HOME CAPITAL 2Q/03

Toronto-based Home Capital Group reported that its personal and credit card loans doubled in the second quarter, from $17.9 million in 2Q/02 to $34.4 million in 2Q/03. The gross credit card receivable balance is comprised of $18.1 million in accounts secured by cash deposits or residential mortgage collateral, and $5.8 million is unsecured. The total credit approved is comprised of $27.3 million in secured and $7.3 million in unsecured accounts. Security deposits on VISA accounts amounted to $12.0 million. “Equity Plus VISA” credit cards are secured
by a collateral residential mortgage, and this product now amounts to $10.8 million of the credit card receivable balance.

FULL STORY:

Home Capital Group Inc. has
maintained its uninterrupted record of rising quarterly growth and financial
performance with significant increases in earnings, earnings per share, and
total assets in the second quarter of 2003. The Company has now achieved
consistent quarter-over-quarter increases in earnings for 32 consecutive
quarters.

This performance reflects the underlying strength of Home’s business
strategy and adherence to a well-developed set of business principles, as well
as the strong demand for Home Trust Company’s products and services within our
large target market. It is also due to the efforts and dedication of our
mortgage broker network and our employees.

– Earnings rose 35.4% to $6.9 million for the three-month period ended
June 30, 2003, compared with earnings of $5.1 million during the
same quarter one year earlier. Earnings per share increased by
32.3% to $0.41, compared with $0.31 for the comparable quarter of
2002. Net income for the first six months of 2003 rose by 31.4% to
$12.9 million from the $9.8 million recorded in the first half of
2002. Net income per share for this six month period increased from
$0.60 to $0.77, and on a fully diluted basis from $0.56 to $0.75.

– Return on equity for the second quarter was 26.7%, compared to
24.6% for the comparable quarter of 2002 and up from 24.8% in the
first quarter, 2003. For the first six months of 2003, return on
equity was 25.7%.

– Total assets were $1.62 billion at June 30, 2003, a substantial
increase of 28.3% over assets of $1.26 billion one year earlier and
16.2% greater than $1.39 billion in assets recorded at the close of
2002.

– The Company issued a further $36.2 million in MBS poolings of
residential mortgages, generating $1.5 million in revenues. The
comparable figures for the second quarter of 2002 were $16.1 million
and $0.3 million respectively. The MBS portfolio administered by
Home Trust stood at $208.1 million at June 30, 2003.

– Home Capital’s consumer lending business, comprised of retail credit
services and VISA products, continues to grow profitably. Earnings
from this segment of $301,000 in the second quarter of 2003
represented a substantial increase over $52,000 in earnings in the
first quarter of the year.

– Net impaired loans at June 30, 2003 represented 0.33% of the total
portfolio down from 0.35% at March 31, 2003 and 0.46% in the second
quarter 2002.

During the quarter, the holders of the Company’s remaining Class A multi-
vote shares agreed to convert these shares into an equal number of single-vote
Class B subordinated voting shares without benefit or enhancement. The
completion of this milestone conversion program increased the float of
publicly traded Class B shares from 15,490,228 to 16,744,195 with no dilutive
effect on the Company’s earnings per share. The dual class structure benefited
the Company during its formative stages; however, the Company’s subsequent
growth and increasingly strong financial performance in recent years made this
a suitable time to adopt a single class share structure. In completing this
transition, the Board of Directors and the Class “A” shareholders fulfilled a
long-standing commitment to eliminate the dual class share.

At the company’s Annual Meeting of May 27, 2003, the company announced an
increase of 25% to the annual dividend from 12 to 15 cents per year,
annualized. As a result, there will be a dividend of $0.0375 per share payable
on September 1, 2003 to shareholders of record at the close of business on
August 15, 2003.

Home Capital Group continues to increase its market share of the large
and expanding Canadian residential mortgage sector and to deliver exceptional
results across all measures of business performance. At the beginning of 2003,
the Company identified four key performance targets for the year ahead. These
are to achieve 20% ROE for the sixth consecutive year; as well as 20% growth
in each of earnings, diluted earnings per share, and total assets, each for
the eighth consecutive year. As was stated at the 2003 Annual General Meeting
of Shareholders, “We are on track to meet or exceed all of these goals.”

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Retek Deploys ISO Solution in Bombay Stores

The Bombay Company and 388 of its stores have begun deployment of Minneapolis-based Retek’s “Integrated Store Operations” which provides for expedited credit card authorizations. The new store operations infrastructure enables real-time sales and inventory access, faster transaction and credit processing and Intranet/email access in the store that deliver an enhanced customer experience, improved operating efficiencies and increased sales. Rollout of the new store systems is scheduled to be completed by October 2003.

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MBNA EUROPE

MBNA reported that managed loans in Europe increased 45% during the second quarter to $14.5 billion while managed loans in Canada grew 43% to $3.2 billion. During the second quarter MBNA added 460,000 new accounts in Europe and 260,000 in Canada, a 50% increase over the second quarter of 2002. The card issuer also added 16 new affinity programs in Europe, and 46 new affinity programs in Canada, during the quarter. To-date, MBNA has 910 card programs in Europe, and 510 card programs in Canada. In April MBNA announced plans to market credit card and related products in Spain through offices located in Madrid. Spain is the fourth international market entered by MBNA preceded by the United Kingdom, Ireland, and Canada. Since operations began in Spain the issuer has signed 29 affinity programs in Spain.

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Debit Card Settlement Notices Top 8 Million

NYC-based Constantine & Partners reported this week that 8,148,276 notices to merchants have been mailed in regard to the settlement of the debit card lawsuit against VISA U.S.A. and MasterCard International. The certified class consists of all persons and business entities that have accepted Visa and/or MasterCard credit cards and therefore have been required to accept Visa and/or MasterCard offline signature debit transactions from October 25, 1992 to the present. Any person or entity that received a copy of the Notice of Settlement in the beginning of July is already registered on the Class Member List and need do nothing at this time. The mailing list was developed from merchant data provided by Visa, MasterCard and the 80 largest merchant acquirers/processors.

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Thrifty Nickel Opts for E-Checks for Micropayments

FL-based Thrifty Nickel, an online publishing concern with 4.1 million customers, has signed Global eTelecom and Integrity Card Service for an electronic check payment solution. Global’s customized technology will enable Thrifty Nickel to accept and process paper checks electronically thus adding increased value and efficiencies. The Thrifty Nickel has published over 400 million private party classified ads, making the Thrifty Nickel the largest free classified newspaper in the United States.

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MyMerchantRewards is Launched for Small Business

First Data and Nashville-based Progeny Marketing Innovations have teamed up to market a new small business benefits program to US merchants. “MyMerchantRewards” offers a range of discounts through Progeny’s parent Cendant Corporation. The program includes discounts and cross-marketing strategies on hotel accommodations through Ramada Inn, Days Inn and Howard Johnson, vehicle rental through Avis and real estate relocation through Cendant Mobility. Discounts also include office equipment and software from IBM and Hewlett- Packard, Airborne Express, Danka business equipment, IDT long distance service, and Ramesys voice-mail services.The small business program is being marketed through First Data and its bank and alliance partners. Merchants are billed for the services used along with their transaction processing fees on one statement.

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Providian Adds Two to its Board

Providian Financial has added James Holdcroft, formerly with Lehman Merchant Banking Partners, and John Douglas, former General Counsel for the FDIC, to its Board of Directors. James Holdcroft most recently served as Managing Director and Principal of Lehman Merchant Banking Partners in New York. John Douglas is currently Partner and Chairman of the Financial Services Group of Atlanta, Georgia-based Alston & Bird. Providian has over $7 billion in reported receivables and over $18 billion in managed receivables and more than 11 million customer relationships.

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LendingTree Generates $261K in Quarterly Card Fees

Atlanta-based LendingTree reported this week it received 60,053 credit card requests during the second quarter and closed 5,841 of the transactions. The dollar volume of credit card transactions closed was $29 million. LendingTree’s credit card business produced total revenue of $261,000 for the company during the second quarter. The average revenue per transmit for credit cards was $3.77 compared to $11.73 for auto loans and $18.99 for personal loans. Overall, the Company posted 2Q/03 revenue of $45 million, 84% greater than the revenue for the second quarter of 2002. For complete details on LendingTree’s 2Q/03 results visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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PayPal Revenues Up 90% in 2Q/03

eBay confirmed yesterday it will pay $10 million to settle a lawsuit with the US Attorney for the Eastern District of Missouri in regard to services it formerly provided to online gambling merchants, which were discontinued following PayPal’s acquisition by eBay. In its report for the quarter ending June 30th, eBay reported that PayPal net transaction revenues were $99.4 million for the quarter, an 89.3% increase compared to one year ago. eBay’s total second quarter payment volume was $2.8 billion, a 7.7% gain over the prior quarter. eBay also reported that its US net transaction revenues for the second quarter totaled $242.4 million, a 45% gain over the year-ago quarter. The company also reported that general and administrative costs totaled $69.5 million for the quarter which included PayPal’s transaction losses, which represented approximately 0.32% of PayPal’s total payment volume. The company also noted that its PayPal transaction processing expense rate increased from 1.14% last year to 1.30% for 2Q/03. However, its PayPal transaction revenue rate increased from 3.25% in 2Q/02 to 3.50% for the second calendar quarter of this year. For complete details on eBay/PayPal’s 2Q/03 results visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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Hypercom Beats the Street for 2Q/03

Phoenix-based Hypercom reported this morning that it “beat the street” with second quarter income from continuing operations of $4.8 million versus an analyst consensus of an estimate of $3.2 million. However, the payment terminal manufacturer also reported that 2Q/03 net revenues declined 5% to $64.4 million. The Company says a soft global economy and fierce competition continue to impact its revenues. Going forward the company lowered its forecast on projected annual revenues from $265 million-$273 million to $249million-$257 million. During the second quarter, Hypercom introduced the “ICE 5500 Plus,” “ICE 5700 Plus,” “ICE 6000 Plus,” and the “T7Plus” with 56k modem and “FastPOS.” The Company also obtained VISA “PED” certification for integrated pinpads for the “T7Plus” and the “ICE 5500 Plus.” The company was also selected by the Industrial and Commercial Bank of China as its preferred provider for terminals for 2003. For complete details on Hypercom’s 2Q/03 results visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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MSL Takes Over Ingenico’s Barcelona Plant

Paris-based Groupe Ingenico has selected Massachusetts-based MSL as its primary worldwide strategic supplier, providing global support for Ingenico’s electronic payment terminals. As part of the multi-year agreement, Ingenico’s subsidiary Telesincro, located in Barcelona, Spain, will transfer to MSL its manufacturing employees with technical expertise in EFTPOS and secure payment products, as well as certain assets and manufacturing space. The Barcelona plant, formerly Ingenico’s only internal manufacturing site, manufactures approximately 600,000 terminals annually, approximately 40% of the company’s global demand. MSL will provide manufacturing, build-to-order (BTO), order fulfillment, and repair services to Ingenico from Barcelona and from additional locations worldwide.

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Fair Isaac’s Profits Double in 2Q/03

Fair Isaac reported second quarter revenues of $163.0 million, a 79% increase over 2Q/02, lead by explosive growth in Strategy Machine Solutions. Net income for the quarter was $30.0 million, compared with $14.4 million, in the same quarter last year. Scoring Solutions revenues for the quarter were $34.5 million, 2% gain over the same year-ago quarter. Strategy Machine Solutions increased 144%, from $39.9 million in 2Q/02, to $97.4 million in 2Q/03. Professional Services revenues were up 57% to $21.9 million. Analytic Software Tools revenues increased 162%, from $3.5 million to $9.2 million during the quarter. For complete details on Fair Isaac’s 2Q/03 results visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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