Y2K Problem is Tip of Iceberg

The president of a Silicon Valley software firm which helps major corporations ready their computer systems for the year 2000 (Y2K), commented on reports from the White House Office of Management and Budget (OMB) that it will cost $3.8 billion to prepare government computer systems for 2000. He believes their cost will be “double that.”

Doug Engfer, president of The Windward Group, a software design, development, quality assurance, and documentation consultancy here said: “Problems with Y2K go far beyond computers thinking ’00’ means 1900 instead of the year 2000. Companies and the government need to get their arms around a problem that seems to grow without stopping.

“If shareholders of America’s major corporations knew the state of the Y2K assessment in those companies, they’d be appalled,” said Engfer. “At least the government is trying to understand the scope of what they face. This is not the last such surprise we will get from the OMB, and the final budget will likely be at least double current estimates.

“We can count on similar ‘bombs’ from industries we have trusted in the private sector, including banks, credit card companies and others,” Engfer said. “Even if they begin work immediately, most organizations will not be able to complete their projects in time.”

The Windward Group provides software design and development, documentation, and quality assurance services to a diverse client base. Their success in a broad spectrum of technologies springs from their ability to create long-term partnerships, dedication to quality, and experienced associates with strong technical expertise. Key clients include: FedEx Ship (shipping software for the SOHO market), PIM software and handheld-to-desktop architecture for Palm Computing Division of 3COM Corp., and GUIA (Genesis Utility Information Applications) for Itron Inc.

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Arkansas Banks Go Online

During the next year, all banks within the First United Bancshares Inc. system will have online real-time banking capabilities available through the Internet. With this service, bank customers anywhere in the world will be able to access their accounts and bank services through the Internet.

With the online banking product, bank customers will be able to make inquiries on their loan and deposit accounts, get online account statements, transfer funds, make loan payments, order checks, request stop payments, apply for loans, and open new accounts. Customers will also be able to download account information into home accounting software such as Quicken. The system will also be capable of supporting electronic bill payments and check image displays when these services are fully implemented. An extensive online help section will be provided for users.

“We are very pleased to introduce this service at our banks,” said James V. Kelley, chairman, president and chief executive officer of First United. “Many of our customers have asked for the online banking product and we anticipate that acceptance will grow rapidly. Online banking makes it easier and more convenient for our banks’ customers to access their accounts from their homes, offices or any site with Internet access.”

“Online banking is part of a broader array of services that banks must offer in order to meet the needs of a diverse population and First United is leading the way in providing our customers with this outstanding product,” Kelley continued. “Our customers will continue to be able to handle their transactions at the bank if they prefer, but the segment of our customers who prefer to use the online method will be able to do so.”

Fredonia State Bank, which is headquartered in Nacogdoches, Texas, introduced the product in August. Internet banking will be available at all First United Bancshares locations within the next year.

First United is a multi-bank holding company with nine affiliate banks and a non-bank subsidiary, First United Trust Company, N.A., serving 30 communities in Arkansas and Texas. The member banks are: First National Bank of El Dorado, Ark.; First National Bank of Magnolia, Ark.; Merchants & Planters Bank, N.A. of Camden, Ark.; City National Bank of Fort Smith, Ark.; Commercial Bank at Alma, Ark.; First United Bank, Stuttgart, Ark.; The Bank of North Arkansas, Melbourne, Ark.; FirstBank, Texarkana, Texas; and Fredonia State Bank, Nacogdoches, Texas.

In addition, First United has signed a definitive agreement to obtain City Bank & Trust, a $64 million bank in Shreveport, La. Also, First United has signed a definitive agreement to purchase Citizens National Bancshares Inc., a $263 million bank holding company headquartered in Hope, Ark. Citizens National Bancshares owns Citizens National Bank of Hope, Ark. and Texarkana, Ark., as well as Peoples Bank and Loan Company in Lewisville, Ark.

First United’s stock is listed on the NASDAQ National Market System under the symbol “UNTD.”

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Turkey’s SET Pilot

VeriFone, a leading global provider of secure payment solutions, has announced a major project with Garanti Bank in Turkey to provide a total Internet payment solution for its Secure Electronic Transaction (SET) pilot program. Garanti Bank ranks second in the world in terms of profit on capital and fourth in terms of returns on assets and will adopt VeriFone’s complete end-to-end suite of SET pilot products. This will enable it to offer a complete Internet payment solution for its merchant partners.

The three-fold solution will be based on VeriFone’s vPOS, vGATE and vWALLET software, conforming to the SET protocol and running on HP servers, to enable electronic commerce and create new retail banking opportunities via the Internet as an alternate delivery channel.

The SET protocol, originally proposed by Visa and MasterCard, is being developed with contributions from VeriFone and other companies as the standard for Internet bankcard transactions. VeriFone is committed to rolling out SET pilot and production solutions that are fully compliant with the latest MasterCard/Visa SET protocol standards.

“Internet commerce is an emerging market in Turkey and is showing promising growth,” commented Husnu Erel, General Manager, Garanti Ticaret. “Garanti Bank was the first bank in Turkey to extend on-line/real time service to its entire branch network and will also be the first bank in Turkey to use the VeriFone Internet commerce solution. VeriFone’s proven expertise and experience in the PoS and payment systems arena, together with Hewlett-Packard, means that we are in a position to offer merchants the best possible solution to compete in the market.”

“This Garanti Bank project extends the global momentum behind the adoption of the VeriFone and HP SET solutions,” commented Jan-Erik Rottinghuis, vice president of VeriFone, Europe, Middle-East and Africa regions. “Turkey is one of the fastest growing countries for payment cards in Europe and VeriFone is introducing multiple new solutions to meet the requirements of the Turkish banks and their merchants.”

“Together, HP and VeriFone have been able to offer Garanti Bank a turn-key solution encompassing hardware, electronic commerce software, banking and payment systems and consulting services. This should enable Garanti Bank to establish a leading position in SET-enabled electronic commerce just as it has with its Internet Banking offering,” commented Jean-Richard Bloch, electronic commerce program manager, financial services Europe, HP.

VeriFone brings its leading Internet payment software and solutions and a combination of International and local payment expertise, whilst HP provides world-class enterprise computing and services, including consulting and systems integration expertise.

VeriFone’s SET Products will offer a complete end-to-end software solution for Internet payment, and consist of VeriFone’s vPOS, vGATE and vWALLET software. Versions of these products are already being used to provide live Internet payment services to Internet merchants in Europe, North America and Asia.

With paid-in capital of TL 40 trillion, Garanti Bank () ranks among the largest 1,000 banks in the world according to The Banker and was named “Best Bank” in Turkey for the last three years by Euromoney. It prides itself on providing its customers with quality service and a diverse range of products. Garanti has applied the principles of market segmentation, customer focus and relationship management, transforming branches into dedicated marketing units offering integrated financial services to corporate, commercial and retail customers.

HP is a global provider of computing, Internet and intranet solutions, services, communications products and measurement solutions, all of which are recognized for excellence in quality and support. HP has 120,500 employees and had revenue of $38.4 billion in its 1996 fiscal year. Information about HP and its products can be found on the World Wide Web at .

Istanbul-based Iletisim Teknoloji Danismanlik Ticaret A.S, ITD () distributes VeriFone’s payment solutions throughout Turkey. The company was established in 1991 and is a market leading solutions provider in the voice systems and electronic payments technology markets.

VeriFone, Inc. (), a wholly owned subsidiary of Hewlett-Packard Company, is the leading global provider of secure electronic payment solutions for financial institutions, merchants and consumers. VeriFone has shipped more than six million electronic payment systems, which are used in over 100 countries.

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Experian Certified

After an embarrassing start in selling consumer credit reports over the Internet last month Experian announced yesterday it will adopt the National Computer Security Association’s ‘Secure Web Vendor’ program. Experian is also requiring all its Internet partners to achieve NCSA certification. The NCSA program requires Web sites to meet certain security criteria and to pass remote and on-site inspections. Experian suspended its on-line consumer report service Aug 15.

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Partnerships & Smart Cards

The Smart Card Forum opened its fifth annual meeting yesterday in Washington, DC with more than 400 global members in attendance. This year’s meeting is focusing on the importance of alliances in both the technical and business areas of smart card development. The Forum says partnerships generate better outcomes in terms of response times, product and service performance, quality levels, and costs, resulting in a competitive advantage.

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Responsible Bankruptcy

Two members of the House of Representatives introduced legislation yesterday aimed at correcting alleged flaws in the current personal bankruptcy code. ‘The Responsible Borrower Protection Bankruptcy Act of 1997’ , sponsored by Rep. Bill McCollum, R-Fla., and Rep. Rick Boucher, D-Va., will restrict personal bankruptcy options by forcing borrowers with the ability to repay at least 20% of their unsecured debts into a Chapter 13 filing, instead of a the full liquidation provided under a Chapter 7 filing. The proposed legislation also calls for significant changes in the time period between bankruptcy filings, implementation of administrative reforms and creation of a clearinghouse of bankruptcy statistics. Yesterday’s action is backed by the credit card industry which has been thwarted in its efforts to change the code by way of the National Bankruptcy Review Commission. The NBRC will present its recommendations to Congress next month.

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The Cash

NCR Corp rolled out its new low -priced ATM yesterday, called ‘The Cash’. The machine is designed for retail outlets and features a swipe card reader, two denomination currency dispenser and a Windows-based remote management software system, all for less than $5,200. NCR said the number of ATMs installed in U.S. retail locations nearly doubled last year, from 12,000 to 22,000. The company is promoting its ATMs by showing retailers that cash customers are more profitable because their transaction cost is lower: 7 cents per transaction compared to 43 cents for checks and 80 cents for credit card.

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People’s Second 97 Securitization

People’s today announced that People’s Bank Credit Card Master Trust has priced $500 million of five-year floating rate credit card asset-backed securities.

The securitization transaction features two classes of publicly traded securities (Class A and Class B) and a separate privately placed collateral invested amount.

The transaction, Series 1997-2, includes $425 million of Class A (senior) floating rate asset-backed certificates, $33.75 million of Class B (subordinate) floating rate asset-backed certificates and a $41.25 million privately placed floating rate collateral invested amount.The Class A certificates accrue interest at 13 basis points over the one month London Interbank Offered Rate (LIBOR). The Class B certificates accrue interest at 33 basis points over the one month LIBOR. Both the Class A and Class B certificates were priced at par. J.P. Morgan & Co. was the lead manager of the transaction; Goldman Sachs & Co., Lehman Brothers Inc., and Salomon Brothers Inc., were co-managers. The transaction is scheduled to close September 24, 1997.

The offering of these securities will be made only by means of a prospectus. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

People’s Bank, the largest independent bank headquartered in Connecticut, has assets of approximately $7.9 billion and 110 branches statewide. Based in Bridgeport, the 155-year-old institution offers diversified consumer and commercial financial services as well as investment services provided by its wholly owned subsidiary, People’s Securities, Inc. People’s is the leading mortgage lender in the state and the 26th largest issuer nationally of Visa and MasterCard credit cards.

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Card Capture Hits 2,940 ATMS

Card Capture Services Inc. (CCS) installed 340 new ATMs to its portfolio during the months of April, May and June of this year, bringing the total number of ATMs under CCS management as of June 30, 1997, to 2,940 nationwide.

As a result, the company posted an average of 868,930 transactions per month during second-quarter 1997, compared to an average of 466,944 transactions per month during second-quarter 1996. Second-quarter revenues for the four-year-old, privately held company exceeded $5.7 million.

Card Capture Services Inc. was incorporated in May 1993 in Portland, Ore. CCS offers turnkey ATM programs providing transaction processing, machine maintenance, customer service, accounting and reporting to a growing base of merchant owned and operated Automated Teller Machines (ATMs) nationwide. By tapping non-traditional and unrealized markets, CCS is leading the wave of independent ATM deployments nationally. The company currently has 34 employees and a nationwide network of 45 independently contracted dealers.

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Chase Card Bonds Rated

Chase Credit Card Master Trust’s (formerly Chemical Master Credit Card Trust I) $250 million class A index amortizing asset-backed certificates, series 1997-3, are expected to be rated ‘AAA’ by Fitch. The corresponding $20.833 million class B floating-rate certificates are expected to be rated ‘A+’.

The certificates are backed by a pool of credit card receivables totaling $13.6 billion. The receivables pool was generated from accounts originated by both the former Chemical and Chase Manhattan banks. Series 1997-3 is the eleventh transaction issued from the trust.

The ratings are based on the available credit enhancement, the strength and quality of the Visa and MasterCard receivables pool, Chase Manhattan Bank’s servicing expertise and the transaction’s solid legal and cash flow structures. Credit enhancement totaling 16% of the invested amount is available for class A certificateholders through a 9% collateral interest (CIA) and 7% class B subordination. Class B benefits from the 9% CIA subordination.

Several stress scenarios were applied to the portfolio to determine appropriate credit enhancement levels for each class. The scenarios reduced portfolio yield and monthly payment rate assumptions to determine the level of defaults available enhancement can support. With the credit enhancement available, the class A certificates can sustain a simultaneous 35% decrease in yield, a 35% drop in payment rates and chargeoffs rising to a level of 32% and still make timely interest and full principal payments to investors. Class B withstands a scenario whereby yield drops 25%, payment rates drop 25% and chargeoffs rise above 22%.

Amortization events protect investors from a servicer default, a severe deterioration in asset quality or other adverse conditions that may affect the trust or specific series. If an amortization event occurs, an accelerated payout of principal will commence and investors may be paid off earlier or later than expected.

For this index amortizing series, the timing of principal repayment is controlled by another variable — 3 month LIBOR. On each distribution date of the controlled amortization period, which begins following the two-year revolving period, the amount of principal, if any, to be distributed to class A investors will be based on the prior month’s 3 month LIBOR rate. Therefore, timing of principal repayment is uncertain. According to a predetermined amortization table, investors could receive their full principal at the start of the amortization period, periodically throughout the amortization period, or not until the scheduled maturity.

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NDC Grows 29% Annually

National Data Corporation (NDC) today announced a 29 percent increase in first quarter earnings.

Earnings for the quarter ended August 31 were $10.6 million and $.38 a share. This compares to $8.2 million and $.30 per share for the same quarter during the last fiscal year.

Revenue increased to $120.1 million compared to $101.2 million for the first quarter of last year, a 19 percent growth. The company reported a 25 percent revenue growth in its Health Care segment; 22 percent in the Integrated Payment Systems business; and 11 percent in its Global Payment Systems subsidiary.

Earnings before interest, taxes, depreciation and amortization were $29.8 million or 25 percent of revenue. Operating income totaled 16.3 percent of revenue versus 13.8 percent during last year’s first quarter – reflecting continued productivity gains. Cash flow from operations was at an annualized rate of $84 million.

During the quarter the company took action to enter the health care data base management business and established a base to pursue health care opportunities in Europe through acquisition of two UK-based pharmacy systems companies. It also announced a number of new health care network information service alliances.

With these transactions, health care will exceed 50 percent of total revenues.

In the payment systems portion of its business NDC introduced new outsourcing services that will broaden its market presence and sources of future revenue growth. Market reaction has been positive.

“These results are particularly gratifying,” said Robert A. Yellowlees, NDC chairman and CEO. “They extend the trend of the last four years that has produced strong earnings growth combined with the predictability from a high recurring revenue stream. They show the ability of our management team and employees to produce quality earnings while making near-term investments in new products and distribution channel expansion for long-term growth.

“NDC will continue to proactively expand its franchise through both internal programs and value-added strategic acquisitions,” said Yellowlees. “We remain optimistic about the breadth of new market opportunities worldwide. The tremendous talent of our people, augmented by the broad reach of our network infrastructure, positions us well to take advantage of these opportunities.”

National Data Corporation is a leading provider of value-added services for the health care and payment systems markets.

When used in this report, press releases and elsewhere by management or the Company from time to time, the words “believes,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements concerning the Company’s operations, economic performance and financial condition, including particular, the likelihood of the Company’s success in developing and expanding its business. These statements are based on a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business decisions which are subject to change. A variety of factors could cause actual results to differ materially from those anticipated in the Company’s forward-looking statements, some of which include competition in the market for Company’s services, continued expansion of the Company’s processing and payment systems markets, successfully completing and integrating acquisitions in existing and new markets and other risk factors that are discussed from time to time in the Company’s Securities and Exchange Commission (“SEC”) reports and other filings. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligations to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or thereof, as the case may be, or to reflect the occurrence of unanticipated events.

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DigiBuy Service

Maagnum E-Commerce Services, a leading Internet commerce provider, today announces the launching of its new online order fulfillment service for digital goods merchants, DigiBuy: The Digital Marketplace ().

With DigiBuy, Maagnum has established a new trend in the shareware and software payment processing market by being the first to provide authors with an immediate e-commerce solution. By bringing a new level of efficiency and self-service to the Internet, time to market is reduced, allowing authors to literally begin accepting secure credit card payments in about 5 minutes.

DigiBuy enables publishers of shareware, software, digital art, and other electronic goods to affordably and easily sell their products electronically over the web. Combining secure real-time processing and credit card authorization with the most advanced registration system on the web today, DigiBuy allows publishers to instantly:

— Feature their product in the DigiBuy Marketplace

— Accept credit card orders directly from their web site

— Increase sales through secure Internet processing

— View transaction logs online

— Update product information online

DigiBuy’s complete service includes: secure real-time processing, credit card authorization, CreditScan fraud detection system, email order notification, digital receipt generation, author specific order forms, convenient author administration access, immediate activation, and reliable monthly transaction reporting.

“What sold me on DigiBuy was its reasonable cost, professional appearance, fast turnaround, and self-administration,” said Tony Leung of Arcosoft, Inc. “It doesn’t turn off the buyer with membership fees. Three days after first hearing about DigiBuy, we made our first sale.”

“Some others offer similar services, but at rates two or three times more than DigiBuy,” said Rob McCormack, President of Money Tree Software Company. “The ability to add new products and update others on-line in real time is what I was looking for all over the web. I am canceling my other on-line service and will be using DigiBuy exclusively.”

For publishers, DigiBuy offers a simple, secure way to begin accepting real-time credit card transactions immediately. For customers, DigiBuy offers a convenient place to purchase shareware on the Internet. Featuring the most popular platforms and hundreds of categories, DigiBuy is a comprehensive resource for those looking for the latest shareware and software titles on the web. The DigiBuy system is also customer friendly. The entire order process is smooth and efficient, even providing the customer with a timely digital receipt.

By taking advantage of DigiBuy’s unique service, authors of all types of digital goods gain a professional, flawless electronic commerce system that easily integrates with their existing web site. DigiBuy is the only online registration site that provides an instant solution, avoiding the complexities and high cost normally associated with e-commerce.

For more information about DigiBuy: The Digital Marketplace, please call Maagnum E-Commerce Services at 203-699-8225, email info@digibuy.com, or visit our web site at .

Maagnum E-Commerce Services () provides end-to-end commerce solutions for retail, software, and direct marketing companies of any size, including online order processing, credit card authorization, catalog management, warehousing, fulfillment, telephone, and/or fax order processing service.

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