AmEx Yield Up

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

                              98-1Q          97-1Q
          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;


Iris ATM Goes Online

Britain’s Nationwide Building Society introduced the world’s 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 customer’s eye.


LEO and PayCard Demo

ORGA Kartensysteme GmbH, will be showcasing a host of new applications for its innovative technology at CardTech/SecurTech ’98 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 company’s new “Paycard,” 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.


Cap One Dividend

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.


VISA Helps Fight Hotel No-Shows

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.  Visa’s “Managing No-shows: Issues and Answers” 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.


Paymentech TX Vol Up 38%

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.


Vietnam Cards

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.


First Citizens – Vital Sign

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 .


SPS Up 33% for 1Q

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.

Financial Highlights
(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 —

(In thousands, except per share data)

Three Months Ended
March 31,
1998 1997

Processing and service revenues $ 68,142 $ 75,309
Merchant discount revenue 2,966 3,138
71,108 78,447

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


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

(In thousands, except share data)
March 31, December 31,
1998 1997

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



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)
Electronic point-of-sale
transactions processed 113,681 101,882 121,950
TeleServices service
minutes processed 12,416 17,022 14,848
TeleServices customer
contacts processed 2,154 2,550 2,685
Active consumer private label
accounts(end-of-period) 2,898 3,246 3,080
Active commercial
accounts(end-of-period) 1,003 951 979

Asset Quality
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.


Chase 1Q

Chase Manhattan’s first quarter was a mixed bag as delinquency fell and chargeoffs edged up. Chargeoffs, as a percentage of average receivables, stood at 5.77% for the first quarter compared to 5.66% for first quarter 1997. Delinquency, 90+ day past due as a percentage of average receivables, logged in at 2.04% compared to 2.46% last year.

                         CHASE  SNAPSHOT
                    1Q98                4Q97
     Recv           $31.4b              $32.5b
     Q Vol          $10.2b              $11.7b
     Accts          21.3m               21.5m
     Actives        13.2m               13.5m
     Cards          29.9m               30.1m
Source Card Management Information Services 1Q Portfolio Survey