UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 333-74817
---------
MAIN PLACE FUNDING, LLC
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 57-0236115
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 North Tryon Street, Charlotte, NC 28255
-------------------------------------------
(Address of principal executive offices)(Zip Code)
(704) 388-7436
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes x No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]
On March 23, 2000, there were no shares of common stock outstanding. As of March
23, 2000, members' interests consisted of ownership percentages of 99 percent
and 1 percent for Bank of America, N.A. and Main Place Trust, respectively.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) and
(b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
Documents incorporated by reference: NONE
<PAGE>
PART I
Item 1. BUSINESS
Main Place Funding, LLC (Main Place), a Delaware limited liability company, is a
subsidiary of Bank of America, N.A., which is a wholly owned indirect subsidiary
of Bank of America Corporation (the Corporation). On April 28, 1999, BankAmerica
Corporation changed its name to Bank of America Corporation. On July 5, 1999,
NationsBank, N.A. changed its name to Bank of America, N.A. On July 23, 1999,
Bank of America, N.A. merged into Bank of America NT&SA, and the surviving
entity of that merger changed its name to Bank of America, N.A.
Main Place is the successor by merger of Main Place Real Estate Investment Trust
(MPREIT) with and into Main Place. MPREIT was established on October 29, 1996 as
a Maryland real estate investment trust to consolidate the acquisition, holding
and management of certain closed-end residential mortgage loans owned by certain
affiliates of the Corporation. MPREIT was the successor by merger of Main Place
Funding Corporation (MPFC) with and into MPREIT on November 1, 1996. On October
15, 1998, Main Place Holdings Corporation, the former parent of MPREIT, merged
with and into Main Place, and on December 23, 1998, MPREIT merged with and into
Main Place, its parent company. These mergers were each accounted for in a
manner similar to a pooling of interests and, accordingly, the accompanying
financial statements include the results of operations and financial condition
of the combined entities since the beginning of the earliest period presented.
As a result of the December 23, 1998 merger, Bank of America, N.A. holds a 99
percent membership interest in Main Place. The other 1 percent membership
interest is held by Main Place Trust, a Delaware business trust. In connection
with the merger of MPREIT with and into Main Place, all outstanding MPREIT Class
A Trust Shares were cancelled. All outstanding MPREIT Class B Trust Shares were
converted into rights to receive cash. As a result of the December 23, 1998
merger, Main Place's ownership interests are presented in the accompanying
financial statements to reflect the equity structure of a limited liability
company. As the surviving entity, Main Place issues and sells mortgage-backed
bonds and acquires, owns, holds and pledges the related mortgage notes and other
assets serving as collateral in connection therewith. In connection with the
merger with MPREIT, Main Place assumed MPREIT's obligations under the Series
1995-2 and Series 1997-1 mortgage-backed bonds.
Item 2. PROPERTIES
Main Place does not own or lease any physical property.
Item 3. LEGAL PROCEEDINGS
Main Place has no legal actions or proceedings pending against it.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted in accordance with General Instruction I to Form 10-K.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
There is no common stock outstanding for Main Place. During 1999, Main Place
paid distributions of $12.0 billion. During 1998, Main Place paid distributions
of $10.0 billion. In addition, during 1998 all MPREIT Class B Trust Shares were
converted into rights to receive cash. All outstanding MPREIT Class A Trust
Shares were cancelled.
2
<PAGE>
Item 6. SELECTED FINANCIAL DATA
Omitted in accordance with General Instruction I to Form 10-K.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Total net income was $1.3 billion and $1.8 billion for the years ended December
31, 1999 and 1998, respectively. The decrease primarily resulted from decreases
in interest income and decreased gains on sales of securities, partially offset
by a decrease in interest expense and the elimination of income tax expense. The
absence of income tax expense for the year ended December 31, 1999 is due to
Main Place's reorganization as a limited liability company during 1998. Income
tax expense was $562.6 million for the year ended December 31, 1998. Income tax
expense for the years ended December 31, 1999 and 1998 on a pro-forma basis was
$457.2 million and $736.9 million, respectively.
Total income for the year ended December 31, 1999 was $1.8 billion, representing
a decrease of $1.7 billion compared to 1998. The decrease includes a decline in
interest income from the securities portfolio of $913.8 million, resulting from
a reduction of $13.2 billion in the average balance of the securities portfolio.
The decrease also includes declines in interest on time deposits placed of
$414.0 million, resulting from a reduction of $6.8 billion in the respective
average balances, as well as a 55 basis point decrease in average yields to 4.92
percent. Interest and fees on loans also declined $193.4 million due to a
consistent reduction in the loan portfolio. The remaining decrease in total
income for the year ended December 31, 1999 is the result of a $157.2 million
decrease in gains on sales of available-for-sale securities.
Total expenses (excluding income taxes) for the year ended December 31, 1999
were $506.9 million, representing a decrease of $594.1 million compared to 1998.
The decrease includes a decline in interest expense on securities sold under
agreements to repurchase of $572.5 million, resulting from a reduction of $9.9
billion in average borrowings, as well as a 53 basis point decrease in average
rates to 4.94 percent. The decrease also includes a decline in interest expense
on long-term debt of $6.0 million for the year ended December 31,1999, resulting
from a 35 basis point decrease in average rates to 5.61 percent. In addition,
other operating expense, which primarily consists of mortgage servicing costs,
decreased $15.2 million, resulting from the reduction in the average balances of
mortgage loans outstanding in 1999.
Main Place made no provision for credit losses for the year ended December 31,
1999 due to the decline in the average balance of the loan portfolio in 1999
compared to 1998 and the $26.7 million decrease in nonperforming loans to $83.1
million at December 31, 1999 compared to the same period in 1998. Future
economic conditions and changes in the loan portfolio may increase nonperforming
loans and, accordingly, the level of the allowance for credit losses. The nature
of the process by which Main Place determines the appropriate allowance for
credit losses requires the exercise of considerable judgment. After review of
all relevant matters affecting loan collectibility, management believes that the
allowance for credit losses is appropriate given its analysis of incurred credit
losses at December 31, 1999.
Bank of America Technology & Operations, Inc. (formerly NationsBanc Services,
Inc.), a subsidiary of Bank of America, N.A., provides data processing and other
support services to Main Place and certain other subsidiaries of the
Corporation. These services included the completion of substantially all of Main
Place's Year 2000 software conversion projects as of December 31, 1999. The
related costs, which are expensed when billed, are included in "Other operating
expenses." Bank of America Technology & Operations, Inc. is reimbursed through
affiliate allocations to the other subsidiaries. For further information related
to the Corporation's Year 2000 efforts, refer to the section entitled "Year 2000
Project" in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1999.
3
<PAGE>
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and financial statement schedule required by this Item
are listed in the Index to Financial Statements.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting and
financial disclosures.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted in accordance with General Instruction I to Form 10-K.
Item 11. EXECUTIVE COMPENSATION
Omitted in accordance with General Instruction I to Form 10-K.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Omitted in accordance with General Instruction I to Form 10-K.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted in accordance with General Instruction I to Form 10-K.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a. The financial statements and financial statement schedule listed
in the Index to Financial Statements are filed as part of this
report.
b. No reports on Form 8-K were filed during the quarter ended
December 31, 1999.
c. The exhibits filed as part of this report are listed in the Index to
Exhibits.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Main Place Funding, LLC
-----------------------
Date: March 23, 2000 /s/ John E. Mack
-----------------------
John E. Mack
President
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ John E. Mack President March 23, 2000
- --------------------------- (Principal Executive
John E. Mack Officer)
/s/ Susan R. Faulkner Treasurer and Senior Vice March 23, 2000
- -------------------------- Predident / Principal
Susan R.Faulkner Financial and
Accounting Officer
(Principal Financial and
Duly Authorized Officer)
Bank of America, N.A.
By: /s/ John E. Mack Managing Member March 23, 2000
---------------------
John E. Mack
Main Place Trust
By: /s/ John E. Mack Special Managing March 23, 2000
---------------------- Member
John E. Mack
Business Trustee
5
<PAGE>
<TABLE>
<CAPTION>
MAIN PLACE FUNDING, LLC
INDEX TO FINANCIAL STATEMENTS
<S> <C>
Page
Report of Independent Accountants 7
Financial Statements:
Statement of Income for the Years Ended December 31, 1999, 1998 and 1997 8
Balance Sheet at December 31, 1999 and 1998 9
Statement of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997 10
Statement of Changes in Members' and Shareholders' Equity for the Years Ended December 31, 11
1999, 1998 and 1997
Notes to Financial Statements 12
Financial Statement Schedules:
Report of Independent Accountants on Financial Statement Schedule 23
Schedule IV - Mortgage Loans on Real Estate 24
</TABLE>
6
<PAGE>
Report of Independent Accountants
To the Members of Main Place Funding, LLC
In our opinion, the accompanying balance sheet and the related statements of
income, of changes in members' and shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Main Place
Funding, LLC (the "Company") at December 31, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States. 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 of these
statements in accordance with auditing standards generally accepted in the
United States, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 16, 2000
7
<PAGE>
<TABLE>
<CAPTION>
Main Place Funding, LLC
Statement of Income
(Dollars in Thousands)
Year Ended December 31
-----------------------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Interest and fees on loans $917,468 $1,110,868 $1,059,949
Interest on securities 431,486 1,345,293 472,836
Interest on time deposits placed 371,059 785,030 370,722
Gains on sales of securities 44,064 201,236 22,752
-----------------------------------------------------
Total income 1,764,077 3,442,427 1,926,259
-----------------------------------------------------
Expenses:
Interest on securities sold under agreements to repurchase 289,842 862,302 357,610
Interest on long-term debt 191,274 197,245 241,921
Provision for credit losses - 400 -
Other operating expense 25,820 41,054 32,576
-----------------------------------------------------
Total expense 506,936 1,101,001 632,107
-----------------------------------------------------
Income before income taxes 1,257,141 2,341,426 1,294,152
Income tax expense - 562,622 452,953
-----------------------------------------------------
Net income $1,257,141 $ 1,778,804 $ 841,199
=====================================================
See accompanying notes to financial statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Main Place Funding, LLC
Balance Sheet
(Dollars in Thousands)
December 31
----------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 901,145 $ 2,219,988
Time deposits placed with affiliates 5,000,000 12,000,000
Securities:
Available-for-sale 2,858,278 8,794,598
Held-for-investment, at cost (market value $45,406 and $201,220) 45,364 201,190
--------------------------------------
Total securities 2,903,642 8,995,788
--------------------------------------
Loans, net of unearned income 12,328,216 13,092,178
Allowance for credit losses (35,988) (37,599)
---------------------------------------
Loans, net of unearned income and allowance for credit losses 12,292,228 13,054,579
Interest receivable 80,083 127,536
Accounts receivable from affiliates 19,249 460,734
Other assets 14,514 92,281
---------------------------------------
Total assets $21,210,861 $ 36,950,906
=======================================
Liabilities
Accrued expenses $ 3,818 $ 933
Accrued expenses due to affiliate 578,249 590,623
Securities sold under agreements to repurchase from affiliates 2,557,522 8,658,818
Current portion of long-term debt 2,500,000 -
Long-term debt 1,499,945 2,499,879
----------------------------------------
Total liabilities 7,139,534 11,750,253
----------------------------------------
Members' Equity
Contributed equity 13,395,436 24,980,572
Undistributed income 722,217 -
Accumulated other comprehensive income (loss) (46,326) 220,081
----------------------------------------
Total members' equity 14,071,327 25,200,653
----------------------------------------
Total liabilities and members' equity $21,210,861 $36,950,906
========================================
See accompanying notes to financial statements.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Main Place Funding, LLC
Statement of Cash Flows
(Dollars in Thousands)
Year Ended December 31
------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income $1,257,141 $1,778,804 $841,199
Reconciliation of net income to net cash provided by operating activities
Gains on sales of securities (44,064) (201,236) (22,752)
Provision for credit losses - 400 -
Deferred income tax (benefit) expense - (33,567) 28,369
Net decrease (increase) in interest receivable 47,453 105,666 (141,366)
Net decrease (increase) in accounts receivable from affiliates 441,485 169,668 (315,186)
Net increase (decrease) in accrued expenses 2,885 (165,207) 48,612
Net (decrease) increase in accrued expenses due to affiliate (12,374) 476,887 112,837
Other operating activities 82,201 175,923 (152,598)
------------------------------------------------
Net cash provided by operating activities 1,774,727 2,307,338 399,115
------------------------------------------------
Investing Activities
Proceeds from maturities of held-for-investment securities 156,226 277,030 140,308
Proceeds from sales and maturities of available-for-sale securities 5,779,228 16,701,252 2,276,101
Purchases of available-for-sale securities (50,892) (1,337,677) (3,063,523)
Net decrease (increase) in time deposits placed with affiliates 7,000,000 5,950,000 (17,950,000)
Purchases of loans (2,923,376) (4,339,301) (4,822,224)
Collections of loans outstanding 3,546,540 5,928,302 2,389,677
------------------------------------------------
Net cash provided by (used in) investing activities 13,507,726 23,179,606 (21,029,661)
------------------------------------------------
Financing Activities
(Decrease) increase in securities sold under agreements to repurchase (6,101,296) (13,475,781) 22,134,599
Issuances of long-term debt 1,500,000 - 1,000,000
Retirement of long-term debt - (1,499,797) (1,072,733)
Redemption of Class B Trust Shares - (1,100) -
Capital contribution from NationsBank, N.A. - - 25,000
Distribution (12,000,000) (10,000,088) -
Cash dividends paid - - (88)
------------------------------------------------
Net cash (used in) provided by financing activities (16,601,296) (24,976,766) 22,086,778
------------------------------------------------
Net (decrease) increase in cash and cash equivalents (1,318,843) 510,178 1,456,232
Cash and cash equivalents at beginning of period 2,219,988 1,709,810 253,578
------------------------------------------------
Cash and cash equivalents at end of period $ 901,145 $ 2,219,988 $ 1,709,810
================================================
Supplemental cash flow disclosure
Cash paid for interest $ 488,304 $ 1,132,793 $ 509,040
Cash paid for income taxes - 33,792 478,886
Held-for-investment securities contributed from affiliate $ - $ - $ 619,144
Available-for-sale securities contributed from affiliate - 75,182 19,585,750
Net loans contributed from affiliate - - 16,019
Distribution of loans to members 120,060 - -
Loans securitized and retained in the securities portfolio - 1,903,041 537,924
See accompanying notes to financial statements.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Main Place Funding, LLC
Statement of Changes in Members' and Shareholders' Equity
(Dollars in Thousands)
Accumulated Total
Class A Class B Additional Retained Other Members'and Compre-
Trust Trust Paid-In Earnings Contributed Undistributed Comprehensive Shareholders' hensive
Shares Shares Capital (Deficit) Equity Income Income (Loss)(1) Equity Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $100 $1,100 $12,042,736 $(34,875)$ $ $ 8,530 $12,017,591
Net income 841,199 841,199 $ 841,199
Other comprehensive income,
net of tax 158,677 158,677 158,677
---------
Comprehensive income $999,876
=========
Cash dividends paid (87) (87)
Cash dividends paid to
Bank of America, N.A. (1) (1)
Net assets contributed by
Bank of America, N.A. 20,245,913 20,245,913
Other 33,247 33,247
-----------------------------------------------------------------------------------------
Balance, December 31, 1997 100 1,100 32,321,896 806,236 167,207 33,296,539
Net income 1,778,804 1,778,804 $1,778,804
Other comprehensive income,
net of tax 52,874 52,874 52,874
---------
Comprehensive income $ 1,831,678
=========
Net assets contributed by
Bank of America, N.A. 75,182 75,182
Distribution (1,100) (7,415,048)(2,585,040) (10,001,188)
Other (1,558) (1,558)
------------------------------------------------------------------------------------------
Balance prior to conversion
to limited liability company 100 - 24,980,472 - - - 220,081 25,200,653
Conversion to limited
liability company (100) (24,980,472) 24,980,572 -
------------------------------------------------------------------------------------------
Balance, December 31, 1998 - - - - 24,980,572 - 220,081 25,200,653
Net income 1,257,141 1,257,141 $1,257,141
Other comprehensive income,
net of tax (266,407) (266,407) (266,407)
---------
Comprehensive income $ 990,734
=========
Distribution (11,585,136) (534,924) (12,120,060)
-------------------------------------------------------------------------------------
Balance, December 31, 1999 - - - - $13,395,436 $722,217 $ (46,326) $14,071,327
========================================================================================================================
(1) Changes in Accumulated Other Comprehensive Income (Loss) include after-tax net unrealized gains (losses)on available-for-sale
securities.
See accompanying notes to financial statements.
</TABLE>
11
<PAGE>
Main Place Funding, LLC
Notes to Financial Statements
Note 1 - Description of Business
Main Place Funding, LLC (Main Place), a Delaware limited liability company, is a
subsidiary of Bank of America, N.A., which is a wholly owned indirect subsidiary
of Bank of America Corporation (the Corporation). On April 28, 1999, BankAmerica
Corporation changed its name to Bank of America Corporation. On July 5, 1999,
NationsBank, N.A. changed its name to Bank of America, N.A. On July 23, 1999,
Bank of America, N.A. merged into Bank of America NT&SA, and the surviving
entity of that merger changed its name to Bank of America, N.A. (the "Parent").
Main Place is the successor by merger of Main Place Real Estate Investment Trust
(MPREIT) with and into Main Place. MPREIT was established on October 29, 1996 as
a Maryland real estate investment trust to consolidate the acquisition, holding
and management of certain closed-end residential mortgage loans owned by certain
affiliates of the Corporation. MPREIT was the successor by merger of Main Place
Funding Corporation (MPFC) with and into MPREIT on November 1, 1996. On October
15, 1998, Main Place Holdings Corporation, the former parent of MPREIT, merged
with and into Main Place, and on December 23, 1998, MPREIT merged with and into
Main Place, its parent company. These mergers were each accounted for in a
manner similar to a pooling of interests and, accordingly, the accompanying
financial statements include the results of operations and financial condition
of the combined entities since the beginning of the earliest period presented.
As a result of the December 23, 1998 merger, Bank of America, N.A. holds a 99
percent membership interest in Main Place. The other 1 percent membership
interest is held by Main Place Trust, a Delaware business trust. In connection
with the merger of MPREIT with and into Main Place, all outstanding MPREIT Class
A Trust Shares were cancelled. All outstanding MPREIT Class B Trust Shares were
converted into rights to receive cash. As a result of the December 23, 1998
merger, Main Place's ownership interests are presented in the accompanying
financial statements to reflect the equity structure of a limited liability
company. As the surviving entity, Main Place issues and sells mortgage-backed
bonds and acquires, owns, holds and pledges the related mortgage notes and other
assets serving as collateral in connection therewith. In connection with the
merger with MPREIT, Main Place assumed MPREIT's obligations under the Series
1995-2 and Series 1997-1 mortgage-backed bonds.
Note 2 - Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of the financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and
assumptions that affect reported amounts and disclosures. Actual results could
differ from these estimates. Significant estimates made by management are
discussed in these footnotes as applicable. Certain prior period amounts have
been reclassified to conform to current period classifications.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash items in the process of
collection and amounts due from affiliated banks.
12
<PAGE>
Securities
Securities are classified based on management's intention on the date of
purchase. Securities which management has the intent and ability to hold to
maturity are classified as held-for-investment and reported at amortized cost.
All other securities are classified as available for sale and carried at fair
value with net unrealized gains and losses included in accumulated other
comprehensive income on an after tax basis.
Interest and dividends on securities, including amortization of premiums and
accretion of discounts, are included in interest income. Realized gains and
losses from the sales of securities are determined using the specific
identification method.
Loans
Loans are reported at their outstanding principal balances net of any unearned
income, charge-offs, unamortized deferred fees and costs on originated loans and
premiums or discounts on purchased loans. Unearned income, discounts and
premiums are amortized to income using methods that approximate the interest
method.
Nonperforming Loans
Real estate secured consumer loans are classified as nonperforming at 90 days
past due. The amount deemed to be uncollectible on real estate secured loans is
charged off upon determination. Interest accrued but not collected is generally
written off along with the principal.
Commercial real estate loans that are past due 90 days or more as to principal
and interest, or where reasonable doubt exists as to timely collection,
including loans that are individually identified as impaired, are classified as
nonperforming loans unless well secured and in the process of collection.
Interest accrued but not collected is reversed when a commercial real estate
loan is classified as nonperforming. Interest collections on nonperforming
commercial real estate loans for which the ultimate collectibility of principal
is uncertain are applied as principal reductions. Otherwise, such collections
are credited to income when received.
Allowance for Credit Losses
The allowance for credit losses is available to absorb management's estimate of
incurred credit losses in the loan portfolio. Additions to the allowance for
credit losses are made by charges to the provision for credit losses. Credit
exposures deemed to be uncollectible are charged against the allowance for
credit losses. Recoveries of previously charged off amounts are credited to the
allowance for credit losses.
Main Place performs periodic and systematic detailed reviews of its loan
portfolios to identify risks inherent in and to assess the overall
collectibility of the portfolios. The nature of the process by which management
determines the appropriate allowance for credit losses requires the exercise of
considerable judgement. Certain homogeneous loan portfolios are evaluated
collectively based on individual loan type, while remaining portfolios are
reviewed on an individual loan basis. These detailed reviews, combined with
historical loss experience and other factors, result in the identification and
quantification of specific allowances and loss factors which are used in
determining the amount of the allowance for credit losses and related provision
for credit losses. The actual amount of incurred credit losses confirmed may
vary from the estimate of incurred losses due to changing economic conditions or
changes in industry or geographic concentrations. Main Place has procedures in
place to monitor differences between estimated and actual incurred credit
losses, which include detailed periodic assessments by senior management of both
individual loans and credit portfolios and models used to estimate incurred
credit losses in those portfolios.
13
<PAGE>
Foreclosed Properties
Loans are reclassified to foreclosed properties upon actual foreclosure or when
physical possession of the collateral is taken regardless of whether foreclosure
proceedings have taken place. Foreclosed properties are carried at the lower of
the recorded amount of the loan for which the foreclosed property previously
served as collateral or the fair value of the property less estimated costs to
sell. Prior to foreclosure, the loan is written down, if necessary, by charging
the allowance for credit losses.
Subsequent to foreclosure, gains or losses on the sale of and losses on the
periodic revaluation of foreclosed properties are credited or charged to
expense. Net costs of maintaining and operating foreclosed properties are
expensed as incurred.
Securities Sold Under Agreements To Repurchase
Securities sold under agreements to repurchase are treated as collateralized
financing transactions and are recorded at the amounts which the securities were
sold plus accrued interest.
Income Taxes
Prior to the merger of Main Place Holdings Corporation into Main Place on
October 15, 1998, the operating results of Main Place Holdings Corporation were
included in the consolidated federal income tax return of the Corporation. The
method of allocating federal income tax expense was determined under a tax
allocation agreement with the Corporation. This agreement specified that income
tax expense be computed for all subsidiaries on a separate company method,
taking into account tax planning strategies and the tax position of the
consolidated group.
There are two components of income tax expense: current and deferred. Current
income tax expense approximates taxes to be paid or refunded for the applicable
period. Balance sheet amounts of deferred taxes are recognized on the temporary
differences between the basis of assets and liabilities as measured by tax laws
and their basis as reported in the financial statements. Deferred tax expense or
benefit is then recognized for the change in deferred tax liabilities or assets
between periods.
Recognition of deferred tax assets is based on management's belief that it is
more likely than not that the tax benefit associated with certain temporary
differences will be recognized. A valuation allowance is recorded for those
deferred tax items for which it is more likely than not that realization will
not occur.
After October 14, 1998, Main Place is classified as a limited liability company
and as such does not expect to be subject to income taxes. Because it is
disregarded as an entity separate from its owner for income tax purposes, the
tax effect of Main Place's activities are expected to accrue to its members.
Accordingly, the accompanying financial statements do not reflect income taxes
subsequent to October 14, 1998; pro-forma income tax information is presented in
Note Seven as if Main Place had been subject to income tax for the years ended
December 31, 1999 and 1998.
On December 23, 1998, MPREIT, which was taxed as a partnership from May 20,
1998, was merged with and into Main Place. MPREIT was taxed as a real estate
investment trust from November 1, 1996 until May 19, 1998.
Recently Issued Accounting Pronouncement
In 1999, the Federal Financial Institution Examination Council issued The
Uniform Classification and Account Management Policy (the Policy) which updated
and expanded the classification of delinquent retail credits. The Policy
provides guidance on the treatment of delinquent open-end and closed-end loans.
Main Place is required to implement the policy by December 31, 2000. Main Place
does not expect the adoption of this Policy to have a material impact on its
results of operations or financial condition.
14
<PAGE>
Note 3 - Securities
The amortized cost and market values of held-for-investment securities at
December 31 were (dollars in thousands):
<TABLE>
<CAPTION>
1999
----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Mortgage-backed
securities $ 45,364 $ 54 $ (12) $ 45,406
================ ============= ============= ================
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Mortgage-backed
securities $ 201,190 $ 227 $ (197) $ 201,220
================ ============= ============= ================
</TABLE>
The amortized cost and market values of available-for-sale securities at
December 31 were (dollars in thousands):
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------------- ------------- --------------- ------------------
<S> <C> <C> <C> <C>
Mortgage-backed
securities $2,904,604 $3,423 $ (49,749) $ 2,858,278
=================== ============= =============== ==================
</TABLE>
<TABLE>
<CAPTION>
1998
-------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C>
Mortgage-backed
securities $8,574,517 $224,796 $ (4,715) $ 8,794,598
=================== =============== =============== ==================
</TABLE>
15
<PAGE>
Gross gains of approximately $44.1 million, $201.3 million and $22.9 million
were realized on sales of available-for-sale securities during 1999, 1998 and
1997, respectively.
The expected maturities of held-for-investment and available-for-sale securities
at December 31, 1999, are summarized in the following tables (dollars in
thousands). Actual maturities may differ from contractual maturities or
maturities shown below since borrowers may have the right to prepay obligations
with or without prepayment penalties.
<TABLE>
<CAPTION>
Held-for-Investment Securities
Net
Amortized Market Unrealized
Cost Value Gains (Losses)
------------------ ------------------- ----------------
<S> <C> <C> <C>
Due in one year or less $ 29,836 $ 29,835 $ (1)
Due after one year through five years - - -
Due after five years through ten years 10,778 10,819 41
Due after ten years 4,750 4,752 2
------------------ ------------------- ----------------
$ 45,364 $ 45,406 $ 42
================== =================== ================
Available-for-Sale Securities
Net
Amortized Market Unrealized
Cost Value Gains (Losses)
------------------ ------------------- ----------------
Due in one year or less $ 1,904 $ 1,870 $ (34)
Due after one year through five years 254,806 249,439 (5,367)
Due after five years through ten years 86,360 84,087 (2,273)
Due after ten years 2,561,534 2,522,882 (38,652)
------------------ ------------------- ----------------
$2,904,604 $2,858,278 $(46,326)
================== =================== ================
</TABLE>
During 1999, 1998 and 1997, the valuation allowance (net of tax) for
available-for-sale securities (decreased) increased accumulated other
comprehensive income by ($266.4 million), $52.9 million and $158.7 million,
respectively.
16
<PAGE>
Note 4 - Loans
The following table presents the composition of loans at December 31 (dollars in
thousands):
<TABLE>
<CAPTION>
1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Residential mortgage $ 12,304,562 $ 13,052,858
Other consumer loans 13,706 21,997
Commercial real estate 9,948 17,323
-------------------- ----------------------
Total loans, net of unearned income $ 12,328,216 $ 13,092,178
==================== ======================
</TABLE>
Mortgage loans collateralizing mortgage-backed bonds were comprised of the
following at December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Adjustable-rate $ 5,086,850 $ 2,419,756
Fixed-rate 1,551,596 1,265,581
-------------------- ----------------------
Total mortgage loans $ 6,638,446 $ 3,685,337
==================== ======================
</TABLE>
Transactions in the allowance for credit losses for the years ended December 31
were as follows (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1 $ 37,599 $ 41,412 $ 42,396
Net loans charged off (1,611) (4,213) (986)
Provision for credit losses - 400 -
Other - - 2
---------------- ------------- -----------
Balance, December 31 $ 35,988 $ 37,599 $ 41,412
================ ============= ===========
</TABLE>
Main Place had $83.1 million of nonperforming loans at December 31, 1999 and
$109.8 million at December 31, 1998. Foreclosed properties at December 31, 1999,
were $6.1 million compared to $9.1 million at December 31, 1998.
Note 5 - Affiliate Transactions
Main Place maintains its cash and cash equivalent accounts with the Parent at
December 31, 1999. Main Place had $5.0 billion and $12.0 billion of time
deposits placed with the Parent for the years ended December 31, 1999, and 1998,
respectively. Interest income on time deposits for the years ended December 31,
1999, 1998 and 1997 was $371.1 million, $785.0 million and $370.7 million,
respectively.
At December 31, 1999 and 1998, Main Place had $19.2 million and $460.7 million,
respectively, of accounts receivable from affiliates. These receivables are
related to mortgage payments and securities principal and interest payments in
process of collection, which generally clear within 30 days.
At December 31, 1999 and 1998, Main Place had $2.6 billion and $8.7 billion,
respectively, of U.S. government securities sold under agreements to repurchase
from the Parent and Banc of America Securities LLC, a wholly-owned subsidiary of
the Corporation, which mature on demand. Interest expense on these securities
for the years ended December 31, 1999, 1998 and 1997 was $289.8 million, $862.3
million and $357.6 million, respectively. At December 31, 1999, both the
carrying amount and the market value of the underlying securities sold under
these repurchase agreements were $2.6 billion. At December 31, 1999, the
interest rate on the $2.6 billion repurchase liability was 5.58%.
17
<PAGE>
Main Place has entered into agreements with the Parent for the servicing and
administration of its mortgage loan portfolio. Servicing fees paid to the Parent
approximated $23.3 million, $34.9 million and $31.3 million for the years ended
December 31, 1999, 1998 and 1997, respectively, and are included in "Other
operating expense" on the accompanying statement of income.
From time to time, Main Place purchases certain mortgage loans originated by the
Parent. Main Place purchased $2.9 billion, $3.9 billion and $4.8 billion of
loans from the Parent for the years ended December 31, 1999, 1998 and 1997,
respectively. In addition, during 1998, Main Place purchased $425 million of
loans in the secondary market through the Parent.
Accrued expenses due to affiliate as of December 31, 1999 and 1998 included
$571.9 million of allocated income taxes payable to the Corporation. The
allocated income tax liability relates to periods prior to Main Place's
conversion to a limited liability company on December 23, 1998. See Note Seven
of the financial statements for a further discussion of income taxes.
During the second quarter of 1999, Main Place made a $12.0 billion cash
distribution of capital of which $11.9 billion was made to the Parent and $0.1
billion was made to Main Place Trust. During the second quarter of 1999, Main
Place made a $120.1 million loan distribution of which $118.9 million was made
to the Parent and $1.2 million was made to Main Place Trust. This distribution
was recorded at the book value of the assets distributed.
During the first quarter of 1998, the Parent contributed $75.2 million in
available-for-sale securities to Main Place. This contribution was recorded at
the book value of the assets contributed.
During 1997, the Parent contributed approximately $20.2 billion in
mortgage-backed securities and collateralized mortgage obligations,
approximately $16.0 million of mortgage loans and $25.0 million in cash to Main
Place. The contributions received by Main Place were recorded at the book value
of the assets contributed.
At December 31, 1999, Main Place had a revolving line of credit agreement with
the Parent for the benefit of the trustee under the Series 1995-2
mortgage-backed bonds. The maximum borrowing allowed under this agreement, which
expires in 2000, is $82.5 million. The borrowings bear interest at prime and are
subject to a 0.25 percent per annum commitment fee on the unused portion of the
facility. There have been no borrowings under this agreement.
Bank of America Technology & Operations, Inc., a subsidiary of the Parent,
provides data processing and other support services to Main Place and certain
other subsidiaries of the Corporation. These services included the completion of
substantially all of Main Place's Year 2000 software conversion projects as of
December 31, 1999. The related costs, which are expensed when billed, are
included in "Other operating expenses" in the accompanying statement of income.
Bank of America Technology & Operations, Inc. is reimbursed through affiliate
allocations to the other subsidiaries.
18
<PAGE>
Note 6 - Long-Term Debt
In April 1999, the Securities and Exchange Commission declared effective Main
Place's shelf registration statement (Registration Statement) providing an
additional $5 billion of capacity for issuance of mortgage-backed bonds (Bonds).
Bonds have been issued under this as well as previously effective registration
statements. The Bonds, which were issued in series pursuant to separate
indentures, are generally subject to the following terms. The Bonds,
collateralized primarily by mortgage loans on 1-to-4 family dwellings, are
obligations solely of Main Place. The Bonds are not prepayable at the option of
Main Place, but are subject to redemption in whole or in part under certain
circumstances. Under the terms of an indenture relating to each series of Bonds,
Main Place must maintain a minimum amount of eligible collateral, which is
determined on a discounted basis and may consist of mortgage loans, certain U.S.
agency mortgage pass-through certificates, U.S. government securities and cash
held by a trustee (the Trustee). The types, characteristics and permitted
amounts of eligible collateral are subject to change from time to time without
the consent of the bondholders if such changes would not adversely affect the
ratings assigned to the Bonds. In the event such collateral requirements are not
met with respect to any series, Main Place must provide additional or substitute
mortgage loans or other acceptable collateral with respect to such series to
meet the required amounts of eligible collateral and/or repurchase Bonds in an
amount sufficient to meet collateral requirements. If sufficient eligible
collateral is not supplied and/or sufficient Bonds are not repurchased, Main
Place must redeem a portion of the outstanding Bonds of such series such that
the existing amount of the eligible collateral meets the collateral requirements
of the indenture relating to the Bonds of such series that remain outstanding
after the redemption. As of December 31, 1999, Main Place had the authority to
issue approximately $3.5 billion of securities under its existing shelf
registration statement.
The following table displays the primary terms of Main Place's 1999-1, 1997-1
and 1995-2 mortgage-backed bonds at December 31, 1999 (dollars in thousands):
<TABLE>
<CAPTION>
Series Series Series
1999-1 1997-1 1995-2
(Issued (Issued (Issued
May 1999) March 1997) October 1995)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amount issued $1,500,000 $1,000,000 $1,500,000
Reference rate 3-mo. LIBOR 3-mo. LIBOR 3-mo. LIBOR
+12 bps +5 bps +17 bps
Period-end interest rate 6.221% 6.231% 6.393%
Maturity 2002 2000 2000
Mortgage loans and cash collateralizing mortgage-backed bonds:
Collateral - book value $2,577,026 $1,643,238 $2,561,419
Collateral - discounted value $1,958,194 $1,259,290 $1,851,803
Collateral - approximate amount exceeding
minimum indenture requirements $375,694 $204,290 $269,303
</TABLE>
On July 17, 1998, Main Place repaid its obligations of $1.5 billion on the
Series 1995-1 mortgage-backed bonds.
Interest expense on the Series 1999-1, 1997-1 and 1995-2 mortgage-backed bonds
for the year ended December 31, 1999 was $191.3 million compared to $197.2
million and $227.9 million on the Series 1997-1, 1995-2 and 1995-1 bonds for the
years ended December 31, 1998 and 1997, respectively.
19
<PAGE>
Note 7 - Income Taxes
Due to Main Place's tax status as discussed in Note Two, no current or deferred
tax expense has been provided after October 14, 1998. Current and deferred tax
expenses are presented below on a pro-forma basis for 1999 and 1998, as if Main
Place were subject to income taxes. The components of pro-forma income tax
expense for the years ended December 31, 1999 and 1998 and income tax as
provided for the period ended October 14, 1998 and year ended December 31, 1997,
respectively, were as follows (dollars in thousands):
<TABLE>
<CAPTION>
Pro-Forma
---------
1999 1998 1998 1997
- ------------------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Current - expense
Federal $ 443,121 $ 738,910 $ 574,968 $424,584
State 27,158 31,268 21,221 -
--------------- -------------- ------------- -------------
470,279 770,178 596,189 424,584
--------------- -------------- ------------- -------------
Deferred - (benefit)/expense
Federal (12,628) (32,219) (32,475) 27,277
State (492) (1,082) (1,092) 1,092
--------------- -------------- ------------- -------------
(13,120) (33,301) (33,567) 28,369
--------------- -------------- ------------- -------------
Total income tax expense $ 457,159 $ 736,877 $ 562,622 $452,953
=============== ============== ============= =============
</TABLE>
A reconciliation of the expected federal income tax expense, based on the
federal statutory rate of 35 percent for 1999, 1998 and 1997, to the pro-forma
income tax expense for the years ended December 31, 1999 and 1998 and to the
income tax expense provided for the period ended October 14, 1998 and year ended
December 31, 1997, respectively, is as follows (dollars in thousands):
<TABLE>
<CAPTION>
Pro-Forma
-----------
1999 1998 1998 1997
- ------------------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Expected federal tax expense $ 439,999 $ 819,499 $ 819,499 $452,953
Increase (decrease) in taxes resulting from
Reorganization of subsidiary - (100,000) (263,481) -
State tax expense, net of federal benefit 17,160 19,242 12,702 1,092
Other - (1,864) (6,098) (1,092)
--------------- -------------- ------------- -------------
Total income tax expense $ 457,159 $ 736,877 $ 562,622 $452,953
=============== ============== ============= =============
</TABLE>
Significant components of Main Place's pro-forma deferred tax assets and
(liabilities) on December 31, are as follows (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities
Allowance for credit losses $ (2,336) $ (1,750)
Securities available for sale - (77,028)
Other, net - (8,924)
--------------- --------------
Gross deferred tax liabilities (2,336) (87,702)
--------------- --------------
Deferred tax assets
Securities available for sale 16,214 -
Discount accretion 6,519 4,480
Other, net 2,743 -
--------------- --------------
Gross deferred tax assets 25,476 4,480
--------------- --------------
Net deferred tax assets/(liabilities) $ 23,140 $ (83,222)
=============== ==============
</TABLE>
Income taxes previously unremitted to the Corporation of $571.9 million are
included in the accompanying balance sheet as of December 31, 1999 and 1998,
respectively.
20
<PAGE>
Note 8 - Fair Values of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments," requires the disclosure of the estimated fair
values of financial instruments. The fair value of an instrument is the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. Quoted market
prices, if available, are utilized as estimates of the fair values of financial
instruments. Fair values of items for which no quoted market prices exist have
been derived based on management's assumptions, the estimated amount and timing
of future cash flows and estimated discount rates. The estimation methods for
individual classifications of financial instruments are more fully described
below. Different assumptions could significantly affect these estimates.
Accordingly, the net realizable values could be materially different from the
estimates presented below. In addition, the estimates are only indicative of
individual instruments' values and should not be considered an indication of the
fair value of Main Place.
Short-Term Financial Instruments
The carrying value of short-term financial instruments, including cash and cash
equivalents, repurchase agreements, accounts receivable from affiliates,
interest receivable and time deposits placed with affiliates, approximates the
fair value. These financial instruments generally expose Main Place to limited
credit risk, have no stated maturities or have maturities of less than 30 days
and carry interest rates, which approximate market.
Loans
Fair values were estimated for the loans based on type of loan, credit quality
and maturity. The fair value of loans was determined by discounting estimated
cash flows using interest rates approximating the December 31 origination rates
of the Corporation and its affiliates for similar loans. Contractual cash flows
for residential mortgage loans were adjusted for estimated prepayments using
published industry data. Where credit deterioration has occurred, cash flows for
fixed- and variable-rate loans have been reduced to incorporate estimated
losses. Where quoted market prices were available, such market prices were
utilized as estimates of fair value.
21
<PAGE>
Long-Term Debt
The Series 1995-2, 1997-1 and 1999-1 mortgage-backed bonds are variable rate
instruments and the fair value approximated book value at December 31, 1999 and
1998.
Held-for-Investment and Available-for-Sale Securities
The carrying value of held-for-investment and available-for-sale securities
approximates the fair value.
The book and fair values of financial instruments for which book and fair value
differed on December 31 were (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
---------------------------------------------------------------------------------
Book Fair Book Fair
Value Value Value Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financial assets
Loans, net of unearned income $12,328,216 $ 12,291,041 $ 13,092,178 $ 13,510,477
</TABLE>
For all other financial instruments, book value approximates fair value.
22
<PAGE>
Report of Independent Accountants on
Financial Statement Schedule
To the Members of Main Place Funding, LLC
Our audits of the financial statements referred to in our report dated March 16,
2000 also included an audit of the Financial Statement Schedule listed in Item
14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related financial statements.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 16, 2000
23
<PAGE>
<TABLE>
<CAPTION>
Main Place Funding, LLC
Schedule IV - Mortgage Loans on Real Estate
December 31, 1999 (Dollars in Thousands)
- --------------------------------------------------------------------------------------------------------------------------
Principal Amount
Final Carrying of Loans Subject
Interest Maturity Periodic Amount of to Delinquent
Description Rate Date Payment Terms Mortgage Loans Principal/Interest
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Conventional loans original balance
$0 to $50 6.00% to 10.00% Varies Int and prin monthly $ 483,832 $ 9,630
Number of Loans 22,715 368
$50 to $100 6.00% to 10.00% Varies Int and prin monthly 990,439 21,781
Number of Loans 17,104 374
$100 to $150 6.00% to 10.00% Varies Int and prin monthly 618,469 11,529
Number of Loans 5,883 108
$150 to $200 6.00% to 10.00% Varies Int and prin monthly 394,976 3,601
Number of Loans 2,614 26
Greater than $200 6.00% to 10.00% Varies Int and prin monthly 826,008 7,768
Number of Loans 4,220 39
Government loans original balance
$0 to $50 6.00% to 10.00% Varies Int and prin monthly 4,813 564
Number of Loans 125 14
$50 to $100 6.00% to 10.00% Varies Int and prin monthly 27,406 1,296
Number of Loans 392 21
$100 to $150 6.00% to 10.00% Varies Int and prin monthly 9,069 209
Number of Loans 80 2
$150 to $200 6.00% to 10.00% Varies Int and prin monthly 1,221 -
Number of Loans 8 -
Greater than $200 7.01% to 9.50% Varies Int and prin monthly - -
Number of Loans - -
Jumbo loans original balance
Greater than $200 6.00% to 10.00% Varies Int and prin monthly 8,274,229 19,072
Number of Loans 24,685 61
Loans serviced by others 6.46% to 10.18% Varies Int and prin monthly 697,754 7,630
Number of Loans 5,659 75
- ----------------------------------------------------------------- -------------------------------------
Total mortgage loans on
real estate $ 12,328,216 $ 83,080
==========================================================================================================================
Total number of mortgage loans on
real estate 83,485 1,088
==========================================================================================================================
</TABLE>
The loans in the table above are secured primarily by single-family dwellings
with initial maturities ranging from 15 to 30 years. The following table
presents a summary of activity of loans, net of unearned income, for the years
ended December 31, 1999, 1998 and 1997.
24
<PAGE>
<TABLE>
<CAPTION>
1999 1998 1997
----------------------- ----------------------- ---------------------
<S> <C> <C> <C>
Balance, beginning of period $ 13,092,178 $ 16,612,818 $ 14,704,375
Additions during the period
Purchases of mortgage loans 2,923,376 4,339,301 4,822,224
Loans contributed from affiliate - - 16,019
Other - - -
----------------------- ----------------------- ---------------------
2,923,376 4,339,301 4,838,243
Deductions during the period
Collections of principal 3,547,343 5,928,302 2,389,677
Distribution of loans to members 120,060 -
Loans securitized - 1,903,041 537,924
Other 19,935 28,598 2,199
----------------------- ----------------------- ---------------------
3,687,338 7,859,941 2,929,800
----------------------- ----------------------- ---------------------
Balance, close of period $ 12,328,216 $ 13,092,178 $ 16,612,818
======================= ======================= =====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Main Place Funding, LLC
Form 10-K
Index to Exhibits
<S> <C>
Exhibit No. Description
2 (a) Agreement of Merger merging Main Place Holdings Corporation into Main Place Holdings,
LLC, dated as of October 15, 1998. (1)
2 (b) Agreement and Plan of Merger between Main Place Real Estate Investment Trust and Main
Place Funding, LLC, dated as of December 22, 1998.(1)
3 (a) Limited Liability Company Agreement of Main Place Holdings, LLC, dated as of October
15, 1998. (1)
3 (b) Amended and Restated Limited Liability Company Agreement of Main Place Funding, LLC,
dated as of December 14, 1998. (1)
4 (a) Indenture of Trust dated as of October 31, 1995, between Main Place Funding
Corporation and First Trust National Association, pursuant to which Main Place
Funding Corporation issued Mortgage-Backed Bonds, Series 1995-2. (incorporated by
reference from the Form 8-K previously filed on October 31, 1995)
4 (b) First Supplemental Indenture of Trust dated as of November 1, 1996 to Indenture of
Trust dated as of October 31, 1995 between Main Place Funding Corporation and First
Trust National Association, as Trustee. (incorporated by reference from the Form 10-Q
previously filed on November 14, 1996)
4 (c) Indenture of Trust dated as of March 18, 1997, between Main Place Funding Corporation
and First Trust National Association, as Trustee. (incorporated by reference from the
Form 10-Q previously filed on May 13, 1997)
4 (d) Second Supplemental Indenture of Trust, dated as of December 23, 1998, between Main
Place Funding, LLC and U.S. Bank Trust National Association, as Trustee, in
connection with the Indenture of Trust dated as of October 31, 1995. (1)
4 (e) First Supplemental Indenture of Trust, dated as of December 23, 1998, between Main
Place Funding, LLC and U.S. Bank Trust National Association, as Trustee, in
connection with the Indenture of Trust dated as of March 18, 1997. (1)
4 (f) Indenture of Trust dated as of May 25, 1999, between Main Place Funding, LLC and U.S.
Bank National Association, as Trustee. (incorporated by reference from the Form 8-K
filed on May 25, 1999)
4 (g) Assignment and Assumption Agreement between NationsBank, N.A. and Main Place Trust,
dated as of December 14, 1998. (1)
4 (h) Trust Agreement of Main Place Trust, dated as of December 14, 1998. (1)
10 (a) Servicing Agreement dated as of July 18, 1995, between Main Place Funding Corporation
and NationsBanc Mortgage Corporation. (incorporated by reference from the Current
Report on Form 8-K previously filed on July 18, 1995)
10 (b) Servicing Agreement dated as of October 31, 1995, between Main Place Funding
Corporation and NationsBanc Mortgage Corporation. (incorporated by reference from the
Current Report on Form 8-K previously filed on October 31, 1995)
10 (c) Servicing Agreement dated November 1, 1996, between Main Place Real Estate Investment
Trust and NationsBanc Mortgage Corporation. (incorporated by reference from the
Quarterly Report on Form 10-Q previously filed on November 14,1996)
10 (d) Servicing Agreement dated as of November 1, 1996, between Main Place Real Estate
Investment Trust and NationsBank, N.A. (incorporated by reference from the Quarterly
Report on Form 10-Q previously filed on November 14,1996)
10 (e) Servicing Agreement dated as of March 18, 1997, between Main Place Funding
Corporation and NationsBanc Mortgage Corporation. (incorporated by reference from the
Quarterly Report on Form 10-Q previously filed on May 13, 1997)
10 (f) Servicing Agreement dated as of May 25, 1999, by and between Main Place Funding LLC
and Nationsbanc Mortgage Corporation. (incorporated by reference from the Form 8-K
filed on May 25, 1999)
12 Ratio of Earnings to Fixed Charges.
23 Consent of PricewaterhouseCoopers LLP.
27 Financial Data Schedule.
(1) Incorporated by reference from the Form 10-K previously filed on March 31, 1999.
(2) Incorporated by reference from the Form 10-K previously filed on March 31, 1998.
</TABLE>
<TABLE>
<CAPTION>
Main Place Funding, LLC Exhibit 12
Ratio of Earnings to Fixed Charges
- ------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before taxes $ 1,257,141 $ 2,341,426 $ 1,294,152
Fixed charges:
Interest expense 477,810 1,056,419 595,818
Amortization of debt discount and
appropriate issuance costs 3,306 3,128 3,713
--------------------------------------------------------------------
Total fixed charges 481,116 1,059,547 599,531
Earnings before fixed charges $ 1,738,257 $ 3,400,973 $ 1,893,683
====================================================================
Fixed charges $ 481,116 $ 1,059,547 $ 599,531
====================================================================
Ratio of Earnings to Fixed Charges 3.61 3.21 3.16
====================================================================
</TABLE>
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (No. 333-74817 and 33-82040) of Main Place Funding, LLC
and Main Place Real Estate Investment Trust, predecessor to Main Place Funding,
LLC, respectively, of our report dated March 16, 2000 relating to the financial
statements and our report dated March 16, 2000 relating to the Financial
Statement Schedule, which appear in this Form 10-K.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 16, 2000
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the December 31,
1999 Form 10-K for Main Place Funding, LLC and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 901,145
<INT-BEARING-DEPOSITS> 5,000,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,858,278
<INVESTMENTS-CARRYING> 45,364
<INVESTMENTS-MARKET> 45,406
<LOANS> 12,328,216
<ALLOWANCE> (35,988)
<TOTAL-ASSETS> 21,210,861
<DEPOSITS> 0
<SHORT-TERM> 2,557,522
<LIABILITIES-OTHER> 578,249
<LONG-TERM> 3,999,945
0
0
<COMMON> 0
<OTHER-SE> 14,071,327
<TOTAL-LIABILITIES-AND-EQUITY> 21,210,861
<INTEREST-LOAN> 917,468
<INTEREST-INVEST> 431,486
<INTEREST-OTHER> 371,059
<INTEREST-TOTAL> 1,720,013
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 481,116
<INTEREST-INCOME-NET> 1,238,897
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 44,064
<EXPENSE-OTHER> 25,820
<INCOME-PRETAX> 1,257,141
<INCOME-PRE-EXTRAORDINARY> 1,257,141
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,257,141
<EPS-BASIC> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 83,080
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 37,599
<CHARGE-OFFS> (1,987)
<RECOVERIES> 376
<ALLOWANCE-CLOSE> 35,988
<ALLOWANCE-DOMESTIC> 35,988
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
