===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended September 30, 1998
|_| Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission file number 33-83524
MERIT SECURITIES CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1736551
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
10900 Nuckols Road, 3rd Floor, Glen Allen, Virginia 23060
Address of principal executive offices) (Zip Code)
(804) 217-5800
(Registrant's telephone number, including area code)
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 ninety days. |X| Yes |_| No
As of October 31, 1998, the latest practicable date, there were 1,000
shares of Merit Securities Corporation common stock outstanding.
The registrant meets the conditions set forth in General Instructions
H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the
reduced disclosure format.
===============================================================================
MERIT SECURITIES CORPORATION
FORM 10-Q
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at September 30, 1998 and
December 31, 1997 3
Statements of Operations for the three and nine months
ended September 30, 1998 and 1997 4
Statement of Shareholder's Equity for the nine months
ended September 30, 1998 5
Statements of Cash Flows for the nine months ended
September 30, 1998 and 1997 6
Notes to Unaudited Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 14
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MERIT SECURITIES CORPORATION
Balance Sheets
(amounts in thousands except share data)
September 30, December 31,
1998 1997
----------------- ----------------
ASSETS:
Collateral for collateralized bonds $ 3,836,438 $ 3,835,289
Prepaid shelf registration fees 406 334
Cash 10 10
================= ================
$ 3,836,854 $ 3,835,633
================= ================
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
Non-recourse debt - collateralized bonds $ 3,634,691 $ 3,622,877
Due to affiliates 8,994 43,789
----------------- ----------------
3,643,685 3,666,666
----------------- ----------------
SHAREHOLDER'S EQUITY:
Common stock, no par value,
10,000 shares authorized,
1,000 shares issued and outstanding 10 10
Additional paid-in capital 190,156 125,952
Accumulated other comprehensive income 26,591 64,707
Accumulated deficit (23,588) (21,702)
----------------- ----------------
193,169 168,967
================= ================
$ 3,836,854 $ 3,835,633
================= ================
<FN>
See notes to unaudited financial statements.
</FN>
MERIT SECURITIES CORPORATION
Statements of Operations
(amounts in thousands except share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- ---------------
Interest Income:
Collateral for collateralized bonds $ 71,119 $ 51,097 $ 191,187 $ 133,260
-------------- -------------- -------------- ---------------
Interest and related expense:
Interest expense on collateralized bonds 68,066 49,577 191,051 126,161
Other collateralized bond expense 744 777 2,729 2,414
-------------- -------------- -------------- ---------------
68,810 50,354 193,780 128,575
-------------- -------------- -------------- ---------------
Net interest margin before provision for losses 2,309 743 (2,593) 4,685
Provision for losses (1,686) (600) (4,550) (1,800)
-------------- -------------- -------------- ---------------
Net interest margin 623 143 (7,143) 2,885
Net gain on sale of securities and other income 6,122 - 7,247 -
Interest on due to affiliate (636) (780) (1,990) (2,074)
-------------- -------------- -------------- ---------------
Net (loss) income $ 6,109 $ (637) $ (1,886) $ 811
============== ============== ============== ===============
<FN>
See notes to unaudited financial statements.
</FN>
MERIT SECURITIES CORPORATION
Statement of Shareholder's Equity
(amounts in thousands except share data)
Accumulated other
Common Additional comprehensive Accumulated
stock paid-in capital income deficit Total
------------ --------------- ------------------- --------------- ---------------
Balance at December 31, 1997 $ 10 $ 125,952 $ 64,707 $ (21,702) $ 168,967
Comprehensive loss:
Net loss - - - (1,886) (1,886)
Change in net unrealized gain on
investments available-for-sale - - (38,116) - (38,116)
------------ --------------- ------------------- --------------- ---------------
Total comprehensive loss - - (38,116) (1,886) (40,002)
Contributed capital - 64,204 - - 64,204
------------ --------------- ------------------- --------------- ---------------
Balance at September 30, 1998 $ 10 $ 190,156 $ 26,591 $ (23,588) $ 193,169
============ =============== =================== =============== ===============
<FN>
See notes to unaudited financial statements.
</FN>
MERIT SECURITIES CORPORATION
Statements of Cash Flows
(amounts in thousands)
Nine Months Ended
September 30,
1998 1997
------------------- ------------------
Operating activities:
Net (loss) income $ (1,886) $ 811
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Gain on sale of assets (7,247) -
Provision for losses 4,550 1,800
Amortization, net 28,525 14,487
(Increase) decrease in prepaid shelf registration fees (72) 313
Other (560) 699
------------------- ------------------
Net cash provided by operating activities 23,310 18,110
------------------- ------------------
Investing activities:
Collateral for collateralized bonds:
Purchase of loans subsequently securitized (1,692,780) (1,027,684)
Principal payments on collateral 1,588,220 619,061
Proceeds from sale of collateralized bonds 43,425 -
Net increase in accrued interest receivable and funds held
by trustee 1,219 (1,629)
------------------- ------------------
Net cash used for investing activities (59,916) (410,252)
------------------- ------------------
Financing activities:
Collateralized bonds:
Proceeds from issuance of collateralized bonds 1,589,272 989,797
Principal payments on collateralized bonds (1,581,640) (621,503)
Increase in accrued interest payable (435) 237
(Decrease) increase in due to affiliate (34,795) 968
Proceeds from capital contributions 64,204 22,643
------------------- ------------------
Net cash provided by financing activities 36,606 392,142
------------------- ------------------
Net change in cash - -
Cash at beginning of period 10 10
------------------- ------------------
Cash at end of period $ 10 $ 10
=================== ==================
Supplemental disclosure of cash flow information:
Cash paid for interest $ 188,460 $ 126,473
=================== ==================
<FN>
See notes to unaudited financial statements.
</FN>
MERIT SECURITIES CORPORATION
Notes to Unaudited Financial Statements
September 30, 1998
(amounts in thousands except share data)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. The financial statements include the accounts of
Merit Securities Corporation (the "Company"). The Company is a wholly-owned,
limited-purpose finance subsidiary of Issuer Holding Corporation ("IHC"). IHC
was formed on September 4, 1996 to acquire all of the outstanding stock of the
Company and certain other affiliates of Dynex Capital, Inc. ("Dynex") a New York
Stock Exchange listed financial services company (symbol: DX). IHC is a
wholly-owned subsidiary of Dynex. The Company was organized to facilitate the
securitization of securities secured by loans through the issuance and sale of
collateralized bonds (the "Bonds").
In the opinion of management, all material adjustments, consisting of
normal recurring adjustments, considered necessary for a fair presentation of
the financial statements have been included. The Balance Sheet at September 30,
1998, the Statements of Operations for the three and nine months ended September
30, 1998 and 1997, the Statement of Shareholder's Equity for the nine months
ended September 30, 1998, the Statements of Cash Flows for the nine months ended
September 30, 1998 and 1997, and the related notes to financial statements are
unaudited. Operating results for the nine months ended September 30, 1998 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the audited
financial statements and footnotes included in the Company's Form 10-K for the
year ended December 31, 1997.
Certain amounts for 1997 have been reclassified to conform to the
presentation for 1998.
NOTE 2-COLLATERAL FOR COLLATERALIZED BONDS
In accordance with the provisions of Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities, the Company has classified collateral for collateralized bonds as
available-for-sale. The following table summarizes the Company's amortized cost
basis and fair value of collateral for collateralized bonds at September 30,
1998 and December 31, 1997, and the related average effective interest rates
(calculated for the month ended September 30, 1998 and December 31, 1997, and
excluding unrealized gains and losses):
- ---------------------------------------------------------------------------------------------------------------
September 30, 1998 December 31, 1997
- ---------------------------------------------------------------------------------------------------------------
Effective Effective
Fair Value Interest Rate Fair Value Interest Rate
- ---------------------------------------------------------------------------------------------------------------
Collateral for collateralized bonds:
Amortized cost $ 3,828,334 7.3% $ 3,795,393 7.2%
Allowance for losses (18,487) (24,811)
- ---------------------------------------------------------------------------------------------------------------
Amortized cost, net 3,809,847 3,770,582
Gross unrealized gains 47,503 77,973
Gross unrealized losses (20,912) (13,266)
- ---------------------------------------------------------------------------------------------------------------
$ 3,836,438 $ 3,835,289
- ---------------------------------------------------------------------------------------------------------------
Collateral for collateralized bonds consists of debt securities backed
primarily by adjustable-rate and fixed-rate mortgage loans secured by first
liens on single family and multifamily residential housing properties and
commercial properties, manufactured housing installment loans secured by either
a UCC filing or a motor vehicle title, and property tax receivables. All
collateral for collateralized bonds is pledged to secure repayment of the
related collateralized bonds. All principal and interest (less servicing-related
fees) on the collateral is remitted to a trustee and is available for payment on
the collateralized bonds. The Company's exposure to credit losses on collateral
for collateralized bonds is generally limited to the principal amount of
collateral pledged in excess of the related collateralized bonds issued, as the
collateralized bonds issued by the limited-purpose finance subsidiaries are
non-recourse to the Company.
During the nine months ended September 30, 1998, the Company securitized
$1.7 billion of collateral, through one series of collateralized bonds. The
collateral securitized was primarily single-family mortgage loans and
manufactured housing loans. Under SFAS No. 125, if an entity retains a call
provision on the bonds in excess of a "clean-up" call, usually defined as 10% of
the initial principal amount of the bond, the entity is precluded from
accounting for the securitization of the collateral and the issuance of the
bonds as a sale. The call provision is considered individually for each bond
issued. On all but one class of bonds issued in this securitzation, the Company
retained call rights which allow the Company to call the bonds at the earlier of
the time that the outstanding principal reaches 35% of the aggregate initial
principal amount of the bonds, or on May 28, 2000. For the one class of bonds
with an original principal amount totaling $55,007, the Company retained only a
clean-up call provision of 10%. The Company therefore treated the issuance of
this class as a sale and recognized a gain of $7,534 in connection with the sale
of that class of bonds. The issuance of the remaining classes of bonds was
considered a secured financing transaction.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Merit Securities Corporation (the "Company") was incorporated in Virginia
on August 19, 1994 as a wholly-owned, limited-purpose finance subsidiary of
Dynex Capital, Inc. ("Dynex") a New York Stock Exchange listed financial
services company (symbol: DX). On September 4, 1996, Issuer Holding Corporation,
Inc. ("IHC"), a wholly-owned subsidiary of Dynex, acquired all of the
outstanding stock of the Company and certain other affiliates of Dynex.
The Company was organized to facilitate the securitization of securities
secured by loans through the issuance and sale of collateralized bonds (the
"Bonds"). The Bonds will be secured primarily by: (i) mortgage loans secured by
first or second liens on residential property, (ii) Federal National Mortgage
Association Mortgage-Backed Certificates, (iii) Federal Home Loan Mortgage
Corporation Mortgage-Backed Certificates, (iv) Government National Mortgage
Association Mortgage-Backed Certificates, (v) other mortgage pass-through
certificates or mortgage-collateralized obligations, (vi) property tax
receivables and (vii) consumer installment loans (collectively, the
"Collateral"). In the future, the Company may also securitize other types of
loans.
After payment of the expenses of an offering and certain administrative
expenses, the net proceeds from an offering of Bonds will be used to purchase
Collateral from IHC or various third parties. IHC can be expected to use the
proceeds to reduce indebtedness incurred to obtain such loans or to acquire
additional Collateral. After the issuance of a series of Bonds, the Company may
sell the Collateral securing that series of Bonds, subject to the lien of the
Bonds.
During the nine months ended September 30, 1998, the Company issued one (1)
series of bonds totaling approximately $1.6 billion aggregate principal amount.
As of September 30, 1998, the Company had eight (8) series of collateralized
bonds outstanding totaling approximately $3.6 billion, compared to $3.6 billion
at December 31, 1997, and $2.7 billion at September 30, 1997. Interest income on
the Collateral increased $57.9 million to $191.2 million for the nine months
ended September 30, 1998 compared to $133.3 million for the nine months ended
September 30, 1997, primarily as a result of the increased amount of outstanding
collateral. Interest expense on the Bonds increased $64.9 million from $126.2
million for the nine months ended September 30, 1997 to $191.1 million for the
nine months ended September 30, 1998, primarily due to the additional series
outstanding.
Net interest margin for the nine months ended September 30, 1998 decreased
to a negative $7.1 million from a positive $2.9 million for the same period for
1997. This decrease was primarily the result of higher premium amortization
caused by higher prepayments during the nine months ended September 30, 1998
than during the same period in 1997. In addition, the Company securitized lower
coupon collateral, principally A+ quality single-family ARM loans during 1997.
The most recent securitization included loan premium of 0.34% of the total
collateral.
With collateralized bond structures, the Company retains credit risk
relative to the amount of overcollateralization required in conjunction with the
bond insurance. Losses are generally first applied to the overcollateralized
amount, with any losses in excess of that amount borne by the bond insurer or
the holders of the collateralized bonds. The Company only incurs credit losses
to the extent that losses are incurred in the repossession, foreclosure and sale
of the underlying collateral. Such losses generally equal the excess of the
principal amount outstanding, less any proceeds from mortgage or hazard
insurance, over the liquidation value of the collateral. To compensate the
Company for retaining this loss exposure, the Company generally receives an
excess yield on the collateralized securities relative to the yield on the
collateralized bonds. At September 30, 1998, the Company retained $174.5 million
in aggregate principal amount of overcollateralization, and had reserves, or
otherwise had provided coverage on $48.8 million of this potential credit loss
exposure. $30.3 million of this reserve amount is in the form of a loss
reimbursement guarantee from an A rated third-party.
At September 30, 1998, the Company had securities of approximately $329
million remaining for issuance under a registration statement filed with the
Securities and Exchange Commission. The Company anticipates issuing additional
Bonds in the future.
The Company competes in a national market with other private conduits and
various financial services companies. Economic conditions, interest rates,
regulatory changes and market dynamics all influence the mortgage securities
market.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
None
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
3.1 Articles of Incorporation of the Registrant (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
3.2 Bylaws of the Registrant (Incorporated herein by reference to the
Exhibits to Registrant's Registration Statement No. 33-83524 on Form S-3 filed
August 31, 1994).
3.3 Amended and Restated Articles of Incorporation of the Registrant,
effective April 19, 1995 (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed April 21, 1995).
4.1 Indenture between Registrant and Trustee, dated as of August 1, 1994
(Incorporated herein by reference to the Exhibits to Registrant's Registration
Statement No. 33-83524 on Form S-3 filed August 31, 1994).
4.2 Form of Supplement Indenture between Registrant and Trustee
(Incorporated herein by reference to the Exhibits to Registrant's Registration
Statement No. 33-83524 on Form S-3 filed August 31, 1994).
4.3 Copy of the Indenture, dated as of November 1, 1994, by and between the
Registrant and Texas Commerce Bank National Association, as Trustee
(Incorporated herein by reference to Exhibit to the Registrant's Current Report
on Form 8-K, filed December 19, 1994).
4.4 Copy of the Series 1 Indenture Supplement, dated as of November 1,
1994, by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (including schedules and exhibits) (Incorporated herein
by reference to Exhibit to the Registrant's Current Report on Form 8-K, filed
December 19, 1994).
4.5 Copy of the Series 2 Indenture Supplement, dated as of February 1,
1995, by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (including schedules and exhibits) (Incorporated herein
by reference to Exhibit to the Registrant's Current Report on Form 8-K, filed
March 8, 1995).
4.6 Copy of the Series 3 Indenture Supplement, dated as of March 1, 1995,
by and between the Registrant and Texas Commerce Bank National Association, as
Trustee (including schedules and exhibits) (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed April 21, 1995).
4.7 Copy of the Series 4 Indenture Supplement, dated as of June 1, 1995, by
and between the Registrant and Texas Commerce Bank National Association, as
Trustee (including schedules and exhibits) (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed July 10, 1995).
4.8 Copy of the Series 5 Indenture Supplement, dated as of October 1, 1995,
to Indenture, dated as of November 1, 1994, by and between the Registrant and
Texas Commerce Bank National Association, as Trustee (related exhibits available
upon request to the Trustee). (Incorporated herein by reference to Exhibit to
the Registrant's Current Report on Form 8-K, filed November 15, 1995).
4.9 Copy of the Series 6 Indenture Supplement, dated as of March 1, 1996,
by and between the Registrant and Texas Commerce Bank National Association, as
Trustee (including schedules and exhibits) (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed March 21, 1996).
4.10 Copy of the Series 7 Indenture Supplement, dated as of May 1, 1996, by
and between the Registrant and Texas Commerce Bank National Association, as
Trustee (related schedules and exhibits available upon request of the Trustee).
(Incorporated herein by reference to Exhibit to Registrant's Current Report on
Form 8-K, filed June 19, 1996).
4.11 Copy of the Series 8 Indenture Supplement, dated as of September 1,
1996, by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (related schedules and exhibits available upon request
of the Trustee). (Incorporates herein by reference to Exhibit of Registrant's
Current Report on Form 8-K, filed October 9, 1996).
4.12 Copy of the Series 9 Indenture Supplement, dated as of June 1, 1997,
by and between the Registrant and Texas Commerce Bank National Association, as
Trustee (related schedules and exhibits available upon request of the Trustee).
(Incorporates herein by reference to Exhibit of Registrant's Current Report on
Form 8-K, filed July 11, 1997).
4.13 Copy of the Series 10 Indenture Supplement, dated as of December 1,
1997, by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (related schedules and exhibits available upon request
of the Trustee). (Incorporates herein by reference to Exhibit of Registrant's
Current Report on Form 8-K, filed January 6, 1998).
4.14 Copy of the Series 11 Indenture Supplement, dated as of March 1, 1998,
by and between the Registrant and Texas Commerce Bank National Association, as
Trustee (related schedules and exhibits available upon request of the Trustee).
(Incorporates herein by reference to Exhibit of Registrant's Current Report on
Form 8-K, filed June 12, 1998).
99.1 Standard Provisions to Servicing Agreement (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.2 Form of Servicing Agreement (Incorporated herein by reference to the
Exhibits to Registrant's Registration Statement No. 33-83524 on Form S-3 filed
August 31, 1994).
99.3 Standard Terms to Master Servicing Agreement (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.4 Form of Master Servicing Agreement (Incorporated herein by reference
to the Exhibits to Registrant's Registration Statement No. 33-83524 on Form S-3
filed August 31, 1994).
99.5 Form of Prospectus Supplement of Bonds secured by adjustable-rate
mortgage loans (Incorporated herein by reference to Exhibits to Registrant's
Pre-Effective Amendment No. 4 to Registration Statement No. 33-83524 on Form S-3
filed December 5, 1994).
99.6 Form of Financial Guaranty Assurance Policy (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.7 Form of GEMICO Mortgage Pool Insurance Policy (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.8 Form of PMI Mortgage Insurance Co. Pool Insurance Policy (Incorporated
herein by reference to the Exhibits to Registrant's Registration Statement No.
33-83524 on Form S-3 filed August 31, 1994).
99.9 Form of Prospectus Supplement of Bonds secured by fixed-rate mortgage
loans (Incorporated herein by reference to Exhibits to Registrant's
Pre-Effective Amendment No. 4 to Registration Statement No. 33-83524 on Form S-3
filed December 5, 1994).
99.10 Copy of Financial Guaranty Insurance Policy No. 50331-N issued by
Financial Security Assurance Inc., dated December 7, 1994, with respect to the
Series 1 Bonds (Incorporated herein by reference to the Exhibit to Registrant's
1994 Form 10-K, dated and filed March 31, 1995).
99.11 Copy of Financial Guaranty Insurance Policy No. 95010074 issued by
Financial Guaranty Insurance Company, dated February 23, 1995, with respect to
the Series 2 Bonds (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed March 8, 1995).
99.12 Copy of the Saxon Mortgage Funding Corporation Servicing Guide for
Credit Sensitive Loans, February 1, 1995 Edition (Incorporated herein by
reference to Exhibit to the Registrant's Current Report on Form 8-K, filed March
8, 1995).
99.13 Copy of Financial Guaranty Insurance Policy No. 50364-N issued by
Financial Guaranty Assurance Inc., dated April 7, 1995, with respect to the
Series 3 Bonds (Incorporated herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed April 21, 1995).
99.14 Copy of Financial Guaranty Insurance Policy No. 50382-N issued by
Financial Guaranty Assurance Inc., dated June 29, 1995, with respect to the
Series 4 Bonds (Incorporated herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed July 10, 1995).
99.15 Copy of the Standard Terms to Master Servicing Agreement, June 1,
1995 Edition (incorporated herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed July 10, 1995).
99.16 Copy of Financial Guaranty Insurance Policy No. 19804 issued by MBIA
Insurance Corporation (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed November 15, 1995).
99.17 Copy of Financial Guaranty Insurance Policy No. 20596 issued by MBIA
Insurance Corporation (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed March 21, 1996).
99.18 Copy of Financial Guaranty Insurance Policy No. 21296 issued by MBIA
Insurance Corporation (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed June 19, 1996).
(b) Reports on Form 8-K
Current Report on Form 8-K as filed with the Commission on September 3,
1998, relating to the Registrant's Series 6 Bonds.
Current Report on Form 8-K as filed with the Commission on September 3,
1998, relating to the Registrant's Series 8 Bonds.
Current Report on Form 8-K as filed with the Commission on September 3,
1998, relating to the Registrant's Series 8 Bonds.
Current Report on Form 8-K as filed with the Commission on September 23,
1998, relating to the Registrant's Series 11 Bonds.
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.
MERIT SECURITIES CORPORATION
By: /s/ Lynn K. Geurin
Lynn K. Geurin
(Principal Executive Officer)
/s/ Stephen J. Benedetti
Stephen J. Benedetti
(Principal Financial & Accounting Officer)
Dated: November 13, 1998