U.S. Household Debt Straining the Economy

Moody’s “Economy.com” research shows rising U.S. household debt and defaults are straining the economy thanks in part to falling home prices. This is evident with 2.72 million first mortgage loans in default as of end of June 2008, with projections of reaching beyond the 3 million for all of 2008. This compared to a total of 1.5 million in 2007 and 1 million in 2006. Household liabilities in delinquency/default totaled $775 billion by the end June 2008, national house prices were down 16% from their spring 2006 peak, some 9.6 million U.S. homeowners now have mortgage balances that exceed the market value of their home (compared to 4.1 million in 2007 and 2.7 million in 2006) and another 5 million homes are at significant risk of default before 2010. This decline in home value has resulted in increases of credit card use with card receivables up 15% in California, 20% in Florida, and 30% in Nevada. These states happen to be among the highest in falling real estate value.

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Bankers Bank Deploys an Endpoint Solution

OK-based Bankers Bank has deployed Endpoint “X9 Express Direct”
processing, providing hosted, Web-based service for “X9.37” check image
exchange. “X9 Express Direct” provides The Bankers Bank, which handles
banking services for over 240 banks throughout the region, with secure,
low-cost point of entry for check image exchange services using its File
Transfer Protocol. Endpoint Exchange provides electronic check image
exchange to the financial services industry to process millions of items
per day while the Bankers Bank provides correspondent services to
regional community banks.

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Big Three Issuers’ Q2 Volume Rises a Mere 2%

The nation’s top three general purpose credit card issuers, who collectively control nearly 60% of the U.S. card market based on card loans, posted a 3.4% gain in outstandings and a 2.4% gain in volume for the second quarter, compared to the year ago period. The modest gains pale in comparison to the double digit gains of prior years. Bank of America, Chase and Citibank reported outstandings of $460.9 billion for 2Q/08, compared to $454.6 billion for 2Q/07, according to CardData (www.carddata.com). The top three also posted purchase volume of $238.4 billion for 2Q/08, compared to $232.8 billion one-year ago. BofA reported purchase volume for U.S. consumer and business cards of $61.0 billion for 2Q/08, compared to $56.8 billion for 1Q/08 and $61.3 for 2Q/07. Chase posted second quarter charge volume of $93.6 billion an increase of 6% from 2Q/07. Citi reported that purchase volume for North American cards was flat at $83.8 billion, compared to $83.5 billion for 2Q/07. For the latest issuer statistics for the second quarter visit CardData ([www.carddata.com](http://www.carddata.com)).

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Monthly Payment Rates Rise in June by 32BPS

Monthly payment rates, the amount that cardholders pay on their credit card debt, took a turn north in June. The MPR rose 32 basis points between May and June. Among managed credit card outstandings, the MPR increased to 17.86% in June, compared to 17.54% in the prior month and 18.40% one-year ago. The June MPR figure is the second lowest in four years. According to CardData (www.carddata.com), the yield declined in June to 13.77% from 13.85% in May, and was down 116 bps, compared to year-ago levels.

U.S. PORTFOLIO METRICS
YIELD MPR
Jun 07: 14.93% 18.40%
Jul 07: 14.77% 18.30%
Aug 07: 14.80% 18.99%
Sep 07: 14.71% 18.86%
Oct 07: 14.82% 19.21%
Nov 07: 14.80% 18.89%
Dec 07: 14.63% 18.41%
Jan 08: 13.53% 18.11%
Feb 08: 13.33% 19.10%
Mar 08: 13.68% 18.33%
Apr 08: 13.89% 18.03%
May 08: 13.85% 17.54%
Jun 08: 13.77% 17.86%
Source: CardData (www.carddata.com)

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OnPoint Community CU & Diebold Seal a Deal

OnPoint Community Credit Union has forged an outsourcing partnership
with Diebold Inc to provide its 186,000 members access to convenient
technologies in the financial industry. Diebold Integrated Services will
provide the credit union with “Opteva” ATMs, first -and second-line
maintenance, armored carrier, network monitoring, ATM and debit card
processing, Diebold “RemoteLink OpteView” services, currency management,
client services, help desk support and the resource to add 30 ATMs by
2011. The OH-based Diebold outsourcing organization employs more than
17,000 associates with representation in nearly 90 countries worldwide
and will be managing the program with OnPoint through a single point of
contact.

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ID Insight Launches the CompleteID Solution

ID Insight identity-fraud risk assessment company has launched its
“CompleteID” verification solution and risk assessment solution. The
new risk assessment solution analyzes when, where and who is conducting
a transaction using ID Insight’s proprietary “Access-Point Intelligence”
technology, with a comprehensive set of data to examine every available
piece of information, such as the location, to produce a risk score to
determine any necessary decisive, actionable assessment in about one
second. Minnesota-based ID Insight created “Access-Point” Intelligence
to leverage its massive collection of data on people and access points
using analytics to help financial services companies, credit issuers,
retailers, online merchants and wireless providers prevent fraud.

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ExaDigm Names Two POS Sales Executives

ExaDigm wired and wireless point-of-sale (POS) terminal solutions has
appointed Tim McWeeney VP of North American Sales and Chase Oelkers VP
of Major Account Sales. Both bringing to the organization extensive
sales and business development experience in electronic payments, this
development is projected to be beneficial to all parties concerned.
McWeeney was most recently VP of North American Sales for WAY Systems,
succeeding his role as Strategic Account Executive with Lipman USA.
Oelkers was most recently National Sales Director and Regional VP of
Sales for ExaDigm, which followed his management roles with Hypercom,
First Data and Payment Systems for Credit Unions. ExaDigm develops wired
and wireless POS terminal solutions focal on reducing cost and boosting
productivity.

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Fair Isaac Second Quarter Profit Slips 28%

MN-based Fair Isaac reported that revenues for the quarter ended June 30th were $183.3 million, a 7% drop from the prior year quarter. Net income from continuing operations for the quarter totaled $18.8 million, versus $26.1 million reported in the prior year period. Strategy Machine Solutions revenues declined 9% to $94.8 million, primarily due to a decline associated with collections and recovery, fraud and marketing solutions, offset by an increase in revenues derived from consumer and originations products. Scoring Solutions revenues dipped 20.5% to $37.6 million for the quarter, primarily due to a decrease in the volume of credit bureau risk scores, including a one-time true-up relating to the previously announced agreement with Equifax, and a decrease in revenues derived from its “PreScore” service. Professional Services revenues rose more than 11% to $39.1 million in the quarter due to an increase in revenues derived from collections and recovery, fraud and “Blaze Advisor” implementation services. Analytic Software Tools revenues increased 17% to $11.8 million, due to an increase in revenues generated from sales of the “Xpress MP” and “Model Builder” products. For complete details on Fair Isaac’s latest performance visit CardData ([www.carddata.com](http://www.carddata.com)).

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QVC and Bill Me Later Team

QVC and alternative payment method
Bill Me Later have launched a
multichannel alternative payments solution to online, call center and
automated phone service customers. Providing users convenience and
flexibility, MD-based Bill Me Later is an alternative to credit card
payments with a similar, buy-now-pay-later function. Bill Me Later
provides next-generation payment and marketing solutions in the digital
payments industry with flexible financing options for many popular brand
items while PA-based QVC has shipped more than a billion packages in its
22-year history and generates an annual revenue of over $7 billion
through its website and programming, which is readily available in 166
million homes worldwide.

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Triton and Dover Tackle AP Reports

Triton has responded to a report by the Associated Press its parent company, Dover Corporation of Long Beach, MS, is facing closure. Triton assures customers the ATM-manufacturing facility is to remain open and fully operational. This confusion was attributed to misinterpreted information in a press release issued by Dover reflecting “the loss from discontinued operations,” which was meant to reference accounting performance rather than facility operation. The AP has subsequently corrected the article reflecting the false information. Triton ATM manufacturer has over 180,000 installations in over 24 countries worldwide while the Dover Corporation has over $7 billion in annual revenues.

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OBERTHUR 2Q/08

Oberthur Technologies reported that revenues for its Card Systems unit grew 30% year-on-year to 187 million euros, driven by the integration of XponCard. Overall, the Company reports second quarter sales of 217 million euros, up 20% year-on-year at current rates. Excluding XPonCard, the whole payment segment posted revenue of
71 million euros, up 33% over 2Q/07, with 34 million microprocessor payment cards sold during the second quarter. The personalization services segment posted growth of 7.4% with sustained demand in all regions of the world. The scratch card activity was stable compared to 2Q/07. For complete details on Oberthur’s second quarter performance visit CardData (www.carddata.com).

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STMICROELECTRONICS 2Q/08

STMicroelectronics has reported 2Q/08 net revenues increased 9.7% to
$2.39 billion while net revenues grew 14.6% since the year ago period,
both of which were driven by strong growth in the Industrial and Telecom
(wireless) segments. Gross profit for the quarter was $880 million for
the quarter and gross margin was 36.8% thanks to the addition of $185
million in impairment and restructuring to the reported operating loss
of $26 million. Income and margin for the quarter were $159 million and
6.7%, respectively, impairment and restructuring charges amounted to
$185 million-for which ST reported an operating loss of $26 million
compared to an operating loss of $772 million during 2Q/07- and $47
million was reported in net loss. Finally, net cash from operating
activities totaled $416 million for the quarter while inventory totaled
$1.58 billion.

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