Advanta’s Hemorrhage Slows

Advanta’s credit card chargeoffs dropped below 7% while delinquency edged up slightly during the fourth quarter. The chargeoff rate for managed card loans stood at 6.81% for 4Q/97 compared to 7.39% for 3Q/97. The delinquency rate (30+ day) rose from 5.20% in third quarter to 5.29% in the fourth. Card outstandings ended 1997 at $11.2 billion compared to $12.7 billion one year ago.


CU Journal Sold

Thomson Financial Services unit, Faulkner & Gray, announced Thursday that it has acquired the assets of CU Journal Inc., publisher of the weekly Credit Union Journal. Terms of the agreement were not disclosed.

“It has been a long-standing goal of ours to enter the credit union publishing market,” said Jack Love, President of Faulkner & Gray. “With our coverage of most sectors of financial services, the vibrant credit union market is an important one for us to enter. We have had a number of credit union subscribers to our other financial services publications and attendees to our conferences through the years, and recognize the vital role they play in financial services delivery. With the Credit Union Journal we now have a top-notch publication geared exclusively to the needs and concerns of this market, and it will be the cornerstone of what will be a family of products targeted specifically for the needs of credit union executives.”

Credit Union Journal was founded in early 1997 by Frank J. Diekmann, Editor and Co-Publisher, and Timothy J. O’Hara, Advertising Director and Co-Publisher, and has quickly become the leading news authority on the credit union industry. “I am pleased to have the opportunity to enter the credit union market with the services of Frank Diekmann and Tim O’Hara, who will remain with the publication and will spearhead Faulkner & Gray’s credit union efforts,” said Andrew L. Goodenough, Executive Vice President and Group Publisher of Faulkner & Gray. “Combined, these executives have nearly 20 years’ experience in the credit union publishing field, a tremendous asset to us as we build our credit union business.”

Credit Union Journal will continue to operate out of its West Palm Beach offices, located at 224 Datura Street, Suite 709, West Palm Beach, Florida, 33401. Additional personnel will be hired in West Palm Beach to round out the publication’s editorial and advertising staff.

“We are delighted to be joining the Faulkner & Gray team,” said Frank Diekmann. “The company is highly regarded in the financial services industry for its commitment to the highest journalistic standards. We look forward to bringing the resources of Thomson to bear on our enterprise.”

In a related move, Faulkner & Gray also acquired the publishing assets of Credit Union News, the nation’s oldest credit union newspaper, founded in 1980, from BKB Publications Inc. Credit Unions News’s subscribers will receive Credit Union Journal effective with the January 28 issue.

Faulkner & Gray is publisher of 18 specialty business magazines and newspapers in a wide array of financial service industry segments, including accounting, banking, credit collections, credit cards, mortgage banking, managed care and insurance. Its titles include National Mortgage News, Credit Card Management, US Banker, Bank Technology News, Financial Service Online and dozens of related, newsletters, daily fax news bulletins, statistical directories, sourcebooks and websites. The company is also the largest independent provider of conference events in financial services, and sponsors Credit Card Forum, Home Banking Forum, Mortgage Technology Conference and Banking Call Center Conference, among others.

Faulkner & Gray is a division of Thomson Financial Services, a leading provider of quality financial information, research, analysis, and software products to the global investment and corporate communities. Part of The Thomson Corporation (TTC), TFS employs more than 5,500 people in nearly 40 offices around the world.

The principal activity of TTC is specialized information and publishing worldwide. In addition, TTC has important interests in newspaper publishing in North America and in leisure travel in the United Kingdom and Sweden. TTC had sales of US$7.7 billion in 1996 and has some 50,000 staff members. TTC’s common shares are traded on the Toronto, Montreal and London stock exchanges. For more information, visit TTC’s Internet address at [][1]



New AmEx EVP of  Service Delivery

American Express today announced the appointment of Steven Grant as Executive Vice President, U.S. Service Delivery, Consumer Card Services Group. In this role, Mr. Grant will be responsible for managing all U.S. operations that support the American Express Consumer Card Services, Corporate and Small Business Services, Government and Purchasing Card Businesses and Established Services through the customer service centers located in North Carolina, Florida and Arizona. He will also oversee the Illinois Payment Facility. Mr. Grant will report to Phillip J. Riese, President, Consumer Card Services Group.

“Steve possesses strong leadership skills and expert knowledge of American Express’ operations and business strategies,” said Phillip Riese, President, Consumer Card Group, noting that Grant replaces Louis Lombardo whose retirement was announced earlier last year. “Steve has been a key partner in integrating customer servicing throughout many of the U.S. Business Units. We look forward to him continuing the business partnership approach as leader of the U.S. Service Deliver Team.”

Previously Mr. Grant served as Senior Vice President, Service Strategy and Chief Quality Officer for Travel Related Services, a position he held since 1994, where he was responsible for overseeing the company’s service center structure and implemented comprehensive customer measurement and quality processes that increased the overall effectiveness of the centers. For the last years, Mr. Grant has played a key role in the company’s reengineering efforts, particularly in the reconfiguration of the service center structure. Hie efforts led to the development of the current three-center formation, which has resulted in enhanced customer service capabilities and significant economic savings for the company.

Mr. Grant joined American Express in 1981 to head voice and data communications for First Data Resources, which was part of American Express at that time. He advanced through increasingly senior positions in several areas of the company including systems technology, quality, reengineering and operations.

Prior to joining American Express, Mr. Grant held management positions in network operations and marketing at MasterCard International and Rockwell International.

Originally from Hampton, Iowa, Mr. Grant has a B.A. from Cornell College, and an M.A. from Duke University. He currently resides in New York City.

American Express Travel Related Services Company, Inc., is a wholly-owned subsidiary of the American Express Company — a diversified worldwide travel and financial services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance and international banking.


High Tech Card Gambling

Betting Inc. announced it is developing the Patented Second Line Computer KeyBoard device to allow US game players to use their ATM card with PIN to open or replenish their Sports Book or Off Track Betting accounts.  Usage of the ATM card with PIN will result in same day cash for the gaming operators and a small fee for the players.

In Europe and Asia and Latin America, Betting Inc. is seeking joint venture partners to develop home wagering with the Second Line Computer KeyBoard.

The Second Line Computer KeyBoard features a built in modem, printer, DES encryption and a credit, smart, and ATM card reader.  Functioning as a regular keyboard, it offers the consumer the option to send all bank data, toll free, by a second dial up phone line to the bank host.  The host will alert the Internet merchant as to payment.

The Second Line Computer KeyBoard prints a receipt using the built in printer and now opens up the usage of same day cash ATM card with PIN and smart card Internet commerce.

By the simple usage of a second phone line, the buyer’s bank data is completely secure as no information is being transmitted across the Internet.

Betting Inc. is the host and equipment supplier for personal encrypted remote financial electronic card transactions.


First Md Expects $60 Million Sale Gain

First Maryland Bancorp reported Wednesday record earnings of $151.2 million for the year ended December 31, 1997 which represented a 14% increase over 1996.  The results include a $17.4 million aftertax gain from the sale of bankcard loans in the third quarter.  Excluding this gain, merger-related costs and amortized acquisition goodwill, tangible earnings for the year were $174.3 million, an increase of 28%.

First Maryland posted fourth quarter 1997 earnings of $27.7 million. These results include merger-related costs of $12.5 million after-tax ($20 million pre-tax) related to the acquisition of Dauphin Deposit on July 8, 1997.  Excluding the merger-related costs, reported fourth quarter earnings were $40.2 million, a 12% increase over 1996.

Highlights of First Maryland’s underlying performance included strong growth in retail lending (up 17%), commercial lending (up nearly 13%) and trust and investment advisory income (up 23%).

Asset quality remained strong with non-performing assets of $81 million at December 31, 1997, representing .45% of total assets.  Nonperforming loans of $64 million were covered 263% by total provisions of $168.2 million.

Frank P. Bramble, president and CEO of First Maryland, commented on the results, “First Maryland had another strong year with particularly good results in our retail, commercial and trust businesses.  We completed the acquisition of Dauphin Deposit in July and we are pleased that the integration process is well underway.

“With the announced sale of our credit card and mortgage origination businesses, we are focused on our core strengths and on maximizing our potential in our enlarged market,” said Bramble.

In December 1997, First Maryland announced an agreement to sell its consumer credit card portfolio to Bank of America, N.A.  The transaction should be completed soon and is expected to result in a pre-tax gain of approximately $60 million.  Under terms of the agreement, Bank of America will provide a full range of consumer credit card products under First Maryland’s brand names.

Also announced during the fourth quarter of 1997 was an agreement with National City Mortgage Co. to sell certain assets of the mortgage loan origination businesses of two subsidiaries at approximately book value.  This transaction is also expected to close in the near future.  First Maryland will continue to offer mortgages and home equity products through its branch network.

First Maryland Bancorp is the holding company for First National Bank of Maryland, Dauphin Deposit Bank, The York Bank, and First Omni Bank. Headquartered in Baltimore, First Maryland operates nearly 300 branches and more than 400 ATMs from southern Pennsylvania through Maryland and the District of Columbia and into northern Virginia.  At December 31, 1997 total assets were $17.8 billion.

                            FIRST MARYLAND BANCORP
                             FINANCIAL HIGHLIGHTS
                                                            % Change to 1996
                        1997           Adj.        1996        1997    Adj.
                                      1997(A)                          1997
    Reported Results
     Quarter ended
      December 31
       Net income
        ($ in
        thousands)     27,732         40,232      36,032        -23%     12%
       Return on
        assets           0.64%          0.93%       1.33%
       Return on average
        common equity    5.59%          8.43%      12.11%
       Net charge-offs as
        a % of average
        loans            0.46%          0.46%       0.87%
     Year ended
      December 31
       Net income
        ($ in
        thousands)    151,188        146,249     132,337         14%     11%
       Return on
        assets           1.07%          1.03%       1.26%
       Return on average
        common equity    9.66%          9.32%      11.33%
       Net charge-offs as
        a % of average
        loans            0.48%          0.48%       0.61%

    Tangible Results
     Quarter ended
      December 31
       Net income
        ($ in
        thousands)     39,280         51,780      37,002          6%     40%
       Return on
        assets           0.96%          1.26%       1.38%
       Return on average
        common equity   18.23%         24.52%      13.46%
       Year ended
        December 31
         Net income
          ($ in
          thousands)  179,204        174,265     136,332         31%     28%
         Return on
          assets         1.32%          1.28%       1.31%
         Return on
          equity        18.69%         18.14%      12.34%

    (A) Excludes the after tax gain from the sale of bankcard loans and
         after-tax merger related expenses.

                                               December 31
                                       1997          1996     % Change

    Period End Balance Sheet
     ($ in millions)
      Total assets                     17,792      10,791        65%
      Loans, net of unearned income    10,084       6,798        48%
      Deposits                         12,464       7,498        66%
      Intangible assets                   967          99       877%
      Stockholders’ equity              1,873       1,247        50%

    Asset Quality ($ in millions)
      Nonperforming loans                  64          46        39%
      Nonperforming assets                 81          59        37%
      As a % of loans and OREO           0.80%       0.87%
      As a % of total assets             0.45%       0.55%
      Allowance for credit losses         168         155         8%
      As a % of nonperforming loans       263%        338%

    Capital Ratios
      Leverage                           7.26%      12.18%
      Tier 1                             8.30%      14.12%
      Total capital                     11.90%      17.20%


Smart Card Interviews

Five executives from NatWest (UK), Banksys (Belgium), the Smart Card Institute, Terisa Systems and US West, provide their views on how smart cards change market opportunities for bank and phone card issuers in a video series now available from the market research firm of Killen & Associates, Inc.

The video series-“NatWest, Banksys, Smart Card Institute, Terisa Systems and US West’s Views On Phone and Bank SmartCard Business Opportunities” consists of five half hour interviews. Michael Killen, president of Killen & Associates, conducted each of the interviews. The series is immediately available for $495 (Note Members of the press can receive an electronic copy of the transcript of any one interview; contact Killen & Associates at [email protected]).

The executives who share their thoughts (and the topics) in this series are

1. David Anastasi, VP and GM, US West Public Services, and President, Global Chip Card Alliance – discusses the global acceptance of phone cards, including

— The smart card and the banks A Telco perspective

— Smart cards opportunities, applications, and platforms

— The Smart card The great enabler and product/service differentiator

— The Smart card and the Internet

— The Global Chip Card Alliance Vision and mission

— Interoperability

2. Tim Jones, co-founder Mondex, and CEO of Retail Banking, NatWest, discusses Mondex and NatWest’s retail banking strategy

— Building a new retail bank and de-emphasizing the branch

— The Distributive platform and the distributed customer base

— Card business profitability

— Merchant business opportunities

— Electronics devices and services

— Mondex International & MasterCard

— The Modex franchise

— Smart card market segmentation

— Debit, credit, and charge cards drive to the chip platform

— The Java Card and banking applications

3. Daniel Skala, Vice President, International Sales, Banksys, provides Banksys and Proton’s view of the smart card market (two-part series)

— Proton, American Express, and VISA Smart Cash

— The Belgian, Swiss and Australian Proton experience

— Loyalty systems and payments

— The purse The key driver for licensees

— How banks make and save money

— Banksys’ ATM, POS terminals, and network

— Card fee structures

— Proton and the South American telcos

— Smart card critical mass the economic case in the Netherlands

— Transaction flow and security

— The case against inter-card electronic cash transfers

— Electronic payments The international model

— Cash replacement and Internet purchasing drive smart cards

— Hot branding issues for card issuers

4. Jerry Svigals, Founder, Smart Card Institute, provides a view on “Why bank card associations won’t help banks exploit smart cards”

— The smart card’s impact on the transaction industry

— Card association’s revenue streams

— The Internet’s impact on financial transactions

— 23 million bank cards in France

— The stored value machine and the U.S. smart card timetable

— Multiple application devices

5. Allan M. Schiffman, Chief Technical Officer, Terisa Systems, discusses SET developments, including

— Implementing SET Protocol in a merchant acquiring operation

— Comparing SET and non-SET transactions

— Pilot projects

— Integrating third party software

— Transaction protection dynamics

— Europe versus the US Transaction characteristics

— Telco participation

— Asian SET activity

— SET’s future in cards

Killen & Associates is the publisher of three related studies “Non Bank’ Smart Card Strategies New Opportunities to Increase Sales and Profits”, “Smart Card Opportunities for Phone Card Providers”, and “Transferring Value to Phone and Bank Cards Opportunities for Telephone Companies and Financial Services Providers.”

Killen & Associates is a leading market research and consulting firm whose studies, seminars and television programming enable clients in the telecommunication, banking/financial services and information technology industries to identify business opportunities created by technology advances, public policy changes and market forces.

To order the video series or obtain additional information contact Jules Street at [email protected], tel 650-617-6130, fax 650-617-6140. For additional information, visit Killen & Associates Web site, [http//][1] (Videos).



FDC Acquires Gaming Services

First Data Corporation announced Wednesday it has acquired the Gaming Services unit of Ceridian Corporation .  Ceridian announced that it has acquired First Data’s NTS transportation services unit.  Terms of the transactions were not disclosed.

NTS, based in Forth Worth, Texas, provides a broad range of transaction processing and information services to the trucking and truck stop industries, including funds transfer, fuel purchase, cash advance and permit services. NTS serves more than 11,000 motor carriers and 4,500 truck stops across the United States.  NTS will become part of Ceridian’s Comdata business.

First Data will retain NTS’s TransPay card product, which was launched in April 1997.  TransPay allows businesses to remit payroll, commission and expense reimbursement payments to employees through automated teller machines and other means.  First Data also will retain the Western Union(R) Greenback service, a paper-based cash advance product developed jointly by NTS and First Data subsidiary, Western Union.  Approximately 100 NTS employees will remain with First Data.

The Gaming Services unit acquired by First Data provides a full range of funds transfer (credit card, debit card, ATM, money transfer and check cashing) and other services to casinos and their patrons.  The Nashville, Tenn.-based business provides services at more than 800 gaming properties.

“We are very pleased to be bringing together NTS and Comdata,” said Tony Holcombe, president and chief executive officer of Comdata.  “Comdata’s goal is to be the best service provider for the transportation industry, and we believe the combination of our two organizations will enable us to achieve this objective.  In addition, Comdata’s ability to provide more products and services to the transportation industry will be greatly enhanced by this acquisition.  Comdata will fully support the needs of transportation companies and their drivers.  We will work diligently to meet the needs of all NTS customers, and thus contribute to their success.”

“This is a further step in our desire to put together a total package of financial services for the gaming industry,” said Steve Shaper, chief executive officer of both the Gaming Services business and TeleCheck Services, Inc., First Data’s check authorization and guarantee business unit.  “The combination of expertise within Gaming Services and TeleCheck will enable us to build new and innovative products to better serve the needs of the industry and its patrons.”

Houston-based TeleCheck Services, Inc., is the world’s leading check acceptance company and provides check acceptance, check guarantee and collection services to more than 167,000 retail, financial institution, travel, association and gaming clients through a sales and service network with offices in more than 90 cities in the United States, Canada, Puerto Rico, Australia and New Zealand.  In 1996, TeleCheck authorized over $40.2 billion in checks and processed more than 645 million check transactions.  For more information about TeleCheck and its products and services, visit it on the Internet at

Ceridian Corporation is a leading information services company that serves the transportation, human resources and electronic media markets.  Its Comdata business ( ) provides funds transfer, fuel purchase, cash advance, and permit services, as well as fleet optimization and routing software, for the trucking industry; point-of-sale and data collection services for the truck stop industry; and long-distance telecommunications services for both trucking companies and truck stops.  For further information about Ceridian, please visit it on the Internet at

Founded in 1992, Hackensack, N.J.-based First Data Corporation is a global leader in payment systems, electronic commerce and information management products and services.  First Data and its principal operating units process the information that allows millions of consumers to pay for goods and services by credit, debit or smart card at the point of sale or over the Internet; by check or wire money.  For further information about First Data, please visit it on the Internet at


E-Commerce Conference

As sure as electronic commerce is the future, implementation is a serious challenge. The 1998 Internet & Electronic Commerce Conference & Exposition (iEC) is dedicated to providing the answers with the launch of their first technical skills conference for MIS and IT managers. The iEC Technical & Applications conference program will provide the technical information that implementors need to choose the right software, hardware, and applications that support their organization’s electronic commerce strategy, as well as explain how to work with many of these applications.

With over 200 exhibits, 80 conference sessions, and more than 10,000 attendees, iEC is the nation’s largest event dedicated to electronic commerce. The conference will be held at New York’s Jacob K. Javits Convention Center on April 27-29, 1998. The Technical & Applications Conference complements iEC’s fourth annual, high-level, electronic commerce conference produced by GartnerGroup.

“With electronic commerce growing as never before, CEOs are changing their business to fully embrace the opportunities an integrated EC strategy allows. But strategies need the right hardware, software, and applications to support these new e-business opportunities. That’s where the iEC technical conference comes in. We’ve developed a comprehensive program to answer the `how-to’ questions of MIS and IT professionals,” said Rich Westerfield, show director for Expocon, a division of Advanstar Communications, producer of the iEC event.

The iEC technical conference offers timely, accurate, and useful information to the IT and MIS managers who provide the technical support behind electronic commerce ventures. A sampling of conference topics include Utilizing Intelligent Agents to Analyze Advertising and Marketing Data, The Internet and Distributed Object Computing, Digital Authentication, Selecting a Commerce Server, Secure Web Architectures, Secure Electronic Commerce Putting the Pieces Together, IPv6 The Next Generation Internet Protocol, and Implementing Bandwidth Strategies.

Case studies are an essential part of the iEC learning experience as industry leaders talk about their successes, their failures, and the knowledge they gained. Following is a sample of the sessions and case studies being presented

— The director of systems and technology at U.S. Office Products, a major office supplies company, will discuss how his organization faced the challenges of implementing an electronic commerce transaction processing application with sub-second response rates. They found the answers in a unique Java architecture and ultra-thin client technology.

— The Wall Street Journal Interactive Edition case study will prove how information, as well as goods, can be sold over the Internet. Conference attendees will learn about the technology behind article delivery and content management.

— Expecting a billion dollars in sales over their Web site alone, representatives from Dell Computer Corporation will discuss key considerations in deploying electronic commerce sites, present an in-depth analysis of hardware and software systems, and share their experience in developing a highly scaleable site.

— E-Trade’s case study of successful development and deployment of a mission-critical application over the Internet will demonstrate how to select server software; ensure, performance, scalability and high availability; integrate with legacy application; and determine ROI.

— Harvard Business School Publishing will demonstrate how to attract customers and assure purchases. System architecture, management and administrative tools, security, content recommendations, and the development of one-to-one customer relationships will all be part of the discussion.

All iEC attendees will be invited to hear four high-profile keynote speakers including Michael S. Dell, chairman and chief executive officer for Dell Computer Corporation; Steve Forbes, president and CEO of Forbes Inc.; Jim McCann, president of 1-800-FLOWERS, Inc.; and Halsey Minor, chairman and CEO of CNET The Computer Network. Having seen financial success on the Internet, each keynote speaker will share his experiences in conducting a profitable business on the World Wide Web.

In addition to the conference program, over 200 vendors including sponsors AT&T, GE Information Services, IBM, KPMG Peat Marwick, Manugistics, Mastercard, and UUNET will demonstrate the latest products and services available. Exhibitors include hardware manufacturers, software developers, and business integrators.

GartnerGroup, Inc. is the world’s leading independent advisor to business professionals making information technology (IT) decisions. It provides research, analysis and advice on strategies for users, purchasers and vendors of IT products and services with more than 450 analysts in 75 locations worldwide. GartnerGroup provides its more than 8,300 clients organizations and over 30,000 clients around the world with timely, strategic advice on the application, management, measurement, market research and direction of IT, and training on IT. Additional information is available on the World Wide Web at [http//][1]

Advanstar Communications is a world-wide business information company, which publishes more than 70 business magazines and professional journals, produces over 100 exhibitions and conferences throughout the world, as well as related direct marketing, database, directory and reference products. In addition to serving the electronic commerce industry, the company’s portfolio serves health care, pharmaceutical and scientific fields and a variety of retail and service industry segments. The company currently operates from multiple offices in the United States, Latin America, United Kingdom, and Asia. For more information about iEC contact Norien Hutchinson at 203/256-4700 ext. 112. Or visit our Web site at



First Data to Enhance Debit Card Proc

Applied Communications, Inc. , a subsidiary of Transaction Systems Architects, Inc. , announces that First Data Corporation will enhance its worldwide debit card processing capabilities with a suite of software products from ACI and its TSA affiliates.  First Data will integrate BASE24-pos from ACI, TRANS24-settlement manager from USSI, Inc. and ClaimTrack Client-Server from Crystal Clear Technology, Inc. with First Data’s existing debit card processing platform.

“First Data has always been committed to providing our debit card issuing clients with the advanced technology, scale of resources, and feature/functionality they depend on for the success of their debit card portfolios,” said Todd Strubbe, president of First Data Resources Electronic Payments Group.  “Working with ACI will enable us to continue to drive down our costs, provide increased deposit-access functionality that many of our retail bank clients are demanding, and enhance our international EFTPOS processing capabilities.”

The First Data solution integrates products from multiple TSA subsidiaries.  ACI’s BASE24 software, which operates on Tandem NonStop Himalaya server systems, provides proven, fault-tolerant EFT processing that is scalable to handle ever-increasing transaction volumes.  TRANS24-settlement manager from USSI operates on a variety of hardware platforms including IBM mainframes and multiple UNIX-based servers and offers First Data the tools and functions needed to manage the financial settlement process in a complex acquirer network.  Crystal Clear’s ClaimTrack is a Windows-based product which enhances First Data’s ability to track claims and adjustments.

“TSA is pleased to work with First Data to provide a solution that addresses the increasing acceptance of debit cards around the world,” said William E. Fisher, chairman and CEO of TSA.  “This is a continuation of our strategy to offer a suite of products from across the TSA family that addresses the dynamics of today’s electronic payments world.”

Hackensack, N.J.-based First Data Corporation is a global leader in payment systems, electronic commerce and information management products and services.  First Data and its principal operating units process the information that allows millions of consumers to pay for goods and services by credit, debit or smart card at the point of sale or over the Internet; by check or wire money.  For further information about First Data, please visit the Company on the Internet at .

Applied Communications, Inc., USSI, Inc. and Crystal Clear Technology, Inc. are subsidiaries of Transaction Systems Architects, Inc. (Nasdaq TSAI). Transaction Systems’ software facilitates electronic payments and electronic commerce by providing consumers and companies access to their money.  The company’s products are used to process transactions involving credit cards, debit cards, smart cards, remote banking services, checks, wire transfers and automated clearing and settlement.  Its solutions are used on more than 2,800 product systems in 69 countries on six continents.  Visit TSA on the World Wide Web at .

All trademarks are property of their respective owners.  Please use upper case with no spaces between letters and numbers of BASE24. SOURCE  Applied Communications, Inc.


Household COs Drop to 5.74%

Household International today reported all-time record net income and earnings per share for the fourth quarter and year ended December 31, 1997.  Full-year earnings per share of $6.50 rose 22 percent and net income increased 27 percent to $686.6 million.

Quarterly earnings per share totaled $1.98, a 22 percent increase from $1.62 for the fourth quarter of 1996, on a greater number of average shares outstanding.  Net income rose 33 percent to an all-time quarterly record of $217.6 million, compared with $163.6 million a year earlier.

William F. Aldinger, Household’s chairman and chief executive officer, said, “Household achieved another year of earnings per share growth in excess of 20 percent — the sixth consecutive year that we’ve done so.  We grew revenues 18 percent and kept expenses essentially flat.  We absorbed increased chargeoffs consistent with industry-wide trends and further strengthened our credit loss reserves.  We also improved our return on managed assets.  Our return on equity exceeded 18 percent, even though we significantly increased our capital levels.  Overall, it was a terrific year.”

Mr. Aldinger added, “1997 was not only a record year, it was a year of investing in the long-term growth of our company.  We acquired the consumer finance business of Transamerica Corporation and ACC Consumer Finance, an industry leader in non-prime auto finance.  We expect both acquisitions to contribute to another record year in 1998.”

Compared to the prior year, Household’s managed portfolio of core receivables grew 8 percent, driven by increases in the home equity portfolio. Adjusted for sales of non-strategic portfolios, year-over-year growth was 11 percent.

In the fourth quarter, core receivables grew three percent, and excluding portfolio sales, were up five percent.  MasterCard/Visa receivables increased 8 percent in the fourth quarter.

The company’s quarterly managed net interest margin expanded to 7.60 percent from 7.31 percent a year ago and 7.56 percent in the third quarter.  For the full year, Household’s managed net interest margin widened to 7.48 percent, up from 7.07 percent in 1996.  The wider margin in 1997 reflects a shift in portfolio mix toward higher yielding products and improved pricing.

Operating expenses totaled $470 million in the fourth quarter, up 12 percent from $419 million of a year ago.  Most of this increase was due to the expanded domestic consumer finance and auto businesses as well as higher marketing expenses in the MasterCard/Visa business.  Household’s normalized managed efficiency ratio for the year improved to 36 percent from the 1996 level of 41 percent.

Annualized net chargeoffs for the fourth quarter dropped to 4.50 percent of average managed consumer receivables compared to 4.63 percent in the prior quarter.  In the year-ago quarter, the chargeoff ratio was 3.59 percent.  The sequential quarter drop was driven by an improved MasterCard/Visa chargeoff ratio, which declined to 5.74 percent from 6.42 percent in the third quarter. The full-year consumer chargeoff ratio increased from 3.35 percent in 1996 to 4.47 percent in 1997.  Personal bankruptcies continued to be a significant factor in the level of chargeoffs.  At December 31, two-months-and-over consumer delinquency was 4.82 percent of managed consumer receivables, compared with 4.62 percent at the end of the third quarter and 4.15 percent a year ago.

The company increased credit loss reserves by nearly $350 million during 1997.  The ratio of reserves-to-managed receivables was 4.29 percent at year end compared to 3.75 percent a year ago and 4.10 percent at September 30, 1997.  Total reserves to total nonperforming loans were 117 percent, compared to 119 percent a year ago.

Equity-to-managed assets improved to 9.3 percent at year end from 6.9 percent a year ago.  For 1997, return on equity was 18.2 percent, and return on managed assets improved to 1.39 percent from 1.17 percent in 1996.

Household International, through its subsidiaries, is a leading provider of consumer finance and credit card products in the United States, Canada and the United Kingdom.  HFC, one of Household’s core businesses, is the oldest consumer finance company in the United States.  Additionally, Household is also one of the nation’s largest issuers of private-label and general purpose credit cards.  Its principal card products include the GM Card and the AFL-CIO’s Union Privilege card.

    December 31, 1997

    Quarterly Financial Highlights
    Summary Managed Income Statement
    ($ millions)                Three Months Ended         % Change from Prior
                            12/31/97   9/30/97   12/31/96      Qtr.      Year
    Managed-basis net interest
      margin and other
      revenues (A)          $1,372.9  $1,280.5   $1,108.4     7.2%      23.9%
    Managed-basis provision for
      credit losses (A)(B)     589.9     552.4      440.5     6.8       33.9
    Operating expenses         470.0     442.7      419.1     6.2       12.1
    Income taxes                95.4      98.2       85.2    (2.9)      12.0
    Net Income                $217.6    $187.2     $163.6    16.2%      33.0%

    Common Stock Data
    Basic earnings per
      common share (C)         $2.00     $1.73      $1.64    15.6%      22.0%
    Diluted earnings per
      common share (C)          1.98      1.70       1.62    16.5       22.2
    Average common and
      equivalent shares
      (millions)               108.7     108.4       98.4     0.3       10.5
    Common stock price
      High                   $129.63   $130.00     $98.13    (0.3)      32.1
      Low                     108.38    108.44      82.50    (0.1)      31.4
      Period end              127.63    113.19      92.25    12.8       38.4
    Common shares outstanding
      at period end
      (millions)               107.2     106.9       97.1     0.3       10.4
    Dividends declared per
      common share             $0.42     $0.42      $0.39      —        7.7
    Book value per
      common share             42.13     40.38      30.30     4.3       39.0

    Key Ratios
    Return on average common
      shareholders’ equity      19.4%     17.4%      22.2%   11.5%     (12.6)%
    Return on average
      owned assets              2.78      2.37       2.13    17.3       30.5
    Return on average
      managed assets            1.69      1.47       1.36    15.0       24.3
    Managed efficiency ratio,
      normalized                34.6      35.1       38.8    (1.4)     (10.8)
    Managed net interest
      margin                    7.60      7.56       7.31     0.5        4.0
    Total shareholders’ equity
      as a percent of managed
      assets                    9.33      9.23       6.90     1.1       35.2

    Twelve Months Financial Highlights
    Summary Managed Income Statement
    ($ millions)                    Twelve Months Ended        % Change from
                                  12/31/97        12/31/96       Prior Year
    Managed-basis net interest
      margin and other
      revenues (A)               $4,935.4         $4,190.5         17.8%
    Managed-basis provision for
      credit losses (A)(B)        2,162.5          1,641.0         31.8
    Operating expenses            1,743.7          1,727.2          1.0
    Income taxes                    342.6            283.7         20.8
    Net Income                     $686.6           $538.6         27.5%

    Common Stock Data
    Basic earnings per common
      share (C)                     $6.59            $5.37         22.7%
    Diluted earnings per common
      share (C)                      6.50             5.31         22.4
    Average common and equivalent
      shares (millions)             103.8             98.3          5.6
    Common stock price
      High                         130.00            98.13         32.5
      Low                           78.63            52.00         51.2
    Dividends declared per common
      share                          1.62             1.46         11.0

    Key Ratios
    Return on average common
      shareholders’ equity           18.2%            18.9%        (3.7)%
    Return on average
      owned assets                   2.26             1.82         24.2
    Return on average
      managed assets                 1.39             1.17         18.8
    Managed efficiency ratio,
      normalized                     36.0             40.8        (11.8)
    Managed net interest margin (D)  7.48             7.07          5.8

    (A) To aid analysis, net interest margin and other revenues and provision
for credit losses are presented on a pro forma managed basis as if receivables
securitized and sold with limited recourse were held in the portfolio.
Policyholders’ benefits have been netted against other revenues.
    (B) Includes managed-basis net chargeoffs of $505.1 million in the fourth
quarter of 1997, $507.0 million in the third quarter of 1997 and
$377.1 million in the fourth quarter of 1996 and $1,916.4 million in 1997 and
$1,299.8 million in 1996.
    (C) The Company adopted Statement of Financial Accounting Standards No.
128, “Earnings per Share” (FAS No. 128), effective for financial statements
issued for periods ending after December 15, 1997.  Under FAS No. 128, basic
earnings per common share is computed excluding dilution caused by common
stock equivalents such as stock options.  Diluted earnings per common share
includes the effect of common stock equivalents.
    (D) Managed net interest margin as a percent of average managed
interest-earning assets for 1997 and 1996 excludes temporary investments for
pre-funding acquisitions in each year, and, in 1996, for the sale of the
company’s remaining consumer banking operations.  Including the impact of
these temporary investments, managed net interest margin was 7.46 and 6.98
percent for 1997 and 1996, respectively.


UbiQ Gets Private Placement

UbiQ Inc. announced that it completed a round of financing in December consisting of a $1.5 million private equity placement through John G. Kinnard and Company, and a $1.25 million equity investment by Capstone Ventures.

UbiQ Inc. ( [http//][1] ) is a privately held software firm that has developed proprietary technology for high-volume smart card personalization. It was founded in 1994 by smart card industry veterans and is based in Minnetonka, 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.

In addition, it has relationships with card service bureaus, smart card manufacturers, and card personalization and printing equipment manufacturers. Market segments targeted by UbiQ include electronic commerce/Internet, travel and entertainment, credit/debit/e-cash cards, pay phone, digital wireless/GSM, national ID cards, and healthcare.