US Airways Processor

US Airways has inked a five and one-half year agreement with Bank of America to process the company’s credit card transactions. The contract becomes effective May 15, upon the termination of its current agreement with National Processing. Last month, the U.S. Bankruptcy Court of the Eastern District of Virginia for Alexandria gave US Airways 45 days to finalize an agreement with a new credit card processor. National Processing has originally given a March 31st deadline for US Airways to emerge from reorganization or face termination. In May 2002, National Processing announced its decision to discontinue processing debit and credit card transactions for all its airline clients. The Company said it will not renew airline contracts when their current terms expire. The contracts currently in effect have various expiration dates extending through November 2005. Bank of America is also the issuer of a co-branded VISA card with US Airways. (CF Library 5/30/02; 2/27/03; 3/19/03)

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March Performance

Charge-offs for March, based on the February period, declined from 7.50% in the previous month to 7.45% in March. The news is good considering that losses tend to artificially rise in the first quarter as consumers pay off holiday charges. Compared to one year ago, charge-offs are up a modest 3 bps. However, the trend may be short-lived as delinquency rates continue to rise. Delinquency (30+ days) for March, based on the February period, increased from 5.65% in the previous month to 5.71%. Late stage delinquencies (60+ days) were up 4 bps in March, according to CardData ([www.carddata.com][1]).

Charge-Off Historical
Mar 02: 7.42% Sep 02: 7.33%
Apr 02: 7.57% Oct 02: 7.40%
May 02: 7.73% Nov 02: 7.46%
Jun 02: 7.45% Dec 02: 7.51%
July 02: 7.21% Jan 03: 7.53%
Aug 02: 7.24% Feb 03: 7.50%

note: based on previous month’s performance

Source: CardData ([www.carddata.com][2])

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

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UAL – US Airways

Bankrupt United Airlines and U.S. Airways, which emerged from bankruptcy this week, have begun a reciprocal award redemption program. The program, which went into effect April 1st, enables United “Mileage Plus” members and US Airways “Dividend Miles” members the benefit of award redemption on either carrier. Members from either program also have the flexibility to use United and/or US Airways flights in any combination for award travel. Bank One issues the United Airlines “Mileage Plus VISA” cards and Bank of America issues the U.S. Airways “Dividend Miles VISA” cards.

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Micro-Portfolios 1Q/03

As with larger portfolios, the contraction in the first quarter is apparent among the smallest bank credit card portfolios. In early reports from micro-issuers for 1Q/03, outstandings declined about 6% in the first three months of 2003. The percentage of active accounts versus gross accounts ranged from 48% to 66% for 1Q/03 among the sampling of smaller issuers, which mirrors the pattern among the nation’s top issuers.

OUTSTANDINGS
ISSUER 1Q/03 4Q/02 CHNG
Clinton Natl Bank (IA) $937,015 $950,738 -1.4%
Cecil County Schools FCU (MD) $857,759 $909,819 -5.7%
Magnolia State Bank (MS) $484,127 $513,549 -5.7%
Monroe County Bank (AL) $352,663 $405,217 -13.0%

Source: CardData ([www.carddata.com][1])

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

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PayPass Theater

OTI has developed a POS solution for Loews Cineplex to use in MasterCard’s “PayPass” pilot in Florida. The new OTI reader enables customers to pay for admission tickets, as well as their snacks at the concession stands, by simply placing their MasterCard “PayPass” enabled payment cards in front of a glass window. OTI also provided a turnkey “PayPass” drive-thru solution for one local Orlando retailer. MasterCard “PayPass” is currently being tested with three of MasterCard’s key member financial institutions, more than 15,000 cardholders, and approximately 40 merchant locations in Orlando.

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Portfolios 1Q/03

The seasonal contraction in credit card outstandings is taking shape as first quarter portfolio results are reported. Early reports to CardData’s first quarter survey from several smaller issuers shows a 1Q/03 dip of 4% to 9% in outstandings compared to the fourth quarter.

ISSUER 1Q/03 RECV 4Q/02 RECV
Randolph Brooks FCU (TX) $84,629,996 $91,220,731 -7.2%
First Community CU (MO) $25,019,979 $27,625,872 -9.4%
Citizens Financial (RI) $20,614,920 $17,845,113 +15.5%
Dupaco Community CU (IA) $10,123,450 $10,713,627 -5.5%
Troy Bank& Trust (AL) $ 1,314,551 $ 1,370,025 -4.0%

SOURCE: CardData (www.carddata.com)

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BARCLAYCARD ASIA

Europe’s largest issuer of credit cards is probing the possibilities of expanding into east Asia. Barclaycard is debating the potential of exploiting its sponsorship of the “Premier Football League.” According to the Financial Times the issuer is looking into potential co-branded payment cards in east Asia, where football is very popular. Barclaycard has 11 million cardholders and operates in 62 countries. Barclaycard entered the Italian market last year.

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