First Data reports net income for the first quarter was $131 million, down 4% from $136 million last year. The quarter included a $28.5 million gain on the disposition of NTS and restructuring charges of $28.9 million, principally related to a restructuring and staff reduction program in the merchant card processing business, for a net charge of $0.4 million. Merchant Processing Services revenues were up 10% in the quarter to $317 million. The overall volume trends reflect increasing momentum, particularly in the merchant bank alliances. Domestic merchant Visa and MasterCard volume increased 22% to $53 billion, and domestic transactions processed grew 19% to 964 million. Domestic Card Issuer Services revenues increased 8% to $286 million. Total domestic accounts on file increased 25% to 170 million, as First Dataâs account growth remains well above overall card industry growth. Revenue grew more slowly than accounts on file as a result of the unusually high level of contract renewals and repricing during 1997, and as a result of exiting certain unprofitable relationships in the back office servicing certain unprofitable relationships in the back office servicing business.Details
American Express reported this morning an improvement in net interest yield yesterday for the first quarter due to the expiration of introductory rates. Net interest yield for the AmEx U.S. card base rose to 9.6% from 8.7% one year ago. Meanwhile delinquency leveled-off but chargeoffs climbed for the first three months of 1998.
AMEX 1Q U.S. SNAPSHOT
CARD LOANS $14.2b $12.9b
VOLUME $38.5b $34.6b
CARDS 23.3m 22.9m
DELINQUENCY* 3.6% 3.6%
CHARGEOFFS 6.3% 5.1%
DISCOUNT RATE 2.74% 2.75%
PER CARD VOL $1600 $1498
PER CARD FEE $38 $39
* delinquency rate is for 30+ days;
Britainâs Nationwide Building Society introduced the worldâs first PIN-less ATM yesterday. The ATM system has been pioneered by NCR, using an iris identification system developed by Sensar Inc. of Princeton, NJ. Using the NCR ATM, the customer simply puts in their ATM card and a camera mounted in the machine photographs the colored portion of the eye, the iris. If the iris staring back matched the record on the databank, the ATM will allow instant access to your bank account without need for a PIN number. The entire process can take as little as two seconds, and presents no danger to customerâs eye.Details
ORGA Kartensysteme GmbH, will be showcasing a host of new applications for its innovative technology at CardTech/SecurTech â98 in Washington, DC next week. ORGA will discuss and demonstrate its LEO (Loyalty and Electronic Purse) System to offer merchants worldwide a customized, fraud-resistant smart card payment and loyalty system they can use to attract new customers. Because it has been designed as an open specification architecture, LEO should be able to utilize a diverse range of industry-available terminals, host computers and chip cards. ORGA will also demonstrate Internet application. There will be demonstrations of the companyâs new âPaycard,â a smart card that features the best elements of both contact and contactless technologies, as well as a new biometric fingerprinting system for security/access control.Details
Capital One Financial Corporation today announced a quarterly dividend of $.08 per share payable May 21, 1998 to stockholders of record as of May 7, 1998. This is the Company’s thirteenth consecutive quarterly dividend since it became independent on February 28, 1995. Dividends declared by the Company are eligible for direct reinvestment in the Company’s common stock under its Dividend Reinvestment and Stock Purchase Plan. For additional plan information, stockholders should contact First Chicago Trust Company of New York at 800-446-2617.
The dividend declaration followed the Company’s fourth annual stockholders’ meeting. During the annual meeting, stockholders elected Nigel W. Morris and W. Ronald Dietz to serve three-year terms on the Board of Directors. Mr. Morris is President and Chief Operating Officer of the Company. Mr. Dietz is Chief Executive Officer of TARP, of Arlington, Virginia, and President of Charter Associates, Ltd. Both Messrs. Morris and Dietz have been Directors of the Company since February 28, 1995. In other business, stockholders approved an amendment to the 1994 Stock Incentive Plan and re-appointed Ernst & Young LLP as independent auditors.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation () is a financial services company whose principal subsidiaries, Capital One Bank, and Capital One, F.S.B., offer financial products and services to consumers. Capital One collectively had 12.7 million customers and $14.0 billion in managed loans outstanding as of March 31, 1998, and is one of the largest providers of MasterCard and Visa credit cards in the world.Details
Yesterday at the American Hotel & Motel Association Annual Convention, Visa U.S.A. unveiled a national education and communication program to help the lodging industry solve the problem of no-shows, which experts estimate exceeds $100 million. This program comes on the heals of a successful pilot study Visa completed earlier this year with Best Western International, Inc., Choice Hotels International and Holiday Hospitality. Visaâs âManaging No-shows: Issues and Answersâ program is a multi-faceted education campaign designed to help brand reservationists and hotel staffs understand the magnitude of the no-show problem and improve communications with consumers regarding hotel cancellation policies. The program is available, free of charge, to hotel chains, as well as independent properties of any size.Details
Paymentech, Inc. reported Thursday net income of $4.3 million for the third quarter ended Mar 31, 1998. In the March 1998 quarter, Paymentech processed approximately $11.8 billion in bankcard sales volume and approximately 463 million total transactions, including third-party authorization and capture transactions. Bankcard sales volume increased 16% and total transaction volume increased 38% over the prior-year quarter.Details
Giesecke & Devrient America Inc. (G&D America), a world leader in the development and production of cards and card systems was selected by Netlink Transaction Systems Corp., Victor, N.Y. to provide its STARCOS multi-application smart card for a major financial project in Mexico which combines a payroll service with a “virtual bank account” for employees of Mexican Maquiladora companies.
MetaCo, S.R.L. de C.V., Reynosa, Mexico, a subsidiary of MetaCo LLC, Rochester, N.Y., is deploying the multiple application capabilities in the Mexican Maquiladora industry, a unique Mexican environment made up of Mexican assembly and manufacturing plants along the US border that serve primarily US-based companies.
In Mexico, payment by check or on-line debit is impractical, because nearly 80 percent of Mexican workers do not have bank accounts and the cost of providing these low-value bank accounts is unsustainably high for the banking industry.
Mexican law also requires that all employees be paid in cash. Preparing, transporting, and disbursing cash for more than 25 million Mexican workers has become a costly — and risky — operation for many Mexican companies.
The smart card, called MetaCard, is the keystone for this comprehensive payroll and virtual banking service that MetaCo expects will serve more than 650,000 Mexican workers by the year 2001. The card incorporates reloadable payroll and retail coupons, which can be redeemed by employees at cash dispensers, grocery stores, and soon, a network of ATMs.
As a service to the banks, MetaCo includes the employee’s “virtual bank account” on the card, which provides workers with electronic cash, an interest bearing savings account, and on-demand statement viewing and printing. In the event the card is lost or stolen, MetaCo guarantees the card’s replacement with its full account value and information.
The MetaCard, which uses G&D’s STARCOS multi-application operating system, provides discrete electronic purses for pay, coupons, and stored information applications such as loyalty and demographic marketing.
Additionally, the card provides two traditional access mechanisms: a bar code used to record time and attendance information; and a magnetic stripe used for traditional access to on-line banking applications for customers with access to bank accounts.
The highly secure card also stores a digital image of the employee on the chip, allowing manufacturers to use the card as a company ID. The superior security architecture of the STARCOS card, combined with the electronic storage of fingerprints, provides the user verification needed to assure the safety of “virtual bank account” transactions.
Cardholder, bank, and retailer acceptance has been excellent, according to Donald Sweet, president of Netlink Transaction Systems Corp., the overall solution developer, system supplier, and financial processor for MetaCo and its retail and banking partners. “The ‘virtual bank account’ gives the banks a low-cost way to service the large percentage of the population which is economically unbankable.”
Sweet explained that it is MetaCo’s comprehensive payroll service that is the driving application that provides the manufacturer with the incentive to develop and pay for the necessary infrastructure.
“The costs associated with user training, card loading infrastructure, fingerprint security enrollment and management costs, will be financed by the significant savings of the payroll application,” said Sweet. “It is through the integration of these financial and information transactions that we are able to leverage a significant, and successful, business case for all participants,” Sweet concluded.
Since the beginning of the program 18 months ago, over $1.2 million has been placed on reloadable smart cards. Now, in its final stages of implementation, the program is expected to generate more than $1 million per week in card loading by the end of 1998 and the program will begin in other Latin American countries in 1999.
ABOUT GIESECKE & DEVRIENT
Giesecke & Devrient GmbH is a world leader in the development and production of cards and card systems, including microprocessor, memory, and magnetic stripe cards. A privately-held Munich-based corporation, Giesecke & Devrient employs 4,300 people worldwide in its operating units in Germany, Belgium, Spain, Mexico, China, Russia, Singapore, Australia, South Africa, Canada, and the United States.
The rapidly expanding G&D America manages over 900 employees and is a wholly owned subsidiary of Giesecke and Devrient. The Virginia-based company focuses its North American sales and development efforts on products for Giesecke & Devrient’s Card and Card Systems Division and its pioneering currency processing systems which are used by major central banks and leading commercial banks throughout the world.
G&D’s integrated North American Cards and Card Systems strategy links Giesecke & Devrient Cardtech Inc. of Cleveland with Giesecke & Devrient Security Card Systems Inc., Toronto and Giesecke y Devrient de Mexico S.A. de C.V., Mexico City, which permits G&D to address the full spectrum of card applications ranging from magnetic stripe cards to advanced multi-application smart card environments.
The combined production capacities of the three sites gives G&D one of the largest capacities of any North American card and card systems manufacturer. In addition to these production facilities, G&D America also operates research facilities in Philadelphia and Bedford, Mass.
For further information, please contact G&D America toll free at 800-296-4371 or see the Giesecke & Devrient GmbH web site atDetails
Vietnam’s largest commercial bank, Vietcombank, launched its first VISA card yesterday. The bank says its expects to issue about 1,500 cards this year or about the same number issued to date through its first Vietnam issuing member, Asia Commercial Bank. Vietcombank has issued about 1,200 MasterCards over the past two years. Vietnam has approximately 3,000 VISA/MasterCard merchant acceptance locations. Vietcombank requires a $400 monthly income to qualify for the card. The average per capita income in Vietnam is $300 per year.Details
Snyder Communications, Inc. announced Wednesday that its Blau Marketing subsidiary has opened a new office in San Francisco. Blauâs 7th U.S. office will concentrate on servicing Blauâs relationship with VISA and expanding its West Coast presence. The office is already fully operational and will employ approximately 30 marketing professionals by the end of 1998.Details
Vital Processing Services (Vital), a leading, full-service merchant services provider, announced the signing of a long-term merchant processing agreement with Raleigh, N.C.-based First Citizens Bank.
First Citizens will consolidate all of its acquiring activities with Vital, utilizing Vital’s entire product line including merchant point-of-sale (POS) products and portfolio management services.
A long-term user of Vital’s authorization and capture services, First Citizens currently has 75 percent of its merchant POS business with Vital. Approximately 8,000 merchant accounts also will be converted to Vital’s clearing and settlement merchant processing system by October, 1998.
“First Citizens’ decision to consolidate our acquiring business with one processor signifies our confidence in Vital as a lasting entity in the merchant processing marketplace. We selected Vital because of its keen understanding of our needs and because it is 100 percent behind our strategic direction,” said Wayne Duncan, executive vice president of retail lending at First Citizens Bank.
“The trend towards single-source processing relationships continues. We are delighted First Citizens chose us to be its merchant processing solution,” said Fred Gumbel, CEO and president of Vital.
With more than $9 billion in assets, Raleigh, N.C.-based First Citizens Bank operates 335 branches serving nearly 200 towns and cities in North Carolina and Virginia. First Citizens offers a complete line of financial services to individuals, families, and small to mid-sized businesses. Products and services offered include mortgage, personal and commercial loans, commercial leases, trust and investor services, savings accounts and checking accounts. The bank was founded in 1898 in Smithfield, N.C. Its World Wide Web page is located at .
Vital Processing Services (Vital) is a leading full-service merchant processing company. Its clients include financial institutions that provide credit card processing to their merchant customers. Headquartered in Tempe, Ariz., Vital offers financial institutions operational services that enhance business solutions without competing for their merchant business. Its services include merchant POS products, electronic authorization and data capture; clearing, settlement and exception processing; merchant accounting, billing, and reporting; operational fulfillment services (including the outsourcing of chargeback and retrieval processing); risk management; and customer service. Vital is a merchant processing joint venture of Visa(R) U.S.A. and Total System Services, Inc.(R) (NYSE: TSS) (TSYS(R)) (). Vital’s Internet address is .Details
SPS Transaction Services, Inc. (NYSE: PAY) today reported net income of $9.9 million or 36 cents per share on a diluted basis for the quarter ended March 31, 1998, a 33 percent increase as compared to 27 cents per share for the same period last year. Net operating revenues for the first quarter were $82.3 million, down nine percent from $90.4 million in 1997.
“It’s been a significant week for us. First, the announcement of our sale agreement with The Associates and now announcing our fourth consecutive quarter with year over year earnings increases. It’s a great beginning to 1998,” said Robert L. Wieseneck, SPS president and chief executive officer. “For the balance of the year, we will work toward effecting a smooth transition to The Associates and continue our focus on increasing revenues while maintaining our profit margin.”
The company reported a 12 percent increase in electronic transactions processed for the quarter, from 102 million to 114 million. Active commercial accounts at March 31, 1998 were 1,003,000, up five percent from 951,000 a year ago. Due to a change in service to a major client, service minutes processed by the TeleServices business group during the period decreased 27 percent to 12.4 million.
Total loans outstanding, which represent both owned and securitized credit card loans, declined and were $1.7 billion at March 31, 1998, down from $1.9 billion at the end of last year. Active consumer private label credit card accounts, both owned and managed, decreased 11 percent to 2.9 million, compared to the first quarter in 1997.
SPS Transaction Services, Inc. is a leading provider of technology outsourcing services including the processing of credit card transactions, private label credit card programs, commercial accounts receivable processing and call center teleservices activities. SPS, a 73.3 percent-owned subsidiary of Morgan Stanley Dean Witter & Co., recently announced the sale of substantially all of its assets to Associates First Capital Corporation. The transaction is expected to close later this year.
SPS TRANSACTION SERVICES, INC.
(In thousands, except per share data)
Three Months Ended March 31,
1998 1997 % Change
Net Operating Revenues $ 82,264 $ 90,430 (9%)
Net Income $ 9,897 $ 7,391 34%
Basic Earnings Per Common Share $ 0.36 $ 0.27 33%
Diluted Earnings Per Common Share $ 0.36 $ 0.27 33%
Basic Weighted Average Common
Shares Outstanding 27,249 27,197 —
Diluted Weighted Average Common
Shares Outstanding 27,465 27,367 —
SPS TRANSACTION SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
Processing and service revenues $ 68,142 $ 75,309
Merchant discount revenue 2,966 3,138
Interest revenue 55,206 64,076
Interest expense 17,039 20,382
Net interest income 38,167 43,694
Provision for loan losses 27,011 31,711
Net credit income 11,156 11,983
NET OPERATING REVENUES 82,264 90,430
Salaries and employee benefits 28,187 29,523
Processing and service expenses 22,391 28,327
Other expenses 16,026 20,541
Total operating expenses 66,604 78,391
Income before income taxes 15,660 12,039
Income tax expense 5,763 4,648
NET INCOME $ 9,897 $ 7,391
Basic Earnings Per Common Share $ 0.36 $ 0.27
Diluted Earnings Per Common Share $ 0.36 $ 0.27
Basic Weighted Average Common
Shares Outstanding 27,249 27,197
Diluted Weighted Average Common
Shares Outstanding 27,465 27,367
SPS TRANSACTION SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
Cash and due from banks $ 15,384 $ 14,730
Investments held to maturity –
at amortized cost 36,896 36,617
Credit card loans 1,169,727 1,295,787
Allowance for loan losses (74,822) (79,726)
Credit card loans, net 1,094,905 1,216,061
Accrued interest receivable 14,221 21,847
Accounts receivable 25,666 29,349
Due from affiliated companies 16,561 9,921
Amounts due from asset securitizations 97,715 93,260
Premises and equipment, net 31,951 32,895
Deferred income taxes 41,603 43,059
Prepaid expenses and other assets 14,851 14,664
TOTAL ASSETS $1,389,753 $1,512,403
Noninterest-bearing $ 4,513 $ 6,206
Interest-bearing 540,195 504,088
Total deposits 544,708 510,294
Accounts payable, accrued expenses and other 78,215 80,283
Income taxes payable 18,215 19,725
Due to affiliated companies 474,539 639,066
Total liabilities 1,115,677 1,249,368
Preferred stock, $1.00 par value, 100,000
shares authorized; none issued or outstanding
Common stock, $.01 par value, 40,000,000 and
40,000,000 shares authorized; 27,305,021 and
27,276,269 shares issued; 27,277,357 and
27,206,883 shares outstanding at March 31,
1998 and December 31, 1997, respectively 273 273
Capital in excess of par value 81,792 81,586
Retained earnings 192,680 182,845
Common stock held in treasury, at cost, $.01
par value, 27,644 and 69,386 shares at
March 31, 1998 and December 31, 1997,
respectively (611) (1,662)
Stock compensation related adjustments (58) (7)
Total stockholders’ equity 274,076 263,035
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,389,753 $1,512,403
SPS TRANSACTION SERVICES, INC.
Three Months Ended
March 31, March 31, December 31,
1998 1997 1997
Income Statement Data (thousands)
Transaction processing services $ 22,254 $ 24,462 $ 26,415
Managed Programs 22,765 23,395 21,686
HSB Programs 11,109 14,019 12,769
Servicing fees on securitized loans 12,014 13,433 9,563
Processing and service revenues $ 68,142 $ 75,309 $ 70,433
Balance Sheet Data (millions)
Total loans* $1,749.7 $2,078.4 $1,875.8
Owned loans $1,169.7 $1,498.4 $1,295.8
Total loans* $1,832.5 $2,173.8 $1,832.0
Owned loans $1,252.5 $1,593.8 $1,252.0
Operating Data (thousands)
transactions processed 113,681 101,882 121,950
minutes processed 12,416 17,022 14,848
contacts processed 2,154 2,550 2,685
Active consumer private label
accounts(end-of-period) 2,898 3,246 3,080
accounts(end-of-period) 1,003 951 979
Net charge-off % (Total loans)* 9.7% 8.9% 9.6%
Net charge-off % (Owned) 10.3% 9.1% 10.0%
30-89 days delinquency
%(Total loans)* 5.0% 4.7% 5.4%
30-89 days delinquency %(Owned) 5.3% 5.0% 5.7%
90-179 days delinquency %(Total loans)* 3.9% 3.6% 4.2%
90-179 days delinquency %(Owned) 4.2% 3.8% 4.7%
Allowance for loan losses (Owned)
(thousands) $ 74,822 $ 84,394 $ 79,726
Allowance for loan losses % (Owned) 6.4% 5.6% 6.2%
* Total loans represents both owned and securitized credit card loans.Details