BANKFIRST Sub-Prime Portfolio is Sold

Marshall Bancorp sold its BANKFIRST credit card portfolio to Rushmore Acquisition, an independent consortium of investors that includes Merrill Lynch and CompuCredit. The sub-prime portfolio has approximately $400.0 million in outstandings. Terms of the acquisition were not disclosed. The portfolio sale immediately followed the acquisition of BANKFIRST by Marshall Bancorp this week. BANKFIRST was owned by the Lund family of Brookings, SD.

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Jack Henry Acquires Stratika

MO-based Jack Henry & Associates has acquired MN-based RPM Intelligence d/b/a Stratika, a provider of profitability solutions. RPM, Stratika’s flagship product, helps diverse financial institutions increase revenues, contain costs, and improve profits by calculating profitability for the institution from the individual product and customer profitability levels up to the overall organizational level. Stratika was originally founded by a team of business and software development experts intent on creating advanced business intelligence tools to allow their clients to become more efficient in managing corporate systems.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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GO Software Updates its PCCharge

GO Software has released “PCCharge 5.7.1.” which offers more functionality for additional payment processing platforms, including Global East, Vital, FDMS Omaha, Heartland Payment Systems and Secure Payment Systems. Security remains a concern for merchants, especially with the advent of programs like Visa CISP (Cardholder Information Security Program), which defines a standard for protecting Visa cardholder data. GO Software, a subsidiary of ROI Corporation (OTCBB: ROIE), is a leading provider of point-of-sale (POS) payment processing software. ROI Corporation is a holding company focused on two industries: payment processing and construction information.

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MC Waives Card Fees for Tsunami Donations

MasterCard International announced that, effective January 7th, it will waive its fees to the American Red Cross, AmeriCares, UNICEF, Save the Children and CARE USA for donations for Tsunami relief made by Americans with their MasterCard cards. In addition, MasterCard is double-matching employee contributions to the South East Asia disaster relief funds of the American Red Cross, the International Red Cross/Red Crescent Society, or AmeriCares. Disaster relief contributions by employees to other humanitarian organizations are matched dollar-for-dollar. MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members’ credit, deposit access, electronic cash, business-to-business and related payment programs.

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Calif Education Teams with the CSCCE

The California Department of Financial Institutions announced its partnership with the Center for Student Credit Card Education to offer free credit card literacy program for high school seniors. This is made possible through a non-commercial sponsorship of the program by Citibank. The Department of Financial Institutions will contact teachers this month regarding the program. Participating teachers will receive their program materials no later than March 2005 and they must be presented to the students before the end of the 2005 school year. The Department of Financial Institutions supervises over 650 financial institutions, including 204 commercial and industrial banks and 221 credit unions.

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MBNA to Launch its First Brand Advertising

MBNA will be debuting its first national TV commercial next month and will use “Super Bowl XXXIX” as the launching pad. The 30-second spot will air during the first quarter of the game. The commercial will communicate the MBNA brand by emphasizing the wide range of affinity credit card products the issuer offers. MBNA has 5,000+ affinity partners. The “Super Bowl” commercial kicks off the national branding campaign, which will include print, television, radio, online, outdoor and direct marketing. The commercial and the overall brand campaign is being developed by The Helm Agency, New York. In September MBNA unveiled a new logo.

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04 Fee Income Hits 37% of Total Revenue

More than $136 billion in revenue flowed in to U.S. bank credit card issuers last year producing pre-tax net income of nearly $33 billion. Of the total revenue, more than $50 billion, or 37%, was generated with merchant and cardholder fees. In 2003, fee income represented 33% of total revenue. Ten years ago the figure stood at 17%. According to R.K. Hammer Investment Bankers, card issuers spent $38 billion in operating expense, paid $22 billion for funding costs, and lost $43.5 billion in charge-offs during 2004.

CREDIT CARD P/L
Interest Income: +$85.5 billion
Fee Income: +$50.8 billion
Charge-Offs: -$43.5 billion
Operating Expense: -$38.3 billion
Cost of Funds: -$21.7 billion
Pre-Tax ROA $32.8 billion
Source: R.K. Hammer Investment Bankers

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Card Delinquency Remains Stable in 3Q

Credit card delinquencies, based on total dollars outstanding, leveled off during the third quarter, inching up only 3 basis points over the prior quarter while the number of past-due credit card accounts edged down slightly from the second quarter. Based on total dollars outstanding, credit card delinquencies are now hovering at a two-year low. According to the American Bankers Association’s “Consumer Credit Delinquency Bulletin,” delinquencies, based on total dollars outstanding, for 3Q/04 were 4.36%, compared to 4.33% in the second quarter, and 4.66% for 3Q/03. Based on the number of accounts past-due the figures were 4.26% for 3Q/04, 4.28% for 2Q/04, and 4.09% one-year ago. While credit card delinquency has stabilized, the ABA noted that delinquency on home equity and auto loans increased sharply.

3Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
2003: 4.66% 1999: 4.25% 1995: 4.21% 1991: 4.54% 1987: 3.72% 1983: 2.75%
2002: 4.45% 1998: 4.63% 1994: 2.90% 1990: 4.01% 1986: 4.90% 1982: 3.92%
2001: 4.45% 1997: 5.31% 1993: 3.83% 1989: 3.45% 1985: 3.15% 1981: 2.37%
2000: 3.93% 1996: 5.03% 1992: 4.27% 1988: 3.40% 1984: 3.30% 1980: 3.40%
Source: American Bankers Association Delinquency Bulletin

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AmEx Incents SkyMiles Cardholders

American Express rolled-out two nationwide promotions for “Delta SkyMiles” credit cardholders. “Classic,” “Gold” and “Platinum Delta SkyMiles” credit cardholders can earn a 20.05% “SkyMiles” bonus on all eligible purchases made through January 31st. Additionally, from February 15th through March 15th, all “Delta SkyMiles” credit cardholders can earn triple miles on Delta purchases of $265 or more. Cardholders must register to receive the bonus miles.

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VeriFone’s SC5000 Gets a Chip & PIN Upgrade

Carphone Warehouse Group has selected VeriFone to deliver a custom “Chip and PIN” upgrade solution based on the “SC 5000” programmable smart card device. The Carphone Warehouse required a dual function secure customer-facing device that, in addition to handling EMV-compliant card transactions, would facilitate the SIM card back-up application that all of its stores offer to customers. The “SC
5000” is protected by a comprehensive array of hardware and software-based security features and adheres to “3DES” encryption standards. Carphone Warehouse Group is rolling-out a total of 3,000 “Chip and PIN” “SC 5000s.”

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AmEx’s Alesio to Head D&B

D&B announced this week that Steven Alesio, a 19-year veteran of American Express, has been named its CEO. Steven W. Alesio, 50, joined D&B in January 2001 as senior vice president. He was named president and chief operating officer of D&B in May 2002, at which time he was also elected to D&B’s board of directors. Before joining D&B, Alesio spent 19 years in marketing and general management with the American Express Company, serving in executive positions in the Business Services group and the Consumer Travel group. D&B (NYSE: DNB), the leading provider of global business information, tools and insight, has enabled customers to Decide with Confidence for over 160 years.

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