<PAGE>
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 7, 1999
ARCADIA RECEIVABLES FINANCE CORP.
as originator of
ARCADIA AUTOMOBILE RECEIVABLES TRUST, 1999-C
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(Exact name of registrant as specified in its charter)
Delaware 333-82281 41-1743653
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(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification No.)
7825 Washington Avenue South, Suite 410, Minneapolis, Minnesota 55439-2435
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 942-9880
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(Former name or former address, if changed since last report)
<PAGE>
Item 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not applicable.
Item 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS.
Not applicable.
Item 5. OTHER EVENTS.
On September 7, 1999, the Registrant made available to prospective
investors a term sheet (the "Term Sheet") setting forth a
description of the initial collateral pool and the proposed
structure for the issuance of $600,000,000 aggregate principal
amount of asset-backed notes by Arcadia Automobile Receivables
Trust, 1999-C (the "Trust"). The Term Sheet is attached hereto as
Exhibit 99.
Item 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
The following are filed herewith. The exhibit numbers correspond
with Item 601(b) of Regulation S-K.
Exhibit No. Description
----------- -----------
99 Term Sheet dated September 7, 1999 of Arcadia
Automobile Receivables Trust, 1999-C
<PAGE>
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 hereunto duly authorized.
Dated: September 8, 1999 ARCADIA RECEIVABLES FINANCE CORP.,
as originator of Arcadia Automobile
Receivables Trust, 1999-C
By: /s/ Brian S. Anderson
------------------------------------
Brian S. Anderson
Vice President
<PAGE>
SUBJECT TO REVISION
TERM SHEET DATED SEPTEMBER 7, 1999
$600,000,000 AUTOMOBILE RECEIVABLES-BACKED NOTES
ARCADIA AUTOMOBILE RECEIVABLES TRUST, 1999-C
ISSUER
ARCADIA RECEIVABLES FINANCE CORPORATION
SELLER
ARCADIA FINANCIAL LTD.
SERVICER
Attached is a preliminary Term Sheet describing the structure, collateral pool
and certain aspects of the Arcadia Automobile Receivables Trust, 1999-C. The
Term Sheet has been prepared by the Seller for informational purposes only and
is subject to modification or change. The information and assumptions contained
in the Term Sheet are preliminary and will be superseded in their entirety by a
Prospectus Supplement and by any other additional information subsequently filed
with the Securities and Exchange Commission or incorporated by reference in the
relevant registration statement.
None of the Underwriters named below and none of their respective affiliates
makes any representation as to the accuracy or completeness of any of the
information set forth in the attached Term Sheet. This cover sheet is not a part
of the Term Sheet.
THE REGISTRATION STATEMENT (INCLUDING A BASE PROSPECTUS) RELATING TO THE TRUST
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND HAS BEEN DECLARED
EFFECTIVE. THE PROSPECTUS SUPPLEMENT RELATING TO THE SECURITIES OFFERED BY THE
TRUST WILL BE FILED AFTER THE SECURITIES HAVE BEEN PRICED AND ALL OF THE TERMS
AND INFORMATION ARE FINALIZED. THIS COMMUNICATION IS NOT AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THE SECURITIES OF
THE TRUST IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL BEFORE THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE. YOU SHOULD REVIEW THE PROSPECTUS AND PROSPECTUS SUPPLEMENT, AND
YOUR INVESTMENT DECISION SHOULD BE BASED UPON THE INFORMATION IN THE PROSPECTUS
AND PROSPECTUS SUPPLEMENT AS OF THEIR PUBLICATION DATE. SALES OF THE SECURITIES
TO BE OFFERED BY THE TRUST MAY NOT BE CONSUMMATED UNLESS YOU HAVE RECEIVED BOTH
THE PROSPECTUS AND THE PROSPECTUS SUPPLEMENT. THE SECURITIES TO BE OFFERED BY
THE TRUST UNDER THE PROSPECTUS SUPPLEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION;
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
UNDERWRITERS OF THE NOTES
Credit Suisse First Boston
Banc of America Securities LLC
Chase Securities Inc.
J. P. Morgan & Co.
<PAGE>
ARCADIA AUTOMOBILE RECEIVABLES TRUST, 1999-C
TERM SHEET
SUBJECT TO REVISION
PARTIES
THE TRUST
Arcadia Automobile Receivables Trust, 1999-C will issue the Notes and be
liable for their payment. The Trust's principal asset will be a pool of
automobile loans.
SELLER
Arcadia Receivables Finance Corp. is a wholly-owned special-purpose
subsidiary of Arcadia Financial Ltd. Arcadia Receivables Finance Corp. will
sell the automobile loans to the Trust.
SERVICER
Arcadia Financial Ltd. will service the automobile loans held by the Trust.
THE INSURER
Financial Security Assurance Inc. will issue a note policy, which will
guarantee the payment of timely principal and interest due on the Notes, but
only as set forth in the section of the Prospectus Supplement entitled "The
Note Policy." The note policy is not covered by the Property/Casualty
Insurance Security Fund specified in Article 76 of the New York Insurance Law.
THE INDENTURE TRUSTEE
Norwest Bank Minnesota, National Association, will serve as the indenture
trustee and indenture collateral agent.
THE OWNER TRUSTEE
Wilmington Trust Company.
THE BACKUP SERVICER
Norwest Bank Minnesota, National Association.
ADMINISTRATOR
Wilmington Trust Company.
DATES
PRELIMINARY CUTOFF DATE
August 24, 1999. This is the date used for preparing the statistical
information used in this Term Sheet.
INITIAL CUTOFF DATE
On or about September 8, 1999. The Trust will receive payments due on, or
received with respect to, the initial pool of automobile loans after this
date.
SUBSEQUENT CUTOFF DATES
The Seller will designate a subsequent cutoff date with respect to each pool of
subsequent receivables purchased by the Trust after the closing date.
THE RECEIVABLES
The Trust will own a pool of retail installment sales contracts and promissory
notes purchased from motor vehicle dealers by Arcadia Financial in the ordinary
course of business. These receivables are secured by new and used automobiles
and light trucks.
On the closing date, pursuant to a sale and servicing agreement, the Trust will
purchase the initial receivables from the Seller that are expected to have an
aggregate principal balance of approximately $435,000,000 as of the Initial
Cutoff Date. The Trust will also purchase, subject to the satisfaction of
certain conditions, subsequent receivables prior to the distribution date in
December 1999 that are expected to have an aggregate principal balance of
approximately $165,000,000.
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DESCRIPTION OF THE NOTES
GENERAL
The Trust will issue three classes of its asset-backed notes. The Notes are
designated as the "Class A-1 Notes," the "Class A-2 Notes" and the "Class A-3
Notes."
Each class of Notes will have the initial principal amount set forth in the
following table. The dates on which the final payment of principal and interest
on each class of Notes is scheduled to be made are also set forth in the
following table.
<TABLE>
<CAPTION>
Final
Initial Note Scheduled
Principal Distribution
Class Balance Date
- -------- ----------------- ----------------------
<S> <C> <C>
A-1 $242,000,000 September 15, 2002
A-2 $150,000,000 December 15, 2003
A-3 $208,000,000 June 15, 2007
</TABLE>
The Notes will initially be issued in book-entry form only. The Notes will be
issued in minimum denominations of $1,000 and multiples of $1,000 in excess
thereof.
You may hold your Notes through The Depository Trust Company in the United
States, or through Cedel Bank, societe anonyme or the Euroclear System in
Europe.
The Notes will be secured solely by the pool of automobile loans and the other
assets of the Trust which are described under the section entitled "The
Receivables Pool."
TERMS OF THE NOTES
- - DISTRIBUTION DATES
The Trust will make payments of interest and principal on the Notes on the
fifteenth day of each month commencing October 15, 1999. This day is known as
the distribution date. If the fifteenth day of a given month is not a business
day, the Trust will make the payment on the next following business day.
Payments will be made to holders of record of the Notes as of the business day
preceding the distribution date.
- - INTEREST
Interest on the Notes will accrue at the applicable interest rate from a
distribution date to the day before the next distribution date. In the case of
the first distribution date, interest begins to accrue on the day of the
closing.
Interest on the Notes will be calculated on the following basis:
<TABLE>
<CAPTION>
Class of Notes Calculation Method
-------------- ------------------
<S> <C>
Class A-1 Notes 30/360
Class A-2 Notes 30/360
Class A-3 Notes 30/360
</TABLE>
- - PRINCIPAL
Principal will be payable on the Notes on each distribution date. The
noteholders' principal distributable amount for each distribution date is
calculated as the sum of:
1. the portion of all collections on the automobile loans allocable to
principal, including full and partial principal prepayments, received
during a monthly period,
2. the principal balance of each receivable that became a liquidated
receivable during the monthly period,
3. the principal balance of each receivable that was repurchased by Arcadia
Financial or the Seller as of the last day of the monthly period, and, at
the option of Financial Security Assurance Inc., the principal balance of
each receivable that was required to be, but was not, so repurchased,
4. the aggregate amount of any reduction of the principal balance of a
receivable as a result of a court order in an insolvency proceeding, and
5. any unpaid portion of the amounts included in 1, 2, 3 and 4 above with
respect to a prior distribution date (because of insufficient available
cash).
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Payments of principal on the Notes will be allocated among the classes as
follows:
The Notes will be "sequential pay" classes which will receive principal on
each distribution date as follows:
- to the Class A-1 Notes until the Class A-1 Notes are paid off;
- once the Class A-1 Notes are paid off, to the Class A-2 Notes until they
are paid off; and
- once the Class A-2 Notes are paid off, to the Class A-3 Notes until they
are paid off.
In addition, the outstanding principal amount of any class, to the extent not
previously paid, will be payable on such class's final scheduled distribution
date.
- - OPTIONAL REDEMPTION
The Class A-3 Notes, if still outstanding, may be redeemed in whole, but not in
part, on any distribution date on which the Seller or the Servicer exercises its
"clean-up call" option to purchase the receivables. This can only occur after
the pool balance declines to 10% or less of its original balance after the
funding period. The redemption price is equal to the unpaid principal amount of
the Notes of each such class plus accrued and unpaid interest thereon.
- - MANDATORY REDEMPTION
IF PRE-FUNDING ACCOUNT IS NOT DEPLETED
Each class of Notes will be redeemed in part in the event that any portion of
the approximately $165,000,000 deposited in a segregated pre-funding account
with the Indenture Trustee remains on deposit in such account on December 15,
1999. If the amount to be redeemed is $100,000 or less, the Indenture Trustee
will pay such amount to the Notes in accordance with their "sequential pay"
feature and not pro rata to each class of Notes, to reduce the outstanding
principal balance of the class of Notes then entitled to receive distributions
of principal. If the amount to be redeemed is greater than $100,000, the
Indenture Trustee will use the money to redeem each class of Notes in an amount
equal to such class's pro rata share (based on the respective current principal
amount of each class of Notes) of the redemption amount. If the redemption
amount is greater than $100,000, a redemption premium will also be payable.
UPON EVENT OF DEFAULT
If an event of default under the indenture occurs, the Notes may be accelerated
and subject to immediate payment at par. Only Financial Security Assurance Inc.
can declare an event of default, except in unusual circumstances. The note
policy issued by Financial Security Assurance Inc. does not guarantee payment of
any amounts that become due on an accelerated basis, unless Financial Security
Assurance Inc. elects, in its sole discretion, to pay such amounts in whole or
in part. However, following an acceleration of the Notes, the note policy will
continue to cover payments of principal and interest in accordance with its
terms.
OTHER MATTERS
PRE-FUNDING ACCOUNT
Contingent upon the written consent of Financial Security Assurance Inc. and the
satisfaction of certain other conditions, the Seller will sell additional
automobile loans to the Trust during a period beginning on the closing date and
ending not later than December 15, 1999. This period is known as the "funding
period." The pre-funded amount will be maintained in an account in the name of
the Indenture Trustee.
The pre-funded amount is initially expected to equal approximately $165,000,000
and, during the funding period, will be reduced by the principal balance of
subsequent receivables purchased by the Trust. Arcadia Financial expects that
the pre-funded amount will be reduced to less than $100,000 by the December 1999
distribution date. Any pre-funded amount remaining at the end of the funding
period will be distributed in the manner described under "Mandatory Redemption"
above. Prior to being used to purchase subsequent receivables or being paid to
noteholders, the pre-funded amount will be invested from time to time in
eligible investments.
RESERVE ACCOUNT
So long as there is money in the pre-funding account, funds will be held in a
reserve account. The money
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<PAGE>
held in the pre-funding account probably will generate less interest than the
amount of interest due on the same amount of Notes, and the interest paid on
the automobile loans owned by the Trust may not be enough to make up the
difference. As a result, the Indenture Trustee will establish a reserve
account, and will use funds deposited there to cover any such shortfall.
COLLECTION ACCOUNT
Except under certain conditions, the Servicer will establish one or more
accounts in the name of the Indenture Trustee for the benefit of Noteholders.
All payments from obligors that are received on behalf of the Trust will be
deposited in the collection account no later than two business days after
receipt.
PRIORITY OF DISTRIBUTIONS
On each distribution date, the Indenture Trustee will withdraw the available
funds from the collection account and apply the funds to the following (in the
order of priority indicated):
1. to the Servicer, the amount the Servicer is entitled to be reimbursed
for prior monthly advances,
2. to the Owner Trustee and the Indenture Trustee, any unpaid trustee fees
and other similar fees,
3. to the Servicer, the servicing fee for the related monthly period and
any overdue servicing fees,
4. into the note distribution account, the amount of interest to be paid on
the Notes,
5. into the note distribution account, the amount of principal to be paid
on the Notes,
6. to Financial Security Assurance Inc., amounts owing and not paid to
Financial Security Assurance Inc., and
7. the remaining balance, if any, to a financial institution acting as
collateral agent on behalf of Financial Security Assurance Inc., the
Indenture Trustee (on behalf of the noteholders) and the trustees for other
trusts and warehousing facilities
established by the Seller.
TAX STATUS
It is contemplated that for federal income tax purposes the Notes will be
characterized as debt and the Trust will not be characterized as an association
or a publicly traded partnership taxable as a corporation.
ERISA CONSIDERATIONS
Subject to certain considerations, it is contemplated that the Notes will be
eligible for purchase by employee benefit plans.
RATING OF THE NOTES
The Notes must receive at least the following ratings from Standard & Poor's
Ratings Services, a division of the McGraw-Hill Companies, Inc., and Moody's
Investors Service, Inc. in order to be issued:
<TABLE>
<CAPTION>
Rating
----------------------------------
Class S&P Moody's
- --------- ------------------ ------------
<S> <C> <C>
A-1 AAA Aaa
A-2 AAA Aaa
A-3 AAA Aaa
</TABLE>
You must not assume that the ratings initially assigned to the Notes will not
subsequently be lowered or withdrawn by the rating agencies.
THE RECEIVABLES POOL
GENERAL
The receivables pool will include the following:
- initial receivables and all amounts due thereunder after the initial
cutoff date, and
- any subsequent receivables and all amounts due thereunder after the
applicable subsequent cutoff date.
All of the receivables are or will be retail installment sales contracts or
promissory notes purchased by Arcadia Financial from dealers who regularly
originate and sell these types of contracts or notes to Arcadia Financial. The
initial receivables and the subsequent
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<PAGE>
receivables will be selected from automobile loans in Arcadia Financial's
portfolio for inclusion in the receivables pool in compliance with several
criteria, some of which are set forth below under the heading "Selection
Criteria." Arcadia Financial and the Seller believe that the selection
procedures are not adverse to noteholders and believe that no adverse
selection procedures will be used in selecting the receivables.
The Trust will only be obligated to purchase the subsequent receivables on a
subsequent transfer date if the following criteria are met:
1. The weighted average annual percentage rate (APR) of such receivables
will not be lower than one percentage point below the weighted average APR
of the preliminary initial receivables on the preliminary cutoff date;
2. the weighted average remaining term of such receivables will not be
greater than 68 months nor less than 60 months;
3. not more than 90% of the aggregate principal balance of such receivables
will be attributable to loans for the purchase of used financed vehicles;
and
4. not more than 4% of the aggregate principal balance of such receivables
will be attributable to receivables with an APR in excess of 21%.
The aggregate principal balance of the initial receivables is expected to
be approximately 70% of the aggregate initial principal balance of the
Notes. However, except for the criteria described above, there will be no
required characteristics of the subsequent receivables and the receivables
included in the initial receivables originated after the preliminary
cutoff date. Therefore, following the transfer of subsequent receivables to
the Trust, the aggregate characteristics of the entire receivables pool may
vary from those of the preliminary initial receivables.
DELINQUENCY, CREDIT LOSS AND REPOSSESSION INFORMATION
The following tables set forth information relating to Arcadia Financial's
delinquency, credit loss and repossession experience for each period indicated
with respect to all loans it has purchased and continues to service. This
information includes the experience with respect to all loans in Arcadia
Financial's portfolio of loans serviced during each period. This includes loans
which do not meet the criteria for selection as a receivable to be sold to the
Trust.
DELINQUENCY EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
At December 31, At June 30, 1999
-------------------------------------------------------- -------------------
1996 1997 1998 (unaudited)
------------------- ----------------- ------------------ -------------------
Number Number Number Number
of Loans Balances of Loans Balances of Loans Balances of Loans Balances
------- ---------- -------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Servicing Portfolio at End of Period 302,450 $3,791,857 411,429 $4,956,090 450,635 $5,096,222 469,664 $5,223,583
Delinquencies:
31-60 days 3,884 $ 47,225 8,297 $ 100,161 12,176 $ 135,633 9,062 $ 99,211
61-90 days 1,255 15,877 3,635 45,485 4,161 47,599 3,853 41,964
91 days or more 2,911 37,019 3,019 34,047 5,165 60,591 5,005 52,438
------- ---------- ------ --------- ------- ---------- ------ ----------
Total Automobile Loans
Delinquent 31 or More Days 8,050 $ 100,121 14,951 $ 179,693 21,502 $ 243,823 17,920 $ 193,613
------- ---------- ------ --------- ------- ---------- ------ ----------
------- ---------- ------ --------- ------- ---------- ------ ----------
Delinquencies as a Percentage of Number of Loans
and Amount Outstanding at End of Period(2) 2.66% 2.64% 3.63% 3.63% 4.77% 4.78% 3.82% 3.71%
Amount in Repossession 4,651 64,929 6,083 55,300 5,686 32,676 4,977 27,818
------- ---------- ------ --------- ------- ---------- ------ ----------
------- ---------- ------ --------- ------- ---------- ------ ----------
</TABLE>
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(1) All amounts and percentages are based on the principal amount scheduled to
be paid on each loan. The information in the table includes previously sold
loans which Arcadia Financial continues to service.
(2) Amounts shown do not include loans which are less than 31 days delinquent.
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<PAGE>
CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31, Six Months
------------------------------------ Ended June 30,
1996 1997 1998 1999
----------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
Average Servicing Portfolio Outstanding During the Period $ 3,015,411 $4,458,977 $ 5,071,996 $ 5,148,176
Average Number of Loans Outstanding During the Period 242,419 362,626 435,712 459,828
Number of Charge-Offs 14,403 24,616 33,441 16,943
Gross Charge-Offs(2) $ 35,642 $ 165,233 $ 255,853 $ 123,835
Recoveries(3) 5,653 9,855 21,614 15,079
----------- ---------- ----------- --------------
Net Losses $ 29,989 $ 155,378 $ 234,239 $ 108,756
----------- ---------- ----------- --------------
----------- ---------- ----------- --------------
Gross Charge-Offs as a Percentage of Average Servicing Portfolio 1.18% 3.71% 5.04% 4.81%
Net Losses as a Percentage of Average Servicing Portfolio 0.99% 3.48% 4.62% 4.23%
</TABLE>
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(1) All amounts and percentages are based on the principal amount scheduled
to be paid on each loan. The information in the table includes
previously sold loans which Arcadia Financial continues to service.
(2) Gross charge-offs represent principal amounts which management
estimated to be uncollectible after the consideration of anticipated
proceeds from the disposition of repossessed assets and selling
expenses.
(3) Includes post-disposition amounts received on previously charged off
loans.
As illustrated in the tables above, Arcadia Financial has experienced an
increase in delinquency, gross charge-off and net loss rates during each of the
three years in the period ended December 31, 1998. Management believes that
these increases are primarily due to changes in Arcadia Financial's portfolio
mix such that it included a larger proportion of loans with higher credit risk
characteristics, as well as the continued seasoning of Arcadia Financial's
existing servicing portfolio to include a greater proportion of loans in the
period of highest probability for delinquencies and defaults (generally six to
14 months from the date of origination). To compensate for the expected
increases in loss and delinquency statistics resulting from the rise in the
proportion of loans with higher credit risk characteristics, Arcadia Financial
took the following measures:
- - implemented a risk-based pricing strategy during 1997 to improve the rate
of return on loan originations;
- - increased its allowance for credit losses to 8.15% at December 31, 1998
from 4.75% and 2.51% at December 31, 1997 and 1996, respectively;
- - tightened its credit and underwriting standards; and
- - expanded its use of computerized credit scoring and behavioral analytics to
better service its portfolio and identify improvements when necessary.
As a result of these analytic enhancements, management has discontinued the
purchase of loans which score within certain risk tiers as the rate of return
historically realized on these loans has not been commensurate with the related
risk. Loans included in these discontinued tiers represented approximately 16%
of Arcadia Financial's servicing portfolio at December 31, 1998 and accounted
for approximately 26% of the delinquent loans outstanding at such date and 34%
of net losses incurred during 1998.
Arcadia Financial's delinquency rate has declined compared to December 31, 1998,
in part because of a recovery from the normal seasonal pressure on collection
efforts which is generally highest in the fourth quarter of the year. Arcadia
Financial also believes that the decrease in the delinquency rate reflects
improvements in its collections and servicing functions implemented during 1998
and the first and second quarters of 1999.
Net losses were also affected during 1997, 1998 and the first and second
quarters of 1999 by changes in Arcadia Financial's repossession disposition
strategy. Beginning in March 1997, Arcadia Financial modified its strategy to
increase the utilization of wholesale disposition channels and made further
modifications in June 1998 to discontinue its retail remarketing operations in
its entirety. As a result, the percentage of repossessed vehicles liquidated
through wholesale liquidation channels increased from 30% in 1996 to 54% in 1997
to 81% in 1998 to 100% in the six months ended June 30, 1999. Although recovery
rates on the sale of vehicles through wholesale channels is generally lower than
those realized through retail
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<PAGE>
distribution channels, Arcadia Financial believes that its decision to
discontinue its retail remarketing operations has enabled it to better manage
its level of repossessed inventory and improve the timing of excess cash
flows released to Arcadia Financial from securitization trusts as a result of
an increase in the speed at which repossessed vehicles can be liquidated. At
June 30, 1999, the average days that vehicles were held in inventory had
fallen to approximately 37 days compared to 46 days at December 31, 1998, 105
days at December 31, 1997 and 119 days at December 31, 1996. The change in
the number and net realizable value of repossessed vehicles at June 30, 1999,
reflects the improvement in the average number of days in inventory and the
lower anticipated recovery rates resulting from the change in Arcadia
Financial's liquidation strategy.
Annualized gross charge-offs and net losses during 1997, 1998 and the six months
ended June 30, 1999 include non-recurring charges of 0.57%, 0.42% and 0.00%,
respectively, primarily due to the impact of write-downs of repossessed
inventory due to revisions to Arcadia Financial's inventory valuation policy.
The loans in Arcadia Financial's servicing portfolio include loans other than
the receivables owned by the Trust, including loans which do not meet the
criteria for sale to the Trust. There can be no assurance that the delinquency,
loan loss or repossession experience of the Trust with respect to the
receivables will be better than, worse than or comparable to the experience set
forth above.
SELECTION CRITERIA
The preliminary initial receivables represent substantially all loans in Arcadia
Financial's portfolio, owned and not serviced for others, that
1. were not more than 30 days past due as of the
preliminary cutoff date,
2. did not have a remaining principal balance as of the preliminary cutoff
date less than $500.00,
3. did not have a final scheduled payment date prior to December 1, 1999,
and
4. were otherwise eligible under criteria established by Arcadia Financial
and Financial Security Assurance Inc.
CERTAIN OTHER CHARACTERISTICS
The preliminary initial receivables
1. had a remaining maturity, as of the Preliminary Cutoff Date, of at
least 3 months, but not more than 84 months,
2. had an original maturity of at least 12 months, but not more than 84
months,
3. had an original principal balance of at least $3,999.00 and not more than
$62,999.96,
4. had a remaining principal balance, as of the Preliminary Cutoff Date, of
at least $572.71 and not more than $62,999.96, and
5. had an APR of at least 8.00% and not more than 24.90%.
Approximately 14.79% of the aggregate principal balance of the preliminary
initial receivables was attributable to loans for the purchase of new financed
vehicles, and approximately 85.21% of the aggregate principal balance was
attributable to loans for the purchase of used financed vehicles. The
preliminary initial receivables were purchased from more than 4,400 dealers. Not
more than 0.43% of the aggregate principal balance of the preliminary initial
receivables as of the preliminary cutoff date was originated by any single
dealer. The ten most significant dealers originated approximately 3.08% of the
aggregate principal balance as of the preliminary cutoff date. Approximately
99.74% of the preliminary initial receivables are simple interest obligations,
and interest on the remaining 0.26% of the preliminary initial receivables is
computed on an actuarial basis, with prepayment rebates computed according to
the Rule of 78's. Neither the Seller, Arcadia Financial nor the Servicer may
substitute other loans for the receivables at any time during the term of the
sale and servicing agreement. The composition and distribution by APR and
geographic concentration of the receivables pool as of the preliminary cutoff
date are set forth in the following tables:
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<PAGE>
COMPOSITION OF THE PRELIMINARY INITIAL RECEIVABLES
AS OF THE PRELIMINARY CUTOFF DATE
<TABLE>
<CAPTION>
Number of Average Weighted Average
Weighted Average Aggregate Principal Receivables Principal Weighted Average Original Scheduled
APR of Receivables Balance in Pool Balance Remaining Term(1) Term(1)
- ----------------- ----------------- ------------- ----------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
17.13% $355,817,158.41 24,673 $14,421.32 66.72 months 67.15 months
</TABLE>
- -------------------
(1) Based on scheduled payments due after the Preliminary Cutoff Date (in
the case of the Weighted Average Remaining Term) and assuming no
prepayments on the Preliminary Initial Receivables.
DISTRIBUTION BY APR OF THE PRELIMINARY INITIAL RECEIVABLES AS OF THE
PRELIMINARY CUTOFF DATE
<TABLE>
<CAPTION>
Aggregate Percent of Aggregate
APR Range (%) Number of Receivables Principal Balance Principal Balance(1)
- ------------------------------------------ --------------------- ------------------ -------------------
<S> <C> <C> <C>
8.00 to 8.99.............................. 113 $ 1,802,642.71 0.51%
9.00 to 9.99.............................. 189 3,277,586.99 0.92%
10.00 to 10.99............................ 366 6,006,431.83 1.69%
11.00 to 11.99............................ 565 9,539,273.91 2.68%
12.00 to 12.99............................ 817 13,453,545.65 3.78%
13.00 to 13.99............................ 1,127 19,049,810.96 5.35%
14.00 to 14.99............................ 1,443 23,698,678.23 6.66%
15.00 to 15.99............................ 1,859 29,352,262.97 8.25%
16.00 to 16.99............................ 3,059 47,525,162.81 13.36%
17.00 to 17.99............................ 4,422 65,462,408.87 18.40%
18.00 to 18.99............................ 4,067 56,712,901.06 15.94%
19.00 to 19.99............................ 3,117 40,017,170.59 11.25%
20.00 to 20.99............................ 2,178 25,663,438.54 7.21%
21.00 to 21.99........................... 897 9,763,566.89 2.74%
22.00 to 24.99............................ 454 4,492,276.40 1.26%
--------------------- ------------------ -------------------
24,673 $ 355,817,158.41 100.00%
--------------------- ------------------ -------------------
--------------------- ------------------ -------------------
</TABLE>
- ---------------------------
(1) The sum of the individual Aggregate Principal Balance percentages may not
total 100.00% due to rounding.
-9-
<PAGE>
GEOGRAPHIC CONCENTRATION OF THE PRELIMINARY INITIAL RECEIVABLES AS OF THE
PRELIMINARY CUTOFF DATE
<TABLE>
<CAPTION>
Percentage of Aggregate
State Number of Receivables Aggregate Principal Balance Principal Balance(1)
- ---------------------------------- ----------------------- ---------------------------- ----------------------
<S> <C> <C> <C>
Texas............................. 3,945 $ 59,744,889.07 16.79%
California........................ 1,783 27,707,698.91 7.79%
Florida........................... 1,868 26,953,662.37 7.58%
Georgia........................... 1,276 18,992,488.09 5.34%
Tennessee......................... 1,110 15,851,611.67 4.45%
South Carolina.................... 989 14,247,056.87 4.00%
Oklahoma.......................... 1,037 14,176,261.76 3.98%
North Carolina.................... 933 13,630,812.41 3.83%
Missouri.......................... 821 11,241,531.56 3.16%
Colorado.......................... 711 10,419,889.86 2.93%
Arizona........................... 632 10,230,293.19 2.88%
Oregon............................ 636 8,972,503.45 2.52%
Massachusetts..................... 602 7,621,861.10 2.14%
Virginia.......................... 483 7,459,451.35 2.10%
Illinois.......................... 507 7,054,886.32 1.98%
New York.......................... 543 6,934,000.79 1.95%
Kentucky.......................... 506 6,862,858.01 1.93%
Nevada............................ 412 6,585,375.40 1.85%
Washington........................ 470 6,487,175.53 1.82%
Ohio.............................. 487 6,471,668.85 1.82%
New Mexico........................ 382 5,964,445.54 1.68%
Utah.............................. 380 5,738,898,02 1.61%
Minnesota......................... 393 5,215,322.65 1.47%
Pennsylvania...................... 308 4,688,110.35 1.32%
Indiana........................... 326 4,499,454.17 1.26%
Michigan.......................... 359 4,240,979.00 1.19%
Wisconsin......................... 319 4,195,377.30 1.18%
Maryland.......................... 257 4,044,146.39 1.14%
Nebraska.......................... 274 3,662,339.16 1.03%
All other states(2)............... 1,924 25,922,109.27 7.28%
----------------------- ---------------------------- ---------------------
24,673 $ 355,817,158.41 100.00%
----------------------- ---------------------------- ---------------------
----------------------- ---------------------------- ---------------------
</TABLE>
(1) The sum of the individual Aggregate Principal Balance percentages may not
total 100.00% due to rounding. (2) No other state comprised more than 1.00%
of the Total Aggregate Principal Balance.
-10-
<PAGE>
DISTRIBUTION OF THE RECEIVABLES PORTFOLIO BY ORIGINAL MATURITY
AS OF THE PRELIMINARY CUTOFF DATE
<TABLE>
<CAPTION>
Original Maturity Range Number of Aggregate Percent of Aggregate
(in months) Receivables Principal Balance Principal Balance(1)
- ----------------------------- --------------- --------------------- ------------------------
<S> <C> <C> <C>
13-24........... 38 $ 249,230.47 0.07%
25-36........... 410 2,996,802.98 0.84%
37-48........... 2,039 18,738,090.83 5.27%
49-60........... 7,000 85,910,020.87 24.14%
61-66........... 1,030 14,796,086.82 4.16%
67-72........... 14,152 233,030,327.56 65.49%
73-78........... 0 0.00 0.00%
79-84........... 4 96,598.88 0.03%
Over 84........... 0 0.00 0.00%
--------------- --------------------- ------------------------
24,673 $ 355,817,158.41 100.00%
--------------- --------------------- ------------------------
--------------- --------------------- ------------------------
</TABLE>
- -------------------------------
(1) Sum may not equal 100% due to rounding.
DISTRIBUTION OF THE RECEIVABLES PORTFOLIO BY REMAINING MATURITY
AS OF THE PRELIMINARY CUTOFF DATE
<TABLE>
<CAPTION>
Remaining Maturity Range Number of Aggregate Percent of Aggregate
(in months) Receivables Principal Balance Principal Balance(1)
- ------------------------------- --------------- -------------------- -----------------------
<S> <C> <C> <C>
13-24............. 38 $ 249,230.47 0.07%
25-36............. 410 2,996,802.98 0.84%
37-48............. 2,040 18,747,630.58 5.27%
49-60............. 7,001 85,925,259.86 24.15%
61-66............. 1,030 14,805,320.62 4.16%
68-72............. 14,150 232,996,315.02 65.48%
73-78............. 0 0.00 0.00%
79-84............. 4 96,598.88 0.03%
Over 84............. 0 0.00 0.00%
--------------- -------------------- -----------------------
24,673 $355,817,158.41 100.00%
--------------- -------------------- -----------------------
--------------- -------------------- -----------------------
</TABLE>
- -------------------------------
(1) Sum may not equal 100% due to rounding.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Prepayment on automotive receivables can be measured relative to a prepayment
standard or model. The model used in this Term Sheet, the Absolute Prepayment
Model, or ABS, represents an assumed rate of prepayment each month relative to
the original number of receivables in a pool of receivables. ABS further assumes
that all the receivables are the same size and amortize at the same rate and
that each receivable in each month of its life will either be paid as scheduled
or be prepaid in full. For example, in a pool of receivables originally
containing 10,000 receivables, a 1% ABS rate means that 100 receivables prepay
each month. ABS does not purport to be an historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any pool of
receivables, including the receivables owned by the Trust.
Because the rate of payment of principal of each class of Notes will depend on
the rate of payment (including prepayments) of the principal balance of the
receivables, final payment of any class of Notes could occur significantly
earlier than the respective final scheduled distribution dates. Reinvestment
risk associated with early payment of the Notes will be borne exclusively by the
noteholders.
The table below captioned "Percent of Initial Note Principal Amount at Various
ABS Percentages" has been prepared on the basis of the characteristics of the
receivables. The table assumes that:
1. the receivables prepay in full at the specified constant percentage of
ABS monthly, with no defaults, losses, delinquencies or repurchases,
-11-
<PAGE>
2. each scheduled monthly payment on the receivables is made on the last day of
each month and each month has 30 days,
3. payments on the Notes are made on each distribution date (and each
distribution date is assumed to be the fifteenth day of each applicable month),
and
4. the Servicer does not exercise its option to purchase the receivables.
The table indicates the projected weighted average life of each class of Notes
and sets forth the percent of the initial principal amount of each class of
Notes that is projected to be outstanding after each of the
distribution dates shown at various constant ABS percentages. The table also
indicates the month in which the Servicer can exercise its optional clean-up
call and the associated weighted average life.
The table also assumes that the receivables have been aggregated into
hypothetical pools with all of the receivables within each pool having the
following characteristics and that the level scheduled monthly payment for each
of the pools (which is based on its aggregate principal balance, APR, original
term to maturity and remaining term to maturity as of the cutoff date) will be
such that each pool will be fully amortized by the end of its remaining term to
maturity. Pool 1 has been modeled with a cutoff date of September 1, 1999, and
Pool 2 is assumed to be delivered one month later.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Original Term Remaining Term
Aggregate to Maturity to Maturity
Pool Principal Balance APR (In Months) (In Months)
---- ----------------- ------ ----------- -------------
<S> <C> <C> <C> <C>
1 $435,000,000 17.13% 67 67
2 $165,000,000 17.13% 67 67
</TABLE>
The actual characteristics and performance of the receivables will differ from
the assumptions used in constructing the table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is unlikely that the receivables will prepay at a constant level of
ABS until maturity or that all of the receivables will prepay at the same level
of ABS.
Moreover, the diverse terms of receivables within each of the hypothetical pools
could produce slower or faster principal distributions than indicated in the
table at the various constant percentages of ABS specified, even if the original
and remaining terms to maturity of the receivables are as assumed. Any
difference between such assumptions and the actual characteristics and
performance of the receivables, or actual prepayment experience, will affect the
percentages of initial amounts outstanding over time and the weighted average
lives of each class of Notes.
-12-
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Distribution Date Class A-1 Notes Class A-2 Notes
- --------------------- ----------------------------------------- ---------------------------------------
0.00% 1.20% 1.60% 2.00% 0.00% 1.20% 1.60% 2.00%
-------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date 100 100 100 100 100 100 100 100
10/15/99 98 96 96 95 100 100 100 100
11/15/99 96 91 89 88 100 100 100 100
12/15/99 94 86 83 81 100 100 100 100
01/15/00 92 81 77 74 100 100 100 100
02/15/00 89 76 71 67 100 100 100 100
03/15/00 87 71 65 60 100 100 100 100
04/15/00 84 66 59 53 100 100 100 100
05/15/00 82 61 54 46 100 100 100 100
06/15/00 79 56 48 40 100 100 100 100
07/15/00 77 51 42 33 100 100 100 100
08/15/00 74 46 36 27 100 100 100 100
09/15/00 72 41 31 20 100 100 100 100
10/15/00 69 36 25 14 100 100 100 100
11/15/00 66 31 19 8 100 100 100 100
12/15/00 64 26 14 1 100 100 100 100
01/15/01 61 22 8 0 100 100 100 92
02/15/01 58 17 3 0 100 100 100 83
03/15/01 55 12 0 0 100 100 96 73
04/15/01 52 7 0 0 100 100 88 64
05/15/01 50 3 0 0 100 100 79 54
06/15/01 47 0 0 0 100 97 71 45
07/15/01 44 0 0 0 100 90 63 36
08/15/01 41 0 0 0 100 83 55 27
09/15/01 37 0 0 0 100 75 47 19
10/15/01 34 0 0 0 100 68 39 10
11/15/01 31 0 0 0 100 61 31 2
12/15/01 28 0 0 0 100 54 24 0
01/15/02 25 0 0 0 100 47 16 0
02/15/02 21 0 0 0 100 40 9 0
03/15/02 18 0 0 0 100 34 2 0
04/15/02 15 0 0 0 100 27 0 0
05/15/02 11 0 0 0 100 20 0 0
06/15/02 8 0 0 0 100 14 0 0
07/15/02 4 0 0 0 100 7 0 0
08/15/02 1 0 0 0 100 1 0 0
09/15/02 0 0 0 0 95 0 0 0
10/15/02 0 0 0 0 89 0 0 0
11/15/02 0 0 0 0 83 0 0 0
12/15/02 0 0 0 0 77 0 0 0
01/15/03 0 0 0 0 71 0 0 0
02/15/03 0 0 0 0 64 0 0 0
03/15/03 0 0 0 0 58 0 0 0
04/15/03 0 0 0 0 51 0 0 0
05/15/03 0 0 0 0 45 0 0 0
06/15/03 0 0 0 0 38 0 0 0
07/15/03 0 0 0 0 31 0 0 0
08/15/03 0 0 0 0 24 0 0 0
09/15/03 0 0 0 0 17 0 0 0
10/15/03 0 0 0 0 10 0 0 0
11/15/03 0 0 0 0 3 0 0 0
12/15/03 0 0 0 0 0 0 0 0
01/15/04 0 0 0 0 0 0 0 0
02/15/04 0 0 0 0 0 0 0 0
03/15/04 0 0 0 0 0 0 0 0
04/15/04 0 0 0 0 0 0 0 0
05/15/04 0 0 0 0 0 0 0 0
06/15/04 0 0 0 0 0 0 0 0
07/15/04 0 0 0 0 0 0 0 0
08/15/04 0 0 0 0 0 0 0 0
09/15/04 0 0 0 0 0 0 0 0
10/15/04 0 0 0 0 0 0 0 0
11/15/04 0 0 0 0 0 0 0 0
12/15/04 0 0 0 0 0 0 0 0
01/15/05 0 0 0 0 0 0 0 0
02/15/05 0 0 0 0 0 0 0 0
03/15/05 0 0 0 0 0 0 0 0
04/15/05 0 0 0 0 0 0 0 0
05/15/05 0 0 0 0 0 0 0 0
06/15/05 0 0 0 0 0 0 0 0
07/15/05 0 0 0 0 0 0 0 0
08/15/05 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1) 1.62 0.88 0.75 0.65 3.61 2.33 2.00 1.73
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment on a Note by the number of years from the
date of the issuance of the Note to the related Distribution Date, (ii)
adding the results and (iii) dividing the sum by the related initial
principal amount of the Note.
THIS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
-13-
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Distribution Date Class A-3 Notes
- ---------------------- ---------------------------------------
0.00% 1.20% 1.60% 2.00%
------- ------- ------- ------
<S> <C> <C> <C> <C>
Closing Date 100 100 100 100
10/15/99 100 100 100 100
11/15/99 100 100 100 100
12/15/99 100 100 100 100
01/15/00 100 100 100 100
02/15/00 100 100 100 100
03/15/00 100 100 100 100
04/15/00 100 100 100 100
05/15/00 100 100 100 100
06/15/00 100 100 100 100
07/15/00 100 100 100 100
08/15/00 100 100 100 100
09/15/00 100 100 100 100
10/15/00 100 100 100 100
11/15/00 100 100 100 100
12/15/00 100 100 100 100
01/15/01 100 100 100 100
02/15/01 100 100 100 100
03/15/01 100 100 100 100
04/15/01 100 100 100 100
05/15/01 100 100 100 100
06/15/01 100 100 100 100
07/15/01 100 100 100 100
08/15/01 100 100 100 100
09/15/01 100 100 100 100
10/15/01 100 100 100 100
11/15/01 100 100 100 100
12/15/01 100 100 100 95
01/15/02 100 100 100 89
02/15/02 100 100 100 84
03/15/02 100 100 100 78
04/15/02 100 100 96 73
05/15/02 100 100 91 68
06/15/02 100 100 86 63
07/15/02 100 100 81 58
08/15/02 100 100 77 53
09/15/02 100 96 72 48
10/15/02 100 92 68 44
11/15/02 100 87 63 39
12/15/02 100 83 59 35
01/15/03 100 79 55 31
02/15/03 100 75 51 27
03/15/03 100 71 47 23
04/15/03 100 67 43 20
05/15/03 100 63 40 17
06/15/03 100 59 36 13
07/15/03 100 55 33 10
08/15/03 100 52 30 8
09/15/03 100 48 27 5
10/15/03 100 45 24 3
11/15/03 100 41 21 1
12/15/03 97 38 18 0
01/15/04 92 35 16 0
02/15/04 86 32 13 0
03/15/04 81 29 11 0
04/15/04 75 26 9 0
05/15/04 69 23 8 0
06/15/04 64 20 6 0
07/15/04 58 18 4 0
08/15/04 52 15 3 0
09/15/04 46 13 2 0
10/15/04 40 11 1 0
11/15/04 34 9 0 0
12/15/04 28 7 0 0
01/15/05 21 5 0 0
02/15/05 15 3 0 0
03/15/05 8 2 0 0
04/15/05 2 0 0 0
05/15/05 0 0 0 0
06/15/05 0 0 0 0
07/15/05 0 0 0 0
08/15/05 0 0 0 0
Weighted Average Life
(years)(1) 4.95 4.06 3.56 3.05
- ------------------------------------------------------------------
</TABLE>
- --------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment on a Note by the number of years from the
date of the issuance of the Note to the related Distribution Date, (ii)
adding the results and (iii) dividing the sum by the related initial
principal amount of the Note.
THIS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
-14-
