Metris’ Delinquency Rates Fall to Record Lows

Metris Companies (Direct Merchants Credit Card Bank) reported net income of $27.6 million for the first quarter, a 33.7% decline over the year ago quarter. However, net income was up sharply from the fourth quarter’s $700,000 profit. Metris says its two-cycle plus delinquency rate for its securitized balances was 8.3%, the lowest in almost four years, while the first-cycle ABS delinquency rate of 4.1% is the lowest in its history. The managed net charge-off rate was 14.5% for the first quarter, compared to 15.5% in the fourth quarter and 17.8% for the first quarter of 2004. New account originations for the first quarter were 163,000. Gross active accounts were 2.2 million and managed credit card loans were $6.2 billion as of March 31st. Total expenses were $108.2 million for the quarter, a $6.1 million decrease from 1Q/04. The decrease was primarily due to lower compensation, data processing services and communications, credit protection claims and occupancy expenses due to a reduction in gross active accounts. Partially offsetting this decrease was credit card account and other product solicitation and marketing expenses, which were $19.1 million during the first quarter of 2005, compared to $15.9 million for the quarter ended March 31, 2004. This increase of $3.2 million was due primarily to the increase in account marketing. For complete details on Metris’ first quarter results, visit CardData ([www.carddata.com][1])

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

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Global Payments Inks Ark Restaurants for Processing

Global Payments will provide Global Access @dvantage reporting and transaction management services and payment card processing for New York-based Ark Restaurants Corporation. Ark Restaurants Corporation operates restaurants, bars, catering operations and wholesale and retail bakeries in New York, Las Vegas, and Washington DC. Global Payments Inc. provides electronic transaction processing services.

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VISA/eFunds Expand Their Application Risk Tool

VISA and eFunds have expanded their service to reduce application fraud losses and account takeover fraud. The enhancement was developed with eFunds’ Chex Systems. The VISA/eFunds service is only available through VISA to its card-issuing Members. With the service, issuers will screen their debit and credit card applications and change of address requests against an enhanced database to verify a range of information variables such as address, phone numbers, bankruptcy information and now, related checking account fraud from eFunds. The new service joins the Issuers’ Clearinghouse Service, an application verification database populated with VISA and MasterCard application and fraud data. VISA says a recent study with three issuers found that the new service could have prevented an estimated 23.5% of their total fraud and charge-off losses. The addition of checking account industry fraud data on balance provided in this study a nearly 50% increase in detection performance. The enhanced service will be available in the third quarter.

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Total Card Renews its Certegy Processing Contract

Certegy has renewed a five-year agreement with South Dakota-based Total Card to provide transaction processing services to over 250,000 cardholders nationwide. Certegy Inc. provides global credit and debit processing to over 6,500 financial institutions, 117,000 retailers and 100 million consumers. Total Card performs front-to-back operations for its owned portfolio of VISA credit cards issued by Plains Commerce Bank.

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Choice Hotels to Offer Shift4’s $$$ ON THE NET

Choice Hotels International has signed an exclusive three year agreement with Shift4 to provide its $$$ ON THE NET software to franchisees. $$$ ON THE NET allows Choice’s associates to quickly, accurately and securely process credit card transactions from their property management systems through any processor. Shift4 provides web-based, real-time enterprise payment solutions for the hospitality, retail, foodservices and e-commerce markets.Choice Hotels International is one of the world’s largest lodging franchisors, marketing more than 5,000 hotels in over 40 countries.

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Citi Expands its ThankYou Network to Bank Services

Citibank has introduced a unique way to say “Thank You” to its customers. Following the success of the ThankYou Network for card holders , Citibank customers receive points to redeem for rewards from brand name merchants when they use everyday banking services. Points can be redeemed online. Customers may combine ThankYou Points for banking with the ThankYou Points they acquire when using Citi credit cards. Citibank is a global financial services company with 200 million customer accounts and does business in more than 100 countries.

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Oberthur’s First Quarter Revenues Rise 17%

Oberthur Card Systems reported that first quarter sales grew 17% to $154.4 million. During 1Q/05, the company delivered 43 million smart cards, compared to 34 million in the year ago quarter. However, the number of payment cards delivered was 19.6 million compared to 20.5 million for 1Q/04. Sales of payment cards decreased to $41.4 million, a 6.5% decline. Sales for magnetic stripe cards, scratch cards and memory cards increased 11.9% to $24.6 million. For complete details on Oberthur’s first quarter performance, visit CardData ([www.carddata.com][1]).

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

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Lower Operating & Marketing Expenses Help Cap One

Capital One’s first quarter U.S. credit card profits more than doubled from the fourth quarter as the issuer cut marketing expenses from $511.1 million in 4Q/04 to $311.8 million for the first quarter and posted lower operating costs and improved metrics. Year-on-year Capital One’s net income was up more than 18% to $458.2 million. U.S. card outstandings of $46.6 billion were up 2.8% compared to one-year ago but down 4.1% from the previous quarter. The managed delinquency rate (30+ days) for U.S. credit cards was 3.66% for the first quarter, compared to 3.97% for 4Q/04, and 3.99% for the first quarter of 2004. The net charge-off rate for U.S. credit cards was 4.73% for the first quarter, compared to 4.93% for the fourth quarter, and 5.41% one-year ago. The company now expects its quarterly managed charge-off rate to stay below 4.25 percent this year. Total managed loans for 1Q/05 grew 13.6% year-on-year to $81.6 billion. Cap One expects that managed loans will grow at a rate of between 12% and 15% this year. During the first quarter, Cap One completed the acquisitions of Hfs Group, Onyx, InsLogic, and eSmartloan. Capital One also announced a definitive agreement to acquire Hibernia Corporation. For complete details on Capital One’s first quarter performance, visit CardData ([www.carddata.com][1]).

COF U.S. CARD NET INCOME
1Q/04: $386.8 million
2Q/04: $384.1 million
3Q/04: $414.4 million
4Q/04: $201.9 million
1Q/05: $458.2 million
Source: CardData (www.carddata.com)

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

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Sears’ Top Executives Settle a 2002 Lawsuit

The former head of Sears credit card business has reportedly reached a settlement with Sears’ CEO. Kevin Keleghan, the former president of Sears credit division, filed a lawsuit in mid-November 2002 alleging that Sears has failed to pay him severance benefits, and that CEO Alan Lacy scurrilously attacked his character and credibility. Lacy had said in mid-October 2002 that he had lost confidence in Keleghan after the company uncovered serious problems in its credit card portfolio. The Chicago Sun reports that Keleghan’s attorney said the suit was settled to the parties satisfaction. Sears announced in March 2003 it was looking to unload its $30.8 billion credit card portfolio. Sears eventually sold the portfolio to Citibank in November 2003 for $3 billion. (CF Library 1/29/03; 3/26/03; 7/16/03)

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ICICI Bank Places a Major Hypercom Order

Phoenix-based Hypercom Corporation announced that ICICI Bank of India has purchased 5,000 “T7Plus” EMV-certified credit/debit card payment terminals. The terminals and associated software will be rolled out to retail merchants throughout the country over the next two months. The “T7Plus” model accepts all magnetic stripe and EMV cards, providing fast authorization of online transactions with “One-Touch” shortcut keys for quick access to functions and transactions. ICICI Bank is India’s second largest bank with an asset base of Rs 1462.14 billion as of December 31,2004. Hypercom delivers complete card payment terminal, network access device, server and transaction networking solutions worldwide.

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TSYS Q1 Profits Soar 42% as Accounts Jump 32%

TSYS reported first quarter net income of $46.1 million, a 42% rise over the year-ago quarter. Revenues hit $350 million, a nearly 23% rise over 1Q/04. Accounts on file increased to 370.6 million, up 32%, compared to 280.4 million one-year ago. TSYS reports that it has 12.6 million stored value accounts now on-file, compared to 4.0 million for 1Q/04. During the first quarter, TSYS acquired the remaining 50% interest in Vital Processing, extended its exclusive processing contract with Bank of America through 2014, extended its existing seven-year relationship with MBNA for commercial-card processing services by an additional three years and announced it was sponsoring the creation of an industry-wide prepaid card trade association. Internationally, during the first quarter TSYS signed a seven-year contract with ABN AMRO Bank and implemented two retail gift card programs in Europe. The processor says it anticipates net income growth to be in the range of 22-25% and revenue growth to be in the 30-33% range for 2005. For complete details on TSYS’ latest performance, visit CardData ([www.carddata.com][1]).

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

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