Signio, Inc. has expanded its transaction processing platform to include native support for the ‘IBM AS/400’. Through seamless integration, Signio offers all the key components to automate payment for ‘IBM AS/400’-based Web sites and enables companies to authorize, process, and manage multiple payment types, multi-currency options and different payment schemes online. The solution uses a fixed, flat fee monthly pricing model. There are more than 650,000 ‘AS/400’ servers shipped worldwide. Pacific Sunwear is the first company to integrate the ‘Signio AS/400’ solution.Details
Bank One reported this morning that the net interest margin for the First USA credit card unit declined an estimated 40 basis points in the third quarter from the second quarter. The nation’s second largest bank credit card issuer also confirmed that growth of its credit card outstandings slowed significantly in the third quarter. Total managed loans (which includes private label cards) were $70.0 billion at Sept. 30, a 7% increase from one year ago and up 1% from the end of the second quarter. Bank One says actions are underway to reduce customer attrition and stabilize returns at First USA. The issuer opened 1,835,000 card accounts during the third quarter, sharply lower than the 2.5 million accounts opened during 3Q/98 and the 2.3 million accounts opened in 2Q/99. Delinquency (30+ day) also notched up for 3Q/99 to 4.74% from 4.30% in 2Q/99 and 4.50% in 3Q/98. The only good news is that chargeoffs declined to 5.33% from 5.43% one year ago. However chargeoffs inched up between the second quarter and the third quarter by eight basis points. At the end of the third quarter Bank One has 64,523,000 cardholders and third quarter volume of $29.6 billion. For more details on Bank One/First USA’s third quarter results visit CardData ([www.carddata.com]).
PULSE EFT Association and New Jersey-based Infolynx have jointly announced that PULSE has chosen Infolynx, a PC-based information management and invoicing system, as a data warehouse solution for its member financial institutions.
Infolynx will be used as a key resource in PULSE’s efforts to manage information effectively across many functions and will streamline such functions as database management, management reporting, profitability analysis and invoicing.
“The selection of Infolynx will enable PULSE to leverage its information more effectively and in ways that bring real benefits to our member financial institutions,” notes Stan Paur, PULSE’s president and chief executive officer. “The software will allow us to support multiple applications and advanced functionalities.”
The Infolynx platform will consolidate and integrate various databases, expand PULSE’s management reporting capabilities and boost service to PULSE members through the use of improved data retrieval capabilities.
To facilitate the evaluation and selection of a vendor, PULSE issued a Request for Proposal in May 1998. Out of the six vendors who responded, Infolynx was chosen as the system that can best meet the needs identified by PULSE.
“We are excited that PULSE has selected Infolynx,” said Raymond J. Zoltowski, president of Infolynx Inc. “The unique structure of Infolynx, combining the power of an extensive data warehouse with the convenience of a PC-based system, makes it a perfect fit for PULSE and its member financial institutions.”
PULSE is one of the nation’s leading electronic financial services networks. The Houston-based not-for-profit cooperative serves more than 2,000 member banks, credit unions and thrifts in nine primary states including Alabama, Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, Tennessee and Texas. The network processes in excess of 37 million transactions monthly between member institutions and features more than 52,000 ATMs and 202,000 PULSE(R) PAY point-of-sale terminals in all 50 states.
Infolynx Inc., based in Iselin, N.J., is a privately-held software development company dedicated to serving the needs of the EFT and retail payments industry by providing solutions for administrative and back-office support. Alliast LLC is the exclusive distributor of Infolynx products, with offices in Ridgewood, N.J. and Madison, Wis.Details
Creative Payment Services , a leading provider of pre-authorized check and electronic payment services to merchants in the direct marketing industry, announced Friday that it will be processing payments for one of America’s leading discount shopping services.
Triad Marketing, of Boca Raton. Florida and its affiliate companies provide programs for direct marketers to help them maximize profit potential of each customer. Triad has developed an array of exciting premium programs used by catalog centers and telemarketers as an add-on to each sale. These unique add-on programs help direct marketers build additional revenue streams, customer loyalty, and recurring revenues.
CPS President David Weiss estimates that direct marketers could be losing 20% to 35% of their potential customers every day by not accepting checks over the phone the same way they accept credit card orders.
Triad’s “Best Price” Membership Program is offered as an after-sale add-on by some of the largest direct marketers and catalog order processors in the country. Among the companies offering one or more of Triad’s programs are: American Express, Hanover Direct, Citibank, HBO, Omaha Steaks, Time-Life, Smirnoff, and many more.
Triad has contracted with CPS in order to allow the direct marketing companies who are offering Triad’s add-on products to accept checking information directly from consumers over the phone. It is believed that check acceptance will dramatically increase sales and improve customer relations, by targeting consumers who do not have, or do not wish to use, credit cards for purchases over the phone, fax, or Internet.
Triad’s “Best Price USA” membership program contains name brand products and services at the lowest prices, including travel, entertainment, electronics, car rentals, appliances, furniture, moving, flowers, and more.
Businesses using CPS’ services can take orders by any means (phone, fax, or Internet). CPS processes payments for some of the Country’s largest direct marketers, and provides live account verification, pre-authorized draft printing, and electronic fund transfer services.
CPS is a privately held Florida corporation.Details
VISA U.S.A.’s board of directors have elected Philip Heasley as chairman of the board. Heasley, 50, is president and COO of U.S. Bancorp. He has been a VISA U.S.A. board member since 1998. Carl Pascarella, the president and CEO of VISA U.S.A. since 1993, will continue to oversee the association’s strategic plans and day-to-day operations. Heasley succeeds William Boardman, senior EVP of Bank One Corp. Boardman was named chairman of VISA International earlier this year. VISA U.S.A. has more than 330 million cards in circulation, including 78.9 million VISA Check Cards and has generated $668 billion in transactions in the U.S. alone over the twelve month period which ended June 30.Details
The ERG Motorola Alliance announced this morning it has successfully implemented the first phase of a contactless, smart card automated fare collection system field trial for the Transport Authority of Berlin, or BVG. The BVG initiated the new fare system allowing a select group of 25,000 riders to use smart cards as a form of payment on the U-2 and U-4 subway lines and their 33 stations involved in the field trial. The remaining phases of the trial, which include two bus routes with 44 buses and one tramline with 14 trains, are scheduled to be implemented by the end of this year. Up to 150,000 transactions per day are expected, including transfers between stations and modes of transport. The BVG expects full system implementation covering Berlin and the surrounding greater Brandenburg area by 2002.Details
Cash Technologies has successfully completed testing POS credit card transactions from its ‘EMMA’ system with the credit card processing arm of Concord EFS. Card Technologies recently received certification for ‘EMMA’ ATM card transactions. ‘EMMA’ is the first TCP/IP certification to be completed on Concord’s networks. Through ‘EMMA’, consumers will have access to a wide variety of financial services on an ATM or financial kiosk, including check cashing, electronic bill payment, real-time activated pre-paid phone cards, money order issuance, event ticketing, Internet based e-commerce products and services, interactive advertising, marketing data acquisition, traditional ATM cash dispensing and other functions, using a variety of payment methods, including ATM cards, credit cards and cash.Details
National Processing, Inc. reported that net income for the three months ended September 30, 1999, was $8,321,000 or $.16 per share, compared to $3,381,000 or $.06 per share for the corresponding period in 1998. Included in 1998 net income was a one-time settlement fee of $4,000,000, or $2,400,000 after tax, received for the cancellation of a processing contract. Absent this item, third quarter 1998 net income would have been $981,000 or $.02 per share.
Total revenues for the three months ended September 30, 1999, were $94,909,000, up 15% from comparable amounts in 1998, and were derived solely from the Company’s core business units — Merchant Card Services, Travel Services and Outsourcing Services. Comparable 1998 revenues were $82,372,000 from these core units. Reported revenues for the third quarter of 1998 were $121,430,000 and included $39,058,000 for business lines which were divested in the first half of 1999: Freight Payables, Payables Outsourcing, Remittance, and Merchant Check Services.
For the nine months ended September 30, 1999, exclusive of restructuring charges and impairment loss, net income was $22,247,000 or $.44 per share, compared to net income of $9,861,000 or $.19 per share for the corresponding period of 1998. After-tax impairment losses of $68,309,000 recorded in the first half relating to the business line divestitures noted above, and after- tax restructuring charges of $1,829,000 recorded in the first quarter for closure and relocation of certain processing facilities, resulted in a reported net loss for the first nine months of 1999 of $47,891,000 or $.94 per share. Included in net income for the first nine months of 1998 were the third quarter settlement fee noted above, plus after-tax charges of $1,558,000 recorded in the second quarter of 1998 for the write-off of software and related costs following the cancellation of a customer processing contract. Exclusive of these items, net income for the first nine months of 1998 would have been $9,019,000 or $.18 per share.
Total revenues for the first nine months of 1999 were $329,185,000 compared to $354,257,000 for the first nine months of 1998. For the Company’s core business units — Merchant Card Services, Travel Services, and Outsourcing Services — revenues were $271,850,000 for the first nine months of 1999, up 15% from $235,708,000 in 1998.
Commenting on the financial results, Thomas A. Wimsett, President and CEO, stated, “Revenues in each of the core units have increased sequentially through the first three quarters of the year, and year-to-date net income for each of these units has exceeded the business plan established at the start of the year. We are gratified that the restructuring and refocusing of the company has begun to pay off in a tangible way, and we will continue to work hard to keep things moving forward.”
National Processing, Inc. is a leading provider of merchant credit card processing services and corporate outsourcing solutions. Approximately one out of every six Visa and MasterCard transactions in the United States is processed by National Processing. The Company is 88 percent owned by National City Corporation (NYSE: NCC).
For more 3Q/99 data for National Processing visit CardData ([www.carddata.com])
Bank of America Corporation reported record third quarter earnings of $2.15 billion, or $1.25 per share ($1.23 diluted).
Results far surpassed the $374 million, or $.21 per share ($.21 diluted), earnings of a year earlier that were impacted by global financial turbulence. Excluding a $725 million pre-tax merger-related charge, operating earnings a year ago were $893 million, or $.51 per share ($.50 diluted).
Diluted operating earnings per share were up 7 percent from the second quarter of this year.
The company’s return on equity rose to 18.40 percent in the third quarter, and the return on assets increased to 1.40 percent.
Cash operating earnings – which exclude the amortization of intangibles and merger-related charges – were $2.37 billion, or $1.38 per share ($1.35 diluted). The return on tangible equity was 29.48 percent. A year earlier, cash operating earnings were $1.12 billion, or $.64 per share ($.63 diluted).
“Bank of America made solid progress during the third quarter,” said Hugh L. McColl Jr., chairman and chief executive officer. “Our merger transition continues to go smoothly and remains on schedule. We are successfully building out our investment banking platform and delivering those services to our huge middle market customer base. And we are refocusing a number of our businesses to achieve greater value for customers and higher profitability for shareholders. We are accomplishing all of these initiatives while increasing earnings and improving returns.”
For the first nine months of 1999, operating earnings were up 25 percent to $6.13 billion, or $3.53 per share ($ 3.45 diluted) compared to $4.89 billion, or $2.81 per share ($2.73 diluted) a year earlier. Net income was 49 percent higher at $5.98 billion, or $3.45 per share ($3.37 diluted), compared to $4.00 billion, or $2.30 per share ($2.24 diluted), a year earlier.
Third Quarter Earnings Highlights (compared to a year ago)
* Revenue rose 21 percent, as noninterest income increased 55 percent and fully-taxable equivalent net interest income was up 3 percent.
* Average managed consumer loans increased by 17 percent.
* Fee-based income recorded strong improvement in almost all areas and rose to 45 percent of revenue.
* The efficiency ratio improved to 54 percent.
* Net charge-offs declined to .51 percent of loans.
Net Interest Income
Fully taxable-equivalent net interest income of $4.60 billion was 3 percent higher than a year earlier due to solid loan growth, somewhat offset by the impact of securitizations, loan sales and the funding cost of share repurchases. The net interest yield on earning assets was 3.46 percent compared to 3.60 percent a year earlier.
Noninterest income increased 55 percent to $3.73 billion due to widespread gains across the spectrum of Bank of America’s fee-based businesses. The primary gains were recorded in credit card, trading, investment banking, mortgage banking and service charge income. Fee income rose to 45 percent of revenue.
Securities gains were $44 million compared to $280 million in the third quarter of 1998.
Noninterest expense declined 1 percent to $4.53 billion, reflecting cost savings resulting from recent mergers offset by increased revenue-based incentives, accelerated spending on merger transition projects and continued expansion of the investment banking business. The efficiency ratio improved to 54 percent.
The provision for credit losses in the third quarter was $450 million, compared to $1.4 billion a year earlier. Net charge-offs were $460 million, well below $902 million a year ago which included a $372 million charge-off related to the D.E. Shaw relationship. Net charge-offs represented .51 percent of loans and leases in the latest period.
Nonperforming assets were $3.04 billion, or .84 percent of loans, leases and foreclosed properties on September 30, 1999, compared to $2.58 billion, or .73 percent a year earlier. The allowance for credit losses totaled $7.08 billion on September 30, 1999, equal to 252 percent of nonperforming loans and 1.96 percent of loans and leases. The allowance was $7.21 billion, or 315 percent of nonperforming loans and 2.05 percent of loans and leases, a year earlier.
Shareholders’ equity stood at $45.9 billion at September 30, 1999. The Tier 1 capital ratio was 7.71 percent. The company’s market capitalization was $95 billion. On June 23, the company authorized the repurchase of up to 130 million common shares over 24 months, with an expectation to complete the program within 18 months. Through September 30, the company had purchased 43 million shares.
Business Segment Results
Consumer Banking, which serves individuals and small businesses, earned $1.10 billion, while Commercial Banking, which serves companies with from $10 million to $500 million in revenue, earned $216 million. Together, they represented 61 percent of the company’s operating income. Global Corporate and Investment Banking, which serves large corporate customers, earned $530 million, representing 25 percent of the company’s earnings. Principal Investing and Asset Management, which encompasses the private bank, trust, investment management, mutual funds, retail brokerage and principal investing, earned $244 million, representing 11 percent.
Bank of America, with $621 billion in assets, is the largest bank in the United States. The company serves more than 30 million households and 2 million businesses across the country, offering customers the largest and most convenient delivery network from offices and ATMs to telephone and internet access. It also provides comprehensive international corporate financial services for clients doing business around the world. The company creates financial relationships featuring a wide array of financial services, from traditional banking products to investments and capital raising within the securities markets. Bank of America stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges and certain shares are listed on the Tokyo Stock Exchange. Further investor information can be found at For more 3Q/99 data for Bank of America visit CardData ([www.carddata.com])
SAM’S Club announced this morning the launch of the ‘SAM’S Club Elite Membership Card’. The card, which carries a $100 annual fee, offers special discounts and access privileges on long distance services, home improvement services, roadside assistance, Internet banking, personal and business checks, insurance, auto-buying services, selected entertainment opportunities, and pharmacy services. SAM’s says the benefits package is worth more than $1,600. The Internet banking benefit from Telebank offers bonus rates and reduced minimum balances on all premium yield FDIC-insured accounts as well as instant ‘ATM Refunder’ and free online bill paying with its ‘True.Net’ checking account. Current SAM’S Club members can upgrade to ‘Elite Card’ status for $65. SAM’S Club is the largest warehouse club in the United States with 454 clubs and 37 million cardholders.Details
Fifth Third Bancorp’s net income was $173,504,000 for the third quarter, up 20.4 percent, and $485,507,000 for the first nine months of 1999, up 21 percent compared to $144,073,000 and $401,637,000 on an operating basis, respectively, for the same periods in 1998. Diluted earnings per share were $.62 for the third quarter, up 17 percent compared to $.53 per share for the third quarter of 1998. For the first nine months of 1999, diluted earnings per share were $1.76, up 18 percent over last year’s diluted earnings per share of $1.49.
Return on average assets was 2.13 percent, a historic high for Fifth Third, up from 2.03 percent in the third quarter of last year. Return on average equity was 19.7 percent compared to 19.3 percent for the same period in 1998. Fifth Third’s industry-leading efficiency ratio also improved further to 39.4 percent.
“We are pleased to report another quarter of quality earnings growth,” stated George A. Schaefer, Jr., President and CEO. “Highlights for the quarter included historic highs for ROA and ROE, continued outstanding loan growth led by a 17 percent increase in commercial loans and leases, superior credit quality and a 20 percent dividend increase.”
“In a year that bank stocks seem to have fallen out of favor with investors, we continue to try to differentiate ourselves with some of the best results in our history,” Schaefer continued. “Our earnings momentum continues to be strong across all of our major businesses. Solid revenue increases and careful cost control drove our efficiency ratio down to 39.4 percent — a number we are very proud of. We believe that Fifth Third’s combination of the best operating efficiency in our peer group and our expanded processing of e:commerce transactions positions us very favorably for the future.”
Schaefer concluded, “We are well under way toward the smooth combination of CNB Bancshares, Inc. and Peoples Bank Corporation in Indiana. These acquisitions, along with our existing presence, will vault us to the #3 bank in the Indiana market with three affiliate banks in the state and offer us tremendous opportunity for growth. The employees of CNB and Peoples are to be commended for their hard work and dedication in building momentum for strong post-merger financial results. Our Fifth Third team also completed the conversion of Emerald Financial Corp. in Cleveland this quarter, making us the second largest bank in the state of Ohio and expanding our Northeastern Ohio affiliate to $3.6 billion in assets and 74 Banking Centers.”
Quality Earnings Fueled by Revenue Growth
Successful sales campaigns in Fifth Third’s Banking Centers drove direct installment loan originations of $704 million for the quarter, a 32 percent increase from last quarter’s $532 million and a 69 percent increase from the $417 million for the same period last year. Commercial loan and lease growth accelerated with a 17 percent increase over third quarter 1998. Residential mortgage originations increased 10 percent from last quarter to $1.1 billion despite rising interest rates. Consumer lease originations increased to $495 million, exceeding the $476 million reported last quarter and $279 million for the same period last year. Demand deposits and interest-bearing transaction account balances rose by 14 percent over the third quarter of 1998, driven by an increase in transaction accounts and the popularity of our Corporate One(R) account services for business customers.
Net interest income rose 14 percent over third quarter of last year, driven primarily by 13 percent growth in average loans and leases. Fifth Third’s net interest margin for the quarter was 3.96 percent. For the first nine months of 1999, net interest margin was 4.10 percent, a 21 basis point increase over the same period in 1998 due primarily to lower funding costs from a growing customer deposit base.
Double-digit revenue growth across all of our business lines fueled the 18 percent rise in fee income for the quarter. Higher electronic transaction volume from debit and ATM card usage, expansion of business-to-business e:commerce, and new sales contributed significantly to third quarter’s 27 percent data processing revenue growth. MPS expects to process over four billion electronic transactions in 1999. Investment advisory income increased 12 percent, driven by substantial revenue growth in all product lines. The profitability of the retail brokerage business acquired last year with The Ohio Company has significantly increased through its integration with Fifth Third Securities. Fifth Third Investment Advisors added several new annuity products and their success fueled a 51 percent increase in sales compared to last year. Fifth Third Investment Advisors now has $151 billion in assets under care, a 13 percent increase over September 30, 1998.
Growing revenues faster than expenses further improved Fifth Third’s industry-leading efficiency ratio to 39.4 percent this quarter compared to 42.4 percent for the third quarter of 1998. Salaries, wages, incentives and employee benefits expense grew five percent in the third quarter from incentives for increased sales production, a tighter labor market and more employees as a result of recent acquisitions. Third quarter 1999 expenses were also affected to a lesser extent by routine adjustments of estimated accruals and reserves to actual. Overall, operating expenses rose by only eight percent compared to the same quarter last year.
Fifth Third is Year 2000 compliant. Our operating systems, applications and hardware meet the new processing standards for Year 2000. Fifth Third is also working diligently with our critical business partners to monitor their readiness for the next millennium. This effort includes facilities, utilities and communication partners, as well as other vendors.
Continued Solid and Improving Credit Quality
Underperforming assets (UPAs) continue to improve, declining to .60 percent of total loans and leases and other real estate owned at September 30, 1999, compared to .61 percent last quarter, and .78 percent in the third quarter of 1998. The reserve for credit losses at September 30, 1999 is 2.5 times UPAs, compared to 1.9 times UPAs in the same quarter last year. The reserve for credit losses as a percent of loans and leases is 1.48 percent at September 30, 1999, compared to 1.50 percent last year. Net charge-offs declined 20 percent to $16.4 million, compared to $20.6 million for last quarter. As a percentage of average loans and leases, net charge-offs fell to .33 percent, an 11 basis point decline from last quarter’s .44 percent.
Fifth Third was awarded the #1 ranking in Salomon Smith Barney’s Top 50 Bank Annual for an unprecedented eighth year in a row. The report ranks the top 50 U.S. banks according to a combined measure of profitability, revenue growth, operating efficiency, capital strength and asset quality.
Fifth Third successfully completed its merger with Emerald Financial Corporation during the third quarter. Emerald added $680 million in assets (including $325 million in loans, net of securitization), $561 million in deposits and 15 new Banking Centers to the Cleveland, Ohio market. With this acquisition, Fifth Third became the second largest bank in Ohio in terms of deposit market share. Fifth Third also plans to complete its mergers of CNB Bancshares, Inc. and Peoples Bank Corporation of Indianapolis, in the fourth quarter. CNB has $7.9 billion in assets with 145 Banking Centers, predominantly in Indiana, with a presence in Michigan, Kentucky and Illinois. Peoples has $675 million in assets, $587 million in deposits and nine Banking Centers.
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company, which is Y2K ready, has $33 billion in assets, operates 12 affiliate banks with 497 full-service Banking Centers, including 106 Bank Mart(R) locations open seven-days-a-week inside select grocery stores and 1,179 Jeanie ATMs in Ohio, Kentucky, Indiana, Florida, Arizona and Michigan. A leader in e:commerce, Fifth Third expects to process over four billion electronic transactions in 1999. The Bank’s financial strength continues to be recognized by rating agencies with deposit ratings of AA- and Aa2 and commercial paper ratings of A1+ and P1 from Standard & Poor’s and Moody’s, respectively. Fifth Third operates four main businesses: Retail, Commercial, Investment Advisors, and Midwest Payment Systems, the Bank’s data processing subsidiary. The company’s common stock is traded in the over-the-counter market through the Nasdaq National Market under the symbol “FITB.”
For more 3Q/99 info for Fifth Third visit CardData ([www.carddata.com]).
Citibank reported this morning that income from its card division rose 33% during the third quarter, reflecting growth in U.S. bankcards of 11% in receivables and 8% in sales volume, flat operating expenses, and continued improvements in credit costs. Citi reported 3Q/99 global card income of $297 million compared to $223 million for 3Q/98. For U.S. bankcards Citi had $70.7 billion in 3Q receivables compared to $70.3 billion for 2Q/99. U.S. charge volume for 3Q was $40.9 billion compared to $37.7 billion for 3Q/98. As of Sept. 30, Citi had 40.6 million bank card accounts, a drop of 500,000 accounts since June 30. Net chargeoffs for 3Q/99 were 4.40% compared to 5.15% for 3Q/98. Delinquency (90+ day) was 1.42% compared to 1.49% one year ago. For complete financials on Citibank’s 3Q/99 visit CardData ([www.carddata.com])