Bank of America announced yesterday it has expanded the mini card program to its “Check Card.” BofA, the largest issuer of “VISA Check Cards”, is the first financial institution to offer a mini card linked to a customer’s checking account. Initially launched to credit card customers in October, the BofA mini card is about half the size of a regular “Check Card,” and is designed to be attached to a key chain. The card can only be used with swipe terminals, not ATMs. Bank of America has more than 17 million “Check Card” holders. By the end of this year, the company says it will have issued mini cards to more than 11 million BofA customers. BofA also holds the patent for the new mini card. Following the first year, under a license from Bank of America, VISA member banks will be permitted to issue VISA-branded mini cards, for which Bank of America will receive royalty payments. (CF Library 10/2/02)
Bank of America reported this morning that managed credit card revenue increased 16.8% to $975 million for the fourth quarter with net pre-tax credit card income of $355 million. Over the past twelve months BofA’s credit card outstandings have grown 8.4%, from $27.2 billion to $29.5 billion. The nation’s 8th largest bank credit card issuer also reported a decline in net charge-offs, as a percentage of average managed loans, of 14 basis points. However charge-offs are up 9 basis points to 4.99% compared to one year ago. Delinquency rates for the fourth quarter increased since the previous quarter, but remain below year ago levels. The 30+ day managed delinquency rate for 4Q/02 was 3.94% compared to 3.63% for the third quarter, and 4.12% one year ago. The 90+ day managed delinquency rate was 1.71% compared to 1.66% in the previous quarter, and 1.75% for 4Q/01. For complete details on BofA’s latest performance, plus historical portfolio information visit CardData ([www.carddata.com]).
Bank of America launched an affinity “VISA Gold” card featuring the work of baby photographer Anne Geddes. A portion of the merchant fees generated by the card will donated to the Geddes Philanthropic Trust, which supports the prevention of child abuse and neglect. BofA is offering the card in four designs. The no annual fee card carries a fixed 1.9% intro rate for the first six billing cycles, according to CardWatch ([www.cardwatch.com]). The go-to interest rate is a variable rate between prime +2.99% and prime +9.99%, depending on credit risk. Cardholders who miss two consecutive minimum payments, or within a twelve month period miss three minimum payments, or are three times overlimit, will be subject to an APR of prime +14.99%, with a 21.99% minimum. Anne and Kel Geddes established the Geddes Philanthropic Trust in 1999.
Bank of America said this week it expects more than 1.8 million consumers to pay their bills online this month, compared to about 900,000 customers during January 2002. Last year, BofA customers paid about 5.6 million bills online. In January 2003, customers are expected to pay about 11 million bills online. In January 2002, the amount of the bills that customers paid totaled $1.7 billion. In January 2003, the amount is expected to be about $3 billion. BofA has more than 4.6 million active subscribers to its online banking services, the most in the industry.
Credit card delinquency, based on dollars past due, rose 37 basis points between the second and third quarters, although the metric was flat compared to one year ago. The 37 bps jump reported by the ABA yesterday is exactly the same margin of increase reported by the top ten issuers in October for the third quarter. The ABA reported Thursday that based on total dollars outstanding, bank card delinquencies rose to 4.45% from the previous quarter’s 4.08%, but unchanged from third quarter last year. However, based on the number of accounts past-due, credit card delinquencies actually fell to 3.81% from 3.91% in the second quarter. CardData ([www.carddata.com]) reported on October 31st, that delinquency rates among the top ten VISA and MasterCard hit 6.48% in 3Q/02 compared to 6.11% in the second quarter. Compared to the third quarter of 2001, delinquency rose by 51 bps. Among the top VISA and MasterCard issuers, MBNA, Bank One, Chase, BofA, and Fleet reported lower delinquency rates this year than 3/01. Meanwhile, Discover reported a 30+ day delinquency rate of 5.72% for the quarter ending 8/31/02, compared to 6.31% for the year-ago quarter. The American Express delinquency rate stood at 3.2% for 3Q/02, compared to 3.1% for 2Q/02, and 3.2% one year ago. For more historical information on delinquency rates visit CardData ([www.carddata.com]). (CF Library 10/31/02)
3Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
1999: 4.25% 1995: 4.21% 1991: 4.54% 1987: 3.72% 1983: 2.75%
2002: 4.45% 1998: 4.63% 1994: 2.90% 1990: 4.01% 1986: 4.90% 1982: 3.92%
2001: 4.45% 1997: 5.31% 1993: 3.83% 1989: 3.45% 1985: 3.15% 1981: 2.37%
2000: 3.93% 1996: 5.03% 1992: 4.27% 1988: 3.40% 1984: 3.30% 1980: 3.40%
Source: American Bankers Association Delinquency Bulletin
EDS and Bank of America have signed a $4.5 billion managed network outsourcing services agreement. The relationship will enable Bank of America to continue to deliver high quality and more efficient service for customers. EDS will provide Bank of America end-to-end operations including flexible, secure telecommunications solutions that apply best-in-class technology and processes.
Concord EFS has promoted Bond Isaacson to president of financial services. Isaacson, formerly payments executive at BofA and VISA, joined Concord as EVP in September. Ronald Congemi, president, Star Systems, will continue to have responsibility for the STAR network. Concord also promoted Christopher Reckert as president of payment services. Reckert joined Concord in 1995. The Company also announced that Dan Palmer, chairman and outgoing CEO, will assume the role of chief strategic & financial planning officer in May when Edward Labry, president, succeeds Palmer as CEO.
Bank of America’s “US Airways Dividend Miles VISA” will begin awarding bonus miles on purchases at select retailers next year. Toronto-based Advantex Marketing International has inked a deal with BofA to to integrate the “Advantex Benefit” into all “US Airways Dividend Miles VISA” credit cards by Spring 2003. The “Advantex Benefit” program will enable “Dividend Miles” credit card holders to automatically earn bonus “Dividend Miles” on their purchases at a wide range of participating merchants including retail, golf, hospitality, and more. Advantex clients include Bank of America, US Airways, United Mileage Plus, Air Canada Aeroplan, The Canadian Imperial Bank of Commerce, The New York Times, and other major North American corporations, as well as an extensive list of retailers, restaurants, golf courses, and resorts.
Genpass has hired William Raymond, former senior manager of Bank of America’s ATM network, as EVP. Raymond has been the senior manager of Bank of America’s 14,000 ATM network since 1998 and has eighteen years in the EFT and retail banking industries
The top ten U.S. issuers of credit cards now have more than a 75% share of the market based on the number of cards-in-force. The fastest growing cardbase, among major issuers, is Sears National Bank which has issued nearly 30 million Gold MasterCards in-force, a 50% increase over the past twelve months. However, Target’s Retailers National Bank cardbase of “smart VISA” cards has grown more than seven fold since 3Q/01. Target’s most recent data show over 7.0 million cards-in-force. While the Discover and American Express cardbases have been flat since 3Q/01, so has Bank of America. Bank One and Citigroup have also lost some ground. Chase posted a strong 22% gain driven by its acquisition of Providian accounts. Providian has shed 6.2 million accounts since last year. Data for Citigroup and MBNA may include some Canadian cardholders. For complete details on the third quarter cardbase of hundreds of U.S. issuers visit CardData ([www.carddata.com]).
TOP TEN VISA/MC ISSUER CARDS-IN-FORCE
3Q/02 3Q/01 CHNG 2Q/02 SHARE
1. Citigroup: 92.6m 98.1m -5.6% 96.1m 16.05%
2. MBNA: 70.8m 66.5m +6.5% 69.4m 11.59%
3. Bank One: 53.5m 58.4m -8.4% 53.3m 8.90%
4. Cap One: 50.3m 43.4m +15.9% 50.9m 8.50%
5. Discover 50.0m 50.0m NC 50.0m 8.35%
6. Chase: 39.3m 32.1m +22.4% 38.6m 6.45%
7. AmeEx: 34.8m 34.7m +0.2% 34.8m 5.81%
8. Household: 27.7m 24.5m +13.1% 26.6m 4.44%
9. Sears NB 29.9m 19.8m +51.0% 26.6m 4.44%
10. BofA: 22.3m 22.4m -0.4% 22.4m 3.74%
TOTALS: 471.2m 449.9m +4.7% 446.3m 74.56%
Source: CardData (www.carddata.com)
While delinquency rose 37 bps during the third quarter compared to the second quarter, charge-offs declined 95 bps during the same period. Nine out of the top ten U.S. issuers reported declines in charge-offs during the third quarter. Metris/Direct Merchants Bank was the only issuer reporting an increase. However, Metris charge-offs were only up 10 bps. Compared to the third quarter of 2001, charge-offs were, on average, 8.1% higher. The average third quarter charge-off rate was 7.06%, compared to 6.53% one year ago. Excluding the huge losses at Providian and Metris, the average charge-off rate for the third quarter would have 5.42%. Among issuers reporting the steepest decline since last year are Fleet and Bank One. All three major sub-prime issuers, Capital One, Providian, and Metris reported the biggest increases in charge-offs since 3Q/01. For 3Q/02, Discover reported a charge-off rate of 6.27%, compared to 6.30% in the previous quarter, and 5.79% one year ago. For American Express, losses slowed from 6.20% in 2Q/02 to 5.60% in the third quarter. During 3Q/01, American Express experienced a charge-off rate of 5.60%. For historical data on charge-offs visit CardData ([www.carddata.com]).
TOP TEN VISA/MC ISSUER CHARGE-OFFS
3Q/02 2Q/02 1Q/02 3Q/01 ANN CHNG
1. Citigroup: 5.86% 6.50% 6.41% 5.48% +6.9%
2. MBNA: 4.84% 5.09% 5.00% 4.90% -1.2%
3. Bank One: 5.00% 5.62% 5.69% 5.89% -15.1%
4. Chase: 5.51% 6.42% 5.87% 5.64% -2.3%
5. Cap One: 4.96% 4.98% 4.70% 4.51% +10.0%
6. Providian: 16.71% 17.53% 15.05% 10.33% +61.8%
7. BofA: 5.13% 5.59% 5.43% 4.81% +6.7%
8. Household: 6.81% 7.54% 7.17% 6.75% +0.9%
9. Fleet: 5.25% 5.81% 5.42% 6.26% -16.1%
10. Metris: 15.10% 15.00% 13.00% 10.70% +41.1%
AVERAGE: 7.06% 8.01% 7.37% 6.53%% +8.1%
Source: CardData (www.carddata.com)
Bank of America reported yesterday that its offer of free online bill payment has produced 1.5 million new customers within six months. Global Finance magazine named bankofamerica.com the world’s best consumer Internet banking site.