MBNA Waives Retirement Rules for Krulak

MBNA has waived the age 65 requirement for the retirement of General Charles Krulak, Vice Chairman, who will receive an annual retirement benefit of approximately $1.0 million. Krulak is retiring at the age of 63. The Stock Option Committee waived the age 65 requirement for the vesting of 45,000 shares of restricted common stock awarded in 1999 and 94,345 shares of restricted common stock awarded in lieu of a portion of cash bonuses for 2002 through 2004 and for the vesting of stock options for 150,000 shares of common stock with an exercise price of $20.58. 115,211 shares of restricted common stock were forfeited according to the terms of the awards.

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Chase Launches a Major Brand Campaign

JPMorgan Chase launched a multi-million dollar national advertising campaign this morning, created by mcgarrybowen of New York, to establish “Chase” as its consumer brand. With the tagline “Your Choice, Your Chase,” the advertisements equate the Chase brand with empowerment and uses popular musical hits to set the tone. Chase is redesigning all of its credit cards to reflect the new Chase brand, including the prominent octagon image, first introduced in 1960. JPMorgan Chase & Co. is a leading global financial services firm, with 94 million credit cards and assets of $1.2 trillion. mcgarrybowen is an independent advertising agency whose client roster includes Verizon, Marriott, JPMorgan Chase, Crayola, InBev, Pfizer, Reebok and Disney.

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Metris Makes its Fifth Debt Prepayment

Metris Companies announced an optional pre-payment of $150 million on its senior secured credit agreement, paying it in full. The latest prepayment leaves Metris with only $100 million of unsecured corporate debt outstanding that it intends to prepay by years end. This is the fifth prepayment of corporate debt Metris has made in recent months. In April, the sub-prime issuer made a $75 million prepayment on a term loan. Metris made a $50 million prepayment in late February on senior notes. The Company also made a $50 million prepayment on November 23rd and a $25 million prepayment on December 22nd of its senior secured credit agreement maturing in 2007. In February, Metris announced that it retired $900 million of asset-backed securitization debt that was scheduled to mature in May. Metris recently reported that it made a full-year profit of $33.7 million in 2004. (CF Library 1/26/05; 1/27/05; 2/2/05; 4/1/05)

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Merrick Bank Tops 700,000 Accounts

CardWorks’ Merrick Bank subsidiary reported a nearly 20% gain in credit card outstandings for the first quarter, topping $590 million. The sub-prime specialist also posted a 20% increase in volume with nearly $153 million in the first quarter. The issuer also crossed the 700,000 cardholder milestone during the first quarter. CardWorks is the parent company of CMS, a third-party bankcard servicer that also provides servicing and support to Merrick Bank. For complete details on Merrick Bank’s first quarter performance, visit CardData ([www.carddata.com][1])

MERRICK BANK HISTORICAL
($ outstandings)
1Q/01: $290.4 million
1Q/02: $304.3 million
1Q/03: $445.6 million
1Q/04: $493.2 million
1Q/05: $590.2 million
Source: CardData (www.carddata.com)

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

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Providian Boosts Director Compensation

Providian has raised its annual compensation for non-employee directors to $65,000 with an annual retainer of $16,000 for the chair of the Audit and Compliance Committee and $12,000 extra for each other committee chair. Audit and Compliance Committee members will receive an additional annual retainer of $8,000, and each member of each other committee will receive an additional annual retainer of $6,000. The other components of non-employee director compensation, including annual equity compensation, remain unchanged.

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Consumers Downshift Again in March

Revolving consumer credit continued to hover above the $800 billion milestone in March. However, Americans added a mere $400 million to revolving credit during the third month of the new year, compared to nearly $3 billion one-year ago. Monthly payment rates continue to clip growth in credit card debt. The higher MPR is a combination of low mortgage interest rates and consumer credit score knowledge. According to the Federal Reserve, Americans owed $800.5 billion in revolving credit at the end of March, compared to $796.4 billion for January. One-year ago revolving credit stood at approximately $767.6 billion. The annual growth rate is now 0.6%, compared to 4.8% in the previous month, and 3.6% one-year ago. Bank credit card debt (excluding store and gas credit cards) at the end of the first quarter was about $671 billion, or roughly 84% of total revolving credit, according to CardData ([www.carddata.com][1]). At the end of March, Americans were $2127 billion in debt, excluding home mortgages.

REVOLVING CREDIT HISTORICAL ($billions)
Mar 05 Feb 05 Jan 05 Dec 04 Nov 04 Sep 04 Mar 04
GRWTH: 0.6% 4.8 6.3 3.7 0.9 9.1 3.6
$OWED: $800.5 800.1 796.9 792.7 784.0 785.4 767.6
Source: Federal Reserve; revised figures as of 5/06/05;
For complete historical data, visit CardData (www.carddata.com)

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

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Americans Support Bankruptcy Reforms

More than 60% of Americans support the recently enacted bankruptcy legislation, according to a new survey. Though a clear majority of Americans are in favor of the new law, support for it has weakened from June 2003, when the “Cambridge Consumer Credit Index” found that 73% were in favor of toughened bankruptcy laws and 27% opposed it. The latest CCCI survey also found that 80% of Americans say the new law would deter them from filing for bankruptcy, while the rest would be more inclined to file for bankruptcy if they were overwhelmed with debt. The biggest support for the law comes from white, older consumers with high incomes and more education, while the consumers who would be impacted the most-younger people with lower incomes and less education and blacks, are more opposed to toughening bankruptcy rules. The new bankruptcy laws take effect on October 17th. (CF Library 4/28/05)

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College Students Carry $8K in Card Debt

University administrators report they lose more students to credit card debt than to academic failure and in 2001, more young adults filed for bankruptcy than graduated from college. Analysis by the Illinois CPA Society shows that college students have an average of three credit cards, with a total balance of over $8,000. Totally, college students leave college with about $20,000 in combined student loans and credit card debt.

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The Distra Payment Switch is Coming

Distra and Oracle have recently performed operational integration tests of a simulated end-to-end payments solution with Ohio-based Synoran. Synoran specializes in enterprise wide payment solutions and check image processing. Distra is a software company that specializes in electronic payments and transaction processing applications. Oracle is the world’s largest enterprise software company.

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MasterCard Certifies SmartCCard Lite

Comms XL has become the first software house to achieve global accreditation from MasterCard for a generic “Chip and PIN” system. MasterCard approved Comms XL’s “Chip and PIN” product, “SmartCCard Lite,” for installation by merchants without further testing. “SmartCCard Lite” is a plug and play “Chip and PIN” solution that due to its all-inclusive capabilities, can be implemented by merchants without the problem of approval and third-party integration. Authorization and payment file fulfillment to the acquiring bank takes place through either the “CCServer” module residing on the merchant’s network or over a secure link to Comms XL’s “SecureCXL” payment service.

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U.S. Bank Launches Three SNHU VISA Cards

U.S. Bank is now offering three new affinity credit cards for Southern New Hampshire University. The program will offer a choice of three card design options featuring the Penmen logo, Robert Frost Hall and the new SNHU logo and will offer a reward program to students and alumni. SNHU educates intellectually and culturally enriched individuals to be successful in their careers and contribute to their communities. U.S. Bancorp is the 6th largest financial holding company in the US with $198 billion in assets.

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MBNA Draws a Shareholder Lawsuit

A class action on behalf of MBNA shareholders is underway for the period between January 20th and April 21st. Lerach Coughlin alleges that MBNA’s false statements during the period caused MBNA’s stock to trade at inflated levels which permitted the Company’s top officers and directors to sell more than $75 million worth of their own shares. Following the Company’s April 21st disclosures concerning its business operations, financial results and reduced 2005 earnings expectations, the Company’s stock price plummeted from its closing price of $23.11 on the close of April 20th to below $19 per share on extremely high trading volume of 51 million shares.

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