TNB Raises Balances and Lowers Risk for CUs

MI-based Lapeer County Community CU says that aggregate balances on its credit card accounts have increased by 18% since TNB Card Services purchased the portfolio in 2003. Lapeer says 80% of all transactions now come from low-risk accounts and that its loan-to-share ratio is now 90%, compared to about 70% before the acquisition. The 21,000 member credit union also noted that TNB has been able to improve the overall risk of the portfolio, boosting the average weighted FICO score to 692. Dallas-based TNB has purchased more than 60 card portfolios from credit unions over the past two years. It serves more than 450 financial institutions and manages more than 1.6 million cards.

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Diebold to Purchase Tata Infotech’s ATM Plant

Diebold has signed an agreement to purchase Tata Infotech’s ATM manufacturing plant in Goa. In 2002, Diebold and Tata Infotech entered into a contract-manufacturing agreement in which Tata set up a separate facility to manufacture Diebold ATMs in India for distribution by Diebold throughout India, South Asia and Southeast Asia. The facility will be renamed Diebold Goa Manufacturing. The 30,000 square-foot facility is equipped with modern manufacturing equipment, including testing facilities and production and inspection equipment to undertake prototyping and fabrication.

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Q1 Direct Credit Card Mail Sets a New Record

Direct mail credit card offers during the first quarter were up 11%, making it the highest quarter to-date. According to Synovate’s “Mail Monitor” there were 1.42 billion credit card offers mailed in the first three months of this year. The record high mailings coincide with increasing promotions of bankcards with issuer proprietary reward and rebate programs, which made up 27% of all bankcard mailings in the quarter, up from 16% in the prior year. Synovate says that during the first quarter, 43% of solicitations offered a low introductory APR, usually 0.0%, up from 21% the previous year. However, the response rate reached a record low of 0.4%. According to “Inside Track,” Synovate’s credit card owner behavior and communication tracking service, reward card holders spent more than twice as much as non-reward card holders in the first quarter.

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BofA Managed Credit Card Loans Up 14% in Q2

Bank of America’s credit card loans grew 14% in the second quarter ending with $59.3 billion. The issuer opened a record 1.6 million new credit card accounts during the quarter as pre-tax card income hit $414 million. Second quarter charge-offs were 6.23%, compared to 6.17% in the prior quarter, and 5.88% one year ago. BofA says the increased charge-offs reflected growth and seasoning in the portfolio, the impact of last year’s changes in minimum payment requirements and bankruptcy reform. The managed 30+ day delinquency was 4.25%, compared to 4.20% in the first quarter and 3.86% for 2Q/04. Managed 90+ day delinquency was 1.96%, compared to 2.10% in the first quarter, and 1.76% for 2Q/04. BofA also reported that its merchant acquiring business handled $84.3 billion in processing volume during the second quarter on total transactions of 1.8 billion. Additionally, the issuer noted that debit card purchase volume rose to over $35 billion in the quarter, an increase of 27% from second quarter 2004. For complete details on Bank of America’s 2Q/05 performance, visit CardData ([www.carddata.com][1]).

BOFA CARD LOAN HISTORICAL
2Q/03: $30.8 billion
3Q/03: $33.6 billion
4Q/03: $36.6 billion
1Q/04: $37.3 billion
2Q/04: $52.0 billion
3Q/04: $55.4 billion
4Q/04: $58.6 billion
1Q/05: $57.9 billion
2Q/05: $59.3 billion
Source: CardData (www.carddata.com)

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

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NRF Lauds the Second Interchange Lawsuit

The National Retail Federation said Friday it welcomed the new lawsuit filed against VISA by grocers and drug stores over credit card interchange rates charged to merchants, saying it will help focus attention on the “hidden tax” for consumers. The lawsuit alleges monopolistic practices on the part of Visa, price fixing and illegally tying products and separate network services and contends that Visa’s association rules have restrained merchants’ ability to negotiate lower interchange fees. The National Retail Federation is the world’s largest retail trade association.

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Major Grocers/Drugstores Sue VISA Over Fees

Kroger, a major grocery chain, and six other major merchants yesterday filed a federal lawsuit against VISA over its interchange fee practices. The lawsuit alleges horizontal price fixing by VISA and its members in the setting of interchange rates and charges VISA with creating and imposing rules and restrictions that preclude merchants from being able to negotiate lower fees. Kroger says credit and debit interchange fees have increased 11 times over the past five years and currently cost the firm about $350 million annually. Kroger noted that in 2003, for the first time ever, electronic payments comprised more than 50% of Kroger’s sales. Today, over 60% of Kroger’s overall transactions are made via credit or debit cards. Joining Kroger in the lawsuit are Ahold, Albertson’s, Eckerd, Maxi Drug, Safeway, and Walgreen. MasterCard was not named in yesterday’s lawsuit filed in U.S. District Court, Southern District of New York. A copy of the lawsuit is available via CardFlash Online ([www.cardflash.com][1]).

[1]: http://cardflash.com

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RBC July CASH Index Shows Increasing Pessimism

The “RBC CASH Index” for July dropped to its lowest level since October 2003 amid consumer worries over rising gas prices, the London terrorist attack and a drop in job security. The Index stands at 73.9, down from 84.0 one month ago. This decrease drops consumer confidence to the lowest point in 2005. The RBC CASH Index is a monthly national survey of consumer attitudes on the current and future state of local economies, personal financial situations, savings and confidence to make large investments. Royal Bank of Canada offers diversified financial services.

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FDC Income Falls 16% with Weak Revenue Growth

First Data reported this morning that second quarter net income dropped by 16% as total revenues increased a weak 3%, year-over-year. However, Payment Services gross revenue climbed 15%, driven again by strong performance in its consumer-to-consumer money transfer business. Overall 2Q/05 revenues were $2.612 billion and overall income was $391.9 million. Payment Services operating profits fell 1% to $339 million during the second quarter on revenues of $1089 million. Revenue for the Merchant Services segment was up 3% to $1024 million with operating profit of $238 million, unchanged over the year ago quarter. Card Issuing Services’ revenue was flat at $598 million and operating profit was down 12%, compared to 2Q/04. North America merchant transactions were up 13% to 5.8 billion while issuer transaction rose 5% to nearly two billion for the second quarter. As of June 30th, accounts on file were 419.5 million domestic and 32 million international. Of the 451.5 million card accounts on file, 110.7 million were bank card accounts, 243.4 million were retail accounts and 97.4 million were debit accounts. For complete details on FDC’s second quarter performance, visit CardData ([www.carddata.com][1]).

FDC NET INCOME
2Q/04: $466.0 million
3Q/04: $460.6 million
4Q/04: $465.1 million
1Q/05: $374.5 million
2Q/05: $391.9 million
Source: CardData (www.carddata.com)

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

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TransUnion Names a New VP/Corporate Strategy

TransUnion has promoted ten-year veteran Cathy Madden to VP/Corporate Strategy. Madden will be responsible for working with TransUnion leaders across the enterprise to identify, develop and prioritize cross-divisional business opportunities. Most recently, she served as vice president of Business Planning for U.S. Information Services. She holds a Master of Science in mathematics from Illinois State University and a Bachelor of Science in mathematics from Iowa State University. TransUnion offers a broad range of financial products and services that enable customers to manage risk.

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