Charge-Offs Head North as Filings Rise

The recent decline in charge-offs among credit card-backed securities abated in May while delinquencies continued a downward spiral. Charge-off ratios will likely trend up through January 2006 as last minute personal bankruptcy filings make their way into the courts thru mid-October. For May, charge-offs in the “prime” asset-backed credit card securities market increased 32 basis points to 6.20%. “Sub-prime” charge-offs edged down by one basis point to 13.42%, after collapsing 163 basis points in April. One-year ago, “prime” charge-offs were 6.57% and “sub-prime” charge-offs stood at 16.69%. According to the “Fitch Credit Card Index,” “prime” delinquency (60+ days) fell to 2.72% in May, 36 bps lower than May 2004, the lowest level since July 2002. “Sub-prime” delinquency (60+days) for May declined to 6.78%, the lowest level since June 2001.

ABS CHARGE-OFF HISTORICAL
Month Prime Sub-Prime
May 04: 6.57% 16.69%
Apr 05: 5.88% 13.43%
May 05: 6.20% 13.42%
Source: Fitch Ratings

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Wright Express and TCI Co-Brand a Card

SC-based TCI Tire Centers Commercial Division and Wright Express are introducing a new co-branded fleet fuel card for TCI customers requiring a one-card fueling solution. The new TCI card will consolidate fuel purchases, minimize reporting and enable our local-billed truck fleet customers to establish and enforce fueling policies. The “Wright Express Affinity Card” program allows service marketers to offer a branded fleet fueling card to increase sales, build brand awareness and establish customer loyalty. The fuel card is accepted at more than 180,000 fuel and service locations.

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Golden 1 CU to Deploy ATM Manager Pro

Jack Henry’s e-ClassicSystems is providing California-based Golden 1 Credit Union its “ATM Manager Pro” to manage its network of 270 ATMs. ATM Manager Pro supports ATM channel management by consolidating ATM-related information into a centralized database and provides analytical and reporting tools. The Golden 1 Credit Union is the fourth largest credit union in the United States with over $5.6 billion in assets and more than 600,000 members. Jack Henry & Associates, Inc. is a leading provider of integrated computer systems and processor of ATM/debit card/ACH transactions for banks and credit unions.

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Interchange Reforms May Cost Americans

VISA-funded Americans for Consumer Education and Competition yesterday said the merchant lawsuits filed against credit card companies over interchange could come back to hit consumers at the POS. The Washington, DC-based group cited Australia as an example that regulating interchange produce higher annual fees, higher prices at check out and weaker rewards programs for consumers. ACEC also cited a DATAMONITOR study which concluded that taken collectively, the direct impacts of the Australian interchange reforms on consumers have been wholly negative.

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MedDirect & 1Point Intro the Bridge Card

Michigan-based MedDirect Health Benefits and Tennessee-based 1Point Solutions have introduced an HSA-based card called the “Bridge Card Smart Debit MasterCard” “MedDirect HSA Plus” offers a savings account, mutual funds and FDIC/SIPC protection, as well as overdraft protection, an employer-sponsored benefit available to all employees regardless of their creditworthiness. MedDirect Health Benefits offers financing to patients seeking a more affordable way to pay for elective healthcare and dental procedures. 1Point Solutions is a medical spending administrator and provider of retirement and employee benefit programs.

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Delinquency Hits a Five-Year Low in Q1

Based on total dollars past-due, credit card delinquency declined in the first quarter to its lowest level since the second quarter of 2000. Delinquency has been falling for five consecutive quarters, hitting 3.83% in the first quarter compared to 4.19% in the prior quarter and 4.65% one-year ago. According to data gathered by the American Bankers Association based on the number of accounts past-due, delinquency was 4.03% in the first quarter, compared to an all-time high of 4.43% reached in the fourth quarter of 2003. The composite ratio of closed-end installment loans 30 days or more past due increased slightly to 1.89% from 1.68% of all accounts. The ABA composite ratio tracks eight closed-end consumer installment loans, including personal, auto and home equity.

1Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
1980: 3.00% 1985: 3.10% 1990: 3.29% 1995: 3.50% 2000: 3.94%
1981: 3.16% 1986: 4.92% 1991: 4.55% 1996: 4.62% 2001: 4.13%
1982: 3.33% 1987: 3.71% 1992: 4.31% 1997: 5.43% 2002: 4.50%
1983: 3.06% 1988: 3.71% 1993: 3.98% 1998: 5.42% 2003: 4.51%
1984: 2.84% 1989: 3.39% 1994: 3.51% 1999: 4.44% 2004: 4.65%
Source: American Bankers Association Delinquency Bulletin

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TRM & ORCC Make the Russell 3000 Index

Portland, Oregon-based TRM Corporation and Chantilly, Virginia-based Online Resources Corp. were added to the “Russell 3000 Index” yesterday. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization. Currently, more than $2.5 trillion in assets are benchmarked to Russell indices. TRM operates one of the largest multi-national ATM networks, with over 22,000 ATMs worldwide. Online Resources powers Internet financial services for over 700 firms nationwide, serves over three million consumer end-users and processes over $10 billion in payments annually.

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Algorithm-Driven Identity Quiz Unveiled

New Jersey-based StrikeForce Technologies has unveiled “VerifyID”, a real-time online customized algorithm-driven quiz to eliminate fraud. VerifyID helps eliminate fraud when new accounts are created. StrikeForce’s proprietary algorithms queue up a more challenging mix beyond a social security numbers and mother’s maiden names. Companies can configure the system to ask a few questions or several with varying levels of complexity. StrikeForce Technologies provides online identity assurance solution.

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StoreNext & MTXEPS Form a Partnership

StoreNext Retail Technologies and MTXEPS have formed a partnership whereby StoreNext will market the “WinEPS” electronic payment application with its “ISS45” and “ScanMaster” POS systems under a deal similar to a recent agreement between StoreNext and Pay By Touch. The strategic partnership will enable independent grocers to offer shoppers a wide range of secure electronic payment options, providing a faster and more convenient shopping experience. StoreNext Retail Technologies LLC is a supplier of retail technology to independent grocers and regional chains.

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First Successful Canadian EMV Transaction

Moneris Solutions yesterday demonstrated Canada’s first full data EMV chip transaction under VISA Canada’s “Chip Migration Program.” Moneris President and CEO Jim Baumgartner carried out the transaction today at CreArtive Custom Framing in Toronto. Moneris has been in full support of EMV chip developments in Canada since VISA Canada announced its chip migration plans in 2003.

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FDC Expands its BancorpSouth Contract

First Data has extended its relationship with BancorpSouth for credit and debit card processing as well as merchant processing services. The multi-year extension calls for FDC to continue to provide transaction processing services for BancorpSouth’s 90,000 credit card accounts and 400,000 signature-based debit cards. In addition, BancorpSouth has extended its agreement with First Data for merchant processing services for its 4,000 merchants.

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