Providian Rebound

Following the release of Providian’s fourth quarter earnings report which showed a $400+ million loss, some Wall Street research firms raised ratings on the nation’s 7th largest issuer. As a result, Providian’s stock climbed 20% Friday to close at $4.16, after rising to as high as $4.65 during the day. Analysts indicate the company’s share are well below book value and Providian’s capital looks adequate. Merrill Lynch raised its ratings from “neutral” to “buy”. Meanwhile, a lawsuit has been filed against the firm on behalf of current and former Providian employees regarding its 401k retirement plan. Keller Rohrback LLP of Seattle filed the ERISA fraud class action last week. The Complaint alleges that during the Class Period, Providian breached its fiduciary duties when it was made aware of numerous practices that made Providian’s stock an inappropriate Retirement Plan investment during the Class Period. The suit alleges Providian encouraged participants and beneficiaries of the Plan to continue to make and maintain substantial investments in the Company Stock Funds in the Plan. (CF Library 2/8/02)

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NextCard Unraveling

Trading in NextCard’s stock was halted Friday in the wake of the closure of its AZ-based banking unit by the OCC on Thursday. The FDIC, which was appointed receiver of NextBank, said it will mail checks this morning to the customers holding jumbo CDs of the failed bank, up to federal limits. NextBank had total assets of $700 million and total deposits of $554 million, of which $29.4 million in 2,075 accounts exceeded the federal deposit insurance limit. The status of NextCard’s credit card securitizations remains unclear. The receivership of NextBank is a redemption event. However, as disclosed in the ‘NextCard Credit Card Master Note Trust’ offering memorandum, the FDIC may have the power to prevent the commencement of an early amortization period. The FDIC has not yet publicly stated whether it will attempt to prevent the commencement of the early amortization period. NextCard’s stock dipped to 12 cents per share on Thursday and remains halted at 14 cents per share. The Nasdaq Stock Market announced the trading halt status in NextCard at 8:13 a.m. on Friday. (CF Library 2/8/02)

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OPC Signs NY Towns

Official Payments Corporation (Nasdaq: OPAY) ([www.officialpayments.com][1]) announced that the cities of Rensselaer and Rye and the towns of Amherst, Colonie, and Irondequoit in the state of New York have signed agreements with the company. Under the agreements, citizens of these areas will have the option of paying real estate taxes, utility bills and other fees by credit card over the Internet and via telephone. Commencing in March, residents will be able to make these payments by visiting [www.officialpayments.com][2] or calling 1-800-2PAY-TAX(SM). American Express, Discover Card, Visa and MasterCard are the cards accepted by the program.

Combined, the city and town authorities collected over $410 million in real estate taxes, utility bills and other fees last year. Official Payments provides similar services for the IRS, 21 states including the state of New York, and more than 1,200 local government entities including 22 in New York. “Official Payments continues our expansion in the crucial New York market by adding five clients in some of the state’s largest counties,” stated Thomas R. Evans, Chairman & CEO of Official Payments. “Now, residents of these areas have the option of charging local, state and federal payments, all through our Internet and telephone systems. We bring the convenience of one-stop shopping to the tax payment process,” added Mr. Evans.

Official Payments charges taxpayers a convenience fee for processing these credit card transactions. The fee schedule can be found on the Internet at [http://www.officialpayments.com][3]. For example, a taxpayer who owed the City of Rye $4,800 in real estate taxes and charged their taxes would find a total of $4,933 on their credit card statement: $4,800 for the tax bill and $133 for the convenience fee. Taxpayers using credit cards with bonus rewards programs can, depending on their card’s program, earn rewards, points, and cash-back or airline frequent flyer miles for paying their taxes.

About Official Payments Corporation

Founded in 1996, Official Payments Corporation (Nasdaq: OPAY) is the leading provider of electronic payment options to more than 1,000 government entities in all 50 states. The company has agreements to collect and process credit card payments with the IRS, 21 state governments (AL, AR, CA, CT, IL, IN, IA, KS, MD, MN, MS, NJ, NY, OH, OK, PA, RI, VA, WA, WI, and WV), the District of Columbia, and more than 1,000 counties and municipalities. The company’s principal business is enabling consumers to pay their government taxes, fees, fines, and utility bills by credit card, via Internet and telephone. In 2001, Official Payments collected and processed more than one million transactions totaling $1.2 billion in federal, state and local government payments. Thomas R. Evans, the former President & CEO of the Internet company GeoCities, became Chairman & CEO of Official Payments in the summer of 1999. Mr. Evans brought Official Payments public in November of 1999, raising $80 million in its IPO on the NASDAQ national market.

[1]: http://www.officialpayments.com/
[2]: http://www.officialpayments.com/
[3]: http://www.officialpayments.com/

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SCA Snags Troutman’s

Troutman’s Emporium has selected Shoppers Charge Accounts Co. to operate its private label credit card program. Under terms of the agreement, the Mahwah, N.J.-headquartered SCA has acquired the receivables in Troutman’s portfolio and will administer all facets of the chain’s credit card program on an ongoing basis. Headquartered in Eugene, Ore., Troutman’s operates over 30 department stores in Oregon, Washington, Idaho, northern Nevada and northern California. Locations range in size from 40,000 square feet to 60,000 square feet and sell apparel, cosmetics, giftware, jewelry, accessories and other general merchandise. Troutman’s was ranked 26th nationally last June by The Nilson Report newsletter among retailers that own their store card receivables.

SCA services brick-and-mortar and catalog retailers throughout the U.S., along with their e-commerce operations. The company acquires retailers’ receivables or will develop private label credit card programs for merchants who currently don’t offer a house charge. In both situations, SCA assumes responsibility for generating customers’ billing statements; managing credit, collection, and lockbox functions; and creating customized marketing programs. Ranked among the nation’s largest private label credit card companies, SCA is a division of Hudson United Bank, a subsidiary of Hudson United Bancorp (NYSE: HU). Hudson United Bancorp is a $6.7 billion asset company with over 200 branch offices in New Jersey, Connecticut, New York, and Pennsylvania. Hudson United Bancorp’s subsidiaries offer a full array of innovative products and services to commercial and retail accounts, including imaged checking accounts, 24-hour telephone and Internet banking, loans by phone, alternative investment products, insurance products, private label credit cards programs and a wide variety of commercial loans and services including asset based loans, SBA loans, international services and cash management services. Wealth management services are also provided to individuals and businesses. Public sector products and services are provided to local and state governments, municipalities, educational institutions, civic and not-for-profit organizations.

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Payment Partners Signs Salo

Payment Partners ([http://www.paymentpartners.com][1]), a leading provider of international electronic funds transfers and payment services, announced the appointment of Randy W. Salo as the company’s Chief Technology Officer.

Salo joins Payment Partners to lead the technical development of its En’pointsm service ([http://www.en-point.com][2]), which enables businesses and individuals to easily, quickly and cost-effectively move funds across international borders.

“I’m thrilled to be joining Payment Partners at a time when an industry such as global payments is in such dire need of modernizing,” said Randy Salo, Payment Partners’ new CTO, “delivering leading-edge solutions to update age-old commerce systems is exciting and I look forward to the challenge.”

“We are delighted to have Randy Salo as our technology leader,” said Gregory J. Bjorndahl, CEO of Payment Partners, “his expertise and vision will greatly assist us in providing our time and money saving service to all clients with the need to make and receive cross-border payments.”

Salo comes to Payment Partners with over 20 years experience in engineering, project management, sales and marketing. Most recently he has been a technology planning consultant for companies including Intel (Nasdaq: INTC), LogicTree and Sensoria. And previously Salo held other executive and senior engineering management positions at Qualcomm Inc. (Nasdaq: QCOM), BrookTree/Rockwell, and Mentor Graphics (Nasdaq: MENT), as well as co-founding Wireless Knowledge, Inc.

Salo holds a BS in Computer Science from Oregon State University and is a member of ACM, EIA, and AEA. Salo also sits on the board of several privately held companies.

About Payment Partners

Payment Partners offers international electronic funds transfers and payment services to individuals, corporations, and private-label partnerships. Clients reduce the waiting period to receive funds, reduce the costs of transfers, and receive detailed reporting on-line.

En’pointSM, ([http://www.en-point.com][3]) the Company’s direct electronic funds transfer service, allows users overseas to safely and economically send funds to holders of US bank accounts for fees as low as $5. Individuals and businesses can receive payments from international senders or move funds into their USD bank and investment accounts. The En’point service provides transaction reporting unavailable through traditional wire transfers and international drafts permitting both senders and receivers to track payments on line and match this information with their internal accounting systems.

Transfers are made from any existing foreign bank account to any financial institution using a clearing network operated in concert with JP Morgan Chase and various automated clearing mechanisms around the world. Payment Partners is headquartered in Irvine, California, USA. For more information visit [http://www.paymentpartners.com][4].

[1]: http://www.paymentpartners.com/
[2]: http://www.en-point.com/
[3]: http://www.en-point.com/
[4]: http://www.paymentpartners.com/

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TJX VISA

Capital One has landed the TJX co-branded credit card contract and will begin issuing the card next month. TJX Companies formerly issued the co-branded card through CT-based People’s Bank. The card will be available in 1,400 T.J. Maxx, Marshalls, HomeGoods and A.J. Wright across the country beginning March 1st. Under the program cardholders will earn 5% rewards on TJX purchases and 1% for all other purchases. Rewards are issued to cardholders as they are earned in $10 increments. Pricing details have not been released. TJX operates 688 T.J. Maxx, 582 Marshalls, 112 HomeGoods and 45 A.J. Wright stores in the United States. (CF Library 8/22/97)

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Top Ten 2001

No matter how you slice or dice it, Capital One is the undisputed, fastest growing issuer among the nation’s top ten issuers of bank credit cards. However, Bank of America and Chase posted above average portfolio gains during 2001, while the top 3 issuers realized below average gains last year. Despite a rocky third and fourth quarter, American Express held its own against other major players, posting a slightly better than average gain in card loans, according to CardData ([www.carddata.com][1]).

ISSUER 4Q/01 RECV 4Q/00 RECV CHANGE
1. Citibank $108.9b* $103.2b* + 5.5%
2. MBNA $ 74.9b $ 70.4b + 6.4%
3. First USA $ 68.2b $ 67.0b + 1.8%
4. Discover $ 49.3b* $ 47.1b* + 4.7%
5. Chase $ 40.9b $ 36.2b +13.0%
6. Capital One $ 38.4b* $ 22.7b* +69.2%
7. Providian $ 32.9b $ 26.7b +23.2%
8. American Express $ 32.0b $ 28.7b +11.5%
9. Bank of America $ 27.2b $ 23.0b +18.3%
10. Household $ 16.1b $ 15.2b + 5.9%
TOTAL $488.8b $440.2b +11.0%

* Citibank includes data from Canada and Mexico; Capital One may include some international data; Discover data as of 11/30/01 Source: CardData ([www.carddata.com][2]) RAM Research Group’s Bankcard Barometer

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

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Providian 4Q/01

After delaying the release of its earnings report, Providian reported a net fourth quarter loss of $395 million from continuing operations, compared to an operating profit of $225 million for 4Q/00. The company also confirmed Thursday that banking regulators have accepted its new ‘Capital Plan’. Despite the restructuring, Providian posted a strong fourth quarter as it focused on the middle-market segment, largely abandoning the sub-prime market. During 4Q/01, the company added 500,000 net new accounts and added $950 million to total managed credit card loans. The managed net credit loss rate was 12.70% in the fourth quarter, compared to 8.49% one year ago. The 30+ day managed delinquency rate was 8.81% at year-end 2001, compared to 7.54% at the end of 2000. In light of the loss trends, Providian beefed up its loan loss reserve by $252 million during the fourth quarter. Total loan loss reserves now stand at $1.93 billion at year-end. Providian also noted yesterday it has requested approval from regulators to merge Providian Bank into Providian National Bank. The company also indicated the sale of its credit card business in the United Kingdom is progressing on schedule, as well as the planned disposition of its operations in Argentina. The company has designated its foreign businesses as “discontinued” and as a result added $86 million to its fourth quarter loss. Providian is still seeking a buyer for $3 billion in high-risk accounts. Providian’s 4Q/01 portfolio stats were published in last Friday’s CardFlash. For complete details on Providian’s 4Q/01 performance visit CardData ([www.carddata.com][1]). (CF Library 1/11/02; 1/18/02; 2/01/02)

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

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PayPal IPO Stopped

PayPal’s planned IPO, scheduled for yesterday, was delayed after another online payment company filed a patent infringement lawsuit. However Salomon Smith Barney, the lead underwriter, indicated last night that the IPO will be priced by next Wednesday. CertCo, a NY-based B2B e-commerce solutions provider, filed the lawsuit Feb. 4th in Delaware. PayPal, which will trade under the symbol ‘PYPL’, expects to raise about $80 million in the IPO. The company launched its payments-via-email service three years ago and has lost nearly $300 million. The company has 12.8 million clients. The PayPal service is widely used among buyers and sellers of online auction services such as eBay. PayPal members send more than $10 million per day in approximately 200,000 daily transactions. (CF Library 10/2/01; 11/16/01; 2/6/02)

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InteliData Snags Gilhooly

InteliData Technologies a leading provider of Internet-based financial services and electronic bill payment and presentment software, announced that Karen Gilhooly will join the company as Vice President and General Manager of its Card Solutions group based in Omaha, Nebraska. Gilhooly will focus on revenue generation and managing the relationship with InteliData’s strategic partner, First Data Resources, also based in Omaha.

The InteliData Card Solutions division provides online solutions for the top credit card issuers in the card industry. This set of solutions affords the credit card holder the ability to monitor accounts and pay bills online.

“We are delighted to have Karen join our management team,” said Al Dominick, President and CEO of InteliData. “We believe her strong background in this industry will help build InteliData Card Solutions’ customer base, as Card issuers look to take advantage of the significant technological enhancements we’ve continued to make in our Card Solutions product.”

Gilhooly brings with her almost 20 years of experience in the banking technology industry. She most recently served as Senior Vice President and COO of Electronic Billing Systems for Princeton eCom. During her career she has held numerous positions with Citibank and Citicorp. She was also employed by Thomas Cook Financial Services.

About InteliData

InteliData delivers EBPP products to banks, credit unions and financial institution processors. InteliData provides solutions that power financial institutions’ Internet banking, payment and presentment and online credit and bankcard transactions.

Headquartered in Reston, Virginia, USA, InteliData is publicly traded (Nasdaq: INTD) and its business partners include Spectrum EBP, ALLTEL and other industry leaders. For more information, visit the company’s web site at .

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Ruling Stay

The U.S. District Court for the Southern District of New York this week granted a stay in its ruling which ordered VISA and MasterCard to drop their exclusionary rules which prohibit members from issuing American Express or Discover cards. The stay will enable the card associations to pursue the appeals process and could run from two to three years. In October, Judge Barbara S. Jones issued a 157-page ruling which said VISA’s bylaw ‘210(e)’ and MasterCard’s ‘Competitive Programs Policy’ weaken competition and harm consumers in a number of ways. American Express said the development “was disappointing, but not surprising.” VISA said this week’s ruling “preserves the market structure of an industry” and avoids making the payment card business “subject to an academic experiment using untested remedies with unknown consequences.” MasterCard said the court recognized “the importance of maintaining the member business agreements pending appeal and the potentially irreversible consequences of imposing the Judgement.” The full text of the October court ruling is available on CardFlash Online ([www.cardflash.com][1]).

[1]: http://cardflash.com

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