Historic Lows

Chargeoffs declined to the lowest level in 28 months and delinquencies dropped to the lowest level in 29 months according to the latest Fitch IBCA ‘Credit Card Performance Indices’. Chargeoffs reported in April for the March collection period were 5.94%, a 74 basis point improvement from the year-ago level of 6.68%. This is the first time in more than two years that chargeoffs, among card-backed securities, dipped below 6.00%. The Fitch IBCA ’60+ Day Delinquency Index’ fell 11 basis points since last month to 3.14% and remains 25 basis points lower than last year. The last time delinquency was under 3.14% was Oct. 96 when 60+ day delinquency hit 3.10%. The Fitch IBCA results are consistent with 1Q/99 portfolio results gathered by CardData ([www.carddata.com][1]). However, the good news is coupled with the fact that the monthly payment rate has soared to its highest level since Fitch IBCA began tracking credit card-backed bonds in 1991. The monthly payment rate hit 16.87% compared to 15.44% last month and 15.77% one year ago. The higher payment rates can be attributed to the overall improved financial health of consumers due to the current state of the economy, cardholders paying down balances with the use of other debt consolidation products, growing convenience use by aging baby boomers, and the widespread use of reward-type cards that encourage convenience usage.

CREDIT CARD SECURITIZATION PERFORMANCE

Period CO GY MP DL SP
Mar99 5.94% 20.15% 16.87% 3.14% 5.92%
Feb99 6.05% 19.49% 15.44% 3.25% 5.69%
Jan99 6.10% 19.23% 15.82% 3.28% 5.37%
Dec98 6.00% 19.57% 15.62% 3.15% 5.34%
Nov98 6.27% 19.45% 15.06% 3.26% 5.15%
Oct98 6.20% 19.99% 15.87% 3.26% 5.20%
Sep98 6.35% 19.12% 15.09% 3.19% 4.94%
Aug98 6.29% 19.81% 15.65% 3.17% 4.82%
Jul98 6.30% 19.58% 15.99% 3.15% 4.59%
Jun98 6.72% 19.10% 15.34% 3.17% 4.14%
May98 6.63% 19.02% 14.88% 3.23% 4.40%
Apr98 6.58% 18.73% 15.21% 3.28% 4.57%

CO-chargeoffs; GY-gross yield; MP-monthly payment rate; DL- 60+ day
delinquency rate; SP-3-month excess spread
Source: Fitch IBCA

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

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Internet Debit Cards in Columbia

Trintech, the world’s leading provider of secure electronic payment solutions, will announce that Corporacion Nacional de Ahorro y Vivienda (CONAVI) is launching its bill presentment and payment service based on Trintech’s secure transaction-enabling technology.

The implementation is one of the first times debit cards have been used for Internet payment transactions anywhere in the world. CONAVI debit cardholders now enjoy the convenience of paying their bills ranging from water to telephone on the Internet.

The new service allows Colombia-based CONAVI to reduce costs associated with bill payment processing through any of its 300 branches by up to 80 percent. Billing companies using CONAVI’s service benefit from a streamlined presentment and payment process that cuts costs and simplifies bill paying for consumers. Trintech security and payment-processing technologies, including PayWare(tm), NetWallet(tm) and PayGate(tm), provide the foundation for CONAVI’s innovative bill presentment and payment service.

“It is very clear to CONAVI that there is great market potential in providing secure electronic commerce and Internet-based bill payment and presentment services,” said Dr. Carlos Mario Toro Villegas, vice-president of technology at CONAVI. “The need to offer a complete end-to-end e-commerce solution that is flexible led us to choose Trintech’s suite of secure payment products. Trintech has demonstrated its world-class leadership in the provision of Internet-based secure payment solutions by its successful project implementation. For CONAVI, it is a pleasure to count on Trintech’s solutions for this important project, which is the first of its class in Colombia and the rest of the world.”

Companies using CONAVI’s bill presentment and payment solution streamline the entire payment process. Cardholders’ transactions are secured with Trintech’s NetWallet based on the SET protocol. The companies process cardholder payments using Trintech’s PayWare. Payment details are then securely passed to the bank where Trintech’s PayGate resides. The lead integrator on the CONAVI project was Microsoft (Nasdaq:MSFT), through its Colombia-based partner Techmarketing.

“CONAVI’s bill presentment and payment solution links billing companies with consumers to make the payment process faster, simpler, cleaner and more economical for everyone,” said Fanny Sierra, Microsoft Internet customer unit manager in Colombia. “Microsoft technology is helping and supporting CONAVI in its permanent effort to establish new standards on the Internet and the whole financial sector — it is an innovative, flexible and comprehensive service unlike any other available today.”

“CONAVI clearly leads the market in providing electronic billing and payment services in South America,” said John McGuire, co-founder and CEO of Trintech. “Unparalleled transaction processing and powerful security attained through Trintech products unequivocally gives CONAVI the competitive advantage needed in today’s marketplace.”

About CONAVI

CONAVI is a Savings and Loans Corporation whose financial and technological services are customer-oriented. It was founded in October 1972 by a group of entrepreneurs and companies from Medellin, Colombia.

CONAVI established its first office in April 1974 and from that moment CONAVI has been a leader promoting financial technological development in Colombia. It has a large network of branches (221) and Automatic Teller Machines (440), CONAVI is also a member of the major Financial Networks in Colombia: Red Multicolor, Redeban, Servibanca and ATH for a total of 2,280+ Automatic Teller Machines available nationwide and all the Master Card — Maestro ATMs worldwide. Its high technological development has allowed it to reach the operational level of 4,628,000 transactions per month on average through its network of branches and 3,445,000 /month in its ATMs (measured as of March 1998). At present, CONAVI processes 72% of all its transactions via non-traditional channels such as POS, ATMs and Internet.

About Trintech

Founded in 1986, Trintech is the world’s leading provider of payment software for electronic transactions. The company is co-headquartered in Silicon Valley, Calif. and in Dublin, Ireland, the software capital of Europe. The company offers a complete range of payment software products for credit, debit, commercial and procurement card applications, as well as leading the world in the deployment of payment solutions for Internet commerce that are fully SSL- and SET-compliant.

Trintech’s range of scalable open systems architecture solutions for UNIX(r) and Windows NT platforms covers consumer, merchant and financial institution requirements for physical payments and the burgeoning world of electronic commerce. Trintech has headquarters in Campbell, CA at 2105 South Bascom Avenue, Campbell, CA 95008, USA (Tel: 408/879-1884). Trintech can be reached on the Web at http://www.trintech.com.

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ABN Halographics Update

American Bank Note Holographics, Inc.announced Friday that Salvatore F. D’Amato was appointed Chairman of the Company’s Board of Directors. The Company also announced that Kenneth H. Traub, the Company’s President and Chief Operating Officer, joined the Board of Directors.

Mr. D’Amato commented, “I am delighted to be assuming a more active role with American Bank Note Holographics once again. I look forward to working closely with Mr. Traub to help build upon the Company’s leadership position in the secure holographics industry.”

Mr. D’Amato joined the American Bank Note Holographics Board of Directors on March 26, 1999. He was Chairman and President of the Company from 1983 to 1990, and he has been a senior executive or consultant in the holographic, security printing and related industries for over 30 years.

Mr. Traub was named President and Chief Operating Officer of ABH on February 3, 1999. Mr. Traub was previously co-founder, Executive Vice President, Chief Financial Officer and Secretary of Voxware, Inc. and Vice-President of Trans-Resources, Inc. Mr. Traub earned a Masters in Business Administration from the Harvard Graduate School of Business Administration in 1988.

American Bank Note Holographics is a world leader in the origination, production, and marketing of mass-produced secure holograms, based on its significant market share. The Company’s holograms are used for security applications, such as counterfeiting protection for credit and other transaction cards, identification cards and documents of value; as well as for tamper resistance and authentication of high-value consumer and industrial products.

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Schwartz Joins KPMG

Brian J. Schwartz Joins KPMG’s Financial Services Consulting Practice

KPMG, LLP, the accounting, tax and consulting firm, has announced that Brian J. Schwartz has joined the firm’s financial services consulting practice as a senior manager. Schwartz comes to KPMG from MasterCard International, and will concentrate his efforts on the credit card industry.

‘KPMG will benefit from Brian’s extensive knowledge and broad abilities in the credit card industry, specifically in the areas of strategy and marketing,’ said J. Mac Rabb, partner-in-charge of consumer financial services consulting. ‘His addition to financial services consulting will enhance our ability to service clients in the ever-growing field of credit card issuers.’

Schwartz has more than 10 years of experience in the financial services industry in the areas of project, market and business development, customer profiling, statistical modeling, database management, direct response marketing, credit and operations management. At KPMG, he will focus on the development and management of consulting initiatives targeting the consumer credit card industry.

Prior to joining KPMG, Schwartz was vice president and general manager for MasterCard international’s consulting organization, a worldwide payments services organization. Most recently, he led the establishment of MasterCard Loyalty Consulting Services and the start-up of MasterCard Rewards Services; a full service co-branding business that provides services to major credit card issuers.

Schwartz earned a bachelor of arts degree in business from Pennsylvania State University. Schwartz is a frequent industry speaker focusing on topics such as product and market development in the credit card industry.

KPMG LLP is the U.S. member firm of KPMG International. In the U.S., KPMG partners and professionals provide a wide range of accounting, tax and consulting services. As a provider of information-based services, KPMG delivers understandable business advice – – helping clients analyze their businesses with true clarity, raise their level of performance, achieve growth and enhance shareholder value. KPMG International’s member firms have more than 6,700 partners and 92,000 professionals in 157 countries. KPMG’s Web site is .

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Solid First Quarter

American Express Travel Related Services reported record quarterly net income of $363 million, up 15% from a year ago. TRS net revenues also increased 11% from the prior year despite a general tightening of corporate T&E, and the cancellation of 1.6 million U.S. Government cards in the fourth quarter. The withdrawal from the government business represents approximately $3.5 billion in annualized spending. The impressive first quarter income results were driven by an 8% increase in US charge volume, an 18% surge in US card receivables and an increase in other revenues from the acquisitions of ATM networks. Chargeoffs dropped to 5.9% during the first quarter from 6.3% one year ago. First quarter delinquency (30-89 day) also dipped to 2.1%, from 2.5% for first quarter 1998 and 90+ day delinquency declined from 1.1% last year to 1.0% this year. For full financials details on AmEx visit CardData ([www.carddata.com][1]).

AMEX TRACK RECORD

1Q/99 4Q/98 3Q/98 2Q/98 1Q/98
Receivables $16.7b $16.7b $15.4b $14.8b $14.2b
Q Volume $41.6b $44.2b $41.5b $41.4b $38.5b
Cards 27.9m 27.8m 29.5m 29.6m 29.5m

Source: CardData (www.carddata.com)

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

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Equifax UK Proc Contract

Equifax announced Thursday its first major contract for credit card processing services in the UK. IKANO Financial Services, an owner and processor of private label credit cards in the UK, will outsource its processing operations to Equifax Card Solutions.

IKANO, with 300,000 cardholder accounts for such retail customers as Habitat, IKEA and OASIS, will use the full range of Equifax processing solutions, from account acquisition through collections.

Larry Towe, Equifax senior vice president and general manager, international operations, Equifax Card Solutions, said, “Equifax has deployed its innovative card processing technology and experience with large scale transactions throughout the world. We are especially pleased to offer our card processing services in the UK, where Equifax is already a major force in the consumer and commercial information services, risk management, market segmentation, check authorization and auto lien information industries.”

IKANO will utilize all Equifax’s major processing components: Cardholder Management, New Accounts/Applications (using Equifax unique software APPLY(SM)), Transaction Processing and Collections.

Jens Rom, managing director, IKANO, said, “Our new suite of card processing systems will help us deliver an enhanced service to our clients and our clients’ customers. We are pleased to be embarking on a business partnership with Equifax in developing and delivering a system to meet the challenging requirements of the 21st century.”

Equifax Card Solutions is the largest provider of card processing solutions for independent banks and credit unions in the United States, and a provider of third party processing and software solutions to financial institutions in 30 countries around the world.

Equifax ([www.equifax.com][1]), a worldwide leader in shaping global commerce, brings buyers and sellers together through its information management, transaction processing and knowledge-based businesses. Atlanta-based Equifax serves the financial services, retail, credit card, telecommunications/utilities, transportation, information technology and healthcare industries and government. Equifax adds knowledge, expertise, convenience and security to provide value-added solutions and processes for its customers wherever they do business, including the Internet and other networks. Entering its second century in business, Equifax employs more than 14,000 associates in 18 countries with sales in nearly 50 and has more than $1.6 billion in revenue.

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

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Trend Bucker

While most issuers are reporting a first quarter decline in chargeoffs and delinquency, Providian Financial Corp. posted a significant increase in both benchmarks. Chargeoffs rose from 6.78% for first quarter ’98 to 7.62% for first quarter ’99. Delinquency also increased from 4.61% last year to 4.91% this year. Never the less, Providian reported record first quarter net income of $113.5 million, an increase of 102% over the first quarter of 1998. Providian says it added over 1 million accounts during the quarter, bringing total customer relationships to 9 million. Providian reported a return on average equity of 52.19% for the first quarter. For current and historical financials details on Providian visit CardData ([www.carddata.com][1]).

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

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Big Dog Card

Big Dog Holdings, Inc., a developer, marketer and retailer of branded, lifestyle consumer products, Thursday launched its 1999-2000 Brand Equity Expansion Plan, with the announcement of three of its initial Big Dog license agreements.

In addition to building an Internet Enterprise, the Brand Equity Expansion Plan calls for the licensing and entertainment division, which was established in 1998, to extend, through licensing and cross-promotion opportunities, the Big Dog brand, character and lifestyle appeal to a much broader universe of products and entertainment properties.

In exchange for the licenses, Big Dog Holdings will variously receive royalty/commissions, guarantees, the benefits of associated brand advertising campaigns and a vast expansion in retail presence. There are no material costs anticipated in connection with these incremental revenues.

The three new licensees include Golden West Specialty Foods, for a Big Dog brand line of hot sauces; Cadore Moda Optical Wear, for a Big Dog line of optical frames and sunglasses; and MBNA America Bank, N.A., for a customized Big Dog credit card.

These licensees have been granted the right to use the Big Dog character, image, name and logo, as applicable, in the development and marketing of agreed upon products, services and collateral materials. In effect, these licensees are buying access to the millions of Big Dog customers.

The combined U.S. retail distribution of Golden West Specialty Foods and Cadore Moda Optical Wear is approximately 4,000 outlets, a potential 2,000 percent increase over Big Dog’s current owned and wholesale network. The Cadore Moda Optical Wear program includes a planned advertising campaign of approximately $1.0 million by Cadore Moda, which is scheduled to commence in the third quarter 1999.

Golden West Specialty Foods’ License

The licensing agreement with Golden West Specialty Foods, a Northern California-based, producer and international marketer of gourmet foods, includes the right to use the Big Dog name and character in a line of four specialty sauces, “BIG DOG: THE BRAND WITH BITE,” including hot, barbecue and mustard preparations. These products began shipping in second quarter 1999 to a range of specialty and gourmet food shops, high-end department stores and gift shops.

Golden West Specialty Foods’ distribution network includes approximately 1,500 U.S. high-end retail stores, and selected outlets in Canada and the U.K.

Cadore Moda Optical Wear License

Cadore Moda Optical Wear, is a Miami, Florida-based, international manufacturer and distributor of designer optical frames and sunglasses for adults and children. The Big Dog license gives this high-quality manufacturer the right to use the Big Dog logo, character and name in the design of a collection of optical frames and sunglasses.

This product line is scheduled to be launched to the wholesale market in the fall of 1999, following a $1.0 million advertising campaign. The product line is expected to be in retail stores by second quarter 2000.

Cadore Moda is an optical wear manufacturer and distributor for many of the world’s finest designers. Its distribution network includes a wide range of high-end optical wear retailers, optical wear retail chains (Lens Crafters, Vista Optical, Pearl Vision), department stores and mass merchandisers. Its U.S. distribution alone includes approximately 2,500 retail outlets.

MBNA America Bank, N.A. License

MBNA America Bank, N.A., is the largest independent credit card lender in the world. Its Big Dog license includes the right to use the Big Dog name and logo on a customized Big Dog Visa(r) credit card. The card is scheduled to be launched in the third quarter 1999. Card applications will be available in all Big Dog retail stores in the United States and through the company’s catalog and Web site, [www.bigdogs.com][1].

In exchange for the license, Big Dog Holdings will receive a payment for each new cardholder as well as a royalty related to total card purchase transactions. The cardholder will accumulate loyalty points when the card is used for Big Dog retail, catalog and online purchases. These points, in turn, can be applied to future Big Dog merchandise purchases.

In commenting on these licenses, Andrew Feshbach, president and CEO, Big Dog Holdings, said: “These licenses are integral to our 1999-2000 business objective, which is to build brand equity by leveraging the Big Dog name, character and lifestyle appeal in a universe that is far greater than the one enjoyed by the Company today.

“To accomplish this, we are looking to like-minded licensees, entertainment partners and cross-promotional opportunities. In effect, these relationships will allow us to build Big Dog brand awareness, advertise and market, and expand revenues with little direct cost to the company. The value to be captured in this next generation of our company is what truly distinguishes Big Dog from most other retailers.”

Big Dog Holdings, Inc. develops, markets and retails a branded, lifestyle collection of unique, high-quality, popular-priced consumer products, including activewear, casual sportswear, accessories and gifts. The Big Dog brand image is one of quality, fun and a sense of humor.

BIG DOGS brand is designed to appeal to people of all ages and demographics, particularly baby boomers and their kids, big and tall customers, and pet owners. The company is in the process of extending its brand equity through selective licensing, cross promotions and the building of an Internet enterprise for its market. In addition to its 177 retail stores, Big Dogs markets its products through its catalog, better wholesale accounts and Internet sales.

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

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Strongest Quarter

Household International reported that loan growth in its consumer finance business, improved efficiency, and higher income from its tax refund loan business led to the strongest first quarter in Household’s 120 year history. The company reported net operating income rose 34% to $320.8 million, compared to $239.3 million a year ago. However Household’s VISA/MasterCard portfolio decreased $4.1 billion over the past twelve months due to the company’s restructuring of its domestic credit card business. At March 31, the managed delinquency ratio (60+days) increased to 4.81% from 4.65% one year ago. The annualized managed net chargeoff ratio for the first quarter was 4.37%, compared to 4.17% in the year-ago quarter. For current and historical financials details on Household visit CardData ([www.carddata.com][1]).

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

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Cubic Card Deal

The Singapore Land Transport Authority yesterday awarded Cubic Transportation Systems a $23.6 million contract to provide smart card-vending ticketing machines for use at all LTA rail and bus stations. Under terms of the contract CTS will design, build and deliver 370 advanced ticketing units called the ‘General Ticketing Machine’. The new ticketing machine integrates advanced contactless smart card technology, including the capability to vend, revalue, retrieve, and recycle smart cards. At the same time passengers return cards for recycling, the ‘GTMs’ will refund passenger deposits which are required at the time of purchase. Other features include credit/debit card payment capability. Delivery of the first 100 ‘GTMs’ is scheduled for October 2000.

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Credit Drives Earnings

Sears, Roebuck and Co. reported first-quarter 1999 net income of $146 million compared to $133 million last year. Earnings soared 36%. The earnings increase was primarily due to improved performance of the credit business, which benefited from a lower provision for uncollectible accounts, a result of continuing favorable trends in portfolio quality. However credit revenues decreased 6.8%, primarily attributable to reduced late fee income and a lower level of owned credit card receivables. At the end of the first quarter Sears held $26.8 billion in card loans. Chargeoffs dropped during the past twelve months, from 8.12% to 7.08%. For full financials details on Sears visit CardData ([www.carddata.com][1]).

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

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