Metris Companies said yesterday that it received notification from the Securities and Exchange on August 5th, that it is the subject of a formal, nonpublic investigation. Metris says it believes the investigation relates primarily to the Company’s treatment of loan loss allowances in 2001 and subsequent years, the Company’s 2001 credit line increase program and other related matters. The Company noted that the SEC specifically advised it that this is a fact-finding inquiry and that it has not reached any conclusions related to this matter. The Internal Revenue Service recently completed its examination of Metris’ tax returns through December 31, 1998. The IRS proposed adjustments to increase the Company’s federal income tax by $42.9 million, plus interest of more than $15 million, pertaining to the Company’s treatment of certain credit card fees as original issue discount. Cumulatively through the year ended December 31, 2002, the Company has deferred more than $212 million in federal income tax under the OID rules.Details
ME-based Camden National Corporation has signed a definitive agreement to sell its consumer and business credit card portfolio to U.S. Bancorp’s Elan Financial Services. The sale is expected to be finalized in the fourth quarter of 2003. The Company estimates a positive impact to earnings of $0.02 to $0.05 per share during the fourth quarter. The Company has entered into this strategic partnership with Elan to offer a broader credit card product set to both consumer and business customers. The current credit card portfolios currently generate net annual earnings of approximately $200,000, or 1% of total net income for the Company.Details
FleetBoston has deployed six check-cashing machines to process payroll checks for non-customers in three pilot sites in Connecticut and Massachusetts. The “Paycheck Anytime” machines from Diebold, cash “on-us” payroll checks, to the penny, written against the accounts of Fleet commercial customers. To conduct transactions, consumers are issued a “Paycheck Anytime” card with a PIN. The service is free and Fleet is offering a $5 bonus reward automatically added to each of the first four payroll transactions conducted by participants. The “Paycheck Anytime” uses Diebold’s self-service terminals equipped with an “Intelligent Depository Module” and a coin dispensing module. Fleet is using Diebold Transaction Services’ real-time “WEB” interface to enroll check cashers, perform transaction research, download management reports, and check the current status of the check cashing terminal.Details
AZ-based EZPaymentservices has released an analysis showing that the cost of producing and delivering a paper invoice and processing the resulting payment from a bank is $14.37 ($1.50 for printing the invoice, $2.10 for printing and stuffing the envelope, $1.50 for mailing the envelope, $0.37 for postage, $5.00 for a reminder call, $1.75 to record the incoming check, $2.05 to deposit the check, and $0.10 for the deposit fee). Besides saving the $12 to $17 that the Gartner Group, a top research firm, estimates that it costs to send a paper bill and process a manual check, the time from when the customer makes the payment until the funds are available for use is reduced by one to two weeks. It’s also worth noting that online payment with electronic funds transfer, the same method used by Fortune 500 companies, eliminates the need to pay the discount rate associated with credit card payment.Details
First Data said yesterday it is still unable to assess the potential impact of the VISA/MasterCard debit card settlements on the “NYCE” debit network, majority owned by the Company, and the “STAR” debit network, owned by Concord. FDC did not shed any new light on the potential Concord merger. However, it noted in June that FDC’s Colorado industrial bank subsidiary, First Financial Bank, along with Concord and its Concord EFS National Bank, filed applications with the FDIC and the Colorado Division of Banking to transfer to First Financial Bank, certain assets and certain deposit and other liabilities of Concord EFS National Bank. Once all other conditions to the completion of the merger between the Company and Concord have been satisfied, Concord EFS National Bank will merge into a newly formed interim Colorado industrial bank subsidiary of Concord, thereby terminating the charter of Concord EFS National Bank. Upon completion of the merger between the FDC and Concord, the newly formed interim Colorado industrial bank will transfer certain assets, certain deposits and other liabilities to First Financial Bank and then merge into a nonbank affiliate. First Data has named EVP Scott Betts to lead the FDC integration effort. FDC also said if the Concord merger falls through it is required to pay Concord $25 million.Details
Hypercom announced this morning that its founder George Wallner sold 7 million shares of his personal holdings in the Company to institutional investors. Paul Wallner, George Wallner’s brother, and also a founder of the Company who left the Company in 1999, also sold 7 million shares to institutional investors. Settlement for the 14 million shares is expected to take place on Monday. Hypercom also noted that George Wallner resigned from the Board of Directors, will no longer act as a consultant to the Company, and entered into a non-competition agreement. Hypercom also announced this morning a stock repurchase program of up to $10 million in common stock.Details
Vancouver-based QI Systems has signed a sales and marketing alliance with USOutsourcing of Dallas, Texas.
USOutsourcing will target, prospect, pre-qualify, process and close sales for QI Systems in the USA for the beverage and snack food vending business. QI’s “SmartVend” technology enables debit card purchases by consumers from a wide range of vending machines types. The “SmartVend” system is currently being used in conjunction with many card schemes, including VisaCash, Mondex (Multos), CANTV (Venezuelan phone card), Telus SmartONE card and others.
Target reported this morning that its credit card operations produced 20% of its total pre-tax profit of $793 million for the second quarter ending August 2nd. The retailer’s “smart VISA” portfolio posted 2Q/03 outstandings of $3.89 billion, a 3.7% increase over the first quarter, and a 54% increase over 2Q/02. Meanwhile, Target’s private label “Guest Card” credit card posted another drop as it migrates its best customers to the “smart VISA” program. At the end of the second quarter, Target’s private label outstandings were $733 million, compared to $734 million in the previous quarter, and $865 million one year ago. Target’s net charge-off rate for its VISA program was 9.3%, compared to 8.5% in 1Q/03, and, compared to 4.8% one year ago. Net write-offs for its store credit card program were 8.0%, compared to 8.2% in the prior quarter, and compared to 7.5% for 2Q/02. The 90-day+ delinquency rate for “smart VISA” was 3.5% compared to 3.3% for the first quarter, and, compared to 2.4% for 2Q/02. For its “Guest Card” program the figure edged up slightly to 5.2% from 5.1% in the prior quarter, but unchanged from one year ago. Target’s pre-tax profits from its credit card operations was $160 million compared to $151 million in 1Q/03, and well above the $129 million recorded one year ago. For complete details on Target’s 2Q/03 performance visit CardData ([www.carddata.com]).
Derbyshire Building Society has signed a deal to deploy Diebold’s “Opteva 760” and “Opteva 520.” Derbyshire will install 24 advanced-function, through-the-wall “Opteva 760” units and an “Opteva 520” lobby machine by November. The units will operate on Diebold’s “Agilis” software platform, an open system that allows multiple vendors’ terminals and their respective technologies to co-exist.
The “Opteva” family includes a through-the-wall, walk-up ATM and a lobby ATM, both with advanced functionality, and a through-the-wall and lobby cash dispenser.
ISP EarthLink has added MD-based I4 Commerce’s “Bill Me Later” payment option for new subscribers. With Bill Me Later, it is now easier to sign up for EarthLink dial-up access for customers who want a safe, convenient alternative to using credit cards when buying online or over the phone. Bill Me Later(R) is a bill consolidation service that allows customers to pay monthly by check. Instead of using a credit card, new EarthLink subscribers can select Bill Me Later(R) as a payment option when signing up for dial-up access and receive a monthly paper invoice with no annual fees or charges. Headquartered in Atlanta, EarthLink has earned a national reputation for outstanding customer service, its suite of online products and services, and is ranked Highest in Customer Satisfaction Among High-Speed ISPs, according to J.D. Power and Associates.Details
MasterCard International reported that its second quarter net income dropped 11.2% even though 2Q/03 revenues climbed 23.7% to $556.9 million, compared to one year ago. The nation’ second largest card network said that $79 million of the $107 million increase in second revenues was due to its acquisition one year ago of MasterCard Europe. The decline in net income was impacted by a 29% rise in general and administrative expenses to $281.0 million, and a 22% increase in advertising and market development expenses to $195.4 million. MasterCard says the $63 million increase in general and administrative expenses was due primarily to its acquisition of MasterCard Europe ($39 million) and personnel expenses ($22 million). The network noted that the $35 million increase in advertising and market development expenses included $34 million for its MasterCard Europe acquisition.Details
Sub-prime specialist CompuCredit reported second quarter net income of $20.3 million, compared to net income of $33.2 million in the first quarter, and compared to a net loss in 2Q/02 of $37.1 million. Net charge-offs, as a percentage of average managed loans, hit 20.9% in the second quarter, compared to 20.3% in the previous quarter, and 15.0% one-year ago. Excluding receivables at or near charge-off at the time of purchase, the charge-off rate would have been 11.0% for 2Q/03 and 10.2% for 1Q/03. At the end of the second quarter, the 60-plus day delinquency rate was 10.5%, compared to 13.3% in 1Q/03 and 9.0% at June 30, 2002. CompuCredit’s second quarter managed loans were $2.2 billion, compared to $2.5 billion in the first quarter. On August 1st, the Company, in conjunction with Merrill Lynch, purchased approximately $824 million in credit card receivables from Providian, representing approximately 435,000 credit card accounts. One year ago, Providian dumped $2.6 billion in sub-prime card outstandings to two limited liability companies setup by Goldman Sachs, Salomon Smith Barney, CardWorks, and CompuCredit. For complete details on CompuCredit’s 2Q/03 performance visit CardData ([www.carddata.com]). (CF Library 4/16/02; 8/5/03)