Excess Collateral Holders will have
voting and certain other rights of a
subordinated class of certificates. The
Excess Collateral together with the Offered
Certificates are referred to herein as the
"Certificates."
The Class A Certificates will represent the
right to receive from the assets of the
Trust allocated to the Class A
Certificateholders' Interest funds up to
(but not in excess of) the amounts required
to make payments of interest on the Class A
Certificates at the Class A Certificate
Rate, and the payment of principal during
the amortization period to the extent of the
Class A Invested Amount (which may be less
than the aggregate unpaid principal amount
of the Class A Certificates, in certain
circumstances).
The Class B Certificates will represent the
right to receive from the assets of the
Trust allocated to the Class B
Certificateholders' Interest funds up to
(but not in excess of) the amounts required
to make payments of interest on the Class B
Certificates at the Class B Certificate
Rate, and the payment of principal during
the amortization period, following the final
principal payment of the Class A Invested
Amount to the holders of the Class A
Certificates, to the extent of the Class B
Invested Amount (which may be less than the
aggregate unpaid principal amount of the
Class B Certificates, in certain
circumstances, if there has been a reduction
of the Class B Invested Amount).
Receivables................... The aggregate amount of Receivables in the
Accounts (including the amount of
Receivables in the additional Accounts added
to the Trust on August 4, 1998 and September
3, 1998), as of the close of business on
July 31, 1998, was $31,400,427,503,
comprised of $30,444,107,950 of principal
Receivables and $956,319,553 of finance
charge Receivables.
Interest...................... Class A Certificate Rate: One-month LIBOR
plus %.
Class B Certificate Rate: One-month LIBOR
plus %.
3
<PAGE> 4
Interest Payment Dates........ Interest on the Certificates will be
distributed on the 18th day of each calendar
month or, if such day is not a business day,
on the next succeeding business day (each, a
"Distribution Date"), commencing October 19,
1998, in an amount equal to the product of
(a) the actual number of days in the related
Interest Period divided by 360, (b) the
Class A Certificate Rate or the Class B
Certificate Rate, as applicable, and (c) the
outstanding principal amount of the Class A
Certificates or the outstanding principal
amount of the Class B Certificates, as
applicable, as of the last day of the
preceding calendar month. The "Interest
Period" with respect to any Distribution
Date will be the period from the previous
Distribution Date through the day preceding
such Distribution Date, except that the
initial Interest Period will be the period
from the Closing Date through the day
preceding the initial Distribution Date.
"LIBOR" means the London interbank offered
quotations for one-month United States
dollar deposits prevailing on the date that
LIBOR is determined. The Trustee will
determine LIBOR on September , 1998 for
the period from the Closing Date through
October 18, 1998 and on the second business
day prior to each Distribution Date
thereafter for the period from and including
such Distribution Date through the day
preceding the next succeeding Distribution
Date.
Principal..................... The principal of the Class A Certificates and
the Class B Certificates is scheduled to be
paid on the Class A Expected Final Payment
Date and the Class B Expected Final Payment
Date, respectively, but may be paid earlier
or later under certain circumstances.
Class A Expected Final
Payment Date............... The August 2001 Distribution Date.
Class B Expected Final
Payment Date............... The August 2001 Distribution Date.
Stated Series Termination
Date.......................... The final distribution of principal and
interest on the Certificates will be made no
later than the April 2004 Distribution Date
(the "Stated Series Termination Date").
After the Stated Series Termination Date,
the Trust will have no further obligation to
pay principal or interest on the
Certificates.
Subordination of the Class B
Certificates and the
Excess Collateral.......... The Class B Certificateholders' Interest will
be subordinated to the extent necessary to
fund certain payments with respect to the
Class A Certificates. In addition, the
Excess Collateral Holders' Interest will be
subordinated to the extent necessary to fund
certain payments with respect to the Class A
Certificates and the Class B Certificates.
If the Excess Collateral Amount is reduced
to zero, the Class B Certificateholders will
bear directly the credit and other risks
associated with their undivided interest in
the
4
<PAGE> 5
Trust. To the extent the Class B Invested
Amount is reduced, the percentage of
collections of finance charge Receivables
allocated to the Class B Certificateholders
in subsequent Monthly Periods will be
reduced. Moreover, to the extent the amount
of such reduction in the Class B Invested
Amount is not reimbursed, the amount of
principal distributable to the Class B
Certificateholders will be reduced.
ERISA Considerations.......... If certain conditions are satisfied, including
that upon completion of the public offering
thereof interests in the Class A
Certificates are held by 100 or more persons
independent of the Transferor and each
other, the Class A Certificates should
qualify as "publicly-offered securities" for
purposes of the "plan assets regulation"
issued by the Department of Labor. In such
event, the purchase and holding of Class A
Certificates by an employee benefit plan (or
other entity deemed to hold assets of such a
plan) would not cause the assets of the
Trust to be deemed "plan assets" of any such
plan subject to the prohibited transaction
rules of the Employee Retirement Income
Security Act of 1974, as amended and the
Internal Revenue Code of 1986, as amended.
Further information regarding the status of
the Class A Certificates as publicly-offered
securities will be provided in the
Prospectus Supplement. Accordingly, plan
investors contemplating the purchase of
Class A Certificates should consult their
counsel and review "ERISA Considerations" in
the Prospectus and "Summary of Terms--ERISA
Considerations" in the Prospectus Supplement
prior to making any purchase of Class A
Certificates.
The Underwriters currently do not expect the
Class B Certificates to qualify as
publicly-offered securities and,
accordingly, the Class B Certificates may
not be purchased by employee benefit plans
(or entities deemed to hold assets of such
plans, including without limitation any
insurance company general account deemed to
hold plan assets by reason of a plan's
investment in the general account).
Certificate Ratings........... It is a condition to the issuance of the Class
A Certificates that they be rated in the
highest rating category by at least one
nationally recognized statistical rating
organization (each such rating organization,
a "Rating Agency").
It is a condition to the issuance of the Class
B Certificates that they receive a rating of
at least "A" or its equivalent by at least
one Rating Agency.
Listing....................... Application will be made to list the Offered
Certificates on the Luxembourg Stock
Exchange.
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 BANC ONE CORPORATION ("BANC 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 BANC ONE credit card securitization vehicles. As a result of the
merger of First USA, Inc. with and into BANC ONE on June 27, 1997, the Bank is
now an indirect wholly-owned subsidiary of BANC ONE.
On July 1, 1998, BANC ONE consolidated substantially all of its current
consumer credit card operations in the Bank. The Bank added receivables in
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. The Bank may, from time to
time, add to the Trust additional Receivables arising in accounts originated by
affiliates of the Bank. Each such addition of receivables in accounts originated
by the Bank and affiliates of the Bank to the Trust is subject to certain
restrictions on additions of Accounts in the Pooling and Servicing Agreement,
including satisfaction of the Rating Agency Condition.
BANC ONE and First Chicago NBD Corporation ("FCN"), together with BANK ONE
CORPORATION, formerly BANC ONE CORPORATION (DE) and Hornet Reorganization
Corporation, have entered into an Agreement and Plan of Reorganization, dated as
of April 10, 1998 (as the same may be amended or otherwise modified from time to
time, the "BANC ONE/FCN Agreement"), pursuant to which BANC ONE and FCN will be
merged into BANK ONE CORPORATION, a new corporation organized to effect the
merger (the "BANC ONE/FCN Merger"). BANK ONE CORPORATION will be the surviving
corporation in the BANC ONE/FCN Merger, at which time the separate corporate
existence of BANC ONE and FCN will cease. The BANC ONE/FCN Merger is subject to
the satisfaction of the terms and conditions stated in the BANC ONE/FCN
Agreement, which include the approval of the respective shareholders of BANC ONE
and FCN and certain regulatory approvals. Subject to the satisfaction of such
terms and conditions stated in the BANC ONE/FCN Agreement, the BANC ONE/FCN
Merger is targeted to be completed late in the third quarter or in the fourth
quarter of 1998.
THE BANK'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 other than certain accounts that were not
designated to have their receivables included in the Trust and which represented
less than 1% of the accounts serviced by the Bank as of June 30, 1998 (the "Bank
Portfolio"). The tables in this Series Term Sheet that present information with
respect to the Bank Portfolio do not include the accounts originated by
affiliates of the Bank whose consumer credit card operations have been
consolidated in the Bank as of July 1, 1998. However, the Bank believes that the
inclusion of the Accounts of the affiliates of the Bank added to the Trust on
July 6, 1998 would not adversely affect in any material respect the performance
of the Bank Portfolio as reflected in the following tables had information with
respect thereto been included in such tables. In 1997 the Bank changed its
charge-off policy to align it with that of BANC 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 July 31, 1998 the Receivables in the Trust
Portfolio (including the Receivables in the additional Accounts added to the
Trust on August 4, 1998 and to be added to the trust on September 3, 1998)
represented approximately 97.9% of the Bank Portfolio. The accounts in the Bank
Portfolio that are not included in the Trust Portfolio are primarily newly
originated accounts with lower delinquency and loss rates than the average
accounts in the Trust Portfolio which are generally more seasoned. Therefore,
the actual delinquency and loss experience with respect to the Receivables in
the Trust Portfolio may be different from that set forth
6
<PAGE> 7
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)
SIX MONTHS ENDED -----------------------------------------------------
JUNE 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).............. $29,943,745 100.00% $28,888,003 100.00% $22,119,202 100.00%
=========== ====== =========== ====== =========== ======
Receivables Delinquent:
35-64 days............................ $ 371,612 1.24% $ 425,464 1.47% $ 359,275 1.62%
65-94 days............................ 247,057 0.83 275,747 0.96 250,468 1.13
95 or more days(3).................... 671,056 2.24 584,050 2.02 475,115 2.15
----------- ------ ----------- ------ ----------- ------
Total............................... $ 1,289,725 4.31% $ 1,285,261 4.45% $ 1,084,858 4.90%
=========== ====== =========== ====== =========== ======
<CAPTION>
AS OF DECEMBER 31, (1)
-------------------------
1995
-------------------------
PERCENTAGE
OF TOTAL
RECEIVABLES RECEIVABLES
----------- -----------
<S> <C> <C>
Receivables Outstanding(2).............. $17,411,514 100.00%
=========== ======
Receivables Delinquent:
35-64 days............................ $ 219,240 1.26%
65-94 days............................ 130,088 0.75
95 or more days(3).................... 231,315 1.32
----------- ------
Total............................... $ 580,643 3.33%
=========== ======
</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 BANC 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.
LOSS EXPERIENCE
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, (1)
JUNE 30, ----------------------------------------
1998 1997 1996 1995
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(2).......... $29,133,393 $24,918,928 $ 18,986,458 $13,497,080
Gross Charge-Offs(3)........................ 806,503 1,350,863 895,267 416,406
Gross Charge-Offs as a percentage of Average
Receivables Outstanding(4)................ 5.58% 5.42% 4.72% 3.09%
Recoveries(5)............................... 79,675 122,234 61,787 23,597
Net Losses(5)............................... 726,828 1,228,629 833,480 392,809
Net Losses as a percentage of Average
Receivables Outstanding(4)................ 5.03% 4.93% 4.39% 2.91%
</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 BANC 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.
7
<PAGE> 8
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>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, (1)
JUNE 30, -----------------------------
1998 1997 1996 1995
---------- ----- ----- -----
<S> <C> <C> <C> <C>
Lowest Month........................................ 13.38% 11.73% 10.16% 9.86%
Highest Month....................................... 15.49 14.99 11.86 11.73
Monthly Average..................................... 14.35 13.03 11.18 10.90
</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 six months ended
June 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 six months ended June 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 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>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------
1998 1997 1996 1995
---------- ------ ------ ------
<S> <C> <C> <C> <C>
Average account monthly accrued fees and
charges(1)(2).................................. $39.56 $39.90 $36.82 $32.35
Average account balance(3)....................... 2,822 2,959 2,799 2,580
Portfolio yield from fees and charges(1)(4)...... 16.82% 16.18% 15.79% 15.04%
</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.
8
<PAGE> 9
The increase in portfolio yield for the years ended December 31, 1996 and
December 31, 1997 and for the six months ended June 30, 1998 reflects changes in
the overall pricing distribution of the Bank Portfolio. The accounts in the Bank
Portfolio that are not included in the Trust Portfolio are primarily newly
originated accounts with a greater proportion of Receivables arising pursuant to
direct solicitations of low-rate, no annual fee credit cards, with on average a
lower introductory rate, than the average accounts in the Trust Portfolio, which
are more seasoned. Therefore, 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 August 4, 1998 and to be added to the Trust on September 3, 1998),
as of the close of business on July 31, 1998, consisted of $30,444,107,950 of
principal Receivables and $956,319,553 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 1998-7. The
Accounts, including such additional Accounts added or to be added, had an
average principal Receivable balance of $1,427 (including accounts with a zero
balance) and an average credit limit of $8,441. The percentage of the aggregate
total Receivable balance to the aggregate total credit limit was 17.4%.
As of July 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 July 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 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 August 4, 1998 and to be added to the
Trust on September 3, 1998, certain of which Accounts added to the Trust on July
6, 1998 were originated by affiliates of the Bank) by various criteria as of the
close of business on July 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
ACCOUNT NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
------------- ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C>
Credit Balance........................ 335,049 1.6% $ (56,542,618) (0.2%)
No Balance............................ 9,694,064 45.5 0 --
$0.01 to $2,000.00.................... 6,290,487 29.5 3,857,066,732 12.3
$2,000.01 to $5,000.00................ 2,824,507 13.2 9,803,661,841 31.2
$5,000.01 to $10,000.00............... 1,759,446 8.2 12,174,649,618 38.8
$10,000.01 or More.................... 425,349 2.0 5,621,591,930 17.9
---------- ----- --------------- -----
TOTAL....................... 21,328,902 100.0% $31,400,427,503 100.0%
========== ===== =============== =====
</TABLE>
9
<PAGE> 10
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE OF
CREDIT NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
LIMIT RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
----------- ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C>
$0.00 to $2,000.00.................... 2,068,543 9.7% $ 728,502,644 2.3%
$2,000.01 to $5,000.00................ 4,668,439 21.9 5,670,390,711 18.1
$5,000.01 to $10,000.00............... 7,771,787 36.4 12,027,572,624 38.3
$10,000.01 or More.................... 6,820,133 32.0 12,973,961,524 41.3
---------- ----- --------------- -----
TOTAL....................... 21,328,902 100.0% $31,400,427,503 100.0%
========== ===== =============== =====
</TABLE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
PERIOD OF DELINQUENCY OF TOTAL PERCENTAGE OF
(DAYS CONTRACTUALLY NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
----------- ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C>
Not Delinquent........................ 20,678,324 97.0% $28,739,737,972 91.5%
Up to 34 Days......................... 391,868 1.8 1,441,504,716 4.6
35 to 64 Days......................... 93,197 0.4 396,792,638 1.3
65 to 94 Days......................... 57,102 0.3 260,097,610 0.8
95 or More Days....................... 108,411 0.5 562,294,567 1.8
---------- ----- --------------- -----
TOTAL....................... 21,328,902 100.0% $31,400,427,503 100.0%
========== ===== =============== =====
</TABLE>
COMPOSITION OF ACCOUNTS BY AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE OF
NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
AGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
--- ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C>
Less than or equal to 6 Months........ 3,187,844 14.9% $ 4,220,254,466 13.4%
Over 6 Months to 12 Months............ 3,677,708 17.2 5,148,110,850 16.4
Over 12 Months to 24 Months........... 4,597,285 21.6 6,585,760,493 21.0
Over 24 Months to 36 Months........... 2,941,532 13.8 4,965,810,275 15.8
Over 36 Months to 48 Months........... 3,203,866 15.0 4,943,343,436 15.7
Over 48 Months to 60 Months........... 1,568,787 7.4 2,312,904,632 7.4
Over 60 Months........................ 2,151,880 10.1 3,224,243,351 10.3
---------- ----- --------------- -----
TOTAL....................... 21,328,902 100.0% $31,400,427,503 100.0%
========== ===== =============== =====
</TABLE>
10
<PAGE> 11
COMPOSITION BY GEOGRAPHIC DISTRIBUTION
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE OF
NUMBER OF NUMBER OF AMOUNT OF TOTAL AMOUNT OF
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
----- ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C>
Alabama................................... 247,091 1.2% 377,273,725 1.2%
Alaska.................................... 44,738 0.2 91,407,093 0.3
Arizona................................... 372,035 1.7 565,255,409 1.8
Arkansas.................................. 165,491 0.8 242,023,439 0.8
California................................ 2,420,361 11.3 4,104,619,635 13.1
Colorado.................................. 399,122 1.9 568,725,950 1.8
Connecticut............................... 284,123 1.3 446,251,864 1.4
Delaware.................................. 63,910 0.3 88,778,833 0.3
District of Columbia...................... 37,167 0.2 62,971,253 0.2
Florida................................... 1,326,783 6.2 1,973,865,124 6.3
Georgia................................... 488,968 2.3 794,329,436 2.5
Hawaii.................................... 86,439 0.4 152,902,144 0.5
Idaho..................................... 91,575 0.4 139,731,352 0.4
Illinois.................................. 963,298 4.5 1,360,152,133 4.3
Indiana................................... 467,533 2.2 597,258,812 1.9
Iowa...................................... 35,050 0.2 38,532,498 0.1
Kansas.................................... 188,596 0.9 275,899,705 0.9
Kentucky.................................. 355,396 1.7 388,438,051 1.2
Louisiana................................. 354,261 1.7 518,071,661 1.6
Maine..................................... 84,540 0.4 120,742,551 0.4
Maryland.................................. 429,839 2.0 703,456,233 2.2
Massachusetts............................. 625,088 2.9 815,903,755 2.6
Michigan.................................. 661,356 3.1 1,008,147,199 3.2
Minnesota................................. 293,415 1.4 362,784,965 1.2
Mississippi............................... 143,842 0.7 211,977,139 0.7
Missouri.................................. 376,173 1.8 524,652,249 1.7
Montana................................... 75,191 0.4 112,431,657 0.4
Nebraska.................................. 121,597 0.6 152,037,545 0.5
Nevada.................................... 154,474 0.7 284,817,768 0.9
New Hampshire............................. 96,956 0.5 145,910,092 0.5
New Jersey................................ 748,615 3.5 1,106,437,318 3.5
New Mexico................................ 126,396 0.6 195,117,575 0.6
New York.................................. 1,427,939 6.7 2,168,235,856 6.9
North Carolina............................ 458,870 2.2 662,129,377 2.1
North Dakota.............................. 44,505 0.2 55,875,823 0.2
Ohio...................................... 1,223,018 5.7 1,516,563,781 4.8
Oklahoma.................................. 320,507 1.5 453,666,657 1.4
Oregon.................................... 305,222 1.4 456,003,119 1.5
Pennsylvania.............................. 949,406 4.5 1,171,814,077 3.7
Rhode Island.............................. 85,228 0.4 120,833,249 0.4
South Carolina............................ 223,099 1.0 309,735,225 1.0
South Dakota.............................. 47,032 0.2 65,305,515 0.2
Tennessee................................. 303,468 1.4 401,623,028 1.3
Texas..................................... 1,930,661 9.0 3,043,857,064 9.7
Utah...................................... 175,926 0.8 216,201,722 0.7
Vermont................................... 44,518 0.2 64,325,158 0.2
Virginia.................................. 519,674 2.4 823,239,097 2.6
Washington................................ 517,601 2.4 827,776,146 2.6
West Virginia............................. 151,205 0.7 204,622,458 0.7
Wisconsin................................. 183,149 0.9 167,814,800 0.5
Wyoming................................... 39,888 0.2 56,575,764 0.2
Other U.S. territories and possessions.... 48,567 0.2 83,325,424 0.3
---------- ----- --------------- -----
TOTAL............................ 21,328,902 100.0% $31,400,427,503 100.0%
========== ===== =============== =====
</TABLE>
Since the largest number of cardholders (based on billing addresses) whose
accounts were included in the Trust as of July 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.
11
