ITEM 1 - -BUSINESS
Union Planters Mortgage Finance Corp. (the "Company") was established September 5, 1997 as a wholly owned, limited purpose, finance subsidiary of Union Planters Bank, National Association, which in turn is a subsidiary of Union Planters Corporation. There was essentially no business activity on the part of the Company until May 1998. The Company was organized to facilitate the securitization of loans and other assets through the issuance and sale of collateralized bonds and pass-through securities through trusts established by the Company. Securities issued through trusts will be secured primarily by residential mortgage loans and mortgage-backed certificates of various types. In the future, the Company may finance other types of loans and assets.
The Company competes in a national market with other private conduits and various financial firms. Economic conditions, interest rates, regulatory changes and market dynamics all influence the securities market.
ITEM 2
ITEM 2 - -PROPERTIES
The Company has no physical properties.
ITEM 3
ITEM 3 - -LEGAL PROCEEDINGS
None.
ITEM 4
ITEM 4 - -SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Information in response to this Item is omitted pursuant to General Instruction I.
PART II
ITEM 5
ITEM 5 - -MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
All of the Company's outstanding common stock is owned by Union Planters Bank, National Association. Accordingly, there is no market for its common stock.
ITEM 6
ITEM 6 - -SELECTED FINANCIAL DATA
Information in response to this Item is omitted pursuant to General Instruction I.
ITEM 7
ITEM 7 - -MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Union Planters Mortgage Finance Corp. (the "Company") was established September 5, 1997 as a wholly owned, limited purpose, finance subsidiary of Union Planters Bank, National Association (the "Bank"), which in turn is a subsidiary of Union Planters Corporation. There was essentially no business activity on the part of the Company until May 1998. The Company was organized to facilitate the securitization of loans and other assets through the issuance and sale of collateralized bonds and pass-through securities through trusts established by the Company. Securities issued through trusts will be secured primarily by residential mortgage loans and mortgage-backed certificates of various types. In the future, the Company may finance other types of loans and assets.
In July 2000, the Company securitized approximately $127 million of FHA-insured and VA-guaranteed mortgage loans serviced by the Bank. The loans continue to be serviced by the Bank for a fee (.5% to 1%). Affiliates of the Company purchased all of the subordinated securities issued in this transaction, with an approximate market value of $6.0 million. This securitization, treated as a sale, did not result in any gain or loss for the Company. All expenses related to the transactions were borne by the Bank. Credit losses not covered by insurance or guarantee are absorbed by
subordinated security holders or, in limited circumstances, the Bank as servicer. Therefore, the Company carries no loan loss reserves.
In February 1999, the Company securitized approximately $132 million in principal amount of previously defaulted FHA-insured and VA-guaranteed mortgage loans serviced by the Bank. The loans securitized had a weighted-average maturity of 222 months and a weighted-average interest rate of 9.67% per annum. The loans will continue to be serviced by the Bank for a one percent fee. Affiliates of the Company purchased all of the subordinated securities issued in this transaction, with an approximate market value of $9.3 million. This securitization, treated as a sale, resulted in a gross gain of approximately $5.4 million before costs and expenses. Securitization costs and expenses accrued by the Company were approximately $829,000. Securitization costs and expenses included underwriting costs, legal and accounting fees, as well as cost to prepare, record and deliver loan documents and files. Credit losses not covered by insurance or guarantees are absorbed by subordinated security holders or, in limited circumstances, the Bank as servicer. Therefore, the Company carries no loan loss reserves. Excess cash resulting primarily from the net gain of $4.5 million resulted in declaration of a dividend payment to the Bank of $3.0 million.
On May 28, 1998, the Company securitized approximately $381 million in principal amount of previously defaulted FHA-insured and VA-guaranteed mortgage loans serviced by the Bank. The loans securitized had a weighted-average maturity of 218 months and a weighted-average interest rate of 9.87% per annum. The loans will continue to be serviced by the Bank for a one percent fee. Affiliates of the Company purchased all of the subordinated securities issued in this transaction, with an approximate market value of $17.4 million. This securitization, treated as a sale, resulted in a gross gain of approximately $20.1 million. Credit losses not covered by insurance or guarantees are absorbed by subordinated security holders or, in limited circumstances, the Bank as servicer. Therefore, the Company carries no loan loss reserves. The Company has incurred and will continue to incur expenses associated with preparation and maintenance of loan files and recordation of loan documents. Excess cash resulting largely from a net gain of $17.6 million resulted in declaration of a dividend to dividend payment to the Bank of $11.0 million.
ITEM 7A
ITEM 7A - -QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not Applicable.
ITEM 8
ITEM 8 - -FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of Union Planters Mortgage Finance Corp.
In our opinion, the accompanying balance sheet and the related statements of operations, changes in shareholder's equity and cash flows present fairly, in all material respects, the financial position of Union Planters Mortgage Finance Corp. (the "Company") at December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. 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 of America, 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 our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Memphis, Tennessee February 26, 2001
UNION PLANTERS MORTGAGE FINANCE CORP. BALANCE SHEET
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The accompanying notes are an integral part of these financial statements.
UNION PLANTERS MORTGAGE FINANCE CORP. STATEMENT OF OPERATIONS
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The accompanying notes are an integral part of these financial statements.
UNION PLANTERS MORTGAGE FINANCE CORP. STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
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The accompanying notes are an integral part of these financial statements.
UNION PLANTERS MORTGAGE FINANCE CORP. STATEMENT OF CASH FLOWS
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The accompanying notes are an integral part of these financial statements.
UNION PLANTERS MORTGAGE FINANCE CORP. NOTES TO FINANCIAL STATEMENTS
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES. The accounting and reporting policies of Union Planters Mortgage Finance Corp. (the "Company") conform with generally accepted accounting principles and general practice within the financial services industry. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes; actual results could differ from these estimates.
BASIS OF PRESENTATION. The financial statements include the accounts of the Company. The Company was established September 5, 1997 as a wholly owned, limited-purpose finance subsidiary of Union Planters Bank, National Association (the "Bank"), which in turn is a subsidiary of Union Planters Corporation ("UPC"). The Company was organized to facilitate the securitization of loans and other assets through the issuance and sale of collateralized bonds and pass-through securities through trusts established by the Company. Securities issued through trusts will be secured primarily by residential mortgage loans and mortgage-backed certificates of various types. These financial statements do not include the accounts of the trusts established to carry out the issuance and sale of collateralized bonds and pass-through securities.
NOTE 2. SALE OF LOANS
In 2000, 1999, and 1998, the Company securitized approximately $127 million, $132 million and $381 million, respectively, in principal amount of previously defaulted FHA insured and VA guaranteed mortgage loans serviced by the Bank. The transactions were accounted for as sales in accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfer and Servicing of Financial Assets and Extinguishment of Liabilities." The following summarizes the gains:
NOTE 3. INCOME TAXES
Income taxes are computed on a separate company basis. The Company will file a consolidated federal income tax return with the Bank and UPC. Deferred income taxes are provided in accordance with SFAS No. 109, "Accounting for Income Taxes." The components of income tax expense (benefit) are as follows:
The deferred tax asset is composed of accrued expenses that have not been paid. The Company's effective tax rate does not differ from the federal statutory rate of 35%.
NOTE 4. RELATED PARTY
The Company is financially dependent on agreements with the Bank to effect certain of its operations, including providing loans and other assets for securitization and sale. The Company is also financially dependent on agreements with UPC.
ITEM 9
ITEM 9 - -CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None. PART III
ITEM 10
ITEM 10 - -DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information in response to this Item is omitted pursuant to General Instruction I.
ITEM 11
ITEM 11 - -EXECUTIVE COMPENSATION
Information in response to this Item is omitted pursuant to General Instruction I.
ITEM 12
ITEM 12 - -SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information in response to this Item is omitted pursuant to General Instruction I.
ITEM 13
ITEM 13 - -CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this Item is omitted pursuant to General Instruction I.
PART IV
ITEM 14
ITEM 14 - -EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Index to financial statements is included in Item 8.
(a) (2) Not applicable.
(a) (3) Exhibits.
3.1 Certificate of Incorporation of the Registrant (Incorporated herein by reference to the Exhibits to Registrant's Registration Statement No. 333-35471 on Form S-3, filed September 12, 1997).
3.2 Amended and Restated Bylaws of the Registrant (Incorporated herein by reference to the Exhibits to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement No. 333-35471 on Form S-3, filed January 16, 1998).
4.1 Standard Terms to Pooling and Servicing Agreement (January 1998 Edition) (Incorporated herein by reference to the Exhibits to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement No. 333-35471 on Form S-3, filed January 16, 1998).
4.2 Form of Indenture between Registrant and Trustee (Incorporated herein by reference to the Exhibits to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement No. 333-35471 on Form S-3, filed January 16, 1998).
4.3 Form of Trust Agreement between Registrant and Trustee (Incorporated herein by reference to the Exhibits to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement No. 333-35471 on Form S-3, filed January 16, 1998).
4.4 Form of Deposit Trust Agreement between Registrant and Trustee (Incorporated herein by reference to the Exhibits to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement No. 333-35471 on Form S-3, filed January 16, 1998).
4.5 Standard Terms to Pooling and Servicing Agreement (May 1998 Edition) (Incorporated herein by reference to Exhibit to the Registrant's Current Report on Form 8-K , filed June 11, 1998).
4.6 Copy of the Series 1998-1 Pooling and Servicing Agreement, dated as of May 1, 1998, by and among the Registrant, Union Planters Bank, N.A., as Master Servicer, The Bank of New York, as Contract of Insurance Holder, and The Bank of New York, as Trustee (Incorporated herein by reference to Exhibit to the Registrant's Current Report on Form 8-K , filed June 11, 1998).
4.7 Copy of Series 1999-1 Pooling and Servicing Agreement, dated as of February 1, 1999, by and among the Registrant, Union Planters Bank, N.A., as Master Servicer, and Contract of Insurance Holder, and The Bank of New York, as Trustee (Incorporated herein by reference to Exhibit to the Registrant's Current Report on Form 8-K, filed March 2, 1999).
4.8 Copy of Series 2000-1 Pooling and Servicing Agreement, dated as of July 1, 2000, by and among the Registrant, Union Planters Bank, N.A., as Master Servicer and Contract of Insurance Holder, and the Bank of New York, as Trustee (Incorporated herein by reference to Exhibit to the Registrant's Current Report on Form 8-K, filed August 4, 2000).
99.1 Form of Sales Agreement between the Registrant, as Purchaser, and the Seller (Incorporated herein by reference to the Exhibits to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement No. 333-35471 on Form S-3, filed January 16, 1998).
99.2 Form of Supplemental Servicing Agreement (Incorporated herein by reference to the Exhibits to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement No. 333-35471 on Form S-3, filed January 16, 1998).
(b) The Registrant filed the following current reports on Form 8-K for the fourth quarter of 2000.
None.
(c) Exhibits
Please refer to Item 14(a)(3) hereinabove.
(d) Additional financial statements
(1) Separate Financial Statements of subsidiaries not consolidated and fifty-percent-or-less persons.
None.
(2) Affiliates whose securities are pledged as collateral
None.
(3) Schedules
None.
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.
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.