Recurring Payment Incentive

MasterCard International introduced a merchant incentive program to expand card usage and acceptance for recurring payment transactions in the U.S. MasterCard’s new Service Industries Inventive Program targets the insurance, utility, telecommunications, and cable television industries  the four merchant categories that constitute more that 90 percent of the $500 billion recurring payment category.  Currently 98 percent of recurring payments within these industries are paid by checks  representing an enormous growth opportunity for credit cards.  To assist members in enlisting merchant acceptance of recurring payments by credit card, MasterCard is offering a special incentive interchange rate for all participating merchants in the insurance, utility, telecom and cable industries who begin a Recurring Payment by MasterCard Program. MasterCard is also adopting operational enhancement and has designed an extensive sales and marketing program called “Repeat Pay”.

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Diebold Update

Shareholders of Diebold, Incorporated, today re-elected the Board of Directors at the company’s annual meeting. In addition, the board declared the second-quarter cash dividend and re-elected the company officers.

DIRECTORS RE-ELECTED

Re-elected to the Diebold Board of Directors were:

— Louis V. Bockius III, chairman, Bocko Incorporated, North Canton, Ohio.

— Daniel T. Carroll, chairman, The Carroll Group, Avon, Colo.

— Richard L. Crandall, managing director, Arbor Partners, LLC, Ann Arbor, Mich.

— Donald R. Gant, limited partner, The Goldman Sachs Group, L.P., New York.

— L. Lindsey Halstead, retired chairman of the board, Ford of Europe, Naples, Fla.

— Phillip B. Lassiter, chairman of the board, president and chief executive officer, AMBAC Financial Group Inc., New York.

— John N. Lauer, president and chief executive officer, Oglebay Norton Co., Cleveland.

— Robert W. Mahoney, chairman of the board and chief executive officer, Diebold, Canton.

— William F. Massy, president, The Jackson Hole Higher Education Group, Inc., Jackson Hole, Wyo., professor of education and business administration, emeritus, Stanford University, Stanford, Calif.

— Gregg A. Searle, president and chief operating officer, Diebold, Canton.

— W.R. Timken, Jr., chairman, president and chief executive officer, The Timken Company, Canton.

DIEBOLD DECLARES CASH DIVIDEND

The Board of Directors today declared a 14 cents per share cash dividend on all common shares to be paid Friday, June 5 to shareholders of record at the close of business on Friday, May 15.

OFFICERS NAMED

At the board meeting following the Diebold annual meeting, the Board of Directors re-elected Robert W. Mahoney, chairman of the board and chief executive officer; Gregg A. Searle, president and chief operating officer; Gerald F. Morris, executive vice president and chief financial officer; Alben W. Warf, senior vice president, electronic systems development and manufacturing; David Bucci, group vice president, North American sales and service; Michael J. Hillock, group vice president, international sales and service; Charles J. Bechtel, vice president, information systems; Warren W. Dettinger, vice president and general counsel; Reinoud G.J. Drenth, vice president and managing director, Europe, Middle East and Africa; Donald E. Eagon, Jr., vice president, corporate communications; Charee Francis- Vogelsang, vice president and secretary; Bartholomew J. Frazzitta, vice president and general manager, physical security division; Larry D. Ingram, vice president, procurement and services; Charles B. Scheurer, vice president, human resources; Robert L. Stockamp, vice president and corporate controller; Ernesto R. Unanue, vice president and managing director, Latin America; and Robert J. Warren, vice president and treasurer.

Diebold, Incorporated, headquartered in Canton, Ohio, is a global leader in providing card-based transaction systems, security and service solutions to the financial, education and healthcare industries. Founded in 1859, the company develops, manufactures, sells and services automated teller machines, campus systems, smart card systems, electronic and physical security equipment, automated medication dispensing systems, integrated systems solutions, software and supplies.

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GPS Signs Frst Chicago

Global Payment Systems announced Wednesday that it has signed an agreement to provide a wide variety of end-to-end payment solutions for First Chicago NBD Corp.  Under the terms of the agreement, Global will provide a range of services, including credit and debit card processing as well as check authorization.  Additionally, Global will provide the bank with merchant accounting, charge back and retrieval processing, and point-of-sale terminal deployment services.  These services will allow First Chicago NBD to offer its clients unique products, services and reporting in virtually every market.

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Debit Education Week

During this year’s National Credit Education Week, the National Consumers League is urging consumers to learn more about debit cards.  Consumers who want more information about debit cards can call for a free brochure, published by the League with support from Visa, “Debit Cards: Beyond Cash and Checks.”  For a free copy of the brochure, call the National Consumers League, 202-835-3323.

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Gemini Bankruptcy Solution

Equifax, Inc. and HNC Software Inc introduced yesterday a new product, Gemini Bankruptcy Solution, to significantly improve early identification of potential bankrupt accounts.  Gemini Bankruptcy Solution combines Equifax’s Bankruptcy Navigator Index score with HNC’s ProfitMax Bankruptcy cardholder bankruptcy prediction system.  ProfitMax Bankruptcy is a transaction-based, dynamic HNC profiling of the cardholder relationship and their transactions with a single issuer.  Equifax’s Bankruptcy Navigator evaluates the cardholder’s relationship with all credit grantors.  Gemini Bankruptcy Solution combines the features of both products in an optimized algorithm that combines the two scores.  It accurately predicts more bankrupt accounts, lowers the false-positive rate, and increases the predictive lead-time.

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First USA Excites

First USA announced Wednesday a five-year multimillion-dollar marketing partnership with Excite, Inc. to target market its credit cards on Excite’s flagship services, .  First USA will also create an Excite-branded credit card and will be the exclusive credit card issuer on excite.com.  Leveraging the power of Excite’s MatchLogic division, Excite will match First USA’s thousands of individualized credit card products with Excite’s customized consumer channels.  The alliance will provide consumers with facts about 1,200 First USA products and services that mirror their particular interests.  The targeting will include keyword and topic-related banners, content-related links, behavioral and demographic targeting leveraging MatchLogic’s ad serving and database marketing capabilities.  For example, First USA might offer its American Kennel Club Visa card to an Excite user searching for information about dogs.

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Changing  Landscape  Part  3

Despite recent acquisitions Citibank will not top American Express in charge volume this year. There remains a $16 billion gap between the two players. However Citibank maintains a stunning spread between itself and other top ten issuers.

THE  EMERGING  TOP  TEN (based on YTD 97 volume)

1. American Express (all products*)                     $150.5 billion
2. Citibank (inc Travelers, AT&T Universal)             $134.0 billion
3. Bank One (inc First USA, First Chicago)               $88.9 billion
4. MBNA America                                          $63.4 billion
5. Discover                                              $57.9 billion
6. NationsBank (inc Bank of America)                     $45.0 billion
7. Chase Manhattan(inc Bank of NY)              $39.8 billion
8. Household (inc Beneficial)                            $34.9 billion
9. US Bancorp                                            $26.7 billion
10. Capital One                                          $19.7 billion
   TOTAL                      $660.8 billion

* American Express Optima only volume for 1997 was $20.4 billion
   Source CardWeb

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No  Slack  Quarter

MBNA continues to defy gravity as the nation’s third largest card issuer adds more than two million customers during the first quarter. According to MBNA’s first quarter earnings report the company held $50.2 billion in managed loans and generated net income of $149.4 million for the first three months of 1998. Managed loans includes both credit card loans and consumer installment loans. MBNA says it signed up 110 new affinity programs and added 1.7 million new accounts during the first quarter.

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Cap One & Forbes 500

For the second consecutive year, Forbes magazine recognized Capital One Financial Corporation on its “Forbes 500” lists. In its April 20, 1998 issue, the magazine named Capital One to three lists in the latest edition: the “Forbes Assets 500” list, at number 305; the “Forbes Profits 500” list, at number 400; and the “Forbes Market Value 500” list at 372.

“Capital One has had an exciting year of growth with our product innovations and successful expansions into the UK and Canada,” said Richard D. Fairbank, Capital One’s Chairman and Chief Executive Officer. “All of us at Capital One are delighted with our second consecutive year of inclusion in the Forbes 500.”

Nigel Morris, President and Chief Operating Officer of Capital One added, “This listing is truly a testament to the hard work of our 6,000 associates worldwide who are integral to our success and growth.”

Capital One has locations and associates in Richmond, Fredericksburg and Falls Church, Virginia; Tampa, Florida; Dallas/Fort Worth, Texas; and London and Nottingham, England. The company recently announced plans to hire an additional 2,000 associates in 1998.

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 consumer lending products. Capital One’s subsidiaries collectively had 11.7 million customers and $14.2 billion in managed loans outstanding at December 31, 1997, and are among the largest providers of MasterCard and Visa credit cards in the world.

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Personalizing Smart Cards

John H. Stearns, CEO of fast-growing software startup UbiQ Inc., will delve into a critical industry topic at the CardTech/SecurTech conference on Monday, April 27 in Washington, D.C. His presentation, entitled “Smart Card Personalization in the World of Multi-Application Cards and Interoperability,” is part of the conference’s Smart Card Foundations Workshop from 11:00 a.m. to 5:00 p.m.

Stearns is a smart card industry veteran and has served on international standards committees. Before co-founding UbiQ, he was EVP of operations at DataCard Corporation for eight years, where he was the primary architect of the company’s worldwide new product and business development activities. The text of Stearns’ talk will be posted on UbiQ’s web site after his presentation.

CardTech/SecurTech () is the world’s leading card and security technology conference and exposition, with more than 8500 professionals from 70 nations attending. It is being held at the Washington DC Convention Center.

UbiQ Inc. () is a privately held software firm that has developed proprietary, patent-pending technology for high-volume smart card personalization. It was founded in 1994 and is based in suburban Minneapolis, Minn. (The company’s name is short for “ubiquitous,” a reference to the rapid proliferation of smart cards worldwide.) UbiQ’s mission is to be the highest value integrator in the smart card issuance process, reducing the time and cost necessary for secure, faultless “mass” card issuance. The company’s worldwide customers include smart card issuers such as American Express and member institutions of the Visa, Mastercard, and Mondex networks. It has relationships with card service bureaus, smart card manufacturers, and card personalization and printing equipment manufacturers. Markets or applications targeted by UbiQ include electronic commerce, Internet, travel and entertainment, stored-value cards, pay phone, digital wireless and GSM, national ID cards, and healthcare.

UbiQ’s web site features extensive information about smart cards, personalization, and interoperability, and has links to many other smart card sites worldwide. UbiQ is a registered trademark of UbiQ Inc. and UbiQlink, UbiQware, UbiQard, and UbiQlite are trademarks.

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MC  Electronic  Procurement

MasterCard International, Inc. has begun enterprise deployment of ELEKOM Procurement from ELEKOM Corporation.  The software, currently in use by more than 250 employees, is being rolled out to 2300 end users across MasterCard’s entire enterprise, making it one of the largest implementations of a commercial Electronic Procurement system to date. Thousands of transactions have been successfully completed between MasterCard and its suppliers over the past eight months using ELEKOM Procurement.  The system allows employees to select goods and services form a local catalog containing more than ten thousand items, electronically place orders with suppliers, and pay for products using the MasterCard Corporate Purchasing Card.

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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
receivables
Amount $ 2,014.9 $ 1,675.9
Percent of net finance
receivables 3.50 % 3.51 %

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