Heartland Posts 4Q/10 Revenue Up +$50mm Y/Y

Always a reliable performer, Heartland Payment Systems announced its 4Q/10 net income of $6.6 million and total revenues of $478 million. This was up on total revenue of $420 million in the year ago quarter, but down marginally on $499 million posted in 3Q/10. Performance throughout the quarter was due in great part to Heartland having closed on a new credit facility in November, with a five-year $100 million term loan and a $50 million revolving credit facility with a five-year commitment. While adjusted Net Income was up to $7 million on the $5.9 million posted a year ago, additional 4Q/10 figures show a net revenue of $110.5 million, up 5.1% year-over-year; a 35.7% increase in operating income year-over-year; operating margin on net revenue of 12.9%; and same store sales up 3.8%, up almost 100% since 3Q/09. For all of 2010, GAAP net income was $34.5 million; net revenues for 2010 were $444.9 million, up 6% compared to 2009; adjusted net income and Earnings per Share for fiscal 2010 were $25.8 million, compared to $29.3 million in 2009.

OTI Posts Total Revenue Increase up 81% Y/Y

On Track Innovations contactless microprocessor-based smart card solutions announced 2Q/10 total revenues of $27.8 million, an 81% increase from last year. Additionally, gross margin increased to 54% vs. 51% last year; non-GAAP operating expenses were $13 million, a 15% increase compared to $11.2 million last year; non-GAAP $2.2 million, compared to operating loss of $3.6 million last year; and revenues from licensing and transaction fees of $1.8 million, a 50% increase from last year. OTI designs, develops and markets secure contactless microprocessor-based smart card technology to address the needs of a wide variety of markets. OTI applications include product solutions for petroleum payment systems, homeland security solutions, electronic passports and IDs, payments, mass transit ticketing, parking and loyalty programs.

TOTAL REVENUE
1Q/09: $ 8.4 million
2Q/09: $16.9 million
3Q/09: $26.3 million
4Q/09: $ 8.6 million
1Q/10: $14.4 million
2Q/10: $27.8 million
SOURCE:Carddata.com

Citi Transactions Posts 2Q/10 Net Income of $929MM

Citigroup reported 2Q/10 net income of $2.7 billion or $0.09 per diluted share, on revenues of $22.1 billion, including Transaction Services with $929 million in net income, for a second consecutive profitable quarter. Provisions for credit losses and for benefits and claims declined $2.0 billion sequentially to $6.7 billion, the lowest level since the third quarter of 2007, reflecting continued improvement in credit quality. This helped increase Regional Consumer Banking’s net income by 16% sequentially to $1.2 billion. Citigroup has been focusing on Transaction Services and Regional Consumer Banking. Regional Consumer Banking (“RCB”) revenues were $8.0 billion, down $50 million, or 1%, sequentially, as declines in North America and EMEA were partially offset by continued growth in Asia and Latin America. Transaction Services revenues were $2.5 billion, up $65 million, or 3%, sequentially, with growth across all international regions. Transaction Services net credit losses were $1 million, flat compared to the prior quarter. The $35 million net loan loss reserve release in the quarter was $17 million higher than the prior quarter’s release. Net credit losses in Local Consumer Lending declined $403 million, or 8%, sequentially to $4.5 billion, mainly driven by Retail Partner Cards.

Heartland Payment Reports $411mm 1Q/10 Revenue

Heartland Payment Systems payments processing announced 1Q/10 systems revenues of $411million and GAAP net income of $14.2 million. Net revenues totaled $103.8 million, an increase of 5.4% compared to $98.5 million in year-ago period. Card processing volume for the three months ended March 31, 2010 was $14.4 billion, an increase of 7.2% compared to1Q/09, thanks to contributions from the ramp up in Discover and American Express activity, as well as growth in other SME merchant volume. In the first quarter of 2010, operating income as a percentage of net revenues was 2.5%, reflecting the economy’s impact on net revenue growth. Additionally, small and Mid-Sized merchant (SME) transaction processing volume was $14.4 billion, up 7.2% compared with 1Q/09; Transactions processed for Large National merchants of 685 million, up 6.8% compared with 1Q/09; Quarterly net revenue was $103.8 million, up 5.4% compared with 1Q/09; 94.6% of new merchants installed were on HPS Exchange compared to 91.2% in 1Q/09; and a 370 basis point sequential improvement in same store sales performance (1.5%) relative to the 1Q/09.

HEARTLAND PAYMENT SYSTEMS REVENUES
1Q/09: $372 million
2Q/09: $417 million
3Q/09: $443 million
4Q/09: $420 million
1Q/10: $411 million
Source: CardData (http://www.carddata.com)

Overall Card Trends Set to Improve for 2Q/10

Recent stabilization in the unemployment rate combined with positive early stage delinquency trends are partially to thank for volume trends having grown 2.3% year-over-year for 1Q/10 amongst the top six general purpose card issuers, compared to an average decline of 14.4% in 1Q’09. This is expected to translate into lower credit card portfolio losses in the second half of 2010, although Fitch notes recent legislative and accounting changes will provide some challenges in the near-term. Issuers re-priced card portfolios in 2009 in preparation for the CARD Act. The Act currently places various restrictions on card interest rates and fees and are soon to require penalty fees be reasonable and proportional.

Citi Posts 6% Gain in 1Q/10 Credit Loss

Citigroup today reported 1Q/10 net income of $4.4 billion or $0.15 per diluted share, and revenues having grown $7.5b to $25.4b. RCB net credit losses were $2.2 billion, up $122 million or 6%, due to an increase in loans 90+ days past due in the fourth quarter of 2009 in Citi-branded cards. The $4 million net loan loss reserve build was down from $71 million in the prior quarter. EMEA RCB net credit losses were $97 million, down $41 million or 30%. The $10 million net loan loss reserve release in the quarter compared to a $10 million net build in the prior quarter. Net credit losses in Retail Partner Cards were $1.9 billion, down 2% sequentially, reflecting loss mitigation efforts and continued decline in loans. International net credit losses declined $172 million, or 22%, sequentially to $612 million, reflecting continued improvement in credit trends. Provisions for credit losses and for benefits and claims declined $2.4 billion sequentially to $8.6 billion, the lowest level since the first quarter of 2008. Total provisions for credit losses and for benefits and claims of $8.6 billion declined $2.4 billion or 22% sequentially, to the lowest level since the first quarter of 2008.

Heartland Reports 4Q/09 and Full Year Results

NJ-based Heartland Payment Systems posted a fourth quarter GAAP net loss of $9.6 million while total revenue was up USD34million to USD420 million, compared to 4Q/08. Net revenues in the fourth quarter were USD105.1 million, up 5.0% from the year ago period while Small and Mid-Sized merchant (SME) transaction processing volume totaled USD14.8 billion, also up 5.0% year over year. Operating margin on net revenue of 10.0% as a result of continued investment in the Company’s growth platforms, compared to an operating margin of 13.9% in the fourth quarter of 2008. Adjusted Net Income and Earnings per Share for fiscal 2009 were $29.3 million compared to GAAP earnings of $41.9 million in 2008. For complete details on Heartland Payment Systems’ second quarter performance visit CardData (www.carddata.com).

HEARTLAND PAYMENT SYSTEMS REVENUES
3Q/08: $425 million
4Q/08: $386 million
1Q/09: $372 million
2Q/09: $417 million
3Q/09: $443 million
4Q/09: $420 million
Source: CardData (http://www.carddata.com)

Heartland – VeriFone Dispute Moves to Court

Heartland Payment Systems says VeriFone took down the website that was using the Heartland name to lure Heartland customers following a blowup this week between the firms. The NJ Federal Court granted Heartland Payment Systems’ application for an order to show cause against VeriFone. The return date for an expedited hearing on Heartland‘s injunction on its Lanham Act false-advertising claims was set for December 7th. No motion to transfer these claims to California as requested by VeriFone was granted at the hearing. HPY says the need for the court hearing resulted from the public relations attack VeriFone launched against Heartland last week claiming Heartland can no longer support its customers using VeriFone terminals. The discord between Heartland and VeriFone began when Heartland refused to work exclusively with VeriFone to produce “E3” terminals featuring Heartland’s end-to-end encryption technology.

Heartland Payment Systems’ Q3 Revenue Edges Up 4%

Heartland Payment Systems reported third quarter revenue was up 4.2% to
$442.6 million. Net revenue from Small and Mid-Sized Merchant (SME) card
processing and Network Services were both up in the third quarter. SME
transaction processing volume of $15.8 billion, was up 1.1% from a year
ago. However, due to a decrease in revenues from equipment-related
businesses, net revenues of $110.0 million for the quarter was down
marginally. Network Services transactions processed totaled 757 million
in the quarter compared to 771 million in the same quarter of 2008. Same
store sales in the SME segment were down 8.6% in the quarter, but HPY
says performance in September was the best in nearly a year. Overall,
the processor had a GAAP net loss of $13.6 million. About $36 million
(pre-tax) in expenses was attributable to the prior processing system
intrusion, including charges related to settlement offers made by the
Company. For the full year 2009, HPY expects net revenue (total revenues
less interchange, dues and assessments) to grow in the area of 10%, to
between $420 and $425 million. For complete details on Heartland’s third
quarter performance visit CardData (www.carddata.com).

HEARTLAND PAYMENT SYSTEMS REVENUES
3Q/08: $425 million
4Q/08: $386 million
1Q/09: $372 million
2Q/09: $417 million
3Q/09: $443 million
Source: CardData (http://www.carddata.com)

Capital One Delinquency Up as Charge-Offs Fall

Delinquency for Capital One’s U.S. credit cards rose for the second
month in August, moving above the 5% level for the first time since
April. However, charge-offs dropped to its lowest level in four months.
U.S. Card delinquency increased from 4.83% in July to 5.09% for August.
The charge-off ratio declined from 9.83% in July to 9.32% for August.
One-year ago delinquency stood at 4.07% and charge-offs at 5.96%. The
higher delinquency ratio points to rising charge-offs for the fourth
quarter, which is expected despite signs of a recovery. Managed loans at
the end of August decreased to $63.1 billion, or down $0.5 billion from
the prior month. Capital One previously reported a second quarter
managed delinquency rate (30+ days) for U.S. credit cards of 4.77% for
the second quarter, compared to 5.08% for 1Q/09 and 3.85% for the second
quarter of 2008. The net charge-off rate for U.S. credit cards rose to
9.23% for the second quarter, compared to 8.39% for the first quarter
and 6.26% one-year ago. For complete details on Capital One’s second
quarter and monthly performance, visit CardData (www.carddata.com).

CAPITAL ONE HISTORICAL
DELINQUENCY CHARGE-OFF
Aug 08: 4.07% 5.96%
Sep 08: 4.20% 6.34%
Oct 08: 4.48% 6.54%
Nov 08: 4.70% 6.98%
Dec 08: 4.78% 7.71%
Jan 09: 5.02% 7.82%
Feb 09: 5.10% 8.06%
Mar 09: 5.08% 9.33%
Apr 09: 5.04% 8.56%
May 09: 4.90% 9.41%
Jun 09: 4.77% 9.73%
Jul 09: 4.83% 9.83%
Aug 09: 5.09% 9.32%
Source: CardData.com

CSG Acquisition Drives TNS Q2 Revenue Growth

VA-based transaction communications specialist TNS reported total
second quarter revenue of $122.0 million, a 35% increase. However,
second quarter GAAP net income was $453,000, versus 2Q/08 GAAP net
income of $1.0 million. The results were driven the Company’s May 1st
acquisition of Communication Services Group, a former VeriSign business.
Revenue from the International Services Division decreased 22% to $33
million. Revenue from the Financial Services Division increased 5% to
$12 million. Revenue from the Telecommunication Services Division
increased $40 million to $57 million, due primarily to $42 million in
revenue from the CSG business. Revenue from the POS Division increased
2% to $20 million. TNS says it expects full year revenue to increase to
$478 – $486 million from $468 – $482 million. For complete details on
TNS’ second quarter performance visit CardData (www.carddata.com).

BofA Posts a $1.6B Loss for Global Cards

Bank of America global credit cards posted a $1.6 billion loss in the second quarter compared to a $582 million profit for 2Q/08. Second quarter global cards revenues declined to $7.3 billion, compared to $7.5 billion in the prior quarter and for the second quarter of last year. Second quarter charge-offs rose sharply to 11.73%, compared to 8.62% for 1Q/09 and 5.96% one-year ago. However, the managed 30+ day delinquency ratio decreased to 7.64%, compared to 7.85% in the first quarter and 5.53% for 2Q/08. The managed 90+ day delinquency ratio increased to 4.21%, compared to 3.99% in the first quarter and 5.53% for 2Q/08. Global cards purchase volume declined 19.5% year-on-year to $51.9 billion for the second quarter. For complete details on Bank of America’s 2Q/09 performance, visit CardData (www.carddata.com).

BOFA CREDIT CARD NET INCOME
(Global Cards; Excludes Business Cards)
2Q/08: + $582 million
3Q/08: (-$373 million)
4Q/08: (-$204 million)
1Q/09: (-$1769 million)
2Q/09: (-$1618 million)
Source: CardData (www.carddata.com)