Charge-Offs & Delinquency March North

Charge-offs, among “prime” credit card-backed securities, broke through the 4.00% level in December, rising 33 basis points. This is the third consecutive month of increase even though bankruptcy filings are still running about 68% lower than 2005. The 60+ day delinquency ratio has also been edging up for the fourth straight month, rising nine basis points in December. According to FitchRatings, “prime” charge-offs for December were 4.21% compared to 3.88% in the prior month and 7.03% for December 2005. The “prime” 60-plus day delinquency index for December was 2.59%, compared to 2.50% in November. Fitch also reported that “sub-prime” 60+ day late payments increased slightly to 5.68%. “Sub-Prime” charge-offs increased 34 bps to 9.23%. Fitch says the recent increases in sub-prime charge-offs can be attributed to a delinquency bubble caused by changes made to the minimum payment calculation per OCC guidance.

ABS PRIME CHARGE-OFFS HISTORICAL
Jan 06: 6.88%
Feb 06: 3.29%
Mar 06: 3.10%
Apr 06: 3.19%
May 06: 3.58%
Jun 06: 3.58%
Jul 06: 3.44%
Aug 06: 3.94%
Sep 06: 3.88%
Oct 06: 3.78%
Nov 06: 3.88%
Dec 06: 4.21%
Source: FitchRatings

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Western Union Q4 C2C Revenue Rises 11%

Western Union reports a 10% increase in revenue for the fourth quarter to $1.2 billion. Consumer-to-consumer revenue was $990 million, up 11% driven by transaction growth of 16%. Transaction growth in the international business was up 23% year-on-year. The consumer-to-business segment grew revenue 7% to $162 million. The company reaffirmed the existing 2007 guidance of revenue growth of 10% to 12% excluding acquisitions and operating income growth in the range of 6% to 9% excluding the impact of incremental public company expenses. For complete details on Western Union’s fourth quarter results, visit CardData ([www.carddata.com][1]).

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

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Arriva Card Hits the Jackpot in 6 Mos

Global Cash Access reports that its “Arriva Card” subsidiary has completed more than $15 million in cash advance transactions. The new card was introduced about six months ago and is the first credit card designed for use in casinos. GCA says “Arriva Card” cash advance transactions at casino ATM machines are 115% larger and “signature-based” cash advance transactions are 72% larger than these kinds of transactions with other cards. The new card offers a true grace period on cash advances; gives reward points for cash advances; allows cash advances of the entire credit line; and charges lower fees and interest rates on cash advances than many credit cards. The “Arriva Card” can be used in the 800-plus casino locations in the U.S. and Caribbean that are GCA customers. CIT Bank is the issuer of the card.

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Credit Manager’s Index Rebounds in Jan

The “Credit Manager’s Index” rebounded in January, after slipping for five consecutive months in December. The latest “Index” shows a resilient economy that has so far weathered the headwinds of a tightening monetary policy and a decimated housing market. The National Association of Credit Management also notes that the unusually warm weather in the densely populated East gave an extra boost to the most recent economic indicators. The NACM says that all 10 of the combined index components rose in January. The seasonally adjusted “CMI” rose 2.5% from 54.7 in December to 57.2 in January. One-year ago the “Index” also stood at 57.2. On a year-over-year basis, the total CMI was flat as five components rose and five fell. The manufacturing sector rose 1.2%, outperforming the service sector, which fell 1.2%.

Credit Manager’s Index
Jan 06: 57.2
Feb 06: 57.3
Mar 06: 58.1
Apr 06: 57.5
May 06: 54.9
Jun 06: 57.2
Jul 06: 57.6
Aug 06: 57.3
Sep 06: 57.1
Oct 06: 55.3
Nov 06: 55.2
Dec 06: 54.7
Jan 07: 57.2
Source: National Association of Credit Management

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EU & INTERCHANGE

The European Commission has issued a report that claims large
variations in merchant and interchange fees for payment cards, barriers
to entry in the markets for payment systems and credit registers,
obstacles to customer mobility and product tying. The Competition
Commission says it will use its powers to level the playing field in the
payment card industry. The EC says the outcome of the inquiry should
boost retail banking competition in the run-up to the creation of the
“Single Euro Payment Area.” MasterCard responded yesterday saying the
report acknowledges the positive role of the industry in creating
SEPA and that the Commission has abandoned the idea of abolishing the
interchange fee. MasterCard noted that the EC still seems to believe
that interchange fees should be reduced significantly but is
overlooking that zero or low interchange fees are often based on price
regulation, cross-subsidization or operating losses. Most importantly,
these programs do not deliver the competition throughout the value chain
that SEPA aims to achieve.

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Alliance Data’s Q4 Revenue Soars 32%

Dallas-based Alliance Data Systems posted record fourth quarter revenue of $524.5 million, a 32% increase over the year-ago quarter. Net income rose 27% to $39.6 million driven by strong performance in its Epsilon and Canadian loyalty businesses. Transaction Services revenue increased 6% in the quarter to $195.5 million, compared to the prior year. Credit Services revenue increased 22% in the fourth quarter to $173.9 million, compared to 4Q/05. Marketing Services revenue increased 40% in the quarter to $245.4 million compared to the year-ago period. The private label business was also a significant driver of the fourth quarter with the signings of long-term agreements with Cruise Management International, Pamida Stores and The Dunlap Company. During the quarter, Epsilon signed a multi-year agreement to provide integrated email and marketing solutions for MyFamily.com. Additionally, the Company recently announced it had reached an agreement to acquire Abacus. ADS noted that its “AIR MILES Reward Program” posted more than 20% organic growth over the prior year period. The Company raised its full-year 2007 guidance with revenue of at least $2.2 billion, up from the previous guidance of $2.1 billion.For complete details on ADS’ fourth quarter performance, visit CardData ([www.carddata.com][1]).

ADS REVENUE HISTORICAL
4Q/05: $421.2 million
1Q/06: $477.2 million
2Q/06: $490.5 million
3Q/06: $506.6 million
4Q/06: $524.5 million
Source: CardData (www.carddata.com)

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

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TJX Takes a Charge for Data Breach

TJX Companies says it expects to record a charge of about $.01 per share in the fourth quarter for costs incurred to investigate and contain the December data intrusion including enhancing computer security and systems, communicating with customers, as well as technical, legal, and other fees incurred through the quarter. TJX says it does not yet have enough information to reasonably estimate losses from the data breach for this year. Meanwhile, the Lamb Firm and the law firm of Whatley Drake & Kallas filed lawsuits against TJX and Fifth Third Bank for the alleged failure in securing the personal data of its customers. The lawsuit was filed in the U.S. District Court for the Northern District of Alabama. Also, AL-based AmeriFirst, part of USAL Bancorp, filed a lawsuit against TJX. Philadelphia-based Berger & Montague and Boston-based Stern Shapiro Weissberg & Garin also filed lawsuits this week in the U.S. District Court for the District of Massachusetts. (CF Library 1/31/07)

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Comerica Opens a Resource Center

Detroit-based Comerica Bank has added a “Consumer Protection Resource Center” to its website. The Resource Center is designed to educate consumers on some of the ways they could become victims of fraud and provides information on common fraud scams, privacy, frequently asked questions and contacts for reporting suspicious activities, provides safety tips for ATM and debit cards, credit cards, online banking, laptops, computer/Internet use and e-mail. Comerica has also developed an Internet Fraud Protection brochure containing tips on how to prevent Internet fraud and definition of common types of Internet fraud, such as phishing, pharming and spoofing. The Resource Center can be accessed by going to http://www.comerica.com and clicking on Consumer Protection Center. Comerica Incorporated is a financial services company with total assets of $58 billion at December 31, 2006.

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GE Money Signs a BKBG Card Deal

GE Money’s Sales Finance unit and the Bath and Kitchen Buying Group have partnered to create a private label credit program through GE’s REFINEDesign and PROJECTLOANS programs. The new credit program offers a quick, easy application and sales process with promotional financing and deferred interest terms available. BKBG is a buying group within the kitchen and bath industry. It currently has 200 members with 250 showrooms in 47 states. Americans spent a record $215 billion on residential remodeling in 2005, according to the National Association of Home Builders’ (NAHB).

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