<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) June 17, 1998
-------------
UCFC Acceptance Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Louisiana 333-37499 72-123-5336
- - ------------------------------- ----------- -------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
4041 Essen Lane, Baton Rouge, Louisiana 70809
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (504) 924-6007
--------------
N/A
- - --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
------------
Filing of Computational Materials and Consent of Independent Accountants.*
- - ------------------------------------------------------------------------
Pursuant to Rule 424(b) under the Securities Act of 1933, as amended,
UCFC Acceptance Corporation (the "Depositor") is filing a prospectus and
prospectus supplement with the Securities and Exchange Commission relating to
its Home Equity Loan Asset-Backed Certificates, Series 1998-B.
In connection with the offering of the Home Equity Loan Asset-Backed
Certificates, Series 1998-B, Prudential Securities Incorporated prepared certain
materials (the "Computational Materials") some or all of which were distributed
by each of Prudential Securities Incorporated, Bear, Stearns & Co. Inc. and
First Union Capital Markets, a division of Wheat First Securities Corp. (the
"Underwriters") to their potential investors. Although the Depositor provided
the Underwriters with certain information regarding the characteristics of the
Home Equity Loans in the related portfolio, it did not participate in the
preparation of the Computational Materials. The Computational Materials are
attached hereto as Exhibit 99.1.
Also included for filing as Exhibit 23.1 attached hereto is the Consent
of KPMG Peat Marwick LLP, independent auditors for Financial Guaranty Insurance
Company ("FGIC"), insurer of the Offered Certificates. The Financial Statements
of FGIC as of December 31, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997 are attached hereto as Exhibit 99.2.
The Unaudited Interim Financial Statements of FGIC for the three months ended
March 31, 1998 are attached hereto as Exhibit 99.3.
- - --------
* Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Prospectus dated June 17, 1998, and
Prospectus Supplement dated June 17, 1998, of UCFC Acceptance
Corporation, relating to its Home Equity Loan Asset-Backed
Certificates, Series 1998-B.
-2-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
23.1. Consent of KPMG Peat Marwick LLP.
99.1. Computational Materials.
99.2. Audited Financial Statements of Financial Guaranty Insurance
Company.
99.3 Unaudited Interim Financial Statements of Financial Guaranty
Insurance Company.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UCFC ACCEPTANCE CORPORATION
By: /s/ H.C. McCall, III
------------------------
Name: H.C. McCall, III
Title: President
Dated: June 17, 1998
-4-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page
- - ------- ----
23.1. Consent of KPMG Peat Marwick LLP.
99.1. Computational Materials.
99.2. Audited Financial Statements of Financial
Guaranty Insurance Company.
99.3 Unaudited Interim Financial Statements of Financial
Guaranty Insurance Company.
-5-
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Financial Guaranty Insurance Company:
We consent to the use of our report dated January 23, 1998 on the financial
statements of Financial Guaranty Insurance Company as of December 31, 1997 and
December 31, 1996, and for each of the years in the three-year period ended
December 31, 1997 included in the Form 8-K of UCFC Acceptance Corporation (the
"Registrant") which is incorporated by reference in the registration statement
(No. 333-37499), and to the reference to our firm under the heading "Report of
Experts" in the Prospectus Supplement of the Registrant.
/s/ KPMG Peat Marwick LLP
----------------------------
New York, New York
June 17, 1998
<PAGE>
PRELIMINARY
BACKGROUND INFORMATION
UCFC LOAN TRUST 1998-B (fixed-rate collateral only)
---------------------------------------------------
$[138,000,000] Class A-1 FLOATING-RATE CERTIFICATES
(non-SMMEA-eligible)
$[58,000,000] Class A-2 FIXED-RATE CERTIFICATES
(non-SMMEA-eligible)
$[57,000,000] Class A-3 FIXED-RATE CERTIFICATES
(non-SMMEA-eligible)
$[20,000,000] Class A-4 FIXED-RATE CERTIFICATES
(non-SMMEA-eligible)
$[28,000,000] Class A-5 FIXED-RATE CERTIFICATES
(non-SMMEA-eligible)
$[17,000,000] Class A-6 FIXED-RATE CERTIFICATES
(non-SMMEA-eligible)
$[19,500,000] Class A-7 FIXED-RATE CERTIFICATES
(non-SMMEA-eligible)
$[37,500,000] Class A-8 FIXED-RATE CERTIFICATES
Non-Accelerated Senior Bond
(non-SMMEA-eligible)
The information included herein is provided solely by Prudential Securities
Incorporated ("PSI") as underwriter for the UCFC Loan Trust 1998-B transaction,
and not by or as agent for UCFC Acceptance Corp. or any of its affiliates
(collectively, the "Depositor"). The Depositor has not prepared, reviewed or
participated in the preparation hereof, is not responsible for the accuracy
hereof and has not authorized the dissemination hereof. The analysis in this
report is accurate to the best of PSI's knowledge and is based on information
provided by the Depositor. PSI makes no representations as to the accuracy of
such information provided by the Depositor. All opinions and conclusions in this
report reflect PSI's judgment as of this date and are subject to change. All
analyses are based on certain assumptions noted herein and different assumptions
could yield substantially different results. You are cautioned that there is no
universally accepted method for analyzing financial instruments. You should
review the assumptions; there may be differences between these assumptions and
your actual business practices. Further, PSI does not guarantee any results and
there is no guarantee as to the liquidity of the instruments involved in this
analysis. The decision to adopt any strategy remains your responsibility. PSI
(or any of its affiliates) or their officers, directors, analysts or employees
may have positions in securities, commodities or derivative instruments thereon
referred to herein, and may, as principal or agent, buy or sell such securities,
commodities or derivative instruments. In addition, PSI may make a market in the
securities referred to herein. Neither the information nor the opinions
expressed shall be construed to be, or constitute, an offer to sell or buy or a
solicitation of an offer to sell or buy any securities, commodities or
derivative instruments mentioned herein. Finally, PSI has not addressed the
legal, accounting and tax implications of the analysis with respect to you and
PSI strongly urges you to seek advice from your counsel, accountant and tax
advisor.
<PAGE>
UCFC Loan Trust 1998-B -- Home Equity Loan Asset-Backed Certificates
UCFC LOAN TRUST 1998-B PRICING INFORMATION
--------------------------------------------------------
(FIXED-RATE COLLATERAL ONLY)
UCFC Loan Trust 1998-B Lead Manager: Prudential Securities Incorporated
Co-Manager: First Union Capital Markets Group
Co-Manager: Bear, Stearns & Co. Inc.
<TABLE>
<S> <C> <C> <C> <C> <C>
Class: A-1 A-2 A-3 A-4 A-5
Approximate
Face Amount: [$138,000,000] [$58,000,000] [$57,000,000] [$20,000,000] [$28,000,000]
<S> <C> <C>
Coupon: 1M LIBOR + [TBD] bps [---------------------------------TBD-------------------------------]
<S> <C>
Price: [------------------------------------------TBD-------------------------------------------]
Yield: [------------------------------------------TBD-------------------------------------------]
Spread: [------------------------------------------TBD-------------------------------------------]
<S> <C> <C> <C> <C> <C>
Exp Avg Life
to Maturity: [0.90] [2.05] [3.05] [4.12] [5.13]
Exp Avg Life
to 10% Call (Years): [0.90] [2.05] [3.05] [4.12] [5.13]
Exp 1st Prin Pmt: [07/15/98] [02/15/00] [12/15/00] [04/15/02] [12/15/02]
Exp Mat: [02/15/00] [12/15/00] [04/15/02] [12/15/02] [06/15/04]
Exp Mat to 10% Call: [02/15/00] [12/15/00] [04/15/02] [12/15/02] [06/15/04]
Stated Mat: [06/15/11] [09/15/14] [11/15/18] [11/15/20] [11/15/24]
Expected
Rating: AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA
Pricing Speed: [25]% HEP [25]% HEP [25]% HEP [25]% HEP [25]% HEP
<S> <C>
Pricing Date: [------------------------------------------TBD-------------------------------------------]
Investor
Settle Date: [---------------------------------------[06/22/98]---------------------------------------]
<S> <C> <C> <C> <C> <C>
Pmt Delay: 0 days 14 days 14 days 14 days 14 days
<S> <C>
Cut-off Date: [-----------------------------------------06/01/98---------------------------------------]
<S> <C> <C> <C> <C> <C>
Dated Date: [06/19/98] [06/01/98] [06/01/98] [06/01/98] [06/01/98]
Int Pmt: actual/360 30/360 30/360 30/360 30/360
Pmt Terms: Monthly Monthly Monthly Monthly Monthly
1st Int. Pmt Date: 07/15/98 07/15/98 07/15/98 07/15/98 07/15/98
Collateral Type: Fixed-Rate Fixed-Rate Fixed-Rate Fixed-Rate Fixed-Rate
SMMEA
Eligibility: non-SMMEA non-SMMEA non-SMMEA non-SMMEA non-SMMEA
</TABLE>
- - --------------------------------------------------------------------------------
* The Pass-Through Rate on the Class A-1 Certificates will equal to the lesser
of:
1) One Month LIBOR + [TBD] bps
2) Net Funds Cap
Net Funds Cap: A rate equal to the weighted of the Mortgage Rates on the Home
Equity Loans less [0.647]% per annum for servicing fee, trustee
fee and certificate insurer premium.
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE
SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES
INCORPORATED FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
UCFC Loan Trust 1998-B -- Home Equity Loan Asset-Backed Certificates
UCFC LOAN TRUST 1998-B PRICING INFORMATION (continued)
--------------------------------------------------------
(FIXED-RATE COLLATERAL ONLY)
<TABLE>
<S> <C> <C> <C>
Class: A-6 A-7 * A-8
(NAS BOND)
Approximate
Face Amount: [17,000,000] [19,500,000] [37,500,000]
<S> <C>
Coupon: [-----------------------[TBD]---------------------]
Price: [-----------------------[TBD]---------------------]
Yield: [-----------------------[TBD]---------------------]
Spread: [-----------------------[TBD]---------------------]
<S> <C> <C> <C>
Exp Avg Life to Maturity: [7.15] [11.32] [6.35]
Exp Avg Life to 10% call: [6.91] [7.65] [6.14]
Exp 1st Prin Pmt:
(To Maturity) [06/15/04] [06/15/07] [07/15/01]
Exp 1st Prin Pmt: [06/15/04] [02/15/06] [07/15/01]
(To Call)
Exp Mat: [06/15/07] [02/15/ [12/15/13]
Exp Mat to 10% call: [02/15/06] [02/15/06] [02/15/06]
Stated Mat: [09/15/26] [10/15/29] [10/15/29]
Expected Rating: AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA
Pricing Speed: [25]% HEP [25]% HEP [25]% HEP
<S> <C>
Pricing Date: [-----------------------[TBD]---------------------]
Investor Settle Date: [---------------------06/22/98------------------]
<S> <C> <C> <C>
Pmt Delay: 14 days 14 days 14 days
<S> <C>
Cut-off Date: [---------------------06/01/98------------------]
<S> <C> <C> <C>
Dated Date: 06/01/98 06/01/98 06/01/98
Int Pmt: 30/360 30/360 30/360
Pmt Terms: Monthly Monthly Monthly
1st Int. Pmt Date: 07/15/98 07/15/98 07/15/98
Collateral Type: Fixed-Rate Fixed-Rate Fixed-rate
SMMEA Eligibility: non-SMMEA non-SMMEA non-SMMEA
</TABLE>
* Coupon steps up by 50 bps if optional clean-up call is not exercised.
- - -------------------------------------------
Principal Paydown: 1) To the Class A-8 Certificateholders -- the Class A-8
Principal Distribution Amount
2) To the Class A-1 through A-7 Certificates, in
sequential order
Class A-8 Principal
Disbribution Amount: The applicable Class A-8 Principal Percentage
multiplied by the Class A-8 Principal
Pro Rata Distribution Amount for such Payment Date.
THE CLASS A-8 PRINCIPAL PERCENTAGE
--------------------------------
July 1998 to June 2001 (arrow right) 0%
July 2001 to June 2003 (arrow right) 45%
July 2003 to June 2004 (arrow right) 80%
July 2004 to June 2005 (arrow right) 100%
July 2005 and after (arrow right) 300%
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL TERMSHEETS,
AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE PROSPECTUS
SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
UCFC Loan Trust 1998-B -- Home Equity Loan Asset-Backed Certificates
SUMMARY OF TERMS
--------------------------
Title of Securities: UCFC Loan Trust 1998-B, Home Equity
Loan Asset-Backed Certificates Class A-1, A-2, A-3,
A-4, A-5, A-6, A-7, and A-8 Certificates.
Depositor: UCFC Acceptance Corporation.
Servicer: United Companies Lending Corporation.
Originators: The Home Equity Loans were, and any Subsequent Loans
will be, originated, either directly or through
correspondents or mortgage brokers, or purchased and
re-underwritten, by United Companies and certain
subsidiaries and affiliates thereof.
Trustee: Bankers Trust Company of California, N.A.
Aggregate
Certificate Balance: $[375,000,000]
Securities Offered: 100% FGIC-guaranteed, pass-through certificates.
Offering: Public shelf offering -- a prospectus and prospectus
supplement will be distributed after pricing.
Pricing Date: [TBD]
Investor
Settlement Date: [06/22/98]
Form of Certificates: Book-Entry form, same-day funds through DTC, Euroclear
and CEDEL
Pass-Through Rate: 1-Month LIBOR + bps on Class A-1 Certificates *
[TBD]% on Class A-2 Certificates
[TBD]% on Class A-3 Certificates
[TBD]% on Class A-4 Certificates
[TBD]% on Class A-5 Certificates
[TBD]% on Class A-6 Certificates
[TBD]% on Class A-7 Certificates **
[TBD]% on Class A-8 Certificates (NAS Bond)
* Subject to the Net Funds Cap.
** Coupon steps up by 50 bps if optional clean-up call
is not exercised.
Prepayment
Assumption: 25% HEP (2.5% CPR in month 1 with monthly
incremental increases of 2.5% CPR until the speed
reaches 25% CPR in month 10 based on loan
seasoning.) This means that seasoned loans will
start further up on the prepayment curve.
Distribution Date: The 15th day of each month (or, if any such date is
not a business day, the first business day
thereafter) commencing in July 1998. The payment
delay will be zero days for the Class A-1 and 14
days for the Class A-2, A-3, A-4, A-5, A-6, A-7 and
A-8 Certificates.
Interest Accrual
Period: The initial interest accrual period on the Class A-1
Certificates will be from June [19]th until July
14th. In future periods, interest will accrue on the
Class A-1 Certificates at the applicable
Pass-Through Rate from the preceeding Distribution
Date to and including the day prior to the current
Distribution Date.
Interest on the Class A-2 through A-8 Certificates
will accrue from the first day of the preceeding
month until the 30th day of the preceeding month.
Optional
Cleanup Call: The Servicer will have the right to purchase the
Home Equity Loans on any Remittance Date when the
aggregate Loan Balance of the Home Equity Loans
has declined to 10% or less of an amount equal to
the aggregate balances of the Home Equity Loans as
of the Cut-Off Date including the Subsequent Loans.
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL TERMSHEETS,
AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE PROSPECTUS
SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
UCFC Loan Trust 1998-B -- Home Equity Loan Asset-Backed Certificates
Pre-Funding Account: On the closing date, approximately $[80.2]MM will
be deposited in a pre-funding account for the
purchase of additional fixed-rate mortgage loans.
From the closing date until [September] 15, 1998,
the Trust intends to purchase mortgage loans up to
the entire pre-funding amount. Funds remaining the
pre-funding account that total less than $100,000
after this period will be distributed to investors
in the Class A-1 Certificates as a prepayment on
[September] 15, 1998. If the funds remaining in the
pre-funding account total greater than $100,000
after this period, the funds will be distributed on
a pro-rata basis to the investors in the Class A-1
through A-8 Certificates as a prepayment on
[September] 15, 1998. The additional mortgage loans
will be subject to certain aggregate group
characteristics that will be more fully described in
the Prospectus Supplement.
Certificate Insurer: Financial Guaranty Insurance Company ("FGIC").
FGIC's claims-paying ability is rated "AAA" by
Standard & Poor's, "Aaa" by Moody's Investors
Service and "AAA" by Fitch Investors Service, Inc.
Certificate Insurance
Policy: The Certificate Insurance Policy will provide 100%
coverage of timely interest and ultimate principal
payments due on the Certificates.
Credit Enhancement: A combination of:
(i) the use of Net Excess Cashflow to create
overcollateralization; and
(ii) the Certificate Insurance Policy from FGIC.
Note: The required maintenance levels of
overcollateralization will be sized by the surety
provider.
Servicing Fee: 50 basis points per annum.
ERISA Considerations: Subject to the considerations and conditions
described in the Prospectus Supplement, it is
expected that the Certificates may be purchased by
employee benefit plans that are subject to ERISA.
Taxation: REMIC
Legal Investment: None of the Certificates will be SMMEA-eligible.
Certificates Ratings: "AAA" by S&P, "Aaa" by Moody's, and "AAA" by Fitch
IBCA for the Class A-1, A-2, A-3, A-4, A-5, A-6,
A-7 and A-8 Certificates.
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
<TABLE>
<S> <C> <C>
CURRENT BALANCE: $138,000,000.00 DATED DATE: 06/19/98
CURRENT COUPON: 5.696% ucfc98bf FIRST PAYMENT: 07/15/98
FACTOR: 1.0000000000 TOTAL CLASSES: 8
ORIGINAL BALANCE: $138,000,000.00 BOND A1 DISCOUNT MARGIN ACT/360 TABLE YIELD TABLE DATE: 06/22/98
<CAPTION>
ASSUMED CONSTANT LIBOR-1M 5.6563
PRICING SPEED
25.0% 15.00% 18.00% 22.00% 28.00% 32.00% 35.00%
PRICE HEP HEP HEP HEP HEP HEP HEP
<S> <C> <C> <C> <C> <C> <C> <C>
99-24 32.374 24.848 27.317 30.316 34.305 36.692 38.339
99-24+ 30.597 23.542 25.857 28.667 32.406 34.644 36.188
99-25 28.820 22.236 24.396 27.019 30.508 32.597 34.037
99-25+ 27.043 20.931 22.936 25.371 28.611 30.550 31.887
99-26 25.267 19.625 21.477 23.724 26.714 28.503 29.737
99-26+ 23.491 18.321 20.017 22.077 24.817 26.457 27.588
99-27 21.715 17.016 18.558 20.430 22.921 24.411 25.440
99-27+ 19.940 15.712 17.099 18.784 21.025 22.366 23.291
99-28 18.166 14.408 15.641 17.138 19.129 20.321 21.143
99-28+ 16.391 13.104 14.183 15.492 17.234 18.277 18.996
99-29 14.617 11.800 12.725 13.847 15.339 16.233 16.849
99-29+ 12.843 10.497 11.267 12.202 13.445 14.189 14.702
99-30 11.070 9.194 9.810 10.557 11.551 12.146 12.556
99-30+ 9.297 7.892 8.353 8.913 9.658 10.103 10.411
99-31 7.525 6.589 6.896 7.269 7.764 8.061 8.265
99-31+ 5.752 5.287 5.440 5.625 5.872 6.019 6.121
100-00 3.980 3.986 3.984 3.982 3.979 3.978 3.976
100-00+ 2.209 2.684 2.528 2.339 2.087 1.936 1.832
First Payment 0.064 0.064 0.064 0.064 0.064 0.064 0.064
Average Life 0.898 1.240 1.102 0.972 0.839 0.776 0.738
Last Payment 1.647 2.481 2.147 1.814 1.481 1.397 1.231
Mod.Dur. @ 100-00 0.847 1.153 1.031 0.914 0.794 0.736 0.700
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
<TABLE>
<S> <C> <C>
CURRENT BALANCE: $58,000,000.00 DATED DATE: 06/01/98
COUPON: 6.130% ucfc98bf FIRST PAYMENT: 07/15/98
FACTOR: 1.0000000000 TOTAL CLASSES: 8
ORIGINAL BALANCE: $58,000,000.00 YIELD TABLE DATE: 06/22/98
<CAPTION>
PREPAYMENT SPEED
PRICING SPEED
25.0% 15.00% 18.00% 22.00% 28.00% 32.00% 35.00%
PRICE HEP HEP HEP HEP HEP HEP HEP
<S> <C> <C> <C> <C> <C> <C> <C>
99-24 6.215 6.213 6.214 6.214 6.215 6.216 6.217
99-24+ 6.207 6.207 6.207 6.207 6.206 6.206 6.206
99-25 6.198 6.202 6.201 6.199 6.197 6.196 6.195
99-25+ 6.190 6.196 6.194 6.192 6.188 6.186 6.184
99-26 6.181 6.191 6.188 6.184 6.179 6.176 6.173
99-26+ 6.173 6.185 6.181 6.177 6.170 6.165 6.162
99-27 6.165 6.179 6.175 6.169 6.161 6.155 6.151
99-27+ 6.156 6.174 6.168 6.161 6.152 6.145 6.140
99-28 6.148 6.168 6.162 6.154 6.142 6.135 6.129
99-28+ 6.140 6.163 6.155 6.146 6.133 6.125 6.118
99-29 6.131 6.157 6.149 6.139 6.124 6.115 6.108
99-29+ 6.123 6.151 6.143 6.131 6.115 6.104 6.097
99-30 6.115 6.146 6.136 6.124 6.106 6.094 6.086
99-30+ 6.106 6.140 6.130 6.116 6.097 6.084 6.075
99-31 6.098 6.135 6.123 6.109 6.088 6.074 6.064
99-31+ 6.090 6.129 6.117 6.101 6.078 6.064 6.053
100-00 6.081 6.123 6.110 6.094 6.069 6.054 6.042
100-00+ 6.073 6.118 6.104 6.086 6.060 6.044 6.031
100-01 6.065 6.112 6.098 6.079 6.051 6.033 6.020
100-01+ 6.056 6.107 6.091 6.071 6.042 6.023 6.009
100-02 6.048 6.101 6.085 6.064 6.033 6.013 5.999
100-02+ 6.040 6.096 6.078 6.056 6.024 6.003 5.988
100-03 6.031 6.090 6.072 6.048 6.015 5.993 5.977
100-03+ 6.023 6.084 6.065 6.041 6.006 5.983 5.966
100-04 6.015 6.079 6.059 6.033 5.997 5.973 5.955
100-04+ 6.007 6.073 6.053 6.026 5.987 5.963 5.944
100-05 5.998 6.068 6.046 6.018 5.978 5.952 5.933
100-05+ 5.990 6.062 6.040 6.011 5.969 5.942 5.922
100-06 5.982 6.057 6.033 6.003 5.960 5.932 5.912
100-06+ 5.973 6.051 6.027 5.996 5.951 5.922 5.901
100-07 5.965 6.045 6.020 5.988 5.942 5.912 5.890
100-07+ 5.957 6.040 6.014 5.981 5.933 5.902 5.879
First Payment 1.647 2.481 2.147 1.814 1.481 1.397 1.231
Average Life 2.048 3.161 2.704 2.281 1.860 1.662 1.541
Last Payment 2.481 3.897 3.314 2.814 2.231 1.981 1.814
Mod.Dur. @ 100-00 1.869 2.789 2.419 2.068 1.708 1.535 1.429
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
<TABLE>
<S> <C> <C>
CURRENT BALANCE: $57,000,000.00 DATED DATE: 06/01/98
COUPON: 6.235% ucfc98bf FIRST PAYMENT: 07/15/98
FACTOR: 1.0000000000 TOTAL CLASSES: 8
ORIGINAL BALANCE: $57,000,000.00 YIELD TABLE DATE: 06/22/98
<CAPTION>
PREPAYMENT SPEED
PRICING SPEED
25.0% 15.00% 18.00% 22.00% 28.00% 32.00% 35.00%
PRICE HEP HEP HEP HEP HEP HEP HEP
<S> <C> <C> <C> <C> <C> <C> <C>
99-24 6.319 6.318 6.319 6.319 6.320 6.320 6.320
99-24+ 6.313 6.315 6.314 6.314 6.313 6.313 6.312
99-25 6.308 6.311 6.310 6.309 6.307 6.305 6.305
99-25+ 6.302 6.307 6.306 6.303 6.300 6.298 6.297
99-26 6.296 6.303 6.301 6.298 6.294 6.291 6.289
99-26+ 6.290 6.300 6.297 6.293 6.287 6.284 6.281
99-27 6.285 6.296 6.293 6.288 6.281 6.276 6.273
99-27+ 6.279 6.292 6.288 6.283 6.275 6.269 6.265
99-28 6.273 6.288 6.284 6.278 6.268 6.262 6.257
99-28+ 6.267 6.285 6.280 6.273 6.262 6.255 6.250
99-29 6.261 6.281 6.275 6.267 6.255 6.247 6.242
99-29+ 6.256 6.277 6.271 6.262 6.249 6.240 6.234
99-30 6.250 6.273 6.266 6.257 6.242 6.233 6.226
99-30+ 6.244 6.270 6.262 6.252 6.236 6.226 6.218
99-31 6.238 6.266 6.258 6.247 6.230 6.218 6.211
99-31+ 6.233 6.262 6.253 6.242 6.223 6.211 6.203
100-00 6.227 6.258 6.249 6.237 6.217 6.204 6.195
100-00+ 6.221 6.255 6.245 6.231 6.210 6.197 6.187
100-01 6.215 6.251 6.241 6.226 6.204 6.190 6.179
100-01+ 6.209 6.247 6.236 6.221 6.198 6.182 6.171
100-02 6.204 6.243 6.232 6.216 6.191 6.175 6.164
100-02+ 6.198 6.240 6.228 6.211 6.185 6.168 6.156
100-03 6.192 6.236 6.223 6.206 6.178 6.161 6.148
100-03+ 6.186 6.232 6.219 6.201 6.172 6.153 6.140
100-04 6.181 6.229 6.215 6.195 6.166 6.146 6.132
100-04+ 6.175 6.225 6.210 6.190 6.159 6.139 6.125
100-05 6.169 6.221 6.206 6.185 6.153 6.132 6.117
100-05+ 6.163 6.217 6.202 6.180 6.146 6.125 6.109
100-06 6.158 6.214 6.197 6.175 6.140 6.117 6.101
100-06+ 6.152 6.210 6.193 6.170 6.134 6.110 6.093
100-07 6.146 6.206 6.189 6.165 6.127 6.103 6.086
100-07+ 6.140 6.202 6.184 6.160 6.121 6.096 6.078
First Payment 2.481 3.897 3.314 2.814 2.231 1.981 1.814
Average Life 3.053 5.003 4.215 3.471 2.719 2.386 2.194
Last Payment 3.814 6.314 5.314 4.314 3.314 2.814 2.564
Mod.Dur. @ 100-00 2.698 4.165 3.594 3.028 2.428 2.153 1.991
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
<TABLE>
<S> <C> <C>
CURRENT BALANCE: $20,000,000.00 DATED DATE: 06/01/98
COUPON: 6.335% ucfc98bf FIRST PAYMENT: 07/15/98
FACTOR: 1.0000000000 TOTAL CLASSES: 8
ORIGINAL BALANCE: $20,000,000.00 YIELD TABLE DATE: 06/22/98
<CAPTION>
PREPAYMENT SPEED
PRICING SPEED
25.0% 15.00% 18.00% 22.00% 28.00% 32.00% 35.00%
PRICE HEP HEP HEP HEP HEP HEP HEP
<S> <C> <C> <C> <C> <C> <C> <C>
99-24 6.420 6.420 6.420 6.420 6.420 6.420 6.421
99-24+ 6.416 6.417 6.417 6.416 6.415 6.415 6.414
99-25 6.411 6.414 6.413 6.412 6.410 6.409 6.408
99-25+ 6.407 6.411 6.410 6.408 6.405 6.403 6.402
99-26 6.402 6.409 6.407 6.404 6.401 6.397 6.395
99-26+ 6.398 6.406 6.403 6.400 6.396 6.392 6.389
99-27 6.394 6.403 6.400 6.396 6.391 6.386 6.382
99-27+ 6.389 6.400 6.397 6.392 6.386 6.380 6.376
99-28 6.385 6.397 6.393 6.388 6.381 6.374 6.370
99-28+ 6.380 6.394 6.390 6.384 6.376 6.369 6.363
99-29 6.376 6.392 6.387 6.381 6.371 6.363 6.357
99-29+ 6.371 6.389 6.383 6.377 6.366 6.357 6.351
99-30 6.367 6.386 6.380 6.373 6.361 6.352 6.344
99-30+ 6.363 6.383 6.377 6.369 6.356 6.346 6.338
99-31 6.358 6.380 6.374 6.365 6.351 6.340 6.332
99-31+ 6.354 6.378 6.370 6.361 6.346 6.334 6.325
100-00 6.349 6.375 6.367 6.357 6.341 6.329 6.319
100-00+ 6.345 6.372 6.364 6.353 6.336 6.323 6.313
100-01 6.340 6.369 6.360 6.349 6.331 6.317 6.306
100-01+ 6.336 6.366 6.357 6.345 6.326 6.311 6.300
100-02 6.332 6.364 6.354 6.341 6.322 6.306 6.294
100-02+ 6.327 6.361 6.350 6.337 6.317 6.300 6.287
100-03 6.323 6.358 6.347 6.333 6.312 6.294 6.281
100-03+ 6.318 6.355 6.344 6.329 6.307 6.288 6.275
100-04 6.314 6.352 6.341 6.325 6.302 6.283 6.268
100-04+ 6.309 6.350 6.337 6.321 6.297 6.277 6.262
100-05 6.305 6.347 6.334 6.317 6.292 6.271 6.256
100-05+ 6.301 6.344 6.331 6.313 6.287 6.266 6.249
100-06 6.296 6.341 6.327 6.310 6.282 6.260 6.243
100-06+ 6.292 6.338 6.324 6.306 6.277 6.254 6.237
100-07 6.287 6.336 6.321 6.302 6.272 6.248 6.230
100-07+ 6.283 6.333 6.317 6.298 6.267 6.243 6.224
First Payment 3.814 6.314 5.314 4.314 3.314 2.814 2.564
Average Life 4.118 7.090 5.796 4.699 3.642 3.079 2.756
Last Payment 4.481 8.147 6.397 5.147 3.981 3.397 2.897
Mod.Dur. @ 100-00 3.519 5.542 4.709 3.946 3.158 2.716 2.456
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
<TABLE>
<S> <C> <C>
CURRENT BALANCE: $28,000,000.00 DATED DATE: 06/01/98
COUPON: 6.380% ucfc98bf FIRST PAYMENT: 07/15/98
FACTOR: 1.0000000000 TOTAL CLASSES: 8
ORIGINAL BALANCE: $28,000,000.00 YIELD TABLE DATE: 06/22/98
PREPAYMENT SPEED
<CAPTION>
PRICING SPEED
25.0% 15.00% 18.00% 22.00% 28.00% 32.00% 35.00%
PRICE HEP HEP HEP HEP HEP HEP HEP
<S> <C> <C> <C> <C> <C> <C> <C>
99-24 6.466 6.466 6.466 6.466 6.466 6.466 6.466
99-24+ 6.462 6.463 6.463 6.462 6.462 6.461 6.461
99-25 6.458 6.461 6.460 6.459 6.458 6.456 6.456
99-25+ 6.455 6.459 6.458 6.456 6.454 6.452 6.450
99-26 6.451 6.457 6.455 6.453 6.449 6.447 6.445
99-26+ 6.447 6.454 6.453 6.450 6.445 6.442 6.440
99-27 6.444 6.452 6.450 6.446 6.441 6.438 6.435
99-27+ 6.440 6.450 6.447 6.443 6.437 6.433 6.429
99-28 6.436 6.448 6.445 6.440 6.433 6.428 6.424
99-28+ 6.433 6.446 6.442 6.437 6.429 6.424 6.419
99-29 6.429 6.443 6.440 6.433 6.425 6.419 6.414
99-29+ 6.425 6.441 6.437 6.430 6.421 6.414 6.409
99-30 6.422 6.439 6.434 6.427 6.417 6.409 6.403
99-30+ 6.418 6.437 6.432 6.424 6.412 6.405 6.398
99-31 6.414 6.434 6.429 6.420 6.408 6.400 6.393
99-31+ 6.411 6.432 6.427 6.417 6.404 6.395 6.388
100-00 6.407 6.430 6.424 6.414 6.400 6.391 6.383
100-00+ 6.403 6.428 6.421 6.411 6.396 6.386 6.377
100-01 6.400 6.425 6.419 6.407 6.392 6.381 6.372
100-01+ 6.396 6.423 6.416 6.404 6.388 6.377 6.367
100-02 6.392 6.421 6.414 6.401 6.384 6.372 6.362
100-02+ 6.389 6.419 6.411 6.398 6.380 6.367 6.357
100-03 6.385 6.417 6.408 6.394 6.376 6.363 6.351
100-03+ 6.381 6.414 6.406 6.391 6.371 6.358 6.346
100-04 6.378 6.412 6.403 6.388 6.367 6.353 6.341
100-04+ 6.374 6.410 6.401 6.385 6.363 6.349 6.336
100-05 6.370 6.408 6.398 6.382 6.359 6.344 6.331
100-05+ 6.367 6.405 6.395 6.378 6.355 6.339 6.325
100-06 6.363 6.403 6.393 6.375 6.351 6.334 6.320
100-06+ 6.359 6.401 6.390 6.372 6.347 6.330 6.315
100-07 6.356 6.399 6.388 6.369 6.343 6.325 6.310
100-07+ 6.352 6.396 6.385 6.365 6.339 6.320 6.305
First Payment 4.481 8.147 6.397 5.147 3.981 3.397 2.897
Average Life 5.134 9.630 7.848 5.965 4.503 3.857 3.431
Last Payment 5.981 11.231 9.564 6.981 5.147 4.397 3.897
Mod.Dur. @ 100-00 4.247 6.977 5.978 4.811 3.797 3.318 2.990
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
<TABLE>
<S> <C> <C>
CURRENT BALANCE: $17,000,000.00 DATED DATE: 06/01/98
COUPON: 6.560% ucfc98bf FIRST PAYMENT: 07/15/98
FACTOR: 1.0000000000 TOTAL CLASSES: 8
ORIGINAL BALANCE: $17,000,000.00 YIELD TABLE DATE: 06/22/98
<CAPTION>
PREPAYMENT SPEED
**** TO CALL ****
PRICING SPEED
25.0% 15.00% 18.00% 22.00% 28.00% 32.00% 35.00%
PRICE HEP HEP HEP HEP HEP HEP HEP
<S> <C> <C> <C> <C> <C> <C> <C>
99-24 6.649 6.650 6.650 6.649 6.649 6.649 6.649
99-24+ 6.646 6.648 6.647 6.647 6.646 6.645 6.645
99-25 6.644 6.646 6.645 6.644 6.643 6.641 6.640
99-25+ 6.641 6.644 6.643 6.642 6.639 6.637 6.636
99-26 6.638 6.642 6.641 6.639 6.636 6.633 6.632
99-26+ 6.635 6.640 6.639 6.637 6.633 6.630 6.627
99-27 6.632 6.638 6.636 6.634 6.629 6.626 6.623
99-27+ 6.629 6.636 6.634 6.632 6.626 6.622 6.619
99-28 6.626 6.634 6.632 6.629 6.623 6.618 6.615
99-28+ 6.623 6.632 6.630 6.627 6.619 6.614 6.610
99-29 6.620 6.630 6.628 6.624 6.616 6.610 6.606
99-29+ 6.617 6.628 6.626 6.622 6.613 6.606 6.602
99-30 6.615 6.626 6.623 6.619 6.609 6.603 6.598
99-30+ 6.612 6.624 6.621 6.617 6.606 6.599 6.593
99-31 6.609 6.622 6.619 6.614 6.603 6.595 6.589
99-31+ 6.606 6.620 6.617 6.612 6.600 6.591 6.585
100-00 6.603 6.618 6.615 6.609 6.596 6.587 6.581
100-00+ 6.600 6.616 6.613 6.607 6.593 6.583 6.576
100-01 6.597 6.614 6.610 6.604 6.590 6.579 6.572
100-01+ 6.594 6.612 6.608 6.602 6.586 6.576 6.568
100-02 6.591 6.610 6.606 6.599 6.583 6.572 6.563
100-02+ 6.588 6.608 6.604 6.597 6.580 6.568 6.559
100-03 6.586 6.606 6.602 6.594 6.576 6.564 6.555
100-03+ 6.583 6.604 6.599 6.592 6.573 6.560 6.551
100-04 6.580 6.602 6.597 6.589 6.570 6.556 6.546
100-04+ 6.577 6.600 6.595 6.587 6.566 6.552 6.542
100-05 6.574 6.598 6.593 6.584 6.563 6.549 6.538
100-05+ 6.571 6.596 6.591 6.582 6.560 6.545 6.534
100-06 6.568 6.594 6.589 6.579 6.557 6.541 6.529
100-06+ 6.565 6.592 6.586 6.577 6.553 6.537 6.525
100-07 6.563 6.590 6.584 6.574 6.550 6.533 6.521
100-07+ 6.560 6.588 6.582 6.572 6.547 6.529 6.517
First Payment 5.981 11.231 9.564 6.981 5.147 4.397 3.897
Average Life 6.905 11.606 10.078 8.331 5.849 4.855 4.324
Last Payment 7.647 11.647 10.147 8.564 6.731 5.481 4.814
Mod.Dur. @ 100-00 5.381 7.888 7.157 6.226 4.709 4.032 3.651
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
<TABLE>
<S> <C> <C>
CURRENT BALANCE: $19,500,000.00 DATED DATE: 06/01/98
COUPON: 6.695% ucfc98bf FIRST PAYMENT: 07/15/98
FACTOR: 1.0000000000 TOTAL CLASSES: 8
ORIGINAL BALANCE: $19,500,000.00 YIELD TABLE DATE: 06/22/98
<CAPTION>
PREPAYMENT SPEED
**** TO CALL ****
PRICING SPEED
25.0% 15.00% 18.00% 22.00% 28.00% 32.00% 35.00%
PRICE HEP HEP HEP HEP HEP HEP HEP
<S> <C> <C> <C> <C> <C> <C> <C>
99-24 6.787 6.788 6.788 6.787 6.787 6.787 6.787
99-24+ 6.785 6.786 6.785 6.785 6.784 6.784 6.783
99-25 6.782 6.784 6.783 6.782 6.781 6.780 6.779
99-25+ 6.779 6.782 6.781 6.780 6.778 6.777 6.776
99-26 6.776 6.780 6.779 6.778 6.775 6.774 6.772
99-26+ 6.774 6.778 6.777 6.775 6.773 6.770 6.769
99-27 6.771 6.776 6.774 6.773 6.770 6.767 6.765
99-27+ 6.768 6.774 6.772 6.770 6.767 6.764 6.761
99-28 6.766 6.772 6.770 6.768 6.764 6.760 6.758
99-28+ 6.763 6.770 6.768 6.765 6.761 6.757 6.754
99-29 6.760 6.768 6.766 6.763 6.758 6.754 6.751
99-29+ 6.758 6.766 6.764 6.760 6.755 6.751 6.747
99-30 6.755 6.764 6.761 6.758 6.752 6.747 6.744
99-30+ 6.752 6.762 6.759 6.755 6.749 6.744 6.740
99-31 6.750 6.760 6.757 6.753 6.746 6.741 6.736
99-31+ 6.747 6.758 6.755 6.750 6.743 6.737 6.733
100-00 6.744 6.756 6.753 6.748 6.741 6.734 6.729
100-00+ 6.742 6.754 6.751 6.745 6.738 6.731 6.726
100-01 6.739 6.752 6.748 6.743 6.735 6.728 6.722
100-01+ 6.736 6.750 6.746 6.741 6.732 6.724 6.718
100-02 6.734 6.748 6.744 6.738 6.729 6.721 6.715
100-02+ 6.731 6.746 6.742 6.736 6.726 6.718 6.711
100-03 6.728 6.744 6.740 6.733 6.723 6.714 6.708
100-03+ 6.726 6.742 6.737 6.731 6.720 6.711 6.704
100-04 6.723 6.740 6.735 6.728 6.717 6.708 6.701
100-04+ 6.720 6.738 6.733 6.726 6.714 6.705 6.697
100-05 6.717 6.736 6.731 6.723 6.711 6.701 6.693
100-05+ 6.715 6.734 6.729 6.721 6.709 6.698 6.690
100-06 6.712 6.732 6.727 6.718 6.706 6.695 6.686
100-06+ 6.709 6.730 6.724 6.716 6.703 6.692 6.683
100-07 6.707 6.728 6.722 6.714 6.700 6.688 6.679
100-07+ 6.704 6.726 6.720 6.711 6.697 6.685 6.675
First Payment 7.647 11.647 10.147 8.564 6.731 5.481 4.814
Average Life 7.647 11.647 10.147 8.564 6.893 5.918 5.323
Last Payment 7.647 11.647 10.147 8.564 6.897 5.981 5.481
Mod.Dur. @ 100-00 5.805 7.848 7.145 6.322 5.355 4.738 4.341
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
<TABLE>
<S> <C> <C>
CURRENT BALANCE: $37,500,000.00 DATED DATE: 06/01/98
COUPON: 6.320% ucfc98bf FIRST PAYMENT: 07/15/98
FACTOR: 1.0000000000 TOTAL CLASSES: 8
ORIGINAL BALANCE: $37,500,000.00 YIELD TABLE DATE: 06/22/98
<CAPTION>
PREPAYMENT SPEED
**** TO CALL ****
PRICING SPEED
25.0% 15.00% 18.00% 22.00% 28.00% 32.00% 35.00%
PRICE HEP HEP HEP HEP HEP HEP HEP
<S> <C> <C> <C> <C> <C> <C> <C>
99-24 6.405 6.405 6.405 6.405 6.405 6.405 6.405
99-24+ 6.401 6.402 6.402 6.402 6.401 6.401 6.401
99-25 6.398 6.399 6.399 6.398 6.398 6.398 6.397
99-25+ 6.395 6.396 6.396 6.395 6.395 6.394 6.393
99-26 6.392 6.393 6.393 6.392 6.391 6.390 6.390
99-26+ 6.389 6.390 6.390 6.389 6.388 6.387 6.386
99-27 6.386 6.387 6.387 6.386 6.385 6.383 6.382
99-27+ 6.382 6.385 6.384 6.383 6.381 6.380 6.378
99-28 6.379 6.382 6.381 6.380 6.378 6.376 6.375
99-28+ 6.376 6.379 6.378 6.377 6.375 6.373 6.371
99-29 6.373 6.376 6.375 6.374 6.371 6.369 6.367
99-29+ 6.370 6.373 6.372 6.371 6.368 6.365 6.363
99-30 6.366 6.370 6.369 6.368 6.365 6.362 6.360
99-30+ 6.363 6.368 6.366 6.365 6.361 6.358 6.356
99-31 6.360 6.365 6.363 6.362 6.358 6.355 6.352
99-31+ 6.357 6.362 6.360 6.358 6.355 6.351 6.348
100-00 6.354 6.359 6.357 6.355 6.351 6.348 6.345
100-00+ 6.351 6.356 6.355 6.352 6.348 6.344 6.341
100-01 6.347 6.353 6.352 6.349 6.345 6.340 6.337
100-01+ 6.344 6.351 6.349 6.346 6.341 6.337 6.333
100-02 6.341 6.348 6.346 6.343 6.338 6.333 6.330
100-02+ 6.338 6.345 6.343 6.340 6.335 6.330 6.326
100-03 6.335 6.342 6.340 6.337 6.332 6.326 6.322
100-03+ 6.331 6.339 6.337 6.334 6.328 6.323 6.318
100-04 6.328 6.336 6.334 6.331 6.325 6.319 6.315
100-04+ 6.325 6.334 6.331 6.328 6.322 6.315 6.311
100-05 6.322 6.331 6.328 6.325 6.318 6.312 6.307
100-05+ 6.319 6.328 6.325 6.322 6.315 6.308 6.304
100-06 6.316 6.325 6.322 6.319 6.312 6.305 6.300
100-06+ 6.312 6.322 6.319 6.316 6.308 6.301 6.296
100-07 6.309 6.319 6.316 6.313 6.305 6.298 6.292
100-07+ 6.306 6.317 6.313 6.309 6.302 6.294 6.289
First Payment 3.064 3.064 3.064 3.064 3.064 3.147 3.147
Average Life 6.143 7.114 6.797 6.423 5.808 5.311 5.003
Last Payment 7.647 11.647 10.147 8.564 6.897 5.981 5.481
Mod.Dur. @ 100-00 4.901 5.487 5.301 5.075 4.690 4.364 4.154
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
- - -------------------------------------------------------------------------------
- UCFC FIX 1998B
- Cut Off Date of Tape is 06/01/98
- FIXED RATE COLLATERAL
- $294,796,599.65
- Home Equity Loans Summary Report
- - --------------------------------------------------------------------------------
Number of Mortgage Loans: 6,605
Aggregate Unpaid Principal Balance: $294,796,599.65
Aggregate Original Principal Balance: $295,309,409.61
Weighted Average Gross Coupon: 11.195%
Gross Coupon Range: 8.500% - 16.000%
- - --------------------------------------------------------------------------------
Average Unpaid Principal Balance: $44,632.34
Average Original Principal Balance: $44,709.98
Maximum Unpaid Principal Balance: $521,200.00
Minimum Unpaid Principal Balance: $5,037.14
Maximum Original Principal Balance: $521,200.00
Minimum Original Principal Balance: $5,100.00
Weighted Avg. Stated Rem. Term (LPD to Mat/Bln Date): 248.933
Stated Rem Term Range: 48.000 - 360.000
Weighted Average Age (Original Term - Rem Term): 0.800
Age Range: 0.000 - 181.000
Weighted Average Original Term: 249.734
Original Term Range: 48.000 - 360.000
Weighted Average Note LTV: 78.602
Note LTV Range: 3.200% - 100.000%
- - --------------------------------------------------------------------------------
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
State Loans Balance Balance
Alabama 56 2,774,720.25 0.94
Arkansas 202 7,919,869.50 2.69
Arizona 43 2,210,961.25 0.75
California 185 12,820,724.55 4.35
Colorado 40 1,533,370.89 0.52
Connecticut 39 2,489,676.04 0.84
Dist of Col 5 246,413.74 0.08
Delaware 11 798,409.85 0.27
Florida 492 23,218,550.37 7.88
Georgia 248 13,786,146.55 4.68
Iowa 68 2,251,248.40 0.76
Idaho 6 393,424.74 0.13
Illinois 98 3,799,078.38 1.29
Indiana 228 7,608,622.06 2.58
Kentucky 141 5,818,128.67 1.97
Louisiana 785 31,418,765.92 10.66
Massachsetts 29 1,494,572.36 0.51
Maryland 48 2,402,977.52 0.82
Maine 64 3,042,106.13 1.03
Michigan 356 13,340,140.23 4.53
Minnesota 38 1,377,789.89 0.47
Missouri 114 4,696,372.90 1.59
Mississippi 400 16,797,288.40 5.70
North Carolina 370 18,019,643.04 6.11
North Dakota 1 34,844.61 0.01
Nebraska 24 673,643.32 0.23
New Hampshire 38 1,215,609.00 0.41
New Jersey 77 5,257,948.05 1.78
New Mexico 32 1,806,915.68 0.61
Nevada 18 1,043,278.60 0.35
New York 322 16,649,923.15 5.65
Ohio 354 15,065,085.48 5.11
Oklahoma 245 8,841,991.85 3.00
Oregon 21 1,269,905.15 0.43
Pennsylvania 310 12,736,413.10 4.32
Rhode Island 2 120,650.48 0.04
South Carolina 227 10,787,667.73 3.66
Tennessee 318 15,020,219.71 5.10
Texas 250 10,515,174.68 3.57
Utah 26 1,384,443.26 0.47
Virginia 98 4,332,824.47 1.47
Vermont 3 338,000.00 0.11
Washington 23 1,664,885.82 0.56
Wisconsin 94 3,223,233.08 1.09
West Virgina 53 2,431,450.19 0.82
Wyoming 2 99,879.66 0.03
Unknown 1 23,610.95 0.01
- - --------------------------------------------------------------------------
Total............... 6605 $ 294,796,599.65 100.00%
==========================================================================
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
NOTE LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
NOTE Number of Unpaid Aggregate
Loan-To-Value Mortgage Principal Principal
Ratio Loans Balance Balance
<S> <C> <C> <C>
0.000 (less than)Note LTV(less than or equal to) 5.000 1 10,000.00 0.00
5.000 (less than)Note LTV(less than or equal to) 10.000 3 50,380.92 0.02
10.000 (less than)Note LTV(less than or equal to) 15.000 14 217,891.45 0.07
15.000 (less than)Note LTV(less than or equal to) 20.000 34 727,090.06 0.25
20.000 (less than)Note LTV(less than or equal to) 25.000 39 802,193.25 0.27
25.000 (less than)Note LTV(less than or equal to) 30.000 56 1,412,280.22 0.48
30.000 (less than)Note LTV(less than or equal to) 35.000 70 1,761,120.10 0.60
35.000 (less than)Note LTV(less than or equal to) 40.000 80 1,980,420.55 0.67
40.000 (less than)Note LTV(less than or equal to) 45.000 97 2,872,011.68 0.97
45.000 (less than)Note LTV(less than or equal to) 50.000 150 4,473,845.52 1.52
50.000 (less than)Note LTV(less than or equal to) 55.000 204 6,224,040.23 2.11
55.000 (less than)Note LTV(less than or equal to) 60.000 226 7,878,009.23 2.67
60.000 (less than)Note LTV(less than or equal to) 65.000 333 12,397,712.08 4.21
65.000 (less than)Note LTV(less than or equal to) 70.000 457 18,422,171.85 6.25
70.000 (less than)Note LTV(less than or equal to) 75.000 793 33,915,952.73 11.50
75.000 (less than)Note LTV(less than or equal to) 80.000 1385 67,693,527.54 22.96
80.000 (less than)Note LTV(less than or equal to) 85.000 894 39,130,064.59 13.27
85.000 (less than)Note LTV(less than or equal to) 90.000 810 42,311,259.21 14.35
90.000 (less than)Note LTV(less than or equal to) 95.000 424 24,218,583.47 8.22
95.000 (less than)Note LTV(less than or equal to) 100.000 535 28,298,044.97 9.60
- - -----------------------------------------------------------------------------------------------------
Total.................... 6605 $294,796,599.65 100.00%
=====================================================================================================
</TABLE>
GROSS MORTGAGE INTEREST RATE RANGE
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
NOTE Number of Unpaid Aggregate
Loan-To-Value Mortgage Principal Principal
Ratio Loans Balance Balance
<S> <C> <C> <C> <C>
8.25% (less than) Gross Coupon (less than or equal to) 8.50% 11 1,849,260.91 0.63
8.50% (less than) Gross Coupon (less than or equal to) 8.75% 13 1,008,814.84 0.34
8.75% (less than) Gross Coupon (less than or equal to) 9.00% 99 6,708,677.73 2.28
9.00% (less than) Gross Coupon (less than or equal to) 9.25% 43 3,787,532.40 1.28
9.25% (less than) Gross Coupon (less than or equal to) 9.50% 172 10,328,893.20 3.50
9.50% (less than) Gross Coupon (less than or equal to) 9.75% 208 10,619,933.15 3.60
9.75% (less than) Gross Coupon (less than or equal to) 10.00% 404 22,971,373.61 7.79
10.00% (less than) Gross Coupon (less than or equal to) 10.25% 244 12,632,169.36 4.29
10.25% (less than) Gross Coupon (less than or equal to) 10.50% 501 26,039,197.29 8.83
10.50% (less than) Gross Coupon (less than or equal to) 10.75% 328 16,244,209.91 5.51
10.75% (less than) Gross Coupon (less than or equal to) 11.00% 522 27,412,999.10 9.30
11.00% (less than) Gross Coupon (less than or equal to) 11.25% 517 21,247,117.27 7.21
11.25% (less than) Gross Coupon (less than or equal to) 11.50% 770 34,000,063.89 11.53
11.50% (less than) Gross Coupon (less than or equal to) 11.75% 352 14,565,564.72 4.94
11.75% (less than) Gross Coupon (less than or equal to) 12.00% 419 17,394,213.74 5.90
12.00% (less than) Gross Coupon (less than or equal to) 12.25% 578 16,994,415.47 5.76
12.25% (less than) Gross Coupon (less than or equal to) 12.50% 595 21,983,994.83 7.46
12.50% (less than) Gross Coupon (less than or equal to) 12.75% 212 8,984,271.62 3.05
12.75% (less than) Gross Coupon (less than or equal to) 13.00% 118 4,350,401.47 1.48
13.00% (less than) Gross Coupon (less than or equal to) 13.25% 140 4,253,447.68 1.44
13.25% (less than) Gross Coupon (less than or equal to) 13.50% 121 4,381,286.67 1.49
13.50% (less than) Gross Coupon (less than or equal to) 13.75% 35 1,276,669.23 0.43
13.75% (less than) Gross Coupon (less than or equal to) 14.00% 48 1,452,419.38 0.49
14.00% (less than) Gross Coupon (less than or equal to) 14.25% 51 1,241,653.68 0.42
14.25% (less than) Gross Coupon (less than or equal to) 14.50% 22 662,479.72 0.22
14.50% (less than) Gross Coupon (less than or equal to) 14.75% 57 1,640,154.57 0.56
14.75% (less than) Gross Coupon (less than or equal to) 15.00% 14 377,581.59 0.13
15.00% (less than) Gross Coupon (less than or equal to) 15.25% 4 114,500.00 0.04
15.25% (less than) Gross Coupon (less than or equal to) 15.50% 2 147,300.00 0.05
15.50% (less than) Gross Coupon (less than or equal to) 15.75% 4 102,243.64 0.03
15.75% (less than) Gross Coupon (less than or equal to) 16.00% 1 23,758.98 0.01
- - ---------------------------------------------------------------------------------------------------------------
Total.......... 6605 $294,796,599.65 100.00%
===============================================================================================================
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
CURRENT MORTGAGE LOAN AMOUNTS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Current Number of Unpaid Aggregate
Mortgage Loan Mortgage Principal Principal
Principal Balance Loans Balance Balance
<S> <C> <C> <C>
Balance (less than or equal to) 25,000 1,830 33,192,491.94 11.26
25,000 (less than) Balance (less than or equal to) 50,000 2,741 99,010,950.82 33.59
50,000 (less than) Balance (less than or equal to) 75,000 1,296 78,143,003.00 26.51
75,000 (less than) Balance (less than or equal to) 100,000 388 33,286,096.03 11.29
100,000 (less than) Balance (less than or equal to) 150,000 240 28,353,221.84 9.62
150,000 (less than) Balance (less than or equal to) 191,250 61 10,280,793.60 3.49
191,250 (less than) Balance (less than or equal to) 200,000 9 1,752,522.38 0.59
200,000 (less than) Balance (less than or equal to) 250,000 26 5,912,532.50 2.01
250,000 (less than) Balance (less than or equal to) 300,000 7 1,909,645.11 0.65
350,000 (less than) Balance (less than or equal to) 400,000 3 1,139,142.43 0.39
400,000 (less than) Balance (less than or equal to) 450,000 3 1,295,000.00 0.44
500,000 (less than) Balance (less than or equal to) 600,000 1 521,200.00 0.18
- - ------------------------------------------------------------------------------------------------------------------
Total.................... 6605 $294,796,599.65 100.00%
==================================================================================================================
LOAN SUMMARY STRATIFIED BY
OWNER OCCUPANCY
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
Owner Occupied, 1st Mtg 5094 249,024,106.53 84.47
Non-Owner Occupied, 1st Mtg 563 21,546,727.10 7.31
Second Home, 1st Mtg 7 546,165.93 0.19
Owner Occupied, 2nd Mtg 931 22,989,547.85 7.80
Multiple Properties, 1st Mtgs 10 690,052.24 0.23
- - --------------------------------------------------------------------------
Total.................. 6605 $294,796,599.65 100.00%
==========================================================================
AGE OF LOAN
</TABLE>
<TABLE>
<CAPTION>
PercentAge of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
MortgAge Principal Principal
Age Loans Balance Balance
<S> <C> <C> <C>
Age = 0 4,492 197,595,475.92 67.03%
0 (less than) Age (less than or equal to) 12 2,074 94,382,019.05 32.02%
12 (less than) Age (less than or equal to) 24 18 1,588,970.42 0.54%
24 (less than) Age (less than or equal to) 36 5 537,093.71 0.18%
36 (less than) Age (less than or equal to) 48 5 371,505.06 0.13%
72 (less than) Age (less than or equal to) 84 1 90,033.15 0.03%
84 (less than) Age (less than or equal to) 96 5 101,388.79 0.03%
96 (less than) Age (less than or equal to) 108 1 20,136.25 0.01%
108 (less than) Age (less than or equal to) 120 2 42,211.54 0.01%
156 (less than) Age (less than or equal to) 168 1 44,006.78 0.01%
180 (less than) Age (less than or equal to) 192 1 23,758.98 0.01%
- - -----------------------------------------------------------------------------------------------------
Total............ 6,605 294,796,599.65 100.00%
=====================================================================================================
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
MORTGAGED PROPERTIES
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
Deminimus PUD 6 581,886.18 0.20
Duplex 167 7,780,010.45 2.64
Triplex 19 1,069,764.23 0.36
Fourplex or Quadplex 14 856,412.76 0.29
RowHouse 74 2,048,219.21 0.69
Modular Housing 2 60,529.52 0.02
Manufactured Housing 5 251,239.64 0.09
Man.House/Perm 949 35,945,784.27 12.19
PUD 18 1,390,061.34 0.47
Townhouses 12 373,125.82 0.13
Condominiums 79 3,559,932.57 1.21
Single Family Detached 5260 240,879,633.66 81.71
- - --------------------------------------------------------------------------
Total............... 6605 $294,796,599.65 100.00%
==========================================================================
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE
SUCH A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Remaining Term Loans Balance Balance
<S> <C> <C> <C>
36 (less than) Rem Term (less than or equal to) 48 6 137,258.00 0.05%
48 (less than) Rem Term (less than or equal to) 60 101 1,881,684.49 0.64%
60 (less than) Rem Term (less than or equal to) 72 14 171,821.28 0.06%
72 (less than) Rem Term (less than or equal to) 84 60 1,228,217.98 0.42%
84 (less than) Rem Term (less than or equal to) 96 29 760,533.74 0.26%
96 (less than) Rem Term (less than or equal to) 108 8 246,158.53 0.08%
108 (less than) Rem Term (less than or equal to) 120 783 19,911,470.59 6.75%
120 (less than) Rem Term (less than or equal to) 132 4 156,865.90 0.05%
132 (less than) Rem Term (less than or equal to) 144 322 9,275,033.77 3.15%
144 (less than) Rem Term (less than or equal to) 156 4 129,938.74 0.04%
156 (less than) Rem Term (less than or equal to) 168 10 355,982.69 0.12%
168 (less than) Rem Term (less than or equal to) 180 2,776 109,545,343.06 37.16%
180 (less than) Rem Term (less than or equal to) 192 5 204,406.78 0.07%
192 (less than) Rem Term (less than or equal to) 204 4 90,516.68 0.03%
204 (less than) Rem Term (less than or equal to) 216 4 130,723.86 0.04%
216 (less than) Rem Term (less than or equal to) 228 3 113,008.73 0.04%
228 (less than) Rem Term (less than or equal to) 240 775 36,159,066.24 12.27%
240 (less than) Rem Term (less than or equal to) 252 2 87,449.28 0.03%
252 (less than) Rem Term (less than or equal to) 264 1 61,400.00 0.02%
264 (less than) Rem Term (less than or equal to) 276 2 43,215.41 0.01%
276 (less than) Rem Term (less than or equal to) 288 1 90,033.15 0.03%
288 (less than) Rem Term (less than or equal to) 300 70 3,346,278.02 1.14%
300 (less than) Rem Term (less than or equal to) 312 1 123,308.62 0.04%
312 (less than) Rem Term (less than or equal to) 324 2 271,334.44 0.09%
324 (less than) Rem Term (less than or equal to) 336 7 644,015.80 0.22%
336 (less than) Rem Term (less than or equal to) 348 15 1,605,538.69 0.54%
348 (less than) Rem Term (less than or equal to) 360 1,596 108,025,995.18 36.64%
- - --------------------------------------------------------------------------------------------------------
Total............ 6,605 294,796,599.65 100.00%
========================================================================================================
</TABLE>
ORIGINAL TERM
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Original Term Loans Balance Balance
<S> <C> <C> <C>
36 (less than) Orig. Term (less than or equal to) 48 6 137,258.00 0.05%
48 (less than) Orig. Term (less than or equal to) 60 100 1,857,925.51 0.63%
60 (less than) Orig. Term (less than or equal to) 72 13 160,559.02 0.05%
72 (less than) Orig. Term (less than or equal to) 84 57 1,185,265.80 0.40%
84 (less than) Orig. Term (less than or equal to) 96 27 696,156.51 0.24%
96 (less than) Orig. Term (less than or equal to) 108 8 246,158.53 0.08%
108 (less than) Orig. Term (less than or equal to) 120 783 19,905,206.61 6.75%
120 (less than) Orig. Term (less than or equal to) 132 4 144,337.14 0.05%
132 (less than) Orig. Term (less than or equal to) 144 322 9,281,712.67 3.15%
144 (less than) Orig. Term (less than or equal to) 156 4 129,938.74 0.04%
156 (less than) Orig. Term (less than or equal to) 168 5 209,500.00 0.07%
168 (less than) Orig. Term (less than or equal to) 180 2,787 109,822,531.26 37.25%
180 (less than) Orig. Term (less than or equal to) 192 4 160,400.00 0.05%
192 (less than) Orig. Term (less than or equal to) 204 3 67,955.80 0.02%
204 (less than) Orig. Term (less than or equal to) 216 3 115,100.00 0.04%
216 (less than) Orig. Term (less than or equal to) 228 1 23,300.00 0.01%
228 (less than) Orig. Term (less than or equal to) 240 779 36,295,094.83 12.31%
240 (less than) Orig. Term (less than or equal to) 252 1 56,500.00 0.02%
252 (less than) Orig. Term (less than or equal to) 264 1 61,400.00 0.02%
264 (less than) Orig. Term (less than or equal to) 276 1 34,700.00 0.01%
288 (less than) Orig. Term (less than or equal to) 300 70 3,331,978.63 1.13%
312 (less than) Orig. Term (less than or equal to) 324 2 107,623.25 0.04%
324 (less than) Orig. Term (less than or equal to) 336 2 106,922.09 0.04%
336 (less than) Orig. Term (less than or equal to) 348 1 51,776.17 0.02%
348 (less than) Orig. Term (less than or equal to) 360 1,621 110,607,299.09 37.52%
- - -------------------------------------------------------------------------------------------------------------
Total............ 6,605 294,796,599.65 100.00%
=============================================================================================================
</TABLE>
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
<PAGE>
UCFC Loan Trust 1998-B -- Home Equity Loan Asset-Backed Certificates
UCFC LOAN TRUST 1998-B PRICING INFORMATION
--------------------------------------------------------
(FIXED-RATE COLLATERAL ONLY)
UCFC Loan Trust 1998-B Lead Manager: Prudential Securities Incorporated
Co-Manager: First Union Capital Markets Group
Co-Manager: Bear, Stearns & Co. Inc.
<TABLE>
<CAPTION>
Class: A-1 A-2 A-3 A-4 A-5
<S> <C> <C> <C> <C> <C>
Approximate
Face Amount: [$138,000,000] [$58,000,000] [$57,000,000] [$20,000,000] [$28,000,000]
Coupon: 1M LIBOR + [3] bps [6.005]% [6.120]% [6.220]% [6.265]%
Price: [100-00] [100-00] [100-00] [100-00] [100-00]
Yield: [N/A] [5.956]% [6.111]% [6.233]% [6.290]%
Spread: [3]bps [52]bps [62]bps [73]bps [83]bps
Exp Avg Life
to Maturity: [0.90] [2.05] [3.05] [4.12] [5.13]
Exp Avg Life
to 10% Call (Years): [0.90] [2.05] [3.05] [4.12] [5.13]
Exp 1st Prin Pmt: [07/15/98] [02/15/00] [12/15/00] [04/15/02] [12/15/02]
Exp Mat: [02/15/00] [12/15/00] [04/15/02] [12/15/02] [06/15/04]
Exp Mat to 10% Call: [02/15/00] [12/15/00] [04/15/02] [12/15/02] [06/15/04]
Stated Mat: [06/15/11] [09/15/14] [11/15/18] [11/15/20] [11/15/24]
Expected
Rating: AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA
Pricing Speed: [25]% HEP [25]% HEP [25]% HEP [25]% HEP [25]% HEP
<S> <C>
Pricing Date: [---------------------------------------[06/12/98]---------------------------------------]
Investor
Settle Date: [---------------------------------------[06/22/98]---------------------------------------]
<S> <C> <C> <C> <C> <C>
Pmt Delay: 0 days 14 days 14 days 14 days 14 days
<S> <C>
Cut-off Date: [-----------------------------------------06/01/98---------------------------------------]
<S> <C> <C> <C> <C> <C>
Dated Date: [06/19/98] [06/01/98] [06/01/98] [06/01/98] [06/01/98]
Int Pmt: actual/360 30/360 30/360 30/360 30/360
Pmt Terms: Monthly Monthly Monthly Monthly Monthly
1st Int. Pmt Date: 07/15/98 07/15/98 07/15/98 07/15/98 07/15/98
Collateral Type: Fixed-Rate Fixed-Rate Fixed-Rate Fixed-Rate Fixed-Rate
SMMEA
Eligibility: non-SMMEA non-SMMEA non-SMMEA non-SMMEA non-SMMEA
</TABLE>
- - --------------------------------------------------------------------------------
* The Pass-Through Rate on the Class A-1 Certificates will equal to the lesser
of:
1) One Month LIBOR + [3] bps
2) Net Funds Cap
Net Funds Cap: A rate equal to the weighted of the Mortgage Rates
on the Home Equity Loans less [0.647]% per annum for servicing
fee, trustee fee and certificate insurer premium.
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
UCFC Loan Trust 1998-B -- Home Equity Loan Asset-Backed Certificates
UCFC LOAN TRUST 1998-B PRICING INFORMATION (continued)
--------------------------------------------------------
(FIXED-RATE COLLATERAL ONLY)
<TABLE>
<CAPTION>
Class: A-6 A-7 * A-8
(NAS BOND)
<S> <C> <C> <C>
Approximate
Face Amount: [17,000,000] [19,500,000] [37,500,000]
Coupon: [6.395]% [6.530]% [6.180]%
Price: [100-00] [100-00] [100-00]
Yield: [6.435]% [6.576]% [6.211]%
Spread: [95]bps [105]bps [73]bps
Exp Avg Life to Maturity: [7.15] [11.32] [6.35]
Exp Avg Life to 10% call: [6.91] [7.65] [6.14]
Exp 1st Prin Pmt:
(To Maturity) [06/15/04] [06/15/07] [07/15/01]
Exp 1st Prin Pmt: [06/15/04] [02/15/06] [07/15/01]
(To Call)
Exp Mat: [06/15/07] [02/15/14] [12/15/13]
Exp Mat to 10% call: [02/15/06] [02/15/06] [02/15/06]
Stated Mat: [09/15/26] [10/15/29] [10/15/29]
Expected Rating: AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA
Pricing Speed: [25]% HEP [25]% HEP [25]% HEP
<S> <C>
Pricing Date: [------------------------06/12/98------------------------]
Investor Settle Date: [------------------------06/22/98----------------------]
<S> <C> <C> <C>
Pmt Delay: 14 days 14 days 14 days
<S> <C>
Cut-off Date: [------------------------06/01/98----------------------]
<S> <C> <C> <C>
Dated Date: 06/01/98 06/01/98 06/01/98
Int Pmt: 30/360 30/360 30/360
Pmt Terms: Monthly Monthly Monthly
1st Int. Pmt Date: 07/15/98 07/15/98 07/15/98
Collateral Type: Fixed-Rate Fixed-Rate Fixed-rate
SMMEA Eligibility: non-SMMEA non-SMMEA non-SMMEA
</TABLE>
* Coupon steps up by 50 bps if optional clean-up call is not exercised.
- - --------------------------------------------------------------------------------
Principal Paydown: 1) To the Class A-8 Certificateholders --
the Class A-8 Principal Distribution Amount
2) To the Class A-1 through A-7 Certificates,
in sequential order
Class A-8 Principal
Disbribution Amount: The applicable Class A-8 Principal Percentage
multiplied by the Class A-8 Principal Pro Rata
Distribution Amount for such Payment Date.
THE CLASS A-8 PRINCIPAL PERCENTAGE
--------------------------------
July 1998 to June 2001 (arrow right) 0%
July 2001 to June 2003 (arrow right) 45%
July 2003 to June 2004 (arrow right) 80%
July 2004 to June 2005 (arrow right) 100%
July 2005 and after (arrow right) 300%
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
UCFC Loan Trust 1998-B -- Home Equity Loan Asset-Backed Certificates
SUMMARY OF TERMS
--------------------------
Title of Securities: UCFC Loan Trust 1998-B, Home Equity
Loan Asset-Backed Certificates Class A-1, A-2, A-3,
A-4, A-5, A-6, A-7, and A-8 Certificates.
Depositor: UCFC Acceptance Corporation.
Servicer: United Companies Lending Corporation.
Originators: The Home Equity Loans were, and any Subsequent Loans
will be, originated, either directly or through
correspondents or mortgage brokers, or purchased and
re-underwritten, by United Companies and certain
subsidiaries and affiliates thereof.
Trustee: Bankers Trust Company of California, N.A.
Aggregate
Certificate Balance: $[375,000,000]
Securities Offered: 100% FGIC-guaranteed, pass-through certificates.
Offering: Public shelf offering -- a prospectus and prospectus
supplement will be distributed after pricing.
Pricing Date: [06/12/98]
Investor
Settlement Date: [06/22/98]
Form of Certificates: Book-Entry form, same-day funds through DTC, Euroclear
and CEDEL
Pass-Through Rate: 1-Month LIBOR + [3] bps on Class A-1 Certificates *
[6.005]% on Class A-2 Certificates
[6.120]% on Class A-3 Certificates
[6.220]% on Class A-4 Certificates
[6.265]% on Class A-5 Certificates
[6.395]% on Class A-6 Certificates
[6.530]% on Class A-7 Certificates **
[6.180]% on Class A-8 Certificates (NAS Bond)
* Subject to the Net Funds Cap.
** Coupon steps up by 50 bps if optional clean-up call
is not exercised.
Prepayment
Assumption: 25% HEP (2.5% CPR in month 1 with monthly
incremental increases of 2.5% CPR until the speed
reaches 25% CPR in month 10 based on loan
seasoning.) This means that seasoned loans will
start further up on the prepayment curve.
Distribution Date: The 15th day of each month (or, if any such
date is not a business day, the first business day
thereafter) commencing in July 1998. The payment
delay will be zero days for the Class A-1 and 14
days for the Class A-2, A-3, A-4, A-5, A-6, A-7 and
A-8 Certificates.
Interest Accrual
Period: The initial interest accrual period on the Class A-1
Certificates will be from June [19]th until July
14th. In future periods, interest will accrue on the
Class A-1 Certificates at the applicable
Pass-Through Rate from the preceeding Distribution
Date to and including the day prior to the current
Distribution Date.
Interest on the Class A-2 through A-8 Certificates
will accrue from the first day of the preceeding
month until the 30th day of the preceeding month.
Optional
Cleanup Call: The Servicer will have the right to purchase
the Home Equity Loans on any Remittance Date when
the aggregate Loan Balance of the Home Equity Loans
has declined to 10% or less of an amount equal to
the aggregate balances of the Home Equity Loans as
of the Cut-Off Date including the Subsequent Loans.
THIS COLLATERAL TERMSHEET SUPERSEDES ANY PREVIOUS COLLATERAL
TERMSHEETS, AND WILL BE SUPERSEDED BY THE COLLATERAL INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
THIS PAGE MUST BE ACCOMPANIED BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH
A DISCLAIMER, PLEASE CONTACT YOUR PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISOR IMMEDIATELY.
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
Financial Statements
December 31, 1997
(With Independent Auditors' Report Thereon)
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1997
<TABLE>
<S> <C>
Report of Independent Auditors............................................................................. A-1
Balance Sheets............................................................................................. A-2
Statements of Income....................................................................................... A-3
Statements of Stockholder's Equity......................................................................... A-4
Statements of Cash Flows................................................................................... A-5
Notes to Financial Statements.............................................................................. A-6
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder
Financial Guaranty Insurance Company:
We have audited the accompanying balance sheets of Financial Guaranty Insurance
Company as of December 31, 1997 and 1996, and the related statements of income,
stockholder's equity, and cash flows for each of the years in the three year
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Financial Guaranty Insurance
Company as of December 31, 1997 and 1996 and the results of its operations and
its cash flows for each of the years in the three year period then ended in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
January 23, 1998
A-1
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Fixed maturity securities available-for-sale (amortized cost of $2,313,458 in 1997
and $2,190,303 in 1996)............................................................ $2,443,746 $2,250,549
Short-term investments, at cost, which approximates market........................... 76,039 73,839
Cash................................................................................. 802 860
Accrued investment income............................................................ 38,927 37,655
Reinsurance recoverable.............................................................. 8,220 7,015
Prepaid reinsurance premiums......................................................... 154,208 167,683
Deferred policy acquisition costs.................................................... 86,286 91,945
Property and equipment, net of accumulated depreciation ($17,346 in 1997 and $15,333
in 1996)........................................................................... 3,142 4,696
Receivable for securities sold....................................................... -- 379
Prepaid expenses and other assets.................................................... 21,002 19,520
------------ ------------
Total assets.................................................................... $2,832,372 $2,654,141
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Unearned premiums.................................................................. $ 628,553 $ 681,816
Loss and loss adjustment expenses.................................................. 76,926 72,616
Ceded reinsurance balances payable................................................. 3,932 10,561
Accounts payable and accrued expenses.............................................. 26,352 54,165
Payable to Parent.................................................................. -- 1,791
Current federal income taxes payable............................................... 19,335 52,016
Deferred federal income taxes...................................................... 118,522 91,805
Payable for securities purchased................................................... 5,811 4,937
------------ ------------
Total liabilities............................................................... 879,431 969,707
------------ ------------
------------ ------------
Stockholder's Equity:
Common stock, par value $1,500 per share; 10,000 shares authorized, issued and
outstanding..................................................................... 15,000 15,000
Additional paid-in capital......................................................... 383,511 334,011
Net unrealized gains on fixed maturity securities available-for-sale, net of tax... 84,687 39,160
Foreign currency translation adjustment, net of tax................................ (752) (429)
Retained earnings.................................................................. 1,470,495 1,296,692
------------ ------------
Total stockholder's equity...................................................... 1,952,941 1,684,434
------------ ------------
Total liabilities and stockholder's equity...................................... $2,832,372 $2,654,141
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
A-2
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
REVENUES:
Gross premiums written....................................................... $ 95,995 $ 97,027 $ 97,288
Ceded premiums............................................................... (19,780) (29,376) (19,319)
-------- -------- --------
Net premiums written....................................................... 76,215 67,651 77,969
Decrease in net unearned premiums............................................ 39,788 51,314 27,309
-------- -------- --------
Net premiums earned........................................................ 116,003 118,965 105,278
Net investment income........................................................ 127,773 124,635 120,398
Net realized gains........................................................... 16,700 15,022 30,762
-------- -------- --------
Total revenues............................................................. 260,476 258,622 256,438
EXPENSES:
Loss and loss adjustment expenses............................................ 12,539 2,389 (8,426)
Policy acquisition costs..................................................... 12,936 16,327 13,072
Decrease (Increase) in deferred policy acquisition costs..................... 5,659 2,923 (3,940)
Other underwriting expenses.................................................. 14,691 12,508 19,100
-------- -------- --------
Total expenses............................................................. 45,825 34,147 19,806
-------- -------- --------
Income before provision for Federal income taxes............................. 214,651 224,475 236,632
-------- -------- --------
Federal income tax expense:
Current.................................................................... 39,133 41,548 28,913
Deferred................................................................... 1,715 5,318 19,841
-------- -------- --------
Total Federal income tax expense........................................... 40,848 46,866 48,754
-------- -------- --------
Net income................................................................. $173,803 $177,609 $187,878
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes to financial statements.
A-3
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NET UNREALIZED
GAINS (LOSSES) FOREIGN
ON FIXED MATURITY CURRENCY
ADDITIONAL SECURITIES TRANSLATION
COMMON PAID-IN AVAILABLE- ADJUSTMENT, RETAINED
STOCK CAPITAL FOR-SALE, NET OF TAX NET OF TAX EARNINGS
------- ---------- -------------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995........................... $15,000 $334,011 $(41,773) $(1,221) $ 973,706
Net income......................................... -- -- -- -- 187,878
Dividend paid...................................... -- -- -- -- (25,000)
Change in fixed maturity securities available for
sale, net of tax of $56,839...................... -- -- 105,558 -- --
Foreign currency translation adjustment............ -- -- -- (278) --
------- ---------- ---------- ----------- ----------
Balance, December 31, 1995......................... 15,000 334,011 63,785 (1,499) 1,136,584
------- ---------- ---------- ----------- ----------
Net Income......................................... -- -- -- -- 177,609
Dividend paid...................................... -- -- -- -- (17,500)
Change in fixed maturity securities available for
sale, net of tax of ($13,260).................... -- -- (24,625) -- --
Foreign currency translation adjustment............ -- -- -- 1,070 --
------- ---------- ---------- ----------- ----------
Balance at December 31, 1996....................... 15,000 334,011 39,160 (429) 1,296,692
------- ---------- ---------- ----------- ----------
Net Income......................................... -- -- -- -- 173,803
Capital contribution............................... -- 49,500 -- -- --
Change in fixed maturity securities available for
sale, net of tax of $24,516...................... -- -- 45,527 -- --
Foreign currency translation adjustment............ -- -- -- (323) --
------- ---------- ---------- ----------- ----------
Balance at December 31, 1997....................... $15,000 $383,511 $ 84,687 ($ 752) $1,470,495
------- ---------- ---------- ----------- ----------
------- ---------- ---------- ----------- ----------
</TABLE>
See accompanying notes to financial statements.
A-4
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................................................................ $ 173,803 $ 177,609 $ 187,878
Adjustments to reconcile net income to net cash provided by operating
activities:
Change in unearned premiums............................................. (53,263) (45,719) (29,890)
Change in loss and loss adjustment expense reserves..................... 4,310 (5,192) (20,938)
Depreciation of property and equipment.................................. 2,013 2,472 2,348
Change in reinsurance receivable........................................ (1,205) 657 6,800
Change in prepaid reinsurance premiums.................................. 13,475 (5,596) 2,581
Change in foreign currency translation adjustment....................... (497) 1,646 (427)
Policy acquisition costs deferred....................................... (12,936) (16,327) (16,219)
Amortization of deferred policy acquisition costs....................... 18,595 19,250 12,279
Change in accrued investment income, and prepaid expenses and other
assets............................................................... (2,754) (7,201) 2,906
Change in other liabilities............................................. (36,233) 30,117 (12,946)
Change in deferred income taxes......................................... 1,715 5,318 19,841
Amortization of fixed maturity securities............................... 2,698 792 1,922
Change in current income taxes payable.................................. (32,681) 720 (30,827)
Net realized gains on investments....................................... (16,700) (15,022) (30,762)
---------- ---------- ---------
Net cash provided by operating activities............................... 60,340 143,524 94,546
---------- ---------- ---------
INVESTING ACTIVITIES:
Sales and maturities of fixed maturity securities......................... 741,604 891,643 836,103
Purchases of fixed maturity securities.................................... (848,843) (1,033,345) (891,108)
Purchases, sales and maturities of short-term investments, net............ (2,200) 17,193 (15,358)
Purchases of property and equipment, net.................................. (459) (854) (750)
---------- ---------- ---------
Net cash used in investing activities..................................... (109,898) (125,363) (71,113)
---------- ---------- ---------
FINANCING ACTIVITIES:
Capital Contributions..................................................... 49,500 -- --
Dividends paid............................................................ -- (17,500) (25,000)
---------- ---------- ---------
Net cash provided by financing activities................................. 49,500 (17,500) (25,000)
---------- ---------- ---------
(Decrease) Increase in cash............................................... (58) 661 (1,567)
Cash at beginning of year................................................. 860 199 1,766
---------- ---------- ---------
Cash at end of year....................................................... $ 802 $ 860 $ 199
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
See accompanying notes to financial statements.
A-5
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS
Financial Guaranty Insurance Company (the 'Company') is a wholly-owned
insurance subsidiary of FGIC Corporation (the 'Parent'). The Parent is owned
approximately ninety-nine percent by General Electric Capital Corporation ('GE
Capital') and approximately one percent by Sumitomo Marine and Fire Insurance
Company, Ltd. The Company provides financial guaranty insurance on newly issued
municipal bonds and municipal bonds trading in the secondary market, the latter
including bonds held by unit investment trusts and mutual funds. The Company
also insures structured debt issues outside the municipal market. Approximately
86% of the business written since inception by the Company has been municipal
bond insurance.
The Company insures only those securities that, in its judgment, are of
investment grade quality. Municipal bond insurance written by the Company
insures the full and timely payment of principal and interest when due on
scheduled maturity, sinking fund or other mandatory redemption and interest
payment dates to the holders of municipal securities. The Company's insurance
policies do not provide for accelerated payment of the principal of, or interest
on, the bond insured in the case of a payment default. If the issuer of a
Company-insured bond defaults on its obligation to pay debt service, the Company
will make scheduled interest and principal payments as due and is subrogated to
the rights of bondholders to the extent of payments made by it.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared on the basis of
generally accepted accounting principles ('GAAP') which differ in certain
respects from the accounting practices prescribed or permitted by regulatory
authorities (see Note 3). The prior years financial statements have been
reclassified to conform to the 1997 presentation. Significant accounting
policies are as follows:
Investments
The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards No. 115 ('SFAS 115'), 'Accounting for Certain
Investments in Debt and Equity Securities.' The Statement defines three
categories for classification of debt securities and the related accounting
treatment for each respective category. The Company has determined that its
fixed maturity securities portfolio should be classified as available-for-sale.
Under SFAS 115, securities held as available-for-sale are recorded at fair value
and unrealized holding gains/losses are recorded as a separate component of
stockholder's equity, net of applicable income taxes.
Short-term investments are carried at cost, which approximates fair value.
Bond discounts and premiums are amortized over the remaining terms of the
securities. Realized gains or losses on the sale of investments are determined
on the basis of specific identification.
Premium Revenue Recognition
Premiums for policies where premiums are collected in a single payment at
policy inception are earned over the period at risk, based on the total exposure
outstanding at any point in time. Financial guaranty insurance policies exposure
generally declines according to predetermined schedules. For policies with
premiums that are collected periodically, premiums are reflected in income pro
rata over the period covered by the premium payment.
A-6
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Policy Acquisition Costs
Policy acquisition costs include only those expenses that relate directly
to premium production. Such costs include compensation of employees involved in
underwriting, marketing and policy issuance functions, rating agency fees, state
premium taxes and certain other underwriting expenses, offset by ceding
commission income on premiums ceded to reinsurers (see Note 6). Net acquisition
costs are deferred and amortized over the period in which the related premiums
are earned. Anticipated loss and loss adjustment expenses are considered in
determining the recoverability of acquisition costs.
Loss and Loss Adjustment Expenses
Provision for loss and loss adjustment expenses is made in an amount equal
to the present value of unpaid principal and interest and other payments due
under insured risks at the balance sheet date for which, in management's
judgment, the likelihood of default is probable. Such reserves amounted to $76.9
million and $72.6 million at December 31, 1997 and 1996, respectively. As of
December 31, 1997 and 1996, such reserves included $35.1 million and $28.9
million, respectively, established based on an evaluation of the insured
portfolio in light of current economic conditions and other relevant factors. As
of December 31, 1997 and 1996, case-basis loss and loss adjustment expense
reserves were $41.8 million and $43.7 million, respectively. Loss and loss
adjustment expenses include amounts discounted at an interest rate between 5.9%
and 6.0% in 1997 and between 6.5% and 6.6% in 1996. The discount rate used is
based upon the risk free rate for the average maturity of the applicable bond
sector. The reserve for loss and loss adjustment expenses is necessarily based
upon estimates, however, in management's opinion the reserves for loss and loss
adjustment expenses is adequate. However, actual results will likely differ from
those estimates.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. These temporary differences relate principally to unrealized gains
(losses) on fixed maturity securities available-for-sale, premium revenue
recognition, deferred acquisition costs and deferred compensation. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Financial guaranty insurance companies are permitted to deduct from taxable
income, subject to certain limitations, amounts added to statutory contingency
reserves (see Note 3). The amounts deducted must be included in taxable income
upon their release from the reserves or upon earlier release of such amounts
from such reserves to cover excess losses as permitted by insurance regulators.
The amounts deducted are allowed as deductions from taxable income only to the
extent that U.S. government non-interest bearing tax and loss bonds are
purchased and held in an amount equal to the tax benefit attributable to such
deductions.
Property and Equipment
Property and equipment consists of furniture, fixtures, equipment and
leasehold improvements which are recorded at cost and are charged to income over
their estimated service lives. Office furniture and equipment are depreciated
straight-line over five years. Leasehold improvements are amortized over their
estimated service life or over the life of the lease, whichever is shorter.
Computer equipment and software are depreciated over three years. Maintenance
and repairs are charged to expense as incurred.
A-7
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Foreign Currency Translation
The Company has established foreign branches in France and the United
Kingdom and determined that the functional currencies of these branches are
local currencies. Accordingly, the assets and liabilities of these foreign
branches are translated into U.S. dollars at the rates of exchange existing at
December 31, 1997 and 1996 and revenues and expenses are translated at average
monthly exchange rates. The cumulative translation loss at December 31, 1997 and
1996 was $0.7 million and $0.4 million, respectively, net of tax, and is
reported as a separate component of stockholder's equity.
3. STATUTORY ACCOUNTING PRACTICES
The financial statements are prepared on the basis of GAAP, which differs
in certain respects from accounting practices prescribed or permitted by state
insurance regulatory authorities. The following are the significant ways in
which statutory-basis accounting practices differ from GAAP:
(a) premiums are earned directly in proportion to the scheduled
principal and interest payments rather than in proportion to the total
exposure outstanding at any point in time.
(b) policy acquisition costs are charged to current operations as
incurred rather than as related premiums are earned;
(c) a contingency reserve is computed on the basis of statutory
requirements for the security of all policyholders, regardless of whether
loss contingencies actually exist, whereas under GAAP, a reserve is
established based on an ultimate estimate of exposure;
(d) certain assets designated as non-admitted assets are charged
directly against surplus but are reflected as assets under GAAP, if
recoverable;
(e) federal income taxes are only provided with respect to taxable
income for which income taxes are currently payable, while under GAAP taxes
are also provided for differences between the financial reporting and the
tax bases of assets and liabilities;
(f) purchases of tax and loss bonds are reflected as admitted assets,
while under GAAP they are recorded as federal income tax payments; and
(g) all fixed income investments are carried at amortized cost rather
than at fair value for securities classified as available-for-sale under
GAAP.
A-8
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The following is a reconciliation of net income and stockholder's equity
presented on a GAAP basis to the corresponding amounts reported on a
statutory-basis for the periods indicated below (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1997 1996 1995
------------------------- ------------------------- -------------------------
NET STOCKHOLDER'S NET STOCKHOLDER'S NET STOCKHOLDER'S
INCOME EQUITY INCOME EQUITY INCOME EQUITY
-------- ------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
GAAP basis amount........................ $173,803 $ 1,952,941 $177,609 $ 1,684,434 $187,878 $ 1,547,881
Premium revenue recognition.............. (4,924) (181,209) (9,358) (176,285) (22,555) (166,927)
Deferral of acquisition costs............ 5,659 (86,286) 2,923 (91,945) (3,940) (94,868)
Contingency reserve...................... -- (540,677) -- (460,973) -- (386,564)
Contingency reserve tax deduction (see
Note 2)................................ -- 95,185 -- 85,176 -- 78,196
Non-admitted assets...................... -- (2,593) -- (3,879) -- (5,731)
Case basis loss reserves................. 1,377 (1,872) (3,197) (3,249) 4,048 (52)
Portfolio loss reserves.................. 5,000 29,000 -- 24,000 (22,100) 24,000
Deferral of income taxes................. 1,715 72,260 5,317 70,719 19,842 64,825
Unrealized (gains) on fixed maturity
securities held at fair value, net of
tax.................................... -- (84,687) -- (39,160) -- (63,785)
Recognition of profit commission......... (1,203) (7,388) (441) (6,185) 3,096 (5,744)
Allocation of tax benefits due to
Parent's net operating loss to the
Company (see Note 5)................... 313 10,916 313 10,603 (637) 10,290
-------- ------------- -------- ------------- -------- -------------
Statutory-basis amount.............. $181,740 $ 1,255,590 $173,166 $ 1,093,256 $166,906 $ 1,001,521
-------- ------------- -------- ------------- -------- -------------
-------- ------------- -------- ------------- -------- -------------
</TABLE>
A-9
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. INVESTMENTS
Investments in fixed maturity securities carried at fair value of $3.1
million and $3.1 million as of December 31, 1997 and 1996, respectively, were on
deposit with various regulatory authorities as required by law.
The amortized cost and fair values of short-term investments and of
investments in fixed maturity securities classified as available-for-sale are as
follows (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING FAIR
1997 COST GAINS LOSSES VALUE
- - ---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. government
corporations and agencies.................................. $ 11,539 $ 185 $ -- $ 11,724
Obligations of states and political subdivisions............. 2,272,225 130,183 655 2,401,753
Debt securities issued by foreign governments................ 29,694 603 28 30,269
---------- ---------- ---------- ----------
Investments available-for-sale............................... 2,313,458 130,971 683 2,443,746
Short-term investments....................................... 76,039 -- -- 76,039
---------- ---------- ---------- ----------
Total........................................................ $2,389,497 $ 130,971 $683 $2,519,785
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The amortized cost and fair values of short-term investments and of
investments in fixed maturity securities available-for-sale at December 31,
1997, by contractual maturity date, are shown below. Expected maturities may
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
1997 COST VALUE
- - ---- ---------- ----------
<S> <C> <C>
Due in one year or less........................................... $ 85,199 $ 85,395
Due after one year through five years............................. 61,168 62,955
Due after five years through ten years............................ 589,772 619,972
Due after ten years through twenty years.......................... 1,604,167 1,700,193
Due after twenty years............................................ 49,191 51,270
---------- ----------
Total............................................................. $2,389,497 $2,519,785
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING FAIR
1996 COST GAINS LOSSES VALUE
- - ---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. government
corporations and agencies.................................. $ 57,987 $ 373 $ 1 $ 58,359
Obligations of states and political subdivisions............. 2,098,486 65,254 4,854 2,158,886
Debt securities issued by foreign governments................ 33,830 -- 526 33,304
---------- ---------- ---------- ----------
Investments available-for-sale............................... 2,190,303 65,627 5,381 2,250,549
Short-term investments....................................... 73,839 -- -- 73,839
---------- ---------- ---------- ----------
Total........................................................ $2,264,142 $ 65,627 $5,381 $2,324,388
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
In 1997, 1996 and 1995, proceeds from sales and maturities of investments
in fixed maturity securities available-for-sale carried at fair value were
$741.6 million, $891.6 million, and $836.1 million, respectively. For 1997, 1996
and 1995 gross gains of $19.1 million, $19.8 million and $36.3 million
respectively, and gross losses of $2.4 million, $4.8 million and $5.5 million
respectively, were realized on such sales.
A-10
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. INVESTMENTS--(CONTINUED)
Net investment income of the Company is derived from the following sources
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Income from fixed maturity securities $122,372 $119,290 $112,684
Income from short-term investments........................................... 6,366 6,423 8,450
-------- -------- --------
Total investment income...................................................... 128,738 125,713 121,134
Investment expenses.......................................................... 965 1,078 736
-------- -------- --------
Net investment income........................................................ $127,773 $124,635 $120,398
-------- -------- --------
-------- -------- --------
</TABLE>
As of December 31, 1997, the Company did not have more than 10% of its
investment portfolio concentrated in a single issuer or industry.
5. INCOME TAXES
The Company files a federal tax return as part of the consolidated return
of General Electric Capital Corporation ('GE Capital'). Under a tax sharing
agreement with GE Capital, taxes are allocated to the Company and the Parent
based upon their respective contributions to consolidated net income. The
Company also has a separate tax sharing agreement with its Parent. Under this
agreement the Company can utilize its Parent's net operating loss to offset
taxable income on a stand-alone basis. The Company's effective federal corporate
tax rate (19.0 percent in 1997, 20.8 percent in 1996 and 20.6 percent in 1995)
is less than the corporate tax rate on ordinary income of 35 percent in 1997,
1996 and 1995.
Federal income tax expense relating to operations of the Company for 1997,
1996 and 1995 is comprised of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Current tax expense.......................................................... $ 39,133 $ 41,548 $ 28,913
Deferred tax expense......................................................... 1,715 5,318 19,841
-------- -------- --------
Federal income tax expense................................................... $ 40,848 $ 46,866 $ 48,754
-------- -------- --------
-------- -------- --------
</TABLE>
The following is a reconciliation of federal income taxes computed at the
statutory rate and the provision for federal income taxes (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Income taxes computed on income before provision for federal income taxes, at
the statutory rate......................................................... $ 75,128 $ 78,566 $ 82,821
Tax effect of:
Tax-exempt interest........................................................ (34,508) (32,609) (30,630)
Other, net................................................................. 228 909 (3,437)
-------- -------- --------
Provision for income taxes................................................... $ 40,848 $ 46,866 $ 48,754
-------- -------- --------
-------- -------- --------
</TABLE>
A-11
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. INCOME TAXES--(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the net deferred tax liability or asset at December 31, 1997 and
1996 are presented below (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Loss reserves................................................................. $ 10,999 $ 9,249
Deferred compensation......................................................... 2,242 2,531
Tax over book capital gains................................................... 2,996 2,144
Other......................................................................... 2,260 2,601
-------- --------
Total gross deferred tax assets................................................. 18,497 16,525
-------- --------
Deferred tax liabilities:
Unrealized gains on fixed maturity securities, available-for-sale............. 45,601 21,086
Deferred acquisition costs.................................................... 30,200 32,181
Premium revenue recognition................................................... 40,103 37,159
Rate differential on tax and loss bonds....................................... 9,454 9,454
Other......................................................................... 11,661 8,450
-------- --------
Total gross deferred tax liabilities............................................ 137,019 108,330
-------- --------
Net deferred tax liability...................................................... $118,522 $ 91,805
-------- --------
-------- --------
</TABLE>
Based upon the level of historical taxable income, projections of future
taxable income over the periods in which the deferred tax assets are deductible
and the estimated reversal of future taxable temporary differences, the Company
believes it is more likely than not that it will realize the benefits of these
deductible differences and has not established a valuation allowance at December
31, 1997 and 1996. The Company anticipates that the related deferred tax asset
will be realized based on future profitable business.
Total federal income tax payments during 1997, 1996 and 1995 were $71.8
million, $33.9 million, and $59.8 million, respectively.
6. REINSURANCE
The Company reinsures portions of its risk with other insurance companies
through quota share reinsurance treaties and, where warranted, on a facultative
basis. This process serves to limit the Company's exposure on risks
underwritten. In the event that any or all of the reinsuring companies were
unable to meet their obligations, the Company would be liable for such defaulted
amounts. The Company evaluates the financial condition of its reinsurers and
monitors concentrations of credit risk arising from activities or economic
characteristics of the reinsurers to minimize its exposure to significant losses
from reinsurer insolvencies. The Company holds collateral under reinsurance
agreements in the form of letters of credit and trust agreements in various
amounts with various reinsurers totaling $37.0 million that can be drawn on in
the event of default.
Net premiums earned are presented net of ceded earned premiums of $33.3
million, $23.7 million and $21.9 million for the years ended December 31, 1997,
1996 and 1995, respectively. Loss and loss adjustment expenses incurred are
presented net of ceded losses of $0.2 million, $(0.8) million and $1.1 million
for the years ended December 31, 1997, 1996 and 1995, respectively.
A-12
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. LOSS AND LOSS ADJUSTMENT EXPENSES
Activity in the reserve for loss and loss adjustment expenses is summarized
as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Balance at January 1,........................................................ $ 72,616 $ 77,808 $ 98,746
Less reinsurance recoverable............................................... 7,015 (7,672) 14,472
-------- -------- --------
Net balance at January 1,.................................................. 65,601 70,136 84,274
Incurred related to:
Current year................................................................. 1,047 -- 26,681
Prior years.................................................................. 6,492 2,389 (1,207)
Portfolio reserves........................................................... 5,000 -- (33,900)
-------- -------- --------
Total Incurred............................................................... 12,539 2,389 (8,426)
-------- -------- --------
Paid related to:
Current year................................................................. (1,047) -- (197)
Prior years.................................................................. (8,387) (6,924) (5,515)
-------- -------- --------
Total Paid................................................................... (9,434) (6,924) (5,712)
-------- -------- --------
Net balance at December 31,.................................................. 68,706 65,601 70,136
Plus reinsurance recoverable................................................. 8,220 7,015 7,672
-------- -------- --------
Balance at December 31,...................................................... $ 76,926 $ 72,616 $ 77,808
-------- -------- --------
-------- -------- --------
</TABLE>
The changes in incurred portfolio and case reserves principally relates to
business written in prior years. The changes are based upon an evaluation of the
insured portfolio in light of current economic conditions and other relevant
factors.
8. RELATED PARTY TRANSACTIONS
The Company has various agreements with subsidiaries of General Electric
Company ('GE') and GE Capital. These business transactions include appraisal
fees and due diligence costs associated with underwriting structured finance
mortgage-backed security business; payroll and office expenses incurred by the
Company's international branch offices but processed by a GE subsidiary;
investment fees pertaining to the management of the Company's investment
portfolio; and telecommunication service charges. Approximately $4.9 million,
$8.1 million and $3.2 million in expenses were incurred in 1997, 1996 and 1995,
respectively, related to such transactions.
The Company also insured certain non-municipal issues with GE Capital
involvement as sponsor of the insured securitization and/or servicer of the
underlying assets. For some of these issues, GE Capital also provides first loss
protection in the event of default. Gross premiums written on these issues
amounted to $0.5 million in 1997, $0.6 million in 1996, and $1.3 million in
1995. As of December 31, 1997, par outstanding on these deals before reinsurance
was $112.9 million.
The Company insures bond issues and securities in trusts that were
sponsored by affiliates of GE (approximately 1 percent of gross premiums
written) in 1997, 1996 and 1995.
9. COMPENSATION PLANS
Officers and other key employees of the Company participate in the Parent's
incentive compensation, deferred compensation and profit sharing plans. Expenses
incurred by the Company under compensation plans and bonuses amounted to $5.0
million, $4.5 million and $7.5 million in 1997, 1996 and 1995, respectively,
before deduction for related tax benefits.
A-13
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
10. DIVIDENDS
Under New York insurance law, the Company may pay a dividend only from
earned surplus subject to the following limitations: (a) statutory surplus after
such dividend may not be less than the minimum required paid-in capital, which
was $66.4 million in 1997 and 1996, and (b) dividends may not exceed the lesser
of 10 percent of its surplus or 100 percent of adjusted net investment income,
as defined by New York insurance law, for the 12 month period ending on the
preceding December 31, without the prior approval of the Superintendent of the
New York State Insurance Department. At December 31, 1997 and 1996, the amount
of the Company's surplus available for dividends was approximately $124.6
million and $91.8 million, respectively.
During 1997, 1996 and 1995, the Company paid dividends of $0.0, $17.5
million and $25.0 million, respectively.
11. CAPITAL CONTRIBUTION
During 1997, the Parent made a capital contribution of $49.5 million to the
Company.
12. FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in
estimating fair values of financial instruments:
Fixed Maturity Securities: Fair values for fixed maturity securities
are based on quoted market prices, if available. If a quoted market price
is not available, fair values is estimated using quoted market prices for
similar securities. Fair value disclosure for fixed maturity securities is
included in the balance sheets and in Note 4.
Short-Term Investments: Short-term investments are carried at cost,
which approximates fair value.
Cash, Receivable for Securities Sold, and Payable for Securities
Purchased: The carrying amounts of these items approximate their fair
values.
The estimated fair values of the Company's financial instruments at
December 31, 1997 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
------------------------ ------------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Financial Assets
Cash On hand and in demand accounts.......... $ 802 $ 802 $ 860 $ 860
Short-term investments....................... $ 76,039 $ 76,039 $ 73,839 $ 73,839
Fixed maturity securities.................... $2,443,746 $2,443,746 $2,250,549 $2,250,549
</TABLE>
Financial Guaranties: The carrying value of the Company's financial
guaranties is represented by the unearned premium reserve, net of deferred
acquisition costs, and loss and loss adjustment expense reserves. Estimated fair
values of these guaranties are based on amounts currently charged to enter into
similar agreements (net of applicable ceding commissions), discounted cash flows
considering contractual revenues to be received adjusted for expected
prepayments, the present value of future obligations and estimated losses, and
current interest rates. The estimated fair values of such financial guaranties
range between $355.7 million and $382.6 million compared to a carrying value of
$456.8 million as of December 31, 1997 and between $358.7 million and $387.4
million compared to a carrying value of $487.8 million as of December 31, 1996.
A-14
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
12. FINANCIAL INSTRUMENTS--(CONTINUED)
Concentrations of Credit Risk
The Company considers its role in providing insurance to be credit
enhancement rather than credit substitution. The Company insures only those
securities that, in its judgment, are of investment grade quality. The Company
has established and maintains its own underwriting standards that are based on
those aspects of credit that the Company deems important for the particular
category of obligations considered for insurance. Credit criteria include
economic and social trends, debt management, financial management and legal and
administrative factors, the adequacy of anticipated cash flows, including the
historical and expected performance of assets pledged for payment of securities
under varying economic scenarios and underlying levels of protection such as
insurance or overcollateralization.
In connection with underwriting new issues, the Company sometimes requires,
as a condition to insuring an issue, that collateral be pledged or, in some
instances, that a third-party guarantee be provided for a term of the obligation
insured by a party of acceptable credit quality obligated to make payment prior
to any payment by the Company. The types and extent of collateral pledged
varies, but may include residential and commercial mortgages, corporate debt,
government debt and consumer receivables.
As of December 31, 1997, the Company's total insured principal exposure to
credit loss in the event of default by bond issuers was $108.4 billion, net of
reinsurance of $31.6 billion. The Company's insured portfolio as of December 31,
1997 was broadly diversified by geography and bond market sector with no single
debt issuer representing more than 1% of the Company's principal exposure
outstanding, net of reinsurance.
As of December 31, 1997, the composition of principal exposure by type of
issue, net of reinsurance, was as follows (in millions):
<TABLE>
<CAPTION>
NET
PRINCIPAL
OUTSTANDING
-----------
<S> <C>
Municipal:
General obligation...................................................................... $ 57,244.4
Special revenue......................................................................... 35,526.8
Industrial revenue...................................................................... 405.7
Non-municipal........................................................................... 15,268.7
-----------
Total..................................................................................... $ 108,445.6
-----------
-----------
</TABLE>
The Company's gross and net exposure outstanding was $254,441.1 million and
$193,612.9 million, respectively, as of December 31, 1997.
As of December 31, 1997, the composition of principal exposure ceded to
reinsurers was as follows (in millions):
<TABLE>
<CAPTION>
CEDED
PRINCIPAL
OUTSTANDING
-----------
<S> <C>
Reinsurer:
Capital Re............................................................................... $14,909.1
Enhance Re............................................................................... 8,431.7
Other.................................................................................... 8,290.7
-----------
Total................................................................................. $31,631.5
-----------
-----------
</TABLE>
A-15
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
12. FINANCIAL INSTRUMENTS--(CONTINUED)
The Company is authorized to do business in 50 states, the District of
Columbia, and in the United Kingdom and France. Principal exposure outstanding
at December 31, 1997 by state, net of reinsurance, was as follows (in millions):
<TABLE>
<CAPTION>
NET
PRINCIPAL
OUTSTANDING
-----------
<S> <C>
California................................................................................ $ 12,308.1
Pennsylvania.............................................................................. 10,277.8
Florida................................................................................... 10,181.7
New York.................................................................................. 8,945.5
Illinois.................................................................................. 7,203.8
Texas..................................................................................... 6,072.4
Michigan.................................................................................. 4,526.3
New Jersey................................................................................ 4,476.2
Arizona................................................................................... 3,109.2
Ohio...................................................................................... 2,616.1
-----------
Sub-total................................................................................. 69,717.1
Other states.............................................................................. 38,421.7
International............................................................................. 306.8
-----------
Total..................................................................................... $ 108,445.6
-----------
-----------
</TABLE>
13. COMMITMENTS
Total rent expense was $2.4 million, $2.8 million and $2.2 million in 1997,
1996 and 1995, respectively. For each of the next five years and in the
aggregate as of December 31, 1997, the minimum future rental payments under
noncancellable operating leases having remaining terms in excess of one year
approximate (in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
- - --------------------------------------------------------------------------------------------- -------
<S> <C>
1998......................................................................................... $ 2,909
1999......................................................................................... 2,909
2000......................................................................................... 2,909
2001......................................................................................... 2,911
2002......................................................................................... --
-------
Total minimum future rental payments......................................................... $11,638
-------
-------
</TABLE>
A-16
<PAGE>
EXHIBIT 99.3
FINANCIAL GUARANTY INSURANCE COMPANY
UNAUDITED INTERIM FINANCIAL STATEMENTS
MARCH 31, 1998
<TABLE>
<S> <C>
Balance Sheets.................................................................................... B-1
Statements of Income.............................................................................. B-2
Statements of Cash Flows.......................................................................... B-3
Notes to Unaudited Interim Financial Statements................................................... B-4
</TABLE>
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Fixed maturity securities, available for sale, at fair value (amortized cost
of $2,344,986 in 1998 and $2,313,458 in 1997)............................... $2,453,364 $ 2,443,746
Short-term investments, at cost, which approximates market.................... 116,279 76,039
Cash.......................................................................... 877 802
Accrued investment income..................................................... 37,920 38,927
Reinsurance receivable........................................................ 8,561 8,220
Deferred policy acquisition costs............................................. 85,835 86,286
Property, plant and equipment net of accumulated depreciation of $17,711 in
1998 and $17,346 in 1997.................................................... 2,777 3,142
Prepaid reinsurance premiums.................................................. 148,927 154,208
Prepaid expenses and other assets............................................. 15,089 21,002
-------------- -----------------
Total assets............................................................. $2,869,629 $ 2,832,372
-------------- -----------------
-------------- -----------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Unearned premiums........................................................... $ 610,673 $ 628,553
Losses and loss adjustment expenses......................................... 80,232 76,926
Ceded reinsurance payable................................................... 926 3,932
Accounts payable and accrued expenses....................................... 22,263 26,352
Current federal income taxes payable........................................ 55,296 19,335
Deferred federal income taxes payable....................................... 110,989 118,522
Payable for securities purchased............................................ 2,923 5,811
-------------- -----------------
Total liabilities........................................................ 883,302 879,431
-------------- -----------------
Stockholder's Equity:
Common stock, par value $1,500 per share at March 31, 1998 and at December
31, 1997: 10,000 shares authorized, issued and outstanding............... 15,000 15,000
Additional paid-in capital.................................................. 383,511 383,511
Accumulated other comprehensive income, net of tax.......................... 69,554 83,935
Retained earnings........................................................... 1,518,262 1,470,495
-------------- -----------------
Total stockholder's equity............................................... 1,986,327 1,952,941
-------------- -----------------
Total liabilities and stockholder's equity............................... $2,869,629 $ 2,832,372
-------------- -----------------
-------------- -----------------
</TABLE>
See accompanying notes to unaudited interim financial statements
B-1
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
STATEMENTS OF INCOME
($ IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1998 1997
------- -------
(UNAUDITED)
<S> <C> <C>
REVENUES
Gross premiums written...................................................................... $19,831 $28,518
Ceded premiums.............................................................................. (2,144) (7,137)
------- -------
Net premiums written...................................................................... 17,687 21,381
Decrease in net unearned premiums........................................................... 12,655 8,072
------- -------
Net premiums earned....................................................................... 30,342 29,453
Net investment income....................................................................... 32,785 31,597
Net realized gains.......................................................................... 13,083 6,069
------- -------
Total revenues............................................................................ 76,210 67,119
------- -------
EXPENSES
Losses and loss adjustment expenses......................................................... 3,921 (249)
Policy acquisition costs.................................................................... 5,447 3,851
Other underwriting expenses................................................................. 5,101 3,851
------- -------
Total expenses............................................................................ 14,469 7,453
------- -------
Income before provision for federal income taxes............................................ 61,741 59,666
Provision for federal income taxes.......................................................... 13,975 14,233
------- -------
Net income................................................................................ $47,766 $45,433
------- -------
------- -------
</TABLE>
See accompanying notes to unaudited interim financial statements
B-2
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
---------------------------
1998 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
Operating activities:
Net income......................................................................... $ 47,766 $ 45,433
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for deferred income taxes.............................................. 211 562
Amortization of fixed maturity securities........................................ 895 227
Policy acquisition costs deferred................................................ (4,996) (2,866)
Amortization of deferred policy acquisition costs................................ 5,447 3,851
Depreciation of fixed assets..................................................... 365 629
Change in reinsurance receivable................................................. (341) 29
Change in prepaid reinsurance premiums........................................... 5,281 40
Foreign currency translation adjustment.......................................... (215) 9
Change in accrued investment income, prepaid expenses and other assets........... 6,920 (2,392)
Change in unearned premiums...................................................... (17,880) (8,112)
Change in losses and loss adjustment expense reserves............................ 3,306 (1,903)
Change in other liabilities...................................................... (7,095) (9,000)
Change in current income taxes payable........................................... 35,961 13,663
Net realized gains on investments................................................ (13,083) (6,069)
--------- ---------
Net cash provided by operating activities........................................ 62,542 34,101
--------- ---------
Investing activities:
Sales or maturities of fixed maturity securities................................. 209,199 272,200
Purchases of fixed maturity securities........................................... (231,426) (213,987)
Sales or maturities (purchases) of short-term investments, net................... (40,240) (91,847)
Purchases of property and equipment, net......................................... -- (277)
--------- ---------
Net cash used for investing activities............................................. (62,467) (33,911)
Increase in cash................................................................... 75 190
Cash at beginning of period........................................................ 802 860
--------- ---------
Cash at end of period.............................................................. $ 877 $ 1,050
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to unaudited interim financial statements
B-3
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The interim financial statements of Financial Guaranty Insurance Company
(the Company) in this report reflect all adjustments necessary, in the opinion
of management, for a fair statement of (a) results of operations for the three
months ended March 31, 1998 and 1997, (b) the financial position at March 31,
1998 and December 31, 1997, and (c) cash flows for the three months ended March
31, 1998 and 1997.
These interim financial statements should be read in conjunction with the
financial statements and related notes included in the 1997 audited financial
statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. STATUTORY ACCOUNTING PRACTICES
The financial statements are prepared on the basis of GAAP, which differs
in certain respects from accounting practices prescribed or permitted by state
insurance regulatory authorities. The following are the significant ways in
which statutory basis accounting practices differ from GAAP:
(a) premiums are earned directly in proportion to the scheduled
principal and interest payments rather than in proportion to the total
exposure outstanding at any point in time;
(b) policy acquisition costs are charged to current operations as
incurred rather than as related premiums are earned;
(c) a contingency reserve is computed on the basis of statutory
requirements for the security of all policyholders, regardless of whether
loss contingencies actually exist, whereas under GAAP, a reserve is
established based on an ultimate estimate of exposure;
(d) certain assets designated as 'non-admitted assets' are charged
directly against surplus but are reflected as assets under GAAP, if
recoverable;
(e) federal income taxes are only provided with respect to taxable
income for which income taxes are currently payable, while under GAAP taxes
are also provided for differences between the financial reporting and tax
bases of assets and liabilities;
(f) purchases of tax and loss bonds are reflected as admitted assets,
while under GAAP they are recorded as federal income tax payments; and
(g) all fixed income investments are carried at amortized cost, rather
than at fair value for securities classified as 'Available for Sale' under
GAAP.
B-4
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998 AND 1997
(UNAUDITED)
2. STATUTORY ACCOUNTING PRACTICES--(CONTINUED)
The following is a reconciliation of the net income and stockholder's
equity of Financial Guaranty Insurance Company prepared on a GAAP basis to the
corresponding amounts reported on a statutory basis for the periods indicated
below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------
1998 1997
------------------------ ------------------------
NET STOCKHOLDER'S NET STOCKHOLDER'S
INCOME EQUITY INCOME EQUITY
------- ------------- ------- -------------
<S> <C> <C> <C> <C>
GAAP basis amount.................................. $47,766 $ 1,986,327 $45,433 $ 1,706,316
Premium revenue recognition........................ (619) (181,828) (2,466) (178,751)
Deferral of acquisition costs...................... 451 (85,835) 985 (90,960)
Contingency reserve................................ -- (555,538) -- (474,460)
Non-admitted assets................................ -- (2,313) -- (3,257)
Case-basis losses incurred......................... 188 (1,684) (661) (3,910)
Portfolio loss reserves............................ 1,400 30,400 -- 24,000
Deferral of income tax............................. 211 72,272 569 71,274
Unrealized gains on fixed maturity securities held
at fair value, net of taxes...................... -- (70,446) -- (15,602)
Profit commission.................................. (133) (7,522) (342) (6,528)
Contingency reserve tax deduction.................. -- 72,409 -- 85,176
Allocation of tax benefits due to Parent's net
operating loss to the Company.................... 42 10,958 94 10,426
------- ------------- ------- -------------
Statutory basis amount............................. $49,306 $ 1,267,200 $43,612 $ 1,123,724
------- ------------- ------- -------------
------- ------------- ------- -------------
</TABLE>
3. DIVIDENDS
Under New York Insurance Law, the Company may pay a dividend only from
earned surplus subject to the following limitations:
o Statutory surplus after dividends may not be less than the minimum
required paid-in capital, which was $66.4 million in 1997.
o Dividends may not exceed the lesser of 10 percent of its surplus or 100
percent of adjusted net investment income, as defined therein, for the
twelve month period ending on the preceding December 31, without the
prior approval of the Superintendent of the New York State Insurance
Department.
The amount of the Company's surplus available for dividends during 1998 is
approximately $126.7 million.
4. INCOME TAXES
The Company's effective Federal corporate tax rate (22.6 percent and 23.9
percent for the three months ended March 31, 1998 and 1997, respectively) is
less than the statutory corporate tax rate (35 percent in 1998 and 1997) on
ordinary income due to permanent differences between financial and taxable
income, principally tax-exempt interest.
5. REINSURANCE
In accordance with Statement of Financial Accounting Standards No. 113
('SFAS 113'), 'Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts', the Company reports assets and liabilities relating to
reinsured contracts gross of the effects of reinsurance. Net premiums earned are
shown net
B-5
<PAGE>
FINANCIAL GUARANTY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998 AND 1997
(UNAUDITED)
5. REINSURANCE--(CONTINUED)
of premiums ceded of $7.4 million and $7.2 million, respectively, for the three
months ended March 31, 1998 and 1997.
6. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standard Board issued statement No.
130, 'Reporting Comprehensive Income', which requires enterprises to disclose
comprehensive income and its components. Comprehensive income encompasses all
changes in shareholders' equity (except those arising from transactions with
shareholders) and includes net income, net unrealized capital gains or losses on
available-for-sale securities and foreign currency translation adjustments, net
of taxes. This new standard only changes the presentation of certain information
in the financial statements and does not affect the Company's financial position
or results of operations. The following is a reconciliation of comprehensive
income:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------------------------------
1998 1997
-------------------- --------------------
<S> <C> <C>
Net income........................................................... $ 47,766 $ 45,433
Other comprehensive income:
Change in unrealized investment gains, net of taxes................ (14,241) (23,558)
Change in foreign exchange gains, net of taxes..................... (140) 6
---------- ----------
Comprehensive income................................................. $ 33,385 $ 21,881
---------- ----------
---------- ----------
</TABLE>
B-6
