AmEx TRS Profits Flat Sequentially; Volume Up 15%

American Express Travel Related Services reported fourth quarter net income of $606 million, the same as the previous quarter, but up 10.2% over one-year ago. AmEx reported that marketing, promotion, rewards and cardholder services expenses for 4Q/03 increased 27%. AmEx’s U.S. gross dollar volume increased 15%, and managed card loans increased by 12.2% during the fourth quarter, compared to one-year ago. Card spending volume contributed to a 14.6% rise in discount revenue to $2.4 billion. Credit quality improved as charge-offs fell from the previous quarter and the year-ago quarter. Delinquency (30+ days) declined 10 basis points to 2.7% from the prior quarter, and remain 40 basis points below last year’s level. Charge-offs declined 80 basis points to 4.70% for the fourth quarter, compared to one-year ago. For complete details on AmEx’s fourth quarter performance as well as prior quarters visit CardData ([www.carddata.com][1]).

American Express U.S. Card Portfolio Snapshot
4Q/03 3Q/03 2Q/03 1Q/03 4Q/02 Ann Chng
Volume $72.3b 66.3b 64.6b 58.9b 62.9b +15.0%
Loans $38.5b 35.9b 36.0b 34.6b 34.3b +12.2%
Cards 36.4m 36.2m 35.7m 35.4m 35.1m +4.3%
Delinq* 2.7% 2.8% 2.7% 3.1% 3.1% -40 bps
Losses 4.7% 5.0% 5.4% 5.5% 5.5% -80 bps
Yield** 8.6% 8.9% 8.9% 9.4% 9.8% -120 bps
* 30+ days past due; ** net interest yield

Source: CardData (www.carddata.com)

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

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NEBA Signs Chicago’s MB Financial Bank

Chicago-based MB Financial Bank has joined The New England Bankcard Association for merchant acquiring and potentially, outsourcing merchant back office operations. MB Financial Bank’s plan is to begin acquiring merchant accounts beginning in the first quarter of 2004. NEBA will assist MB through all of the steps involved in setting up and maintaining the success of their merchant portfolio. NEBA provides services to financial institutions throughout the United States, Bermuda and the Cayman Islands. MB Financial Bank is a leader among Chicago area banks and has been delivering competitive personalized service for more than 90 years to privately owned, middle-market companies as well as to individuals who live in the communities where its branches are located.

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Dispenser for Contactless Payment Devices Introduced

WA-based Accelitec has rolled-out a self-service automated transponder dispenser for use in the retail marketplace. “AcceliStation” dispenses and securely authorizes contactless payment devices (key tags, fobs, and larger transponders) for immediate consumer use. The on-site kiosk allows consumers to link payment devices to credit card, debit card, bank or prepaid accounts, and provides issuing companies a secure, efficient means to manage fulfillment as well as loyalty program processes. “AcceliStation” is part of the “AcceliPay” suite of products consisting of proprietary software and hardware — self-service kiosks, authentication and point-of-sale transponder readers, processing network, network monitoring and call center support for implementing a retail contactless payment program.

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AmEx Adds Burns to the Board

American Express named Ursula Burns, SVP and president of Business Group Operations, Xerox Corporation, to its Board of Directors. Ms. Burns, 45, received a Bachelor of Science degree from Polytechnic Institute of New York in 1980, and a Master of Science degree in mechanical engineering from Columbia University in 1981. Ms. Burns began her career in 1980 at Xerox where she first held a variety of engineering positions. American Express Company is a diversified worldwide travel, financial and network services company founded in 1850.

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Shell Canada Extends Sponsorship of the AIR MILES Program

Shell Canada Limited has signed a long-term agreement with Alliance Data Systems, and its The Loyalty Group subsidiary, to continue as a sponsor in the Canadian “AIR MILES” reward program. Shell Canada is one of the top-10 clients and has been a significant, high-frequency sponsor in the “AIR MILES” program for more than 10 years. More than 60% of Canadian households actively collect “AIR MILES” reward miles at more than 100 brand-name sponsors representing over 14,000 retail and service locations across Canada.

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Small Portfolios Command Premiums Up to 26%

When it comes to negotiating premiums for smaller card portfolio sales, size does matter. However,high quality, home grown, and seasoned credit card portfolios can command premiums as high as 26%, regardless of their size. According to R.K. Hammer Investment Bankers, portfolios with less than $1 million in assets generally produce premiums between 4% and 9%. Portfolios in the $1 million to $5 million range usually get a 5% to 15% premium, while portfolios in the $5 million to $10 million bandwidth command premiums ranging from 8% to 16%. Portfolios in the $15 million to $20 million range generally pull an 11% to 26% premium. Hammer says that some premiums paid are misleading since many smaller portfolio deals include an earnings-sharing provision based on future activity, which dilutes the effective premium figure at time of sale.

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Gemplus Achieves CMM Certification in Smart Cards

Gemplus International has achieved the “Capability Maturity Model Level 2” certification, which covers both the smart cards and the “Over The Air” platforms. The “CMM”, developed at Carnegie Mellon
University’s Software Engineering Institute, is considered the industry standard for measuring the maturity of an organization’s software development processes. Gemplus has one of the strongest R&D groups in the industry with 600 smart card R&D engineers in France, Singapore, Germany and China.

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VISA, USAID, and FINCA Launch Global Micro-Finance Program

VISA International, the US Agency for International Development, and the Foundation for International Community Assistance have formed a major public-private partnership that aims to bring new
efficiency and security to microfinance clients in the developing world utilizing electronic payment products. The initiative builds upon a two-year partnership between VISA and FINCA to improve the delivery of financial
services to entrepreneurial women in developing countries. The partnership plans to pilot how VISA solutions will provide FINCA and its clients both cost- and time-saving processes, allowing FINCA to expand
its outreach to more of the world’s poor. Specifically, VISA’s electronic payment solutions will help minimize loan transaction times for both clients and microfinance providers; lower transaction costs for processing loans; provide microfinance clients more secure access to their loan capital; reduce the possibility of cash theft; expand the variety of financial service products available to FINCA’s clients; and, introduce a new market segment to participating commercial banks.

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AmEx Blue Card Launches House of Blues Concerts in LA

American Express began selling tickets on Sunday to its cardholders for concerts at the House of Blues in West Hollywood, scheduled the first week of February, to celebrate the “GRAMMY Awards” and to promote its “Blue Card.” Blue Jam Sessions artists have joined the Blue for Music(R) effort to help raise funds at a time when public school music education programs are being cut nationwide. Again this year American Express is proud to contribute funds raised through Blue for Music activities, beginning with the Blue Jam Sessions in L.A., to the VH1 Save The Music Foundation, a nonprofit organization dedicated to improving the quality of education in America’s public schools by restoring music programs in cities across the country, and raising awareness about the importance of music participation among our nation’s youth.

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Citigroup’s International Card Portfolio Posts 23% Gain in Loans and 29% Increase in Volume

Citigroup’s credit card loans for the EMEA region increased by $600 million during the fourth quarter to $5.2 billion, a 37% gain over one-year ago, partially driven by the acquisition of Diners Europe. However, Citigroup’s overall international credit card profits dropped to $126 million for 4Q/03, a 24% decline from the previous quarter, primarily due to a significant increase in the issuer’s provision for credit losses and costs associated with its expansion into Russia and China. Net charge-offs were 3.84% for 4Q/03 compared to 4.21% one-year ago. The 90-day delinquency rate was 1.76% compared to 1.78% for 4Q/02. Total revenues, for credit cards issued outside North America, came in at $746 million, a 25% increase over 4Q/02. But, the provision for losses increased 47% year-over-year to $423 million, a $94 million increase from the previous quarter. At the end of the year, Citigroup had 15.8 million card accounts, representing $14.7 billion of card loans, in its international card portfolio. Total card volume for the fourth quarter was $11.7 billion, a 29% increase over one-year ago. Latin America card loans increased 25% to $500 million, while Asia (except Japan) increased 17%. Japan posted a 9% increase to $1.2 billion, a two-year high.

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FDIC is the Latest Victim of a Phishing Attack

At approximately 12:00 p.m. (EST) on January 23, 2004, FDIC Consumer Call Centers in Kansas City, Missouri, and Washington, D.C., began receiving a large number of complaints by consumers who received an email that has the appearance of being sent from the FDIC. The email informs the recipient that Department of Homeland Security Director Tom Ridge has advised the FDIC to suspend all deposit insurance on the recipient’s bank account due to suspected violations of the USA PATRIOT Act. The email further indicates that deposit insurance will be suspended until personal identity, including bank account information, can be verified.

This email was not sent by the FDIC and is a fraudulent attempt to obtain personal information from consumers. Financial institutions and consumers should NOT access the link provided within the body of the email and should NOT under any circumstances provide any personal information through this media.

The FDIC and the FBI are attempting to identify the source of the emails and disrupt the transmission.

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The Credit Card Research Group Shuts Down After Ten Years

The Credit Card Research Group, a lobby group funded by the country’s credit card issuers, has shut down. The group was formed in 1993 to provide statistics and industry data on the payment card business. The CCRG Web site went dark on December 31st. Apacs, the banks’ clearing organization, says it will take over publishing the data previously produced by the lobby group. CCRG published monthly data on credit and debit card volume, plus card outstandings. The UK card business has recently been under close scrutiny for its disclosure practices. The country’s card issuers have also been criticized by the government for assessing very high interest rates during a period when other interest rates have hit 40-year lows.

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