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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
[ ] 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 1-10683
MBNA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 52-1713008
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1100 NORTH KING STREET
WILMINGTON, DE 19884-0141
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 362-6255
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, $.01 par value New York Stock Exchange
6 7/8% Senior Notes due October 1, 1999 New York Stock Exchange
7 1/2% Cumulative Preferred Stock, Series A New York Stock Exchange
Adjustable Rate Cumulative Preferred Stock, Series B New York Stock Exchange
MBNA Capital A 8.278% Capital Securities, Series A, New York Stock Exchange
guaranteed by MBNA Corporation to the extent
described therein
MBNA Capital B Floating Rate Capital Securities, New York Stock Exchange
Series B, guaranteed by MBNA Corporation to the
extent described therein
MBNA Capital C 8.25% Trust Originated Preferred New York Stock Exchange
Securities, Series C, guaranteed by MBNA Corporation
to the extent described therein
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 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 the Registrant's knowledge, in the definitive proxy or information
statement incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 10, 1999, the aggregate market value of the voting and
non-voting common equity held by non-affiliates of the Registrant calculated by
reference to the closing price of the Registrant's Common Stock as reported on
the New York Stock Exchange was $17,569,928,840. As of March 10, 1999, there
were outstanding 801,781,250 shares of Common Stock, par value $.01 per share,
which stock is the only class of Registrant's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1998 Annual Report to Stockholders for the year ended
December 31, 1998 are incorporated by reference into Parts I, II and IV.
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held April 26, 1999 are incorporated by reference into Part
III.
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MBNA CORPORATION
1998 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PAGE
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PART I
ITEM 1. Business.................................................... 1
ITEM 2. Properties.................................................. 9
ITEM 3. Legal Proceedings........................................... 10
ITEM 4. Submission of Matters to a Vote of Security Holders......... 10
Executive Officers of the Registrant........................ 10
PART II
ITEM 5. Market for the Registrant's Common Stock and Related
Stockholder Matters....................................... 12
ITEM 6. Selected Financial Data..................................... 12
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 13
ITEM 7A Quantitative and Qualitative Disclosures about Market
Risk...................................................... 13
ITEM 8. Financial Statements and Supplementary Data................. 13
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 13
PART III
ITEM 10. Directors and Executive Officers of the Registrant.......... 13
ITEM 11. Executive Compensation...................................... 13
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 13
ITEM 13. Certain Relationships and Related Transactions.............. 13
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K....................................................... 14
Signatures............................................................. 18
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PART I
ITEM 1. BUSINESS
OVERVIEW
MBNA Corporation (the "Corporation"), a registered bank holding company,
was incorporated under the laws of Maryland on December 6, 1990. It is the
parent company of MBNA America Bank, N.A. (the "Bank"), a national bank
organized in January 1991 as the successor to a national bank formed in 1982.
The Bank has two wholly owned foreign bank subsidiaries, MBNA International
Bank Limited ("MBNA International") formed in 1993 and located in the United
Kingdom and MBNA Canada Bank ("MBNA Canada") formed in 1997. Through the Bank,
MBNA International and MBNA Canada, the Corporation is the world's largest
independent credit card lender and is the leading issuer of affinity credit
cards, marketed primarily to members of associations and Customers of financial
institutions. In addition to its credit card lending, the Corporation also
makes other consumer loans and offers insurance and deposit products.
PRODUCTS
Credit Cards
The Corporation offers two general types of credit cards, premium and
standard, issued under either the MasterCard(R) or Visa(R) name.* The
Corporation markets standard and premium cards to new Customers and it markets
premium cards to qualifying standard card Customers. Premium cards include Gold
and Platinum Plus cards. Premium card usage and average account balances are
generally higher than those of standard card Customers.
Other Consumer Loans
The Corporation's other consumer loan products include unsecured lines of
credit accessed by check and unsecured installment loans. These products are
used by Customers primarily for large purchases or consolidation of other
consumer debt. The Bank markets these products to customers of retailers, to the
Bank's existing credit card Customers and to others.
The Corporation also offers home equity loans through MBNA America Bank
(Delaware), a state bank, and airplane loans to individuals through MBNA
Consumer Services, Inc.
Deposits
The Corporation offers money market deposit accounts and certificates of
deposit through the Bank. Money market deposit accounts provide Customers with
liquidity and convenience of service, as well as insurance up to $100,000 per
depositor by the Federal Deposit Insurance Corporation ("FDIC"). Certificates of
deposit are traditional fixed term investments with maturities that typically
range from six to sixty months. They are also insured by the FDIC up to
$100,000. Deposit products are offered to members of the Corporation's endorsing
associations, to existing credit card Customers and to others.
Insurance
The Corporation offers credit insurance to credit card Customers of the
Bank, MBNA International and MBNA Canada. It also offers automobile insurance
and life insurance through the Bank to Customers. In July 1998, the Corporation
suspended marketing new automobile insurance policies and later terminated its
agreement with TIG, its insurance underwriter. In December 1998, the Corporation
signed a letter of intent with American International Group, Inc. ("AIG") to
underwrite automobile, homeowners, and personal umbrella insurance products for
the Corporation's Customers. The Corporation and AIG expect to begin marketing
AIG automobile insurance to the Corporation's Customers during 1999.
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* MasterCard(R) is a federally registered servicemark of MasterCard
International Inc.; Visa(R) is a federally registered servicemark of Visa
U.S.A., Inc.
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MARKETING
The Corporation directs its marketing efforts primarily to members of
endorsing groups, to customers of financial institutions, and to targeted lists
of people with a strong common interest. The Corporation is the recognized
leader in affinity marketing, with endorsements from thousands of membership
organizations and financial institutions.
Credit cards issued to affinity group members or financial institution
customers usually carry custom graphics and the name and logo of the endorsing
organization. The Corporation develops a customized marketing program for each
endorsing organization or financial institution. In addition to servicing the
credit cards, the Corporation offers economic incentives to the endorsing groups
and financial institutions.
The Corporation's affinity marketing approach includes created personal
interest and regional affinity programs for people with strong common interests
but without a specific group affiliation. Personal interest programs are offered
to people with common interests through purchased targeted lists. Regional
programs include state and city series cards that bear images of regional or
local scenes.
The Corporation also offers co-branded cards through relationships with
commercial firms, including professional sports teams. These programs typically
include incentives to Customers to purchase services or merchandise from the
co-branding firm.
The Corporation primarily uses direct mail, telemarketing, person-to-person
and internet marketing to market its credit cards and other products. Thousands
of different marketing campaigns are developed each year, generating millions of
direct mail pieces designed to add accounts and stimulate use. The Corporation
customizes its marketing approach for each program. The Corporation's in-house
advertising agency designs custom graphics for credit cards and prepares direct
mail programs and advertisements. The Corporation conducts internet marketing
through a combination of banner, e-mail and search engine advertisements. In
addition, the Corporation's marketing activities include efforts to retain
profitable accounts and programs designed to activate new accounts and stimulate
usage of existing accounts, primarily through balance transfer programs.
The Corporation conducts marketing activities in the United States through
MBNA Marketing Systems, Inc., a subsidiary of the Bank. The Corporation markets
credit cards and other consumer loans in the United Kingdom through MBNA
International and in Canada through MBNA Canada.
MBNA Marketing Systems, Inc. has regional centers in Maine, Ohio, Texas,
Maryland, Florida and California and sales offices in New York City, Chicago and
Atlanta. MBNA International has its headquarters in Chester, England and sales
and marketing offices in London, England, Dublin, Ireland and Edinburgh,
Scotland. MBNA Canada has its headquarters in Gloucester, Ontario and a sales
and marketing office in Montreal, Quebec. These regional centers and sales
offices assist the Corporation to obtain endorsements, increase its familiarity
with local markets, better understand the needs and motivations of Customers and
keep in close touch with what competitors are doing.
MBNA Marketing Systems, Inc. has 13 telemarketing facilities in 9 states.
As of December 31, 1998, it employed approximately 3,300 people in
telemarketing, the majority of whom worked part time. The telemarketing
organization generates new accounts by calling prospects obtained from
membership lists of endorsing organizations and other prospects lists.
CREDIT
The Corporation makes credit decisions by combining sophisticated
technology and predictive models with the insight of a credit analyst. Approved
credit applications are reviewed individually by a credit analyst, who assigns a
credit line based on a review of the potential Customer's financial history and
capacity to repay. Less than half of the credit applications received by the
Corporation in 1998 were approved. Credit analysts review credit reports
obtained through an independent credit reporting agency, and use a delinquency
probability model to assist them in reaching a credit decision for each
applicant. Credit analysts also review and verify other information, such as
employment and income, when necessary to make a credit decision.
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Further levels of review are automatically triggered, depending upon the level
of risk indicated by the delinquency probability model and a combination of
other factors indicative of credit quality. Credit lines for existing Customers
are regularly reviewed for credit line increases, and when appropriate,
reductions in credit lines. The Corporation's Loan Review Department
independently reviews selected applications to ensure quality and consistency.
The Corporation's losses have been consistently below the Visa and MasterCard
industry average.
RISK CONTROL
The Corporation manages risk at the Customer level through sophisticated
analytical techniques combined with regular judgmental review. Transactions are
evaluated at the point of sale, where risk levels are balanced with
profitability and Customer satisfaction. Additionally, Customers showing signs
of financial stress are periodically reviewed, a process which includes an
examination of the Customer's credit file and in many cases a phone call for
clarification of the situation.
A balanced approach is also used when stimulating portfolio growth. Risk
levels are measured through statistical models that incorporate payment
behavior, employment information, and transaction activity. Credit bureau scores
and attributes are obtained and combined with internal information to allow the
Corporation to increase credit lines and promote account usage while minimizing
additional risk.
The Corporation utilizes technology, including a neural network and expert
systems, to detect and prevent fraud at its earliest stages. It also employs
authorization strategies to control fraud losses.
COLLECTION (CUSTOMER ASSISTANCE)
The Corporation's collection (Customer Assistance) philosophy, based on a
persistent yet professional approach, is to work with each past due Customer at
an early stage of delinquency. The Corporation employs several computerized
systems to assist in the collection of past due accounts. Initially, the
Predictive Management System analyzes each Customer's purchase and repayment
habits, and selects accounts for initial contact with the objective of
contacting the highest risk accounts first. Subsequently, the accounts selected
are queued to the Corporation's proprietary Collection Tracking and Analysis
system (CTA) and Outbound Call Management System (OCMS). OCMS sorts accounts by
a number of factors, including time zone, degree of delinquency and dollar
amount due. OCMS automatically dials delinquent accounts in order of priority.
Representatives are automatically linked to the Customer's account information
and voice line when a contact is established. Customers who are experiencing
significant financial problems and may consider filing for bankruptcy are
referred to a specialized group of people who have been educated on effective
alternatives to bankruptcy, including debt counseling.
CTA is used to work accounts continually, by market sector, at each stage
of delinquency through the 180-day past due level. As an account enters the
180-day delinquency level, it is classified as a potential charge-off. Accounts
failing to make a payment during the 180-day cycle are written off. Managers may
defer charge-off of an account for another month, pending continued payment
activity or other special circumstances. Senior manager approval is required on
all exceptions to charge-off.
A Customer account may be reaged to remove existing delinquency. Generally,
to qualify for reaging, the account must have been open for at least one year
and cannot have been reaged during the preceding 365 days. The Customer must
have made payments equal to a total of three minimum payments in the last 90
days, including one full minimum payment during the last 30 days. All account
reages are approved by a manager. Collection reages are reviewed by the Loan
Review Department.
Once an account has been charged-off, it may be sold to a third party
vendor or retained by the Corporation for collection. The Corporation has
entered into contracts for the sale of these accounts which provide pricing
which is comparable to amounts which were realized from previous charge-off
collection efforts, after the deduction of the costs of collection.
In February 1999, the Federal Financial Institutions Examinations Council
published a revised policy statement on the classification of consumer loans.
The revised policy establishes uniform guidelines for
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charge-off of loans to delinquent, bankrupt, and deceased borrowers, for
charge-off of fraudulent accounts, and for re-aging, extending, deferring or
rewriting delinquent accounts. The guidelines must be implemented by June 30,
1999, unless programming resources are required, in which case they must be
implemented by December 31, 2000. The Corporation will accelerate charge-off of
some delinquent loans when it implements the guidelines, but does not expect
implementation to have a material effect on the Corporation's consolidated
financial statements.
OPERATIONS
Account processing services performed by MBNA Hallmark Information
Services, Inc. ("Information Services"), a wholly-owned subsidiary of the Bank,
include data processing, payment processing, statement rendering, card
production and network services. Information Services' data network provides an
interface to MasterCard and Visa for performing authorizations and settlement
funds transfers. Most data processing and network functions are performed at
Information Services' facilities in Dallas, Texas, and Newark, Delaware.
Information Services generates and mails to Customers monthly statements
summarizing account activity and processes Customer payments.
TECHNOLOGY
The Corporation uses sophisticated systems and technology in all aspects of
its business operations to enhance Customer service and improve efficiency.
These systems include marketing databases, advanced telecommunications networks
to support Customer service and telemarketing, a credit decisioning system which
processes credit card applications with on-line credit bureaus to support
credit, neural networks to identify and prevent fraud, and selective statement
insertion for customizing communications with Customers. These systems enable
the Corporation to implement customized marketing and service strategies for
endorsed organizations. The Corporation relies primarily on internal development
of technology solutions to ensure the flexibility, quality and responsiveness of
computer and telecommunication systems needed in its business. For a discussion
of Year 2000 compliance, see "Year 2000 Readiness Disclosure" on pages 31
through 33 of the 1998 Annual Report to Stockholders, which is incorporated
herein by reference.
TERMS AND CONDITIONS
Each Customer and the Corporation enter into an agreement which governs the
terms and conditions of the Customer's account. The Corporation reserves the
right to add or change any terms, conditions, services or features of its
accounts at any time, including increasing or decreasing periodic finance
charges, other charges or minimum payment terms. The agreement with each
Customer provides that the Corporation may apply such changes, when applicable,
to current outstanding balances as well as to future transactions. The Customer
can avoid a rate increase by notice to the Corporation and by not using the
account.
A Customer may use an account for purchases and cash advances. Monthly
periodic finance charges are calculated by multiplying the applicable average
daily balances on the account by the applicable daily periodic rates and by the
number of days in the billing cycle.
Finance charges are calculated on purchases from the date of the purchase
or the first day of the billing cycle in which the purchase posts to the
account, whichever is later, and with respect to credit card accounts are not
assessed in most circumstances on new purchases if all balances shown in the
previous billing statement are paid in full by the payment due date, which is
generally 1 day before the next billing date. Finance charges on credit card
accounts are not assessed in most circumstances on previous purchases if all
balances shown on the two previous billing statements are paid by their
respective due dates. Finance charges on cash advances are calculated from the
date of the transaction.
Credit card Customers are required to make a minimum monthly payment equal
to the greater of $15 or 2% of the outstanding balance on the account. With
respect to certain consumer loan products, Customers are required to make a
minimum monthly payment sufficient to repay the account balance over a set term.
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The Corporation offers fixed and variable rates on accounts and also offers
temporary promotional rates. Variable rates are offered at a percentage rate
tied to the U.S. prime rate published in The Wall Street Journal and are
adjusted, if applicable, quarterly.
The Corporation assesses an annual fee on some Customer accounts. Annual
fees, when assessed, are generally waived for the first year on new accounts and
thereafter may be waived or rebated. The Corporation assesses cash advance
transaction, certain purchase, late, overlimit and returned check fees on
Customer accounts in accordance with agreements with Customers.
REGULATORY MATTERS
General
As a bank holding company, the Corporation is subject to regulation under
the Bank Holding Company Act of 1956 (the "BHCA") and to the BHCA's examination
and reporting requirements. Under the BHCA, bank holding companies may not
directly or indirectly acquire the ownership or control of more than five
percent of the voting shares or substantially all of the assets of any company,
including a bank, without the prior approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). In addition, bank holding
companies generally are prohibited under the BHCA from engaging in non-banking
activities, subject to certain exceptions.
The earnings of the Bank and the Corporation are affected by general
economic conditions, monetary policies and the actions of various regulatory
authorities, including the Federal Reserve Board, the Federal Deposit Insurance
Corporation (the "FDIC") and the Office of the Comptroller of the Currency (the
"OCC"). In addition, there are numerous governmental requirements and
regulations which affect the activities of the Corporation.
The Bank is subject to supervision and examination by the OCC, the Bank's
primary regulator. The Bank is insured by, and therefore also is subject to the
regulations of, the FDIC, and is also subject to requirements and restrictions
under federal and state law, including requirements to maintain reserves against
deposits, restrictions on the types and amounts of loans that may be granted and
the interest that may be charged thereon, and limitations on the types of
investments that may be made and the types of services that may be offered.
MBNA International is subject to regulation and supervision by the Bank of
England, the Federal Reserve Board and the OCC. MBNA America Bank (Delaware) is
subject to regulation and supervision by the State Bank Commissioner of Delaware
and the FDIC. MBNA Canada is subject to regulations and supervision by the
Office of Superintendent of Financial Institutions, the Canadian Deposit
Insurance Corporation, the Federal Reserve Board and the OCC.
Dividends
The principal source of funds to the Corporation to pay dividends, interest
and principal on debt securities and to meet other obligations is dividends from
the Bank. The Bank is subject to limitations on the dividends it may pay to the
Corporation. The Corporation may also be subject to limitations on the payment
of dividends to stockholders. See "Capital Adequacy and Dividend Limitations" on
pages 35 and 36 of the 1998 Annual Report to Stockholders, which is incorporated
herein by reference. In addition, both the Corporation and the Bank are subject
to various regulatory policies and requirements relating to the payment of
dividends, including requirements to maintain capital above regulatory minimums.
The appropriate federal regulatory authority is authorized to determine under
certain circumstances relating to the financial condition of a bank or bank
holding company that the payment of dividends would be an unsafe or unsound
practice and to prohibit payment thereof. The OCC and the Federal Reserve Board
have each indicated that banking organizations should generally pay dividends
only out of current operating earnings.
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Borrowings by the Corporation
There are various legal restrictions on the extent to which the Corporation
may borrow or otherwise obtain credit from, or engage in certain other
transactions with, the Bank. In general, these restrictions require that any
such extensions of credit must be secured by designated amounts of specified
collateral and are limited, as to any one of the Corporation or its non-bank
subsidiaries, to 10 percent of the Bank's capital stock and surplus, and as to
the Corporation and all such non-bank subsidiaries in the aggregate, to 20
percent of the Bank's capital stock and surplus.
Extensions of credit and other transactions between the Bank and the
Corporation must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the Bank
as those prevailing at the time for comparable transactions with non-affiliated
companies.
Capital Requirements
The Corporation is subject to risk-based capital guidelines adopted by the
Federal Reserve Board for bank holding companies. The Bank is subject to similar
capital requirements adopted by the OCC. The guidelines require a minimum ratio
of total capital to risk-weighted assets (including certain off-balance sheet
items, such as interest rate swaps) of 8%. At least half of the total capital
may be comprised of common stockholders' equity, non-cumulative perpetual
preferred stock and a limited amount of cumulative perpetual preferred stock,
less goodwill and certain other intangible assets ("Tier 1 risk-based capital").
The remainder ("Total risk-based capital") may consist of mandatory convertible
debt securities, a limited amount of subordinated debt, other preferred stock
and a limited amount of reserves for possible credit losses. In addition, the
Federal Reserve Board has adopted a minimum leverage ratio (Tier 1 risk-based
capital to average total assets less goodwill and certain other intangible
assets) of 3% for bank holding companies that meet certain specified criteria,
including that they have the agency's highest supervisory rating. Under the
guidelines, holding companies that do not satisfy the criteria for the lowest
requirement and holding companies undertaking expansion programs must maintain a
leverage ratio at least 100 basis points to 200 basis points higher than the 3%
minimum ratio. See "Table 9: Regulatory Capital Ratios" on page 35 of the 1998
Annual Report to Stockholders, which is incorporated herein by reference.
Holding companies and banks may be subject to higher risk-based and leverage
capital ratios depending on other specific factors, such as interest rate risk,
concentrations of credit risk, and the conduct of non-traditional activities.
Corporation Support of Bank
Under the National Bank Act, if the capital stock of a national bank is
impaired by losses or otherwise, the OCC is authorized to require payment of the
deficiency by assessment upon the bank's stockholders and, if any such
assessment is not paid, to sell the stock to make good the deficiency. Under
Federal Reserve Board policy, the Corporation is expected to act as a source of
financial strength to the Bank and to commit resources to support it. Any
capital loans by the Corporation to the Bank are subordinate in right of payment
to deposits and to certain other indebtedness of the Bank.
FDICIA and FDIC Insurance
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") provided increased funding for the Bank Insurance Fund ("BIF") of the
FDIC and provided for expanded regulation of banks and bank holding companies.
The regulation includes expanded federal banking agency examinations and
increased powers of federal banking agencies to take corrective action to
resolve the problems of insured depository institutions with capital
deficiencies. These powers vary depending on which of several levels of
capitalization a particular institution meets.
FDIC regulations adopted under FDICIA prohibit a bank from accepting
brokered deposits unless (i) it is well capitalized or (ii) it is adequately
capitalized and receives a waiver from the FDIC. A bank that is adequately
capitalized and that accepts brokered deposits under a waiver from the FDIC may
not pay an interest rate on any deposit in excess of 75 basis points over
certain prevailing market rates; there are no such restrictions on a bank that
is well capitalized. As of December 31, 1998 the Bank met the FDIC's definition
of
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a well capitalized institution for purposes of accepting brokered deposits. For
the purposes of the brokered deposit rules, a bank is defined to be "well
capitalized" if it maintains a ratio of Tier 1 risk-based capital to
risk-adjusted assets of at least 6%, a ratio of total risk-based capital to
risk-weighted assets of at least 10% and a leverage ratio of at least 5% and is
not subject to any order, direction or written agreement to maintain specific
capital levels. Under the regulatory definition of brokered deposits, as of
December 31, 1998, the Bank had brokered deposits of $3.4 billion.
The Bank is subject to FDIC deposit insurance assessments for the BIF. Each
financial institution is assigned to one of three capital groups -- well
capitalized, adequately capitalized or undercapitalized -- and further assigned
to one of three subgroups within a capital group, on the basis of supervisory
evaluations by the institution's primary federal and, if applicable, state
supervisors and other information relevant to the institution's financial
condition and the risk posed to the applicable insurance fund. The assessment
rate applicable to the Bank in the future will depend in part upon the risk
assessment classification assigned to the Bank by the FDIC and in part on the
BIF assessment schedule adopted by the FDIC. FDIC regulations currently provide
that premiums related to deposits assessed by the BIF are to be assessed at a
rate of between 0 cents and 27 cents per $100 of deposits.
The Deposit Insurance Funds Act of 1996 ("DIFA") also separated, effective
January 1, 1997, the Financing Corporation ("FICO") assessment to service the
interest on its bond obligations from the BIF and the Savings Association
Insurance Fund ("SAIF") assessments. The amount assessed on individual
institutions by the FICO will be in addition to the amount, if any, paid for
deposit insurance according to the FDIC's risk-related assessment rate
schedules. FICO assessment rates may be adjusted quarterly to reflect a change
in assessment base for the BIF. By law, the FICO rate on BIF-assessable deposits
must be one-fifth the rate on SAIF-assessable deposits until the insurance funds
are merged or until January 1, 2000, whichever occurs first.
Regulation of the Credit Card and Other Consumer Lending Businesses
The relationship between the Corporation and its Customers is extensively
regulated by federal and state consumer protection laws. The Truth in Lending
Act requires consumer lenders to make certain disclosures along with their
applications (for credit card accounts) and solicitations, upon opening an
account and with each periodic statement. The Act also imposes certain
substantive requirements and restrictions on lenders and provides Customers with
certain rights to dispute unauthorized charges and to have their billing errors
corrected promptly. Customers are also given the right to have their payments
promptly credited to their accounts.
The Equal Credit Opportunity Act prohibits lenders from discriminating in
extending credit on certain criteria such as an applicant's sex, race and
marital status. In order to protect borrowers from such discrimination, the Act
requires that lenders disclose the reasons they took adverse action against an
applicant or a Customer.
The Fair Credit Reporting Act generally regulates credit reporting
agencies, but also imposes some duties on lenders as users of consumer credit
reports. For instance, the Act prohibits the use of a consumer credit report by
a lender except in connection with a proposed business transaction with the
consumer. The Act also requires that lenders notify consumers when the lenders
take adverse action based upon information obtained from credit reporting
agencies.
The federal regulators are authorized to impose penalties for violations of
these statutes and, in certain cases, to order the Corporation to pay
restitution to injured Customers. Customers may bring actions for damages for
certain violations. In addition, a Customer may be entitled to assert a
violation of these consumer protection laws by way of set-off against the
Customer's obligation to pay the outstanding loan balance.
The National Bank Act, which governs the activities of national banks,
authorizes national banks to use various alternative interest rates when they
make loans, including the highest interest rate authorized for state chartered
lenders located in the state where the national bank is located. This ability to
"export" rates, as provided for in the Act, is relied upon by the Bank to charge
Customers the interest rates and fees permitted
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by Delaware law regardless of an inconsistent law of the state in which the
Customer is located, thereby facilitating the Bank's nationwide lending
activities.
Interstate Banking
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
permits bank holding companies, with Federal Reserve Board approval, to acquire
banks located in states other than the holding company's home state, generally
without regard to whether the transaction is prohibited under state law. In
addition, effective June 1, 1997, national and state banks with different home
states were permitted to merge across state lines, with approval of the
appropriate federal banking agency, unless the home state of a participating
bank passed legislation prior to this date expressly prohibiting interstate bank
mergers.
Insurance
Section 92 of the National Bank Act authorizes the Bank to engage in the
business of insurance as an agency from a place of less than 5,000 people. In
order to conduct an agency business the Bank must obtain licensing approval in
each state in which it intends to operate and is subject to state regulation on
agency and agent licensing, disclosure requirements, policy delivery and other
matters. State requirements which are so burdensome or onerous as to
significantly impair the exercise by a national bank of the powers granted to it
under Section 92 are preempted. There are differences among federal and state
regulators as to the extent of federal preemption of state insurance agency
regulation which have not been resolved.
COMPETITION
The Corporation's business is highly competitive. The Corporation competes
with numerous banks with national, regional and local operations in domestic and
international markets and with non-bank competitors who issue credit and charge
cards and make other consumer loans. Strategies used by the Corporation's
competitors include targeted marketing, low introductory rates, no annual fee
credit cards, balance transfers and discounts on products and services. The
Corporation also uses these strategies and, in addition, relies on its strategy
of marketing to people with a strong common interest and its superior Customer
service to compete with its competitors.
EMPLOYEES
As of December 31, 1998, the Corporation had approximately 19,000
employees.
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
From time to time the Corporation may make forward-looking statements
concerning the Corporation's future performance. Such statements are subject to
risks and uncertainties that may cause the Corporation's actual performance to
differ materially from that set forth in such forward-looking statements.
Factors which could cause the Corporation's actual financial and other results
to differ materially from those projected by the Corporation in forward-looking
statements include, but are not limited to the following:
Competition
The Corporation's business is highly competitive. Competition from other
lenders could affect the Corporation's loans outstanding, Customer retention,
and the rates and fees charged on the Corporation's loans.
Economic Conditions
The Corporation's business is affected by general economic conditions
beyond the Corporation's control, including employment levels, consumer
confidence, and interest rates. A recession or slowdown in the economy may cause
an increase in delinquencies and credit losses and reduce new account growth and
charge volume.
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Delinquencies and Credit Losses
An increase in delinquencies and credit losses could affect the
Corporation's financial performance. Delinquencies and credit losses are
influenced by a number of factors, including the quality of the Corporation's
credit card and other consumer loans, general economic conditions, the success
of the Corporation's collection efforts, and the average seasoning of the
Corporation's accounts.
Interest Rate Increases
An increase in interest rates could increase the Corporation's cost of
funds and reduce the net interest margin. The Corporation's ability to manage
the risk of interest rate increases is dependent on its overall product and
funding mix and its ability to successfully reprice outstanding loans.
Availability of Funding and Securitization
Changes in the amount, type, and cost of funding available to the
Corporation could affect the Corporation's performance. A major funding
alternative for the Corporation is the securitization of credit card and other
consumer loans. Difficulties or delays in securitizing loans or changes in the
current legal, regulatory, accounting, and tax environment governing
securitizations could adversely affect the Corporation.
Customer Behavior
The acceptance and use of credit card and other consumer loan products for
consumer spending has increased significantly in recent years. The Corporation's
performance could be affected by changes in such acceptance and use, and overall
consumer spending.
New Products and Services
The Corporation's performance could be affected by difficulties or delays
in the development of new products or services, including products or services
beyond credit card and other consumer loans. These may include failure of
Customers to accept these products or services when planned, losses associated
with the testing of new products or services, or financial, legal or other
difficulties that may arise in the course of such implementation. In addition,
the Corporation could face competition with new products or services, which may
affect the success of such products or services.
Growth
The growth of the Corporation's existing business and the development of
new products and services will be dependent upon the ability of the Corporation
to continue to develop the necessary operations, systems, and technology; hire
qualified people; and obtain funding for significant capital investments.
Legal and Regulatory
The banking and consumer credit industry is subject to extensive
regulation. Changes in the laws and regulations and in policies applied by
banking or other regulators affecting banking, consumer credit or other matters
could impact the Corporation's performance. For example, in recent years
Congress has considered legislation which would have had the effect of limiting
the interest rate that could be charged on credit card accounts. In addition,
the Corporation could incur unanticipated litigation or compliance costs.
ITEM 2. PROPERTIES
The Corporation has approximately 3,000,000 square feet of administrative
offices and credit card facilities in five office complexes that it owns in
Delaware. The majority of these facilities were designed and built expressly for
the Corporation's credit card operations. These complexes include space for
future expansion.
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12
MBNA Information Services conducts its processing from an approximately
557,000 square foot facility that the Corporation owns in Dallas, Texas as well
as from approximately 300,000 square feet of office space at the Corporation's
facilities in Newark, Delaware.
MBNA Marketing Systems, Inc. has regional offices in Camden and Belfast,
Maine, Cleveland, Ohio, Dallas, Texas (part of Information Services' facility),
Boca Raton, Florida and Hunt Valley, Maryland. These facilities are owned by the
Corporation.
MBNA Marketing Systems, Inc. has a leased regional office in San Francisco
and leased sales offices in New York City and Chicago. The leases are for
10-year terms and contain renewal options which, if exercised, would extend the
leases up to five additional years in New York City and San Francisco and 10
additional years in Chicago. Marketing Systems leases telesales facilities in
Delaware, Georgia, Maine, Maryland, New Hampshire, Ohio and Pennsylvania.
MBNA International's credit card operations are located in approximately
252,000 square feet of space in Chester, England. It is constructing additional
expansion space in Chester. It maintains a sales office in London, England and
Edinburgh, Scotland. MBNA International conducts operations in Ireland from an
office in Dublin, Ireland.
MBNA Canada's credit card operations are located in approximately 55,000
square feet of leased office space in Gloucester and Montreal, Quebec.
ITEM 3. LEGAL PROCEEDINGS
In May 1996, Andrew B. Spark filed a lawsuit against the Corporation, the
Bank and certain of its officers and its subsidiary MBNA Marketing Systems, Inc.
The case is pending in the United States District Court for the District of
Delaware. This suit is a purported class action. The plaintiff alleges that the
Bank's advertising of its cash promotional annual percentage rate program was
fraudulent and deceptive. The plaintiff seeks unspecified damages including
actual, treble and punitive damages and attorneys' fees for an alleged breach of
contract, violation of the Delaware Deceptive Trade Practices Act and violation
of the federal Racketeer Influenced and Corrupt Organizations Act. In February
1998, a class was certified by the District Court. In October 1998, Gerald D.
Broder filed a lawsuit against the Corporation and the Bank in the Supreme Court
of the State of New York, County of New York. This suit is a purported class
action. The plaintiff alleges that the Bank's advertising of its cash
promotional annual percentage rate program was fraudulent and deceptive. The
plaintiff seeks unspecified damages including actual, treble and punitive
damages and attorneys' fees for an alleged breach of contract, common law fraud
and violation of New York consumer protection statutes. The Corporation believes
that its advertising practices were and are proper under applicable federal and
state law and intends to defend these actions vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1998, no matters were submitted to a vote of
security holders of the Corporation.
------------------------------
EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the Corporation's executive officers is set forth
below.
Alfred Lerner (65) has been Chief Executive Officer of MBNA Corporation and
Chairman of its Board of Directors since January 1991 and a director of the Bank
since December 1991. Mr. Lerner served as Chairman of the Board and Chief
Executive Officer of MNC Financial, Inc. ("MNC Financial") from September 1990
to July 1991 and as Chairman of the Board from July 1991 to October 1993. He
also served as Chairman of the Board of Equitable Bancorporation from July 1983
until it merged with MNC Financial in January 1990. He has been Chairman of The
Town and Country Trust since August 1993 and was Chief Executive Officer from
August 1993 until October 1997. He has been Chairman and owner of the Cleveland
Browns since October 1998. A graduate of Columbia University and Vice Chairman
of its Board of Trustees,
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Mr. Lerner also is president of the Cleveland Clinic Foundation and a member of
its Board of Trustees. He is also a trustee of Case Western Reserve University
and a member of the Board of Directors of the Marine Corps Law Enforcement
Foundation.
Charles M. Cawley (58) has been President and a director of the Corporation
and Chairman and Chief Executive Officer of the Bank since January 1991. He has
more than 33 years of management experience in the financial services industry
and was the senior operating executive that formed the Bank in 1982. He has
served as Chief Executive Officer of the Bank since 1990, and as President since
1985. He has been a director of the Bank since 1982. He serves on the boards of
Georgetown University, the University of Delaware, the Eisenhower Exchange
Fellowships, the American Architectural Foundation, and the Marine Corps Law
Enforcement Foundation. He is Chairman of the Board of the Grand Opera House in
Wilmington, Delaware.
John R. Cochran III (47) oversees all business development and marketing
activities, including sales, marketing, advertising, regional marketing,
telemarketing, and group administration. He is also responsible for Customer
Satisfaction. He has been a Senior Executive Vice President of the Corporation
and an Executive Vice Chairman of the Bank since November 1998. He has served as
the Chief Marketing Officer since April 1991. He has 26 years of management
experience in the financial services industry and was a member of the management
team that established the Bank in 1982. He has been a director of the Bank since
1986.
Bruce L. Hammonds (50) oversees credit, loss prevention, consumer finance
and technology services. He has been a Senior Executive Vice President of the
Corporation and an Executive Vice Chairman of the Bank since November 1998. He
has served as the Chief Operating Officer since 1990. He has 29 years of
management experience in consumer lending and was a member of the management
team that established the Bank in 1982. He has been a director of the Bank since
1986.
M. Scot Kaufman (49) oversees accounting, finance, and treasury activities.
He has been an Executive Vice President and Treasurer of the Corporation since
January 1991 and Chief Accounting Officer since July 1991. He has been Chief
Financial Officer of the Corporation since July 1992. He has served as Senior
Vice Chairman of the Bank since April 1997 and as its Chief Financial Officer
since 1985. He has 28 years of experience in the financial services industry and
has been with the Corporation since 1985. He has been a director of the Bank
since 1986.
Lance L. Weaver (44) oversees corporate affairs, law, government relations,
compensation and benefits, and real estate. He also oversees Administrative
Services, including corporate insurance, facility management, security,
transportation, and purchasing activities. He has been an Executive Vice
President of the Corporation since April 1994. He has served as Senior Vice
Chairman of the Bank since July 1997 and served as Chief Administrative Officer
of the Bank since February 1993. He has 24 years of experience in consumer
lending and administration and has been with the Corporation since 1991. He has
been a director of the Bank since February 1993.
Ronald W. Davies (57) oversees MBNA Hallmark Information Services, which
provides the Corporation with telecommunications, production operations,
information systems, and systems operations and development. He has been an
Executive Vice President of the Corporation since October 1991. He has served as
Senior Vice Chairman of the Bank since December 1997 and Chief Technology
Officer of the Bank since April 1991. He has served as Chairman and Chief
Executive Officer of MBNA Hallmark Information Services, Inc. since August 1991.
He has 34 years of experience in information systems and technology management
and has been with the Corporation since 1991. He has been a director of the Bank
since April 1991.
Gregg Bacchieri (43) oversees all credit and loss prevention efforts. He
has been an Executive Vice President of the Corporation since July 1997 and
Senior Vice Chairman of the Bank since November 1998. He has 20 years of
management experience in retail lending and was a member of the management team
that established the Bank in 1982. He has been a director of the Bank since July
1997.
Richard K. Struthers (43) oversees international, insurance, deposit,
travel and business card activities. He has been an Executive Vice President of
the Corporation since April 1997. He has served as Senior Vice Chairman of the
Bank since December 1997. He has 21 years of experience in consumer lending and
was
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a member of the management team that established the Bank in 1982. He has been a
director of the Bank since January 1997.
Kenneth F. Boehl (44) joined the Corporation in 1988 and serves as the
Chief Control Officer and is responsible for risk management and personnel
activities. He has been an Executive Vice President of the Corporation and Vice
Chairman of the Bank since July 1997. He has been the Senior Control Officer of
the Bank since April 1992. He has 23 years of experience in financial
management. He has been a director of the Bank since July 1997.
Jules J. Bonavolonta (58) oversees special operations, facility management,
security, transportation and purchasing activities. He has been an Executive
Vice President of the Corporation and Vice Chairman of the Bank since October
1997. Prior to joining the Corporation, he served as President of Universal
Network, Inc., a security consulting firm, from August 1995 to March 1997. He
was director of corporate security for Consolidated Edison of New York from
January 1991 to August 1992 and for Republic National Bank of New York from
August 1992 to July 1995. He had a 23 year career with the Federal Bureau of
Investigation which included extensive experience in domestic and international
investigations, including as Chief of the Organized Crime and Narcotics
Division. He joined the Corporation in March 1997 and has been a director of the
Bank since October 1997.
John W. Scheflen (52) is responsible for corporate affairs, corporate
insurance, government affairs, law and real estate acquisition. He has been an
Executive Vice President, General Counsel and Secretary of the Corporation and
Secretary and Cashier of the Bank since March 1992. He has been a Vice Chairman
and Director of the Bank since September 1998. Prior to joining the Corporation
he was a partner with Venable, Baetjer and Howard from 1984 to March 1992. He
has 24 years of experience in law and has been with the Corporation since 1992.
David W. Spartin (41) oversees investor relations, media relations,
communications, community education initiatives, business analysis, and
administration. He has been an Executive Vice President of the Corporation since
April 1997 and has served as Vice Chairman of the Bank since March 1997. He has
20 years of experience in the financial services industry and has been with the
Corporation since 1991. He has been a director of the Bank since March 1997.
Michael G. Rhodes (33) oversees Customer Satisfaction. He has been an
Executive Vice President of the Corporation and a Vice Chairman and Director of
the Bank since August 1998. Prior to joining the Corporation in 1994, he was an
associate at Duff & Phelps Capital Markets from July 1993 to April 1994 and was
an engineer at Failure Analysis Associates from August 1987 to July 1991. He is
Mr. Cawley's son-in-law.
Vernon H. C. Wright (56) oversees foreign and domestic treasury activities,
including securitization, investments and funding, and corporate finance
activities. He has been an Executive Vice President and Chief Corporate Finance
Officer of the Corporation and Chief Corporate Finance Officer of the Bank since
July 1992. He has been Vice Chairman of the Bank since September 1995. He has
more than 30 years of experience in retail and commercial lending and has been
with the Corporation since 1991. He has been a director of the Bank since
November 1992.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
"Common Stock Price Range and Dividends" on page 74 and "Capital Adequacy
and Dividend Limitations" on pages 35 and 36 of the 1998 Annual Report to
Stockholders are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Ten-Year Statistical Summary" on pages 22 and 23 of the 1998 Annual Report
to Stockholders is incorporated herein by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 25 through 42 of the 1998 Annual Report to Stockholders is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
"Interest Rate Sensitivity" and "Foreign Currency Exchange Rate
Sensitivity" on pages 39 and 40 of the 1998 Annual Report to Stockholders are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The "Report of Independent Auditors", the Consolidated Financial Statements
and Notes to the Consolidated Financial Statements, and the "Summary of
Consolidated Quarterly Financial Information" on pages 45 through 72 of the 1998
Annual Report to Stockholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
"Election of Directors" on pages 4 and 5 in the Definitive Proxy Statement
is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
"Election of Directors" on pages 4 and 5, "Executive Compensation" on pages
6 through 9 and "Compensation Committee Interlocks and Insider Participation" on
page 11 in the Definitive Proxy Statement are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"Security Ownership of Management and Certain Beneficial Owners" on pages 2
and 3 in the Definitive Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships" on page 11 in the Definitive Proxy Statement are incorporated
herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1. The following consolidated financial statements of MBNA Corporation and
subsidiaries are incorporated herein by reference from the pages designated in
the 1998 Annual Report to Stockholders:
PAGE
-----
Report of Independent Auditors.............................. 45
Consolidated Statements of Financial Condition, December 31,
1998 and 1997............................................. 46
Consolidated Statements of Income for the years ended
December 31,
1998, 1997 and 1996....................................... 47
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31,
1998, 1997 and 1996....................................... 48
Consolidated Statements of Cash Flows for the years ended
December 31,
1998, 1997 and 1996....................................... 49
Notes to the Consolidated Financial Statements.............. 50-71
2. Financial Statement Schedules
No Financial Statement Schedules are required to be filed.
3. Exhibits:
The following exhibits are incorporated by reference or filed herewith.
References to the 1990 Form S-1 are to the Registrant's Registration Statement
on Form S-1 effective January 22, 1991, Registration No. 33-38125. References to
the 1997 Form S-4 are to Amendment No. 1 of the Registrant's Registration
Statement on Form S-4, Registration No. 333-21181, filed on February 25, 1997.
References to the 1991 Form 10-K, the 1992 Form 10-K, the 1993 Form 10-K, the
1994 Form 10-K, the 1995 Form 10-K, the 1996 Form 10-K and the 1997 Form 10-K
are to the Registrant's Annual Reports on Form 10-K for the years ended December
31, 1991, 1992, 1993, 1994, 1995, 1996 and 1997, respectively.
Exhibit 3.1 Articles of Incorporation, as amended and supplemented
(incorporated by reference to Exhibit 3.1 of Form 10-Q for
the quarter ended March 31, 1998).
Exhibit 3.2 By-laws, as amended (incorporated by reference to Exhibit
3.2 of 1997 Form 10-K).
Exhibit 4.1* Senior Indenture dated as of September 29, 1992, between the
Registrant and Bankers Trust Company, as Trustee.
Exhibit 4.2* Subordinated Indenture, dated as of November 24, 1992,
between the Registrant and Harris Trust and Savings Bank, as
Trustee.
Exhibit 4.3* Fiscal and Paying Agency Agreement, dated September 21,
1992, between MBNA America Bank, N.A. and Harris Trust and
Savings Bank, as Fiscal and Paying Agent, for the 7.25%
Subordinated Notes due 2002.
Exhibit 4.4* Issuing and Paying Agency Agreement dated as of December 10,
1991, and amended as of August 11, 1993, December 21, 1994
and May 6, 1996 between MBNA America Bank, N.A. and First
Trust of New York, National Association.
Exhibit 4.5 Junior Subordinated Indenture between the Registrant and The
Bank of New York, as Debenture Trustee (incorporated by
reference to Exhibit 4(c) of 1997 Form S-4).
Exhibit 4.6 Amended and Restated Trust Agreement, dated as of December
18, 1996, between the Registrant and The Bank of New York
(incorporated by reference to Exhibit 4.6 of 1996 Form
10-K).
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17
Exhibit 4.7 Guarantee Agreement, dated as of December 18, 1996, between the Registrant and The Bank of New
York (incorporated by reference to Exhibit 4.7 of 1996 Form 10-K).
Exhibit 4.8 Amended and Restated Trust Agreement, dated as of January 23, 1997, between the Registrant and
The Bank of New York (incorporated by reference to Exhibit 4.8 of 1996 Form 10-K).
Exhibit 4.9 Guarantee Agreement, dated as of January 23, 1997, between the Registrant and The Bank of New
York (incorporated by reference to Exhibit 4.9 of 1996 Form 10-K).
Exhibit 4.10 Amended and Restated Trust Agreement, dated as of February 24, 1997, between the Registrant and
The Bank of New York (incorporated by reference to Exhibit 4(e)(4) of the 1997 Form S-4).
Exhibit 4.11 Guarantee Agreement, dated as of March 31, 1997 between the Registrant and The Bank of New York
(incorporated by reference to Exhibit 4.11 of 1997 Form 10-K).
Exhibit 10.1 Tax Sharing and Indemnity Agreement with MNC Financial (incorporated by reference to Exhibit 10.2
of 1990 Form S-1).
Exhibit 10.2 License Agreement with MasterCard (incorporated by reference to Exhibit 10.3 of 1990 Form S-1).
Exhibit 10.3 License Agreement with VISA (incorporated by reference to Exhibit 10.4 of 1990 Form S-1).
Exhibit 10.4 Share Purchase Agreement with Alfred Lerner (including Registration Rights Agreement)
(incorporated by reference to Exhibit 10.10 of 1990 Form S-1).
Exhibit 10.5 Amended and Restated Competitive Advance and Revolving Credit Facility Agreement, dated as of
January 15, 1997, among MBNA America Bank, N.A., certain lenders and Chase Manhattan Bank, as
Agent (incorporated by reference to Exhibit 10.5 of 1996 Form 10-K).
Exhibit 10.6 Fifth Amendment dated March 1, 1999 and Fourth Amendment dated March 27, 1998 to the Credit
Agreement dated as of April 13, 1994, between the Registrant and Bank of America National Trust
and Savings Association (the Third Amendment dated February 27, 1997 and the Second Amendment
dated April 10, 1996 are incorporated by reference to Exhibit 10.6 of 1996 Form 10-K, the First
Amendment dated April 7, 1995 is incorporated by reference to Exhibit 10.6 of 1995 Form 10-K and
the original agreement is incorporated by reference to Exhibit 10.7 of 1994 Form 10-K).
Exhibit 10.7 Amendment dated September 30, 1998 to the Credit Agreement, dated as of October 5, 1994, between
Registrant and The Bank of New York (the Amendment dated October 2, 1996 and amendment dated June
28, 1996 are incorporated by reference to Exhibit 10.7 of 1996 Form 10-K, the Amendment dated
October 4, 1995 is incorporated by reference to Exhibit 10.7 of 1995 Form 10-K and the original
Agreement is incorporated by reference to Exhibit 10.8 of 1994 Form 10-K).
Exhibit 10.8** 1991 Long Term Incentive Plan, as amended (incorporated by reference to Exhibit 10.3 of Form 10-Q
for the quarter ended March 31, 1997 and Exhibit 10.8 of 1995 Form 10-K), and forms of Stock
Option Agreements (1993 agreement incorporated by reference to Exhibit 10.12 of 1993 Form 10-K
and 1995 agreements incorporated by reference to Exhibit 10.8 of 1995 Form 10-K).
Exhibit 10.9** 1997 Long Term Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 of Form 10-Q
for the quarter ended March 31, 1998) and form of Stock Option Grant (incorporated by reference
to Exhibit 10.9 of 1997 Form 10-K).
Exhibit 10.10** Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.9 of 1995 Form 10-K).
Exhibit 10.11** MBNA Corporation Supplemental Executive Retirement Plan, as amended and restated.
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18
Exhibit 10.12** Assumed Deferred Compensation Plans (1989 Deferred
Compensation Plan incorporated by reference to Exhibit 10.12
of 1991 Form 10-K and 1988 Deferred Compensation Plan
incorporated by reference to Exhibit 10.14 of 1993 Form
10-K).
Exhibit 10.13** MBNA Corporation Senior Executive Performance Plan
(incorporated by reference to Exhibit 10.2 of Form 10-Q for
the quarter ended March 31, 1997).
Exhibit 10.14** Form of Split Dollar Agreement (incorporated by reference to
Exhibit 10.18 of 1992 Form 10-K).
Exhibit 10.15** Deferred Compensation Plan and form of Agreement, as amended
and restated effective April 1, 1995 (incorporated by
reference to Exhibit 10.16 of 1994 Form 10-K).
Exhibit 10.16 Amended and Restated Multicurrency Revolving Credit Facility
Agreement dated as of October 11, 1996, among MBNA
International Bank Limited, certain lenders and The First
National Bank of Chicago, as Agent (incorporated by
reference to Exhibit 10.16 of 1997 Form 10-K).
Exhibit 12 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividend Requirements.
Exhibit 13 1998 Annual Report to Stockholders.
Exhibit 21 Subsidiaries of the Corporation.
Exhibit 23 Consent of Independent Auditors.
Exhibit 27 Financial Data Schedule.
- ---------------
* The Registrant agrees to furnish a copy to the Securities and Exchange
Commission on request.
** Management contract or compensatory plan or arrangement required to be filed
as an exhibit pursuant to Item 14(c) of Form 10-K.
4. REPORTS ON FORM 8-K
1. Report dated October 7, 1998, reporting MBNA Corporation's earnings
release for the third quarter of 1998.
2. Report dated October 22, 1998, reporting the securitization of
$750.0 million of credit card receivables by MBNA America Bank,
N.A.
3. Report dated October 29, 1998, reporting the securitization of
$750.0 million of credit card receivables by MBNA America Bank,
N.A.
4. Report dated October 31, 1998, reporting the net credit losses and
loan delinquencies for MBNA America Bank, N.A., for its net loan
portfolio and managed loan portfolio for October 1998.
5. Report dated November 30, 1998, reporting the net credit losses and
loan delinquencies for MBNA America Bank, N.A., for its net loan
portfolio and managed loan portfolio for November 1998.
6. Report dated December 17, 1998, reporting the securitization of
250.0 million pounds sterling of credit card receivables by MBNA
International Bank Limited.
7. Report dated December 23, 1998, reporting the execution of a
definitive agreement with PNC Bank, National Association to acquire
PNC National Bank.
8. Report dated December 31, 1998, reporting the net credit losses and
loan delinquencies for MBNA America Bank, N.A., for its net loan
portfolio and managed loan portfolio for December 1998.
9. Report dated January 4, 1999, reporting MBNA Corporation's earnings
release for the fourth quarter of 1998.
16
19
10. Report dated January 4, 1999, providing the underwriting agreement
which supplements the prospectus included in the Registration
Statement on Form S-3, previously filed by MBNA Corporation, in
connection with the issuance and sale of 50,000,000 shares of
Common Stock.
11. Report dated January 7, 1999, reporting MBNA Corporation's
financial highlights for the fourth quarter of 1998.
12. Report dated January 31, 1999, reporting the net credit losses and
loan delinquencies for MBNA America Bank, N.A., for its net loan
portfolio and managed loan portfolio for January 1999.
13. Report dated February 28, 1999, reporting the net credit losses
and loan delinquencies for MBNA America Bank, N.A., for its net
loan portfolio and managed loan portfolio for February 1999.
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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.
MBNA CORPORATION
By: /s/ ALFRED LERNER
--------------------------------------
Alfred Lerner
Chairman and Chief Executive Officer
March 19, 1999
Pursuant to the requirement 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/ ALFRED LERNER Chairman, Chief Executive Officer March 19, 1999
- --------------------------------------------------- and Director (principal
Alfred Lerner executive officer)
/s/ CHARLES M. CAWLEY President and Director March 19, 1999
- ---------------------------------------------------
Charles M. Cawley
/s/ M. SCOT KAUFMAN Executive Vice President and March 19, 1999
- --------------------------------------------------- Treasurer (principal financial
M. Scot Kaufman and accounting officer)
/s/ JAMES H. BERICK Director March 19, 1999
- ---------------------------------------------------
James H. Berick, Esq
/s/ BENJAMIN R. CIVILETTI Director March 19, 1999
- ---------------------------------------------------
Benjamin R. Civiletti, Esq
/s/ RANDOLPH D. LERNER Director March 19, 1999
- ---------------------------------------------------
Randolph D. Lerner, Esq
/s/ STUART L. MARKOWITZ Director March 19, 1999
- ---------------------------------------------------
Stuart L. Markowitz, M.D.
/s/ MICHAEL ROSENTHAL Director March 19, 1999
- ---------------------------------------------------
Michael Rosenthal, Ph.D.
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EXHIBIT INDEX
The following exhibits are filed with the MBNA Corporation annual report on
Form 10-K for the fiscal year ended December 31, 1998:
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.6 Fifth Amendment dated March 1, 1999 and Fourth Amendment
dated March 27, 1998 to the Credit Agreement dated as of
April 13, 1994, between the Registrant and Bank of America
National Trust and Savings Association (the Third Amendment
dated February 27, 1997 and the Second Amendment dated April
10, 1996 are incorporated by reference to Exhibit 10.6 of
1996 Form 10-K, the First Amendment dated April 7, 1995 is
incorporated by reference to Exhibit 10.6 of 1995 Form 10-K
and the original agreement is incorporated by reference to
Exhibit 10.7 of 1994 Form 10-K).............................
10.7 Amendment dated September 30, 1998 to the Credit Agreement,
dated as of October 5, 1994, between Registrant and The Bank
of New York (the Amendment dated October 2, 1996 and
amendment dated June 28, 1996 are incorporated by reference
to Exhibit 10.7 of 1996 Form 10-K, the Amendment dated
October 4, 1995 incorporated by reference to Exhibit 10.7 of
1995 Form 10-K and the original Agreement is incorporated by
reference to Exhibit 10.8 of 1994 Form 10-K)................
10.11 MBNA Corporation Supplemental Executive Retirement Plan, as
amended and restated........................................
12 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividend Requirements...................
13 1998 Annual Report to Stockholders..........................
21 Subsidiaries of the Corporation.............................
23 Consent of Independent Auditors.............................
27 Financial Data Schedule.....................................
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