Card Delinquency Rises 39BPS in January

Credit card delinquency soared in January by 39 basis points hitting its highest level since November 2003. Delinquency, the amount of dollars 30-days past due as a percentage of gross outstandings, is now 84 basis points above year ago levels. According to CardData ([www.carddata.com][1]) delinquency hit 5.40% in January, compared to 5.01% in the prior month and 4.56% one-year ago. Earlier this week Capital One reported that delinquency for its U.S. Cards rose to 5.05% in January, compared to 4.95% in the prior month and 3.79% one-year ago. The issuer also reported that charge-offs hit 6.65% in January, compared to 5.74% in the prior month and 4.01% one-year ago. (CF Library 2/13/08)

DELINQUENCY
Jan 07: 4.56%
Feb 07: 4.63%
Mar 07: 4.66%
Apr 07: 4.72%
May 07: 4.67%
Jun 07: 4.62%
Jul 07: 4.64%
Aug 07: 4.70%
Sep 07: 4.74%
Oct 07: 4.79%
Nov 07: 4.88%
Dec 07: 5.01%
Jan 08: 5.40%
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

GE Money Names a New CEO to Replace Nissen

GE announced that William Cary has been named president and CEO of GE Money. Cary succeeds David Nissen, who is retiring. Nissen has been with GE for 27 years and has led GE’s consumer finance business since 1993. Cary has served as president and CEO of GE Money Europe, Middle East and Africa, the largest group within GE Money, since February 2006. He is a senior vice president of GE. Recently, GE reported that revenues for its GE Money unit grew 22% in the fourth quarter to $6.6 billion. Profits grew by 7% to $957 million, compared to one-year ago, but down from the prior quarter’s year-on-year growth rate of 13%. In December GE indicated it was looking to sell or form a partnership for some of its GE Money services including its U.S. private-label credit-card business. (CF Library 1/18/07)

Davidson Companies Database is Compromised

MT-based financial services provider Davidson Companies announced that a database containing certain personal information of its current and past clients may have been breached. The company recently became aware of the intrusion and immediately took its public Internet site offline. The company has contacted law enforcement and its regulatory authorities, notified the three credit reporting bureaus, and retained an information technology security and forensic firm to review the incident to assist the company in its response. Based on the company’s review, there is no evidence the unauthorized access enabled the third party to affect or alter client accounts through company systems.

Debt Resolve Names a New CEO & President

NY-based collections solution provider Debt Resolve has appointed Kenneth Montgomery, previously with Pentegra, as its new CEO and promoted CFO David Rainey to President. Montgomery has over 25 years in the financial services industry. From March 2003 to March 2006, he held the position of President and Chief Executive Officer of Pentegra Retirement Services, where he managed assets totaling over $4B and successfully transformed the culture to accelerate growth. From April 2001 to January 2003, Mr. Montgomery was Head of Sales and Business Development at CIGNA Retirement Services. Rainey has been Chief Financial Officer at the company since March 2007. He has over 19 years of experience in public company accounting and finance roles, corporate governance, Sarbanes-Oxley issues, and mergers and acquisitions. Before joining Debt Resolve, Mr. Rainey served as the Chief Financial Officer and Treasurer of Hudson Scenic Studio, where he was responsible for finance and accounting. Debt Resolve provides lenders, collection agencies, debt buyers and utilities with a patent-based online bidding system for the resolution and settlement of consumer debt.

Monthly Payment Rates Slide in December

Monthly payment rates, the amount that cardholders pay on their credit card debt, continued south in December. After topping 20% one-year ago, the MPR dropped 80 basis points between October and December. Among managed credit card outstandings, the MPR declined to 18.41% in December after rising to 19.21% in October. The MPR has remained fairly stable in the first three quarters of this year and remains consistent with historical levels since the new FFIEC minimum payment rules went in effect in 2005. According to CardData, the yield also decreased in December to 14.63% from 14.80% in November, but was flat compared to year-ago levels.

U.S. PORTFOLIO METRICS
YIELD MPR
Dec 06: 14.63% 19.70%
Jan 07: 14.77% 19.88%
Feb 07: 14.75% 19.81%
Mar 07: 15.01% 18.12%
Apr 07: 14.99% 18.04%
May 07: 14.87% 19.01%
Jun 07: 14.93% 18.40%
Jul 07: 14.77% 18.30%
Aug 07: 14.80% 18.99%
Sep 07: 14.71% 18.86%
Oct 07: 14.82% 19.21%
Nov 07: 14.80% 18.89%
Dec 07: 14.63% 18.41%
Source: CardData (www.carddata.com)

PayPal Fourth Quarter Revenues Climb 35%

eBay reported that PayPal posted $563 million in fourth quarter revenue, an increase of 35% year-over-year. Net total payment volume for the quarter was $14 billion, an increase of 35% over 4Q/06. At the end of the year PayPal had 57.3 million active accounts, a 16% increase from one-year ago. During the fourth quarter, PayPal handled 203.9 million payments, an 18% increase over the prior quarter, and up 22% from 4Q/06. PayPal’s 4Q/07 transaction revenue rate decreased to 3.84% from 3.87% in the prior quarter. The processing expense rate for the fourth quarter was 1.18%, compared to 1.13% for 4Q/06. PayPal’s transaction loss rate came in at 27 basis points, down 16 basis points from one-year ago. During the fourth quarter PayPal signed top merchant service account deals with U.S. Airways, AirTran, drugstore.com and Shop NBC among others. The payments company also hired four seasoned executives with deep consumer, technology and international experience to help drive the company’s ongoing expansion. For complete details on eBay/PayPal’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

PAYPAL HISTORICAL
$VOLUME #ACCOUNTS
4Q/06: $10.4 billion 49.4 million
1Q/07: $10.8 billion 51.3 million
2Q/07: $11.1 billion 52.8 million
3Q/07: $11.6 billion 54.8 million
4Q/07: $14.0 billion 57.3 million
SOURCE: CardData (www.carddata.com)

[1]: http://www.carddata.com

Capital One Q4 U.S. Card Profits Up 55%

Capital One’s fourth quarter U.S. credit card profits increased nearly 55% year-on-year, but declined about 7% sequentially. Purchase volume in the U.S. remained flat while U.S. managed card outstandings decreased 3% from the year-ago quarter. The number of U.S. card accounts declined by about 50,000 during the quarter, and remained down from the year-on-year figure of 37.6 million accounts. U.S. card net income was $521.9 million, compared to $560.8 million in the prior quarter and $337.2 million for 4Q/06. U.S. managed card outstandings were $52.1 billion for 4Q/07 compared to $53.6 billion one-year ago and $49.6 billion in the previous quarter. Cap One says loan growth was affected by a reduction in marketing of teaser rates to prime customers, and a $600 million portfolio sale in the first quarter. Purchase volume hit $22.9 billion for 4Q/07, compared to $21.5 billion for 3Q/07 and $22.8 billion for 4Q/06. The managed delinquency rate (30+ days) for U.S. credit cards was 4.95% for the fourth quarter, compared to 4.46% for 3Q/07 and 3.74% for the fourth quarter of 2006. The net charge-off rate for U.S. credit cards was 5.40% for the fourth quarter, compared to 4.13% for the third quarter and 3.82% one-year ago. Cap One expects the U.S. Card managed charge-off rate to be in the mid-6% range in the first half of 2008. For complete details on Capital One’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

COF U.S. CARD NET INCOME
4Q/06: $337.2 million
1Q/07: $495.3 million
2Q/07: $538.3 million
3Q/07: $560.8 million
4Q/07: $521.9 million
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

2008 CCCI

Based on the 2007 Xinhua Finance eziData Consumer Confidence Index
(CCCI), which dropped more than 2 points throughout the year, the
organization is predicting a fluctuating index for 2008. For 2007, price
increases of consumer goods, paired with weakened purchasing, and the
stock market volatility’s effect on consumer confidence led to a roller
coaster
of an index. Due to these factors, the CCCI reached a pinnacle in May,
followed
by a bottom over the Summer, a Fall rebound and, again, a huge Winter
decrease.
Additional findings show that these ups and downs were consistent with ups
and downs in the country’s real estate market. With this information,
the CCCI
is predicting an unpredictable 2008, still influenced by prices and
stock market
movement. What the organization is predicting, however, are price increases
into the first half of 2008 and “shakeouts” and price decreases for the
2nd half
to result, once again, in a dropping CCCI. Xinhua Finance Limited
information
and media service provider was founded in 1999 and has offices and news
bureaus across 11 countries while eziData provides China consumer data
concerning financial and retail markets.

Credit Card Yields Decline in December

Credit card portfolio yield has declined to its lowest level in more than a year driven by lower interest rates offset somewhat by rising fee income. Yesterday’s Fed rate reduction will cut variable credit card interest rates another 75 basis points over the next 45 days as many issuers have yet to establish floor rates. According to CardData ([www.carddata.com][1]), portfolio yield, which is determined by dividing the sum of gross interest and non-interest revenue by the average managed card outstandings and then annualizing, shows a 14.63% figure for December compared to 14.80% in the prior month. Since summer credit card portfolio yield has declined about 30 basis points. According to R.K. Hammer U.S. credit card issuers generated an estimated $30 billion in cardholders fees last year, about 6% higher than 2006. U.S. cardholders also paid approximately $97 billion in interest charges. According to CardTrak (www.cardtrak.com) the average variable interest rates stands at 15.79% for January, compared to 16.59% one-year ago. (CF Library 1/22/08)

CARD YIELD
Jun 07: 14.93%
Jul 07: 14.77%
Aug 07: 14.80%
Sep 07: 14.71%
Oct 07: 14.82%
Nov 07: 14.80%
Dec 07: 14.63%
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

Top 3 Issuers Post Modest Q4 Growth

The nation’s top three general purpose credit card issuers, who collectively control about 58% of the market based on card loans, posted a 5.2% gain in outstandings and a 4.9% gain in volume for the fourth quarter, compared to the year ago period. The modest gains pale in comparison to the double digit gains of prior years. Bank of America, Chase and Citibank reported outstandings of $436.7 billion for the fourth quarter, compared to $415.1 billion for 4Q/06, according to CardData ([www.carddata.com][1]). The top three also posted purchase volume of $248.1 billion for 4Q/07, compared to $236.5 billion one-year ago. In the volume category, Citibank led the group with an 8.4% gain, compared to 4.3% for BofA and 2.2% for Chase. For the latest issuer statistics for the fourth quarter visit CardData ([www.carddata.com][2]).

[1]: http://www.carddata.com
[2]: http://www.carddata.com

GE MONEY 4Q/07

GE reported that revenues for its GE Money unit grew 22% in the fourth quarter to $6.6 billion. Profits grew by 7% to $957 million, compared to one-year ago, but down from the prior quarter’s year-on-year growth rate of 13%. In December GE indicated it was looking to sell or form a partnership for some of its GE Money services including its U.S. private-label credit-card business. Overall, GE is reviewing between $30 billion and $50 billion in financial assets to sell or share. The Company cites a slowing U.S. consumer and a challenging housing market as reasons to reevaluate its financial services business. GE Money’s credit card business contributes about 16% of its $4 billion+ annual net income. During the quarter, GE Money and the National Tour Association established a five-year extension of the GE Money Travel Finance Program available through NTA’s more than 600 tour operators globally; established a relationship with FL-based decoupled ACH debit card provider National Payment Card to link National Payment Card’s ACH-based alternate payment system with the GE Motor Club; extended its consumer financing agreement with FL-based City Furniture; renewed its consumer financing agreement with Thomasville Furniture; and signed a multi-year agreement with Wood-Mizer for revolving and installment financing. For complete details on GE’s fourth quarter performance, visit CardData (www.carddata.com).