Associates’ Hot Quarter

Associates First Capital Corporation today announced that net earnings for the first quarter of 1998 reached $281.0 million, or $0.81 per share (diluted), an 18% increase over the same period a year ago. This was the 93rd consecutive quarter of improved earnings and the company’s best quarter ever.

Also in the quarter, The Associates announced acquisitions that totaled $3 billion in assets, principally in its rapidly growing international operations.

“We continue to build a balanced base of assets around the world that will provide continued earnings growth,” said Keith W. Hughes, chairman and chief executive officer. “The ability to grow profitably, both internally and through acquisitions, is a core strength of our company.”

At March 31, 1998, total managed assets reached $63.6 billion, 23% higher than the same period a year ago.

“Our first quarter performance was marked by quality growth combined with stable profitability,” Mr. Hughes said. “The strength and continued expansion of our operations outside the United States led the way, particularly in Japan where we announced a major acquisition.”

During the first quarter, the company announced an agreement to acquire DIC Finance in Japan, bringing its total Japanese presence to over 3,000 employees, more than 600 locations and approximately $4 billion in net finance receivables.

“Japan is the largest of our international operations and is likely to be an important source of growth for us in the foreseeable future,” Mr. Hughes stated.

In the first quarter, the company completed the acquisitions of Beneficial Corporation’s Canadian consumer loan subsidiary, with 105 offices and approximately $800 million in net receivables, and CEF Limited, a major construction equipment finance company in the United Kingdom with more than 6,300 contracts and approximately $160 million in receivables.

As a result of these acquisitions, The Associates became the largest foreign-owned finance company in Canada. The corporation also reinforced its position as the largest foreign-owned finance company in Japan, and continued its profitable growth in the United Kingdom.

“We will continue to pursue acquisitions as they add value for our future,” added Mr. Hughes. “The three international acquisitions we announced during the quarter met that test.”

The company’s other operating units also made important contributions to the quarter’s growth.

— Consumer operations, the company’s 1,500-office consumer finance network in the U.S., had good results highlighted by the opening of the Texas home equity market where the company made more than 6,500 real-estate secured loans.

— Commercial operations, a leading source of specialized business financial services, showed receivables growth of over $1.1 billion during the quarter, led by significant expansion of its financing to the manufactured housing industry.

— Credit card operations, a major issuer of bank and private-label cards, booked 240,000 new bank card customers during the quarter and became the first bank card issuer to offer Visa’s premier product, the Signature Card.

Associates First Capital Corporation is a leading diversified finance company providing consumer and commercial finance, leasing and related services through 2,404 offices in the U.S. and worldwide. Headquartered in Dallas, it is one of the nation’s 100 largest companies, based on total market capitalization.

THE ASSOCIATES Financial Highlights ($ millions – except earnings per share)

Three Months Ended or at
3/31/98 3/31/97 %Change
Net earnings
Amount $ 281.0 $ 237.8 18
Return on average equity 17.61 % 17.36 %
Return on average adjusted
equity 20.17 20.95
Return on average assets 1.91 1.94
Return on average managed assets 1.82 1.85
Net earnings per diluted share $ 0.81 $ 0.68 18
Stockholders’ equity $ 6,503.4 $ 5,558.7 17
Net finance receivables
Consumer finance $38,952.2 $32,400.8 20
Commercial finance 18,679.1 15,300.3 22
Total net finance
receivables $57,631.3 $47,701.1 21
Managed receivables $61,048.8 $50,299.3 21
Total assets $60,568.0 $49,210.8 23
Total managed assets $63,564.0 $51,809.0 23
Total revenue $ 2,231.1 $ 1,926.7 16
Net interest margin
(as a % of ANR) 9.15 % 9.46 %
Efficiency ratio 43.3 42.4

Three Months Ended or at
3/31/98 3/31/97
Credit Quality:
60+days contractual delinquency 2.26 % 2.25 %
Credit losses (as a % of ANR) 2.38 2.31
Allowance for losses on finance
Amount $ 2,014.9 $ 1,675.9
Percent of net finance
receivables 3.50 % 3.51 %



North American Mortgage Company(R), one of the nation’s largest residential lenders, has formed an exclusive alliance with Delta Air Lines’ SkyMiles(R) program to reward frequent flyer miles to those borrowers who purchase or refinance a home, according to Fred Koons, chairman and chief executive officer of the nationwide mortgage banker. The program is available nationally.

Called HouseMiles(R), North American Mortgage Company will award 1,000 Delta frequent flyer miles for every $10,000 borrowed. Thus, a $250,000 first mortgage would result in 25,000 Delta miles — enough for a round-trip ticket anywhere Delta flies in the continental U.S. (including Alaska) and Canada. There is no limit to the total miles that can be accrued, and all miles are awarded up front, approximately six to eight weeks after the mortgage loan closes, allowing for travel privileges to begin almost immediately. Moreover, the miles awarded through HouseMiles(R) can be combined with other miles earned through Delta’s comprehensive SkyMiles(R) program. There is no fee to join the program.

“By awarding the miles up front, home buyers receive nearly instant gratification. The lump sum reward will allow some people to take a relaxing trip right when they need it most: just after purchasing a new home and moving all their belongings,” said Koons.

In addition to the frequent flyer miles awarded with mortgages, North American Mortgage Company will also award a flat 2,500 miles to those who take out an equity line of credit — regardless of the loan amount. “The use of equity lines, for consolidation of bills, home remodeling projects and educational expenses, continues to grow,” explained Koons, “and we wanted to reward these customers as well.”

“We believe HouseMiles to be a substantial enhancement to existing mileage programs, as well as an additional incentive to choose the loan products of North American Mortgage Company,” said Pete Bonnikson, executive vice president in charge of Residential Loan Production for the mortgage banker. “We are very pleased to be working with Delta Air Lines on this initiative. Delta carries more passengers worldwide than any other airline — more than 100 million people boarded Delta planes last year,” he added.

The Delta SkyMiles earned through a mortgage or equity loan are offered exclusively through the nationwide network of 170 retail branches of North American Mortgage, or its loan-by-phone center. For more information, borrowers can contact any North American Mortgage Company branch, or the loan-by-phone center at 1-800/759-0306.

The SkyMiles awarded with a mortgage or equity line can be added to the other miles awarded for air travel, or through Delta’s other affinity partners which include Charles Schwab, MCI, American Express, and a number of participating hotels, car rental companies and cruise lines.

In 1997, North American Mortgage Company funded $16.05 billion for borrowers to purchase or refinance their homes, ranking it among the nation’s largest residential lenders. The company offers a complete list of conventional, government, jumbo and adjustable mortgage loans. Additionally it offers a pre-approval mortgage card, equity lines of credit, loans for people with blemishes in their credit history, and a full line of insurance products.

North American Mortgage Company, which funds mortgage loans in all 50 states, is a subsidiary of The Dime Savings Bank of New York, FSB. As of Dec. 31, 1997, The Dime Savings Bank of New York had assets of $21.8 billion and deposits of $13.8 billion.


Cross  Selling  Tool

American management Systems announced Tuesday the release of Strata Enterprise 3.0, a next-generation customer-based software platform that enables financial institutions to increase customer relationship value across product lines, functional areas and distribution channels.  Strata Enterprise is the first product of its kind with an enterprise-wide integration capability, which enables organizations to increase customer loyalty, improve retention and enhance customer profitability.  The complex decision-making supported by Strata includes the advanced ability to handle new types of complex algorithms and decision criteria.  Multiple decision tools, including scorecards, decision trees, and multi-variable matrices, allow for flexible and elaborate decision strategies for distinct segments of the total customer portfolio.  Aided by OLAP (online analytical processing) technology, Strata’s multi-0dimensional data model becomes a flexible tool for both customer and account level reporting.


Net  1  Contract  With  VISA

NET 1 UEPS has completed its Technology License Agreement with VISA. Visa International has launched VISA ­ COPACT (Chop off-line pre authorized card) which uses microchip and Net 1’s UEPS technology to permit off-line authorization of transactions with one of Russia’s largest commercial banks, Inkombank, in three cities ­ Ulyanovsk, Togliatti and Nizhny Novgorod.  This system allows transactions to be completed off-line without the need for telephone authorization, making it particularly suited for countries with limited telecommunications and banking services.  The card’s simplicity and security virtually eliminates overspending and fraud which are important in countries that have no banking history or experience with payment cards.  VISA research has identified more than 50 countries where it will be appropriate.  Under the terms of its Technology License Agreement, Net 1 received US $1,000 for each VISA member and non-member financial institution that utilizes the Funds Transfer System patent.


OFE 1.5 Available

A new and updated version of the Open Financial Exchange communications specification featuring a finalized chapter for bill presentment, along with international extensions and revisions designed to improve overall performance, has been published and made available for broad implementation.

Open Financial Exchange 1.5 was developed in concert with the financial services companies, billers and technology solution providers implementing the specification and supporting its continued development.

Open Financial Exchange 1.5 features the first complete version of the bill presentment extension, which will serve as the basis toward convergence of the Open Financial Exchange specification with the Integrion Financial Network’s GOLD specification. As announced on April 7, 1998 by The Banking Industry Technology Secretariat (BITS), a new open framework for the exchange of financial data and instructions that converges the GOLD and Open Financial Exchange specifications is expected to be published in August 1998. The bill presentment extension defines an open platform for billers and financial institutions on which to build and deploy their bill presentment solutions.

The bill presentment extension incorporates revisions suggested by billers and financial institutions to provide greater flexibility when querying for bill summaries, as well as improved handling of multiple message set versions and an expanded data type set. Overall, the bill presentment chapter has been streamlined and made more efficient as compared to 1997’s draft chapter. With the enhancements to the specification, Open Financial Exchange 1.5 also supports online financial services in Europe. The European extensions to the specification, which support online banking and bill pay, include message sets to manage the transfers and scheduling of payments for European financial institutions.

Open Financial Exchange 1.5 is now available to be downloaded from the Open Financial Exchange Web site at . It reflects the continued input of financial services companies, billers and technology solution providers who have been supporting the specification since it was first introduced in February 1997.

About Open Financial Exchange

Open Financial Exchange is a unified specification for the electronic exchange of financial data between financial institutions, businesses and consumers via the Internet. Created by CheckFree, Intuit and Microsoft in early 1997, Open Financial Exchange supports a wide range of financial activities including consumer and small business banking; consumer and small business bill payment, bill presentment and investments, including stocks, bonds and mutual funds. Other financial services, including financial planning and insurance, will be added in the future.

Open Financial Exchange, which supports transactional Web sites, thin clients and personal financial management software, streamlines the process financial institutions need to connect to multiple customer interfaces, processors and systems integrators. By making it more compelling for financial institutions to implement online financial services, Open Financial Exchange will help accelerate the adoption of online financial services by financial institutions and their customers.

The Open Financial Exchange specification is publicly available for implementation by any financial institution or vendor, and is available for review at . Open Financial Exchange is being used by CheckFree, Intuit and Microsoft as the mechanism for supporting financial data exchange in their products and services.


MBNA Dividends

MBNA Corporation Announces Quarterly Common Stock Dividend

MBNA’s Board of Directors declared a quarterly cash dividend of $.09 per common share, payable July 1, 1998 to stockholders of record as of June 16, 1998.

MBNA Corporation, a bank holding company and parent of MBNA America Bank, N.A., a national bank, has $50.2 billion in managed loans. MBNA, the largest independent credit card lender in the world, also provides retail deposit, consumer loan, and insurance products.

MBNA Corporation Announces Preferred Stock Dividends

MBNA Corporation announced today a quarterly dividend of $.46875 per share on the 7-1/2% Cumulative Preferred Stock, Series A, a quarterly dividend of $.3654 per share on the Adjustable Rate Cumulative Preferred Stock, Series B, and a quarterly dividend of $.515625 on the 8.25% MBNA Capital C Trust Originated Preferred Securities. All preferred stock dividends are payable July 15, 1998 to stockholders of record as of June 30, 1998.

MBNA Corporation, a bank holding company and parent of MBNA America Bank, N.A., a national bank, has $50.2 billion in managed loans. MBNA, the largest independent credit card lender in the world, also provides retail deposit, consumer loan, and insurance products.


Tidel Tower ATM Pays Off

Tidel Technologies, Inc. today reported the following record operating results for the three-month and six-month periods ended March 31, 1998, together with the results of the comparable periods from the previous year:

Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
Revenues $ 9,147,923 $ 6,802,255 $15,175,909 $13,058,391
Net income 1,468,414 513,293 1,756,555 918,688
Basic earnings
per share .09 .04 .11 .07
Diluted earnings
per share .09 .04 .10 .07

Revenues increased 34% for the quarter ended March 31, 1998 compared to the same quarter a year ago. Net income for the quarter ended March 31, 1998 increased 186% over the same quarter in 1997. The corresponding basic earnings per share increased 125%, as the weighted average shares outstanding increased approximately 2.7 million shares.

The record sales were due, in part, to the successful introduction of the color display package in early March, as well as overall strong demand for the Company’s tower model automated teller machine. Automated teller machine sales for the quarter were up 46% over the same quarter in 1997. In addition, sales of the Company’s electronic cash security systems were up 14% for the quarter as compared to the same quarter a year ago.

James T. Rash, CEO, stated, “We expect the Company’s operations to continue to improve throughout the remainder of 1998, with the combined results for the remaining six months of fiscal 1998 outperforming the results for the six months ended March 31, 1998.” He added that the Company’s newest multiple-cassette automated teller machine is scheduled for introduction this quarter, and is expected to be well received by customers.

Tidel Technologies, Inc. is a Texas-based manufacturer of automated teller machines and cash security equipment designed for specialty retail marketers.


iCat Commerce Online

CardService International and iCat Corporation, announced Monday, their agreement for integrated e-commerce merchant services.  This agreement will simplify how iCat customers obtain a merchant account in order to accept online credit card payments using the iCat Commerce Online initiative. iCat Commerce Online is a robust new e-commerce solution that allows any business to build a high-quality Web store using only their Internet browser in as little as 30 minutes.  iCat Commerce Online, which debuted yesterday, coupled with Cardservice, will help businesses to create fully functional and feature-rich Web stores with up to 10 items at no charge for the life of the store.  Larger stores can be created without charge for the first 30 days.



HONOR recently awarded Bell Atlantic Network Services, Inc. a contract to install IDSN lines to 275 ATM terminals in the mid-Atlantic U.S. region. HONOR’s ATM support services help financial institutions launch, maintain, and expand their EFT programs.  HONOR is using Bell Atlantic’s ISDN D-channel packet services for low bandwidth ATM data transmissions.  Bell Atlantic is the leading provider of ISDN in the country, having deployed more than 430,000 ISDN lines throughout its region.  HONOR serves more than 45 million cardholders and 2,720 financial institutions with more than 35,000 ATMs and 400,000 merchant Point of Sale terminals.


Phone Card Activator

Merchants will obtain better cash flow and security for long-distance, pre-paid phone cards through an agreement between TeleCheck Services and Zenex Communications.  Through the arrangement, merchants activate the cards at point-of-sale through TeleCheck’s Accelera fully integrated authorization terminal. Consumers will receive a printed receipt showing the amount of time purchased.  Card purchases also can deactivate and reactivate the cards by re-presenting the card at the point-of-sale. Merchants pay for the cards after the cards are activated, thus improving their cash flow and reducing security problems in storing and handling live cards.  Accelera combines TeleCheck’s check processing with credit card processing from First Data Merchant Services to offer merchants a one-stop solution that is unequaled in quality, speed and convenience.  The stand-alone terminal is compatible with any existing point-of-sale equipment.


MasterCard Numbers Out

MasterCard International announced yesterday its total U.S. volume hit $263 billion last year, representing a 14.8% increase over the previous year. The number of MasterCard cards in circulation grew by 10.3% to 186.8 million. For the year, MasterCard’s credit products volume in the U.S. grew 11.7% to $246.2 billion. MasterCard says its debit cards are now growing faster than VISA’s debit cards. The association says MasterCard debit card products posted volume growth of more than 93% during 1997. Approximately 200,000 new U.S. merchant acceptance locations were added in 1997, for a total of 3.8 million. Internationally MasterCard logged $602 billion in gross dollar volume in 1997, representing a doubling in gross dollar volume over the past five years and a 14.1% increase from 1996. Maestro generated more than 6.5 billion transactions during 1997 compared to 5.7 billion transactions for 1996. At year-end there were more than 600 million MasterCard, Maestro or Cirrus cards-in-force in 220 countries.