Concord EFS is mailing out letters this week to its 6,200 financial institution clients detailing a uniform pricing schedule for the ‘STAR’, ‘Cash Station’, and ‘MAC’ debit networks. At the same time, Bank of America advised Concord that although it will continue to use Concord’s processing services, it does not plan to continue its participation in the ‘STAR’ network. BofA was the only sizeable owner of Star Systems that did not sign a long-term network participation contract with Concord when STAR was acquired by Concord in February. Concord will continue to provide ATM processing services to approximately 1,100 Bank of America ATMs, plus point of sale debit gateway processing to selected Bank of America merchants. Concord says the uniform pricing structure for ‘STAR’, ‘Cash Station’, and ‘MAC’, is designed to create consistency across the networks, and to remain competitive with the PIN-secured and signature debit offerings of other national payment networks. Consolidation of Concord’s network created a coast-to-coast network of 180,000 ATMs and the nation’s largest PIN-secured debit payment network with 800,000 merchant locations. There are over 124 million ATM/debit cards that carry the ‘STAR’, ‘MAC’, or ‘Cash Station’ brands. (CF Library 2/2/01; 3/29/01)
The Trial Lawyers for Public Justice this week formally challenged a proposed national class action settlement of credit cardholders’ overcharge claims against Bank of America. The proposed settlement in Boehr v. Bank of America requires cardholders and class members to prove by documentary evidence that the Bank received their payments on or before noon on the date they were due. The settlement guarantees of at least $500,000 to the Bank of America’s ‘Consumer Education Fund’. The Boehr class action was filed on behalf of 8 million current and former Bank of America credit cardholders whose payments the bank did not credit on the date of receipt The settlement creates a fund of $1,316,700 to be distributed among five charitable organizations. The settlement also creates a $1.875 million damages fund to be distributed among class members who can prove that the bank received their payments before a certain hour on the date the payment was due.The TLPJ also contends that the notice provided to the class members was inadequate and that the $1,583,300 in attorneys’ fees sought by class counsel is excessive.
Smart payment card issuance is steaming ahead with an expected 14 million VISA and American Express smart cards to be in use by year’s end nationwide. The infrastructure to harness the power of the card’s chip for payment within the USA is also beginning to build. Yesterday VISA, Bank of America and Vital Processing Services teamed to provide smart card acceptance services at two POS merchant locations. Although a baby step in building merchant acceptance, momentum will quickly build during the fourth quarter and the first half of next year, as Target develops its ‘smart VISA’ program. Based on the latest industry intelligence, slightly more than seven million AmEx ‘Blue’ cards have been issued since the card’s launch two years ago. VISA says it expects about seven million ‘smart VISA’ cards to be issued by year’s end. Providian, the biggest cheerleader of the ‘smart VISA’ card, broke through the one million card level in June, and intends to migrate nearly all its 17 million accounts to smart cards. Combined, Fleet and First USA have issued less than one million ‘smart VISA’ cards to-date. Yesterday’s VISA/BofA/Vital announcement involves smart card acceptance at the employee cafeterias located within VISA’s offices in Foster City, CA. and Vital’s in Tempe, AZ. Vital is the first U.S. merchant payment processor to be ready to process ‘smart VISA’ transactions and has developed a terminal application to enable BofA merchants to accept smart cards at the POS. Vital will authorize, capture and clear the chip-based merchant transactions with Bank of America Merchant Services Group providing transaction acquiring. Hypercom’s smart card enabled touch-screen ‘ICE’ card payment terminals will process the VISA and Vital chip-based transactions. (CF Library 9/9/99;4/26/01;6/20/01;6/29/01)
At mid-year, bank credit card charge volume grew at an annual rate of 14%. At year end 2000, U.S. charge volume increased 13.2% over the previous year. The steady growth in card spending adds further confusion to the direction of consumer spending and its effect on the overall economy. Card volume data analysis are generally skewed by the inclusion of business card usage, shifting of cash/check payments to cards, and the continual widening of general acceptance. According to data collected by CardData ([www.carddata.com]), MBNA posted a 34%+ increase in volume this year while Wachovia and People’s experienced declines.
YTD VOLUME FOR ISSUERS WITH $1 BILLION+ RECEIVABLES
(Jan-Jun 2001; $ billions)
ISSUER 2Q/00 2Q/01 CHNG
1. Citibank $90.7 $106.8 +17.8%
2. MBNA $49.9 $ 67.0 +34.3%
3. Discover $45.4 $ 47.9 + 4.8%
4. Chase $27.3 $ 33.9 +24.2%
5. AmEx $106.4 $114.4 + 7.5%
6. BofA $ 25.3 $ 29.4 +16.2%
7. Household $ 15.7 $ 16.6 + 5.7%
8. Fleet $ 10.0 $ 9.8 – 2.0%
9. Wachovia $ 4.7 $ 4.4 – 6.4%
10. Wells Fargo $ 4.1 $ 5.4 +31.7%
11. USAA FSB $ 5.3 $ 5.6 + 5.7%
12. Frst Natl NE $ 2.3 $ 2.9 +26.1%
13. People’s $ 3.0 $ 2.4 -20.0%
14. Natl City $ 2.1 $ 2.2 + 4.8%
TOTAL $392.2 $448.7 +14.4%
Source: CardData (www.carddata.com)
Bank of America is launching two new national TV ads that communicate the company’s brand philosophy of “ingenuity.”
Told in the format of 30-second stories, each with a linear plot like a short film, the new ads make a clear and compelling connection between Bank of America and “ingenuity.” The ads take a fresh approach to storytelling and show a slight departure in style from the bank’s first brand advertising campaign, launched last September. The company also announced it is increasing its advertising budget from approximately $100 million to $145 million — almost 50 percent — to promote the Bank of America brand in 2002.
The new ads and budget increase are part of an overall strategy to build the Bank of America brand and become one of the world’s most admired companies. Less than a year ago, Dan Roselli was hired as Brand and Communications executive to intensify those efforts. Roselli has a track record for managing and growing well-known American brands at companies such as General Mills, Colgate-Palmolive and M&M/Mars.
“Bank of America has a long history of ingenuity that spans 200 years,” said Dan Roselli, Bank of America Brand and Communications executive. “We were one of the first banks to offer services to immigrants; we helped develop one of the first computers ever used in business, and we created the first coast-to-coast bank. Today, we’re pioneering a new type of Prototype Market banking center in Atlanta, and we recently created an innovative mortgage solution for teachers, the Teacher Flex/Teacher Zero Down. The new spots — and our new tagline ‘Embracing Ingenuity’ — convey with intriguing stories our history of innovation, as well as the spirit of ingenuity that is thriving within Bank of America today.”
One ad called “Swimming Hole” features a boy poised to jump off a ledge into a swimming hole. Other children watch as he contemplates whether he should be the first to jump. The ad is a simple metaphor for the courage and foresight that is required for an individual, or a company, to step forward and break new ground. To prove that Bank of America is no stranger to being a leader, the ad references four separate historical occasions in which the company took a bold or innovative leap: “first credit card,” “first computer used in banking,” “first major bank online” and “first nationwide ATM network.”
The other ad called “Sparring” features a woman in a martial arts studio. Several scenes show her artfully defending against an opponent. An unexpected ending reveals that she is sight-impaired. The ad highlights the innovative Bank of America Talking ATMs for the visually impaired, another area in which Bank of America is taking a leadership role. “Sparring” demonstrates the company’s success in breaking through societal limitations — and creating new banking experiences for sight-impaired customers.
Talking ATMs provide audible instructions to persons who cannot view information on an ATM screen. The ATMs have audio jacks that deliver spoken instructions privately to protect the security of sight-impaired and low- vision customers. Currently, there are 304 Bank of America Talking ATMs in operation — 65 in Florida and 239 in California.
Both ads also convey the Bank of America brand promise: “To be the people who make banking work for customers and clients in ways it never has before.”
“We made some creative changes based on research results from our last round of advertising,” Roselli said. “Our prior ads scored 26 percent higher overall than the norm for the financial industry. However, results showed we still needed to make a clearer connection between Bank of America and ingenuity. Our pre-testing indicated that the new ads should succeed in making this link more apparent to viewers.”
The new ads will run throughout the United States on regional networks, with a particularly strong emphasis in markets in the 21 states and the District of Columbia where Bank of America has retail banks. Through nationwide cable, the company will reach markets in New York, Boston and other cities where it does not have retail banking centers. Print ads and other collateral materials will be developed in the near future.
Bozell, New York, is the advertising agency that developed the television advertising. It is the agency of record for Bank of America. Los Angeles filmmaker Tony Kaye directed the ads.
About Bank of America
One of the world’s leading financial services companies, Bank of America is committed to making banking work for customers like it never has before. The company enables customers to do their banking and investing whenever, wherever and however they choose through the nation’s largest financial services network, including approximately 4,400 domestic offices and 13,000 ATMs, as well as 38 international offices serving clients in 190 countries, and an Internet Web site that provides online access for more than 3 million customers, more than any other bank.
Bank of America stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges. The company’s Web site is . News, speeches and other corporate information may be found at .
The number of active accounts has declined slightly this year compared to one year ago. At the end of the second quarter, 55.4% of gross accounts had posted activity compared to 56.4% for the end of 2Q/00. According to CardData’s ([www.carddata.com]), active accounts, the percentage of gross accounts for the top three issuers (Citi, MBNA, and FUSA), is hovering around 59% compared to 60% last summer. Bank of America, Wachovia and People’s have experienced a sharp decline in active accounts, while Chase and Household are on the upswing.
(as a percentage of gross accounts)
2Q/00 2Q/01 2Q/00 2Q/01
Discover 57% 54% Wells 61% 59%
Chase 60% 63% USAA 63% 74%
BofA 51% 35% Frst NE 43% 47%
Household 48% 53% People’s 56% 46%
Wachovia 36% 31% Natl City 52% 56%
Source: CardData (www.carddata.com)
Eleven of the nation’s top twelve issuers, with at least $10 billion in receivables, posted higher delinquency for 2Q/01 compared to last year’s second quarter. As a peer group, delinquency (30+ days) rose 8.5%, for an average 2Q/01 delinquency rate of 5.38%, according to CardData. Capital One was the only exception, experiencing an 8% decline over the past year. Among issuers reporting 30+ day delinquency, Providian reported the largest increase, rising more than 24% over the past twelve months. Overall, delinquency grew about half as much as charge-offs between 2Q/00 and 2Q/01. The disparity between charge-offs and delinquency is driven by the recent increase in personal bankruptcy filings this year in anticipation of new legislation which has revived the “bankruptcy out-of-the-blue” phenomenon. For complete details on each issuer’s track record visit CardData (www.carddata.com).
SECOND QUARTER DELINQUENCY
2Q/00 2Q/01 DAYS CHANGE
1. Citigroup: 1.26% 1.72% 90+ +36.5%
2. MBNA: 4.44% 4.57% 30+ + 2.9%
3. First USA: 3.83% 4.10% 30+ + 7.0%
4. Discover: 5.11% 5.84% 30+ +14.8%
5. Chase: 1.68% 1.90% 90+ +13.1%
6. AmEx: 2.40% 2.90% 30+ +20.8%
7. Capital One: 5.35% 4.92% 30+ – 8.0%
8. Providian: 6.48% 8.04% 30+ + 24.1%
9. BofA NR NR NA NA
10. Fleet: 4.38% 4.40% 30+ + 4.6%
11. Household 3.14% 3.60% 60+ +14.6%
12. Metris: 7.70% 8.30% 30+ + 7.8%
30+ day Avg*: 4.96% 5.38% +8.5%
*60+ day and 90+ day are not meaningful
SOURCE: CardData ([www.carddata.com])
All twelve of the nation’s top issuers, with at least $10 billion in receivables, posted higher charge-offs for 2Q/01 compared to last year’s second quarter. As a peer group, charge-offs rose 17.5%, for an average 2Q/01 charge-off rate of 6.32%, according to CardData. Providian and American Express led the group with the highest increase in losses, 38.7% and 29.5% respectively. Capital One and Bank of America reported only a slight increase in charge-offs. Losses for sub-prime specialists, Providian and Metris/Direct Merchants, exceeded 10% for the second quarter. The rise in charge-offs has been attributed to a surge in personal bankruptcy filings this year in anticipation of new legislation and to the softening economy. For complete details on each issuer’s track record visit CardData ([www.carddata.com]).
SECOND QUARTER CHARGE-OFFS
2Q/00 2Q/01 CHANGE
1. Citigroup: 4.32% 5.51% +27.5%
2. MBNA: 3.95% 4.82% +22.0%
3. First USA: 5.44% 6.09% +11.9%
4. Discover: 4.21% 4.98% +18.3%
5. Chase: 5.16% 5.54% + 7.4%
6. AmEx: 4.40% 5.70% +29.5%
7. Capital One: 3.97% 3.98% + 0.3%
8. Providian: 7.42% 10.29% +38.7%
9. BofA: 4.84% 4.94% + 2.1%
10. Fleet: 5.78% 6.31% + 9.2%
12. Household: 5.57% 6.82% +22.4%
13. Metris: 9.50% 10.90% +14.7%
AVERAGE: 5.38% 6.32% +17.5%
SOURCE: CardData (www.carddata.com)
Twelve issuers make up the peer group of $10 billion plus in total managed loans as of mid-year. Capital One leads the group in annual growth, jumping more than 60% since last summer. Sub-prime issuers, Providian and Metris also posted above average gains over the same period according to CardData.
2Q/00 2Q/01 Change
1. Citigroup: 92.3 103.9 +12.6%
2. MBNA: 76.3 90.4 +18.5%
3. First USA: 66.3 63.0 – 5.2%
4. Discover: 43.7 50.2 +14.9%
5. Chase: 32.6 36.7 +12.6%
6. AmEx: 25.9 31.2 +20.5%
7. Capital One: 21.9 35.3 +61.2%
8. Providian: 21.8 30.5 +39.9%
9. BofA 20.4 24.8 +21.6%
10. Fleet: 13.8 14.6 + 5.8%
11. Household 15.9 17.0 + 6.9%
12. Metris: 7.8 10.1 +29.5%
Source: CardData (www.carddata.com)
Bank of America reported that its credit card income rose 8% for the second quarter driven by an increase in charge volume, especially debit cards, and by lower funding costs. However an increase in personal bankruptcy filings during the first half of 2001 contributed to a $96 million increase in consumer charge-offs from a year earlier. BofA posted a record $601 million in card income compared to $556 million for 2Q/00.For complete details on BoA’s 2Q/01 credit card performance as well as historical statistics visit CardData ([www.carddata.com]).
BANK OF AMERICA TRACK RECORD
2Q/01 1Q/01 4Q/00 3Q/00 2Q/00
EOP RECV: $24.8b 23.2 22.8 21.1 20.4
INCOME $601m 573.0 595.0 594.0 556.0
CHG-OFFS 4.94% 4.37% 4.31% 4.15% 4.84%
Source: CardData (www.carddata.com)
After years of bird dogging for California trial attorneys, San Francisco-based Consumer Action has decided to partner with Bank of America. With direct funding from BofA, Consumer Action has created a series of informational pieces about preventing home equity loan fraud, credit repair scams, identity theft and credit card fraud. Consumer Action is distributing the fact sheets through its national network of more than 6,000 community-based organizations. So far, nearly 1,000 groups have requested more than 300,000 of the BofA-funded tracts. The set of four fact sheets are also available in Spanish, Chinese, Korean and Vietnamese. A second set of fact sheets on basic banking topics will be released later this year to help provide financial education to the public. Consumer Action is a non-profit advocacy and education organization established in 1971 that distributes more than two million pieces of consumer educational materials annually through its national network of more than 6,000 community based organizations. An additional 500,000 consumers receive information from its multilingual Web site Consumer-Action.org each year.
Bank of America Corporation Chairman and Chief Executive Officer Kenneth D. Lewis announced that Amy W. Brinkley has been named chairman, Credit Policy, with responsibility for credit and market risk management activities across all business lines. At the same time, Lewis announced that Barbara J. Desoer has been named Consumer Products executive, succeeding Brinkley with responsibility for managing several of the company’s major product lines and channels that serve customer needs.
Brinkley, who will also carry the title of deputy Corporate Risk Management executive, will report to F. William Vandiver Jr., Corporate Risk Management executive. “I am very excited about Amy assuming this new role,” Vandiver said, “and look forward to working closely with her in building the premier risk management practice in the industry.”
Brinkley will also serve on the corporation’s Risk & Capital committee, which is comprised of the eight top executives in the company.
“Amy Brinkley and Bill Vandiver form a strong team that will take risk management to the next level for the company,” Lewis said. “Amy combines a strong knowledge of credit risk management gained earlier in her career with a demonstrated track record of successfully managing large business portfolios that encompass a variety of consumer and commercial credit risk. Her broad business skills also will play a big role in influencing how we manage risk holistically.”
Desoer has been the company’s Marketing director since 1999. She takes on responsibility for delivery of the full range of product-related businesses, including the card services, real estate, community development and consumer finance activities that make up the Consumer Products organization.
Reporting to Lewis, she also will oversee rapidly expanding Bank of America self-service delivery capabilities for customers seeking the convenience of doing business over the telephone and Internet. Like Brinkley, Desoer will serve on the Risk & Capital Committee. She also will continue to oversee the company’s Marketing activities until her successor can be identified. An external search is now under way.
The two executives each have more than 20 years of increasingly responsible leadership experience with the company. Prior to her six years as Marketing director, Brinkley headed the Consumer Credit Policy area for six years after establishing that function in 1987. Prior to her service as Marketing director, Desoer’s experience includes heading the Northern California banking group, and before that, a wide variety of commercial lending and credit administration assignments.
About Bank of America
One of the world’s leading financial services companies, Bank of America is committed to making banking work for customers like it never has before. Through innovative technologies and the ingenuity of its people, Bank of America provides individuals, small businesses and commercial, corporate and institutional clients across the United States and around the world new and better ways to manage their financial lives. The company enables customers to do their banking and investing whenever, wherever and however they choose through the nation’s largest financial services network, including approximately 4,400 domestic offices and 13,000 ATMs, as well as 38 international offices serving clients in 190 countries, and an Internet Web site that provides online access for more than 3 million customers, more than any other bank. Bank of America stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges. The company’s Web site is [www.bankofamerica.com]. News, speeches and other corporate information may be found at [www.bankofamerica.com/newsroom].