First Data and Bank of America have signed a letter of intent to expand their relationship. Under the agreement, the “STAR Network” will begin to process PIN-debit transactions for a portion of BofA’s portfolio. In addition, a majority of BofA ATMs will continue to participate in the “STAR Network.” Additionally, FDC will provide plastics personalization for BofA credit and debit card portfolios, including former Fleet credit and debit cards. FDC’s REMITCO unit will also provide remittance processing services for BofA credit card payments. BofA has also agreed to extend its contract with First Data Voice Services for IVR and live agent card activation services for its credit and debit card portfolios. FDC’s TASQ Technology will supply POS equipment and supplies for BofA’s merchant acquiring business. Finally, BofA intends to extend its current contract with FDC’S Primary Payment Systems for risk management services.
The top ten bank credit card issuers in the USA posted organic growth in managed outstandings of 4.7% between the mid-point of 2003 and this year. The top ten issuers now control about 83% of the U.S. bank credit card market compared to 78% one-year ago. Excluding its acquisition of the FleetBoston portfolio, Bank of America led major issuers with a 17% annual gain. If the acquisition is factored in, then BofA’s annual growth rate is 69%, and the average for the top ten would be 7.8%. Capital One continues to grow about three times the rate of its peers, posting a 15% jump in credit card loans since 2Q/03. Discover posted the sharpest decline, dropping more than 8% since mid-year 2003, and Providian slipped nearly 3% as it continues to clean up its portfolio. For complete details on second quarter results for U.S. issuers, visit CardData ([www.carddata.com]).
Top Ten U.S. Issuers – Outstandings
RANK/ISSUER 2Q/04 2Q/03 CHNG
1. Citigroup $115.0 $106.8 +7.7%
2. MBNA 83.5 80.8 +3.3%
3. Bank One 75.6 73.0 +3.6%
4. BofA 52.0 30.8 +16.9% (+69%)*
5. Chase 51.3 51.0 +0.6%
6. Discover 46.8 50.9 -8.1%
7. Cap One 45.2 39.3 +15.0%
8. AmEx 38.3 36.0 +6.4%
9. Household 20.2 19.0 +6.3%
10. Providian 17.3 17.8 -2.8%
TOTAL(inc Fleet) 545.2 505.4 +7.8%
TOTAL (exc Fleet)529.2 505.4 +4.7%
* BofA changed 69% if Fleet is included
Source: CardData (www.carddata.com)
Bank of America posted 1500% growth during the first half of this year for its “SafeSend” remittance service which enables customers to send money to Mexico. Currently, BofA maintains relationships with 57% of the Hispanic households in their territory, which accounts for more than $15 million in deposits with BofA. BofA will further address Hispanic customer demand by increasing mass marketing, launching and entry-level account called Nuevo Futuro, maintaining a Spanish-language Web site, and hiring more Spanish-speaking associates.
Milwaukee-based Metavante is looking to purchase NJ-based Response Data Corporation for $34 million in cash. According to filings with regulators the acquisition would provide Metavante with a new line of credit card payment technology. RDC’s largest clients are Chase and BofA. The deal is the fourth acquisition by Metavante this year. In July, the firm purchased NYCE from First Data for $610 million in cash. In June, Metavante completed its acquisition of The Kirchman Corporation, a provider of automation software and compliance services to the banking industry. In May, Metavante signed a definitive agreement to acquire Advanced Financial Solutions of Oklahoma City, which provides check-imaging technology for over 7,000 financial institutions in the USA and 25 other countries. (CF Library 5/7/04; 6/1/04; 6/14/04).
With the exception of Household International, all top ten bank credit card issuers posted year-over-year declines in delinquency ratios at mid-year. As a group, the average rate for 30+day delinquency plunged from 6.14% in 2Q/03 to 5.03% for the just ended quarter. As expected, issuers with significant exposure in the sub-prime segment reported the largest improvements. Providian’s delinquency declined 328 basis points, as Metris dropped 170 basis points, and Capital One decreased 147 basis points. Household, which only reports 60+ day delinquency, reported a mere 2 basis points increase over one-year ago levels. Compared to the first quarter, average 30+ day delinquency dropped 44 basis points for 2Q/04. For the fourth quarter of 2003, the average rate was 5.97%, compared to 6.07% in 3Q/03. For complete detail on delinquency for U.S. issuers please visit CardData ([www.cardddata.com]).
TOP TEN ISSUERS DELINQUENCY (managed basis)
DAYS 2Q/04 1Q/04 2Q/03 Y/Y CHNG
1. Citigroup: 90 1.61% 1.83% 1.79% -18 bps
2. MBNA: 30 4.10% 4.27% 4.36% -26 bps
3. Bank One: 30 3.37% 3.75% 3.95% -58 bps
4. BofA: 30 3.86% 3.75% 3.99% -13 bps
5. Chase: 30 4.27% 4.43% 4.40% -13 bps
6. Discover: 30 4.88% 5.80% 6.21% -133 bps
7. Cap One: 30 3.95% 3.99% 5.42% -147 bps
8. Household: 60 4.21% 4.35% 4.19% + 2 bps
9. Providian: 30 6.44% 7.36% 9.72% -328 bps
10. Metris/DM: 30 9.40% 10.40% 11.10% -170 bps
AVERAGE (30day): 5.03% 5.47% 6.14% -111 bps
Note: excludes American Express
Source: CardData ( www.cardddata.com).
Bank of America yesterday confirmed it has selected TSYS to provide credit card processing for its recently acquired FleetBoston card portfolio. BofA is a long-term client of TSYS. TSYS processes BofA’s consumer, commercial and government services accounts on TS2. TSYS also processes BofA’s merchant accounts through Vital Processing Services, its joint venture company with VISA. Discussions for a definitive agreement is underway. Last month J.P. Morgan Chase delivered official notification to TSYS to continue providing processing for the combined Chase and Bank One card portfolio. (CF Library 7/8/04)
While average charge-offs among the nation’s top issuers has declined 86 basis points since 2Q/03, the decrease has been driven by the dramatic drop in losses posted by sub-prime issuers Providian and Metris Companies. However, Citigroup, Bank One and Bank of America posted upticks in charge-offs for the second quarter of this year compared to one year ago. Citibank, the nation’s largest card issuer, posted 2Q/04 charge-offs for bank credit cards of 6.15%, compared to 5.95% one-year ago. Bank One, the #3 issuer, reported a managed net charge-off ratio of 5.44%, compared to 5.35% for 2Q/03. Bank of America, the #4 ranked issuer, posted second quarter charge-offs of 5.88%, compared to 5.74% one year ago. Capital One, with about 35% of its portfolio in sub-prime, posted a significant 190 basis point drop in charge-offs from 2Q/03, dropping from 6.32% to 4.42%. Cap One’s net charge-off rate for U.S. credit cards was 5.10% for the second quarter, compared to 7.63% one-year ago. For complete details on current and past charge-off data for the top issuers visit CardData ([www.carddata.com]).
TOP TEN ISSUER CHARGE-OFFS
(net of recoveries)
2Q/04 1Q/04 2Q/03 Y/Y CHNG
1. Citigroup: 6.15% 6.60% 5.95% +20 bps
2. MBNA: 4.95% 4.99% 5.35% -40 bps
3. Bank One: 5.44% 5.35% 5.21% +23 bps
4. BofA: 5.88% 5.08% 5.74% +14 bps
5. Chase: 5.84% 5.80% 6.02% -18 bps
6. Discover: 6.48% 6.31% 6.50% – 2 bps
7. Cap One: 4.42% 4.83% 6.32% -190 bps
8. Household: 7.62% 7.08% 7.90% -28 bps
9. Providian: 12.53% 13.88% 16.84% -431 bps
10. Metris/DM: 17.00% 17.80% 19.10% -210 bps
AVERAGE: 7.63% 7.77% 8.49% -86 bps
Note: excludes American Express
SOURCE: CardData (www.carddata.com)
EDS has inked an eight-and-half-year, $1.1 billion managed network services outsourcing agreement to integrate the communications infrastructure for recently acquired FleetBoston Financial into Bank of America’s voice and data network. Once the integration is complete, BofA’s voice and data network will connect more than 180,000 associates, nearly 5,700 retail banking centers spanning 29 states and the District of Columbia, more than 16,500 ATMs, and facilitate Internet and telephone banking. EDS assumed responsibility for the Bank of America network in early 2003 as part of a 10-year, $4.5 billion contract. Under terms of the agreement, approximately 150 former Fleet associates will transition to EDS.
Bank of America has added a “Stuff Happens” card to its “CampusEdge” checking package for college students. The new card enables students to waive a fee if they make a mistake such as bouncing a check. The “CampusEdge” checking program includes: no monthly fees for the first six months, or free for five years if a parent has an account with Bank of America, and no minimum balance requirements. Students who get a BofA “Student VISA Gold” card receive a CD-ROM with Quicken and “Practical Money Skills for Life” games. Students also can find advice about making the right decisions through the “Making it Count” college freshman orientation program, presented through a partnership between Bank of America and Making it Count, a division of Monster, Inc.
Bank of America officially became the fourth largest bank credit card issuer during the second quarter thanks to its merger with Fleet and its strong marketing efforts. The issuer opened 1.5 million new credit card accounts during the quarter, and added over $16 billion in card outstandings from Fleet. Pre-tax credit card income more than doubled to $641 million for the quarter. Managed card outstandings increased to $51.99 billion, compared to $30.8 billion one-year ago. Second quarter charge-offs were 5.88%, compared to 5.08% in the prior quarter, and 5.74% one year ago. Managed 30+ day delinquency was 3.86%, compared to 3.75% in the first quarter, and 3.99% for 2Q/03. Managed 90+ day delinquency was 1.76%, compared to 1.81% in the first quarter, and 1.80% for 2Q/03. BofA continues to dominate online banking with more than 11.2 million users, achieving a 48% penetration rate among all customers with a checking account. BofA says customers using online banking are 27% more profitable than those who do not use it. For complete details on Bank of America’s 2Q/04 performance visit CardData ([www.carddata.com]).
BOFA CARD LOAN HISTORICAL
1Q/03 $29.1 billion
2Q/03: $30.8 billion
3Q/03: $33.6 billion
4Q/03: $36.6 billion
1Q/04: $37.3 billion
2Q/04: $52.0 billion
Source: CardData (www.carddata.com)
Bank of America has inked a deal to acquire National Processing for $1.4 billion, making it the nation’s second largest bankcard merchant acquirer with nearly $250 billion in annual processing volume. Louisville, KY-based NPC announced in May its intention to sell the company which is 83% owned by National City Corporation. The card processor previously reported first quarter revenues of $122.2 million, a 15% gain over one-year ago. Net income rose 40% to $12.0 million in the first quarter. Merchant Card Services dollar volume processed was $44.5 billion for the first quarter, representing an increase of 13% over the first quarter of 2003. NPC will report second quarter results on July 16th. NPC provides services to approximately 700,000 merchant locations across North America. BofA also announced that Mark Pyke, currently the Chief Operating Officer of National Processing, will lead the combined merchant services business once the transaction is complete.
Bank of America this morning became the first company to simultaneously sign national agreements with “Major League Baseball Properties,” “Minor League Baseball,” and “Little League Baseball.” Under the five-year agreement with Major League Baseball Properties, which begins immediately and continues through the 2008 Major League Baseball season, Bank of America will receive exclusive rights in its category, including the license of intellectual property rights, extensive broadcast and onsite branding opportunities and hospitality at the All-Star Game, the Division Series, the League Championship Series and the World Series. BofA also established a national affiliation with “Minor League Baseball,” and has signed a four-year national sponsorship agreement with “Little League Baseball.” The “Little League Baseball” deal provides exclusive rights to all banking and financial services categories, and includes targeted access to Little League officials, coaches and families, as well as on-site presence at state and regional tournaments, branding and signage at the Little League World Series, and a variety of other promotional programs.