Baltimore-based Creditrust Corp. confirmed this morning it has purchased the remaining owned accounts of now bankrupt Commercial Financial Services. The collection accounts have a face value of $546 million dollars. These accounts, were originally purchased by CFS in the fourth quarter of last year, from 10 of the largest credit grantors in the U.S. for approximately $60 million or 11 cents on the dollar. Creditrust purchased them in a competitive auction for $26.75 million, or 4.89 cents on the dollar. Creditrust says it has been purchasing similar receivables from the same institutions for a weighted average purchase price of 7.5 cents on the dollar. The company noted this morning that its due diligence revealed minimal recovery efforts on these accounts which were purchased by CFS shortly before their bankruptcy filing.Details
The emerging field of optimization may revolutionize the credit card industry and Trajecta last week introduced one of the most advanced products in this new field. The Austin, TX-based announced the availability of its integrated decisioning and management solution: ‘Optimization Simulation Environment’, to select charter clients including the credit card sector. It is the first such solution developed to capture and measure the causal relationships and interaction effects of all customer behaviors in a complete and structured manner. The result is a fully integrated decisioning environment that provides managers with detailed account-level action plans. While incorporating real-world business constraints and policy parameters, the plans provide recommendations that produce maximum economic returns to each account over the entire portfolio. Trajecta says simulation and optimization technologies, when systematically integrated with data mining, prediction and forecasting capabilities, will enable organizations to proactively and precisely recommend CRM decisions and maximize financial returns with much more certainty and confidence. In the credit card market, the ‘O.S.E.’ process will determine which company-controlled card variables such as APR, credit line, product type, fees and cross sales will maximize the organization’s risk-adjusted return and net operating income. This solution is derived from the comprehensive effects of such actions on losses, attrition, balances, fee income, revolving propensities and response rates over time.Details
American consumers tacked on another $5 billion to revolving debt during June. The annual rate of revolving debt growth is now at 8.6% compared to 9.2% for June 1998 according to preliminary figures released Friday afternoon by the Federal Reserve. Overall consumer credit throttled down a bit to a 2.5% annual growth rate from 10.5% in May. Since last June, American consumers have added more than $31 billion to revolving debt, according to the FRB. Revolving credit is mostly credit card debt. At the end of June, American consumers were $1.347 trillion in debt, exclusive of home mortgages.
REVOLVING CREDIT HISTORICAL
Jun99 May99 Apr99 Mar99 Feb99 Jan99 Dec98 Nov98 Oct98 Sep98
%GRWTH: 8.6% 4.2 5.6 -0.9 3.4 11.6 8.6 -2.4 13.0 7.5
$OWED: $576.0 571.9 569.9 567.3 567.5 565.9 560.5 556.5 557.6 551.7
Source: Federal Reserve; revised figures as of 08/06/99; For complete
historical data visit www.carddata.com.
Associates First Capital Corporation announced this morning the retirement of Thomas R. Slone, senior executive vice president of the company’s consumer finance operations. His responsibilities will be divided between Walter B. Copeland and Matthew L. Hollingsworth, executives who have deep experience with The Associates consumer finance organization.
The company will create two separate units within its consumer lending business — Home Equity Operations, including the company’s home equity sales branches, and Consumer Branch Operations. Copeland will lead the home equity business while Hollingsworth will lead the consumer branch network. Both Copeland and Hollingsworth will be promoted to senior executive vice president.
“We fully intend to grow our market-leading home equity operation, and our consumer branch network is moving rapidly to a model that enjoys greater benefits from the efficiencies of centralized support,” said Keith W. Hughes, chairman and chief executive officer of The Associates. “The size of our consumer operation and our growth plans make it appropriate to name dedicated executives to its two major lines of business.”
Slone, who joined The Associates in 1967, will become a volunteer executive with Big Brothers Big Sisters of America, a nationwide social agency that matches caring adults with children at risk.
“Obviously, we will miss Tom and his contributions,” said Hughes. “Few organizations, in any industry, could replace a Tom Slone, but he has done an excellent job of developing his staff for greater responsibilities. We have the people in place to be able to move forward with confidence.”
Copeland joined The Associates in 1976. He has held executive management positions in the consumer operation and for the past four years has been president of the company’s information systems division.
Hollingsworth came to The Associates in 1986 and has managed many of the company’s domestic and international consumer units. He spent three years as president of NationsCredit, the consumer finance subsidiary of NationsBank, before rejoining The Associates in 1998.
Associates First Capital Corporation (NYSE: AFS), established in 1918, is a leading diversified finance company providing consumer and commercial finance, leasing, insurance and related services worldwide. The Associates has operations in the United States and 13 international markets. Headquartered in Dallas, it is one of the nation’s 100 largest companies, based on total market capitalization. For more information, visit The Associates Web site at [http://www.theassociates.com].
MasterCard launched its sponsorship of the ‘State Games of America’ over the weekend by bringing Women’s World Cup champion, Mia Hamm, to St. Louis to officially kick off the activities. SGA is the premier Olympic-style national event set up as a continuation of local ‘State Games’ competitions. Male and female athletes of all ages and abilities will participate in 15 different sports, including basketball, bowling, diving, figure skating, gymnastics, ice hockey, the 5K road race, soccer, softball, swimming, Tae Kwon Do, tennis, track & field, volleyball and wrestling. The event involves more than 6,000 athletes from 40 states. MasterCard also made a $25,000 donation to the Mia Hamm Foundation. The donation amount was based on 10% of all ticket sales for the ‘Women’s World Cup Soccer Tournament’ in June.Details
U.S. Wireless Data has completed the technology trial of its ‘Wireless Express Payment Service’ at two Domino’s Pizza location. Domino’s said Friday it is now including ‘WEPS’ in its product line as an approved wireless card payment service for over 6,300 of its company-owned and franchised locations. The high-speed ‘WEPS’ service supports encryption, real-time diagnostic capability, and online, real-time reporting capabilities. One feature of the ‘WEPS’ service is the ability for merchants and merchant acquirers to access terminal, account and transaction information via a secure Internet web site. ‘WEPS’ provides substantially faster transaction authorizations, averaging 3-5 seconds versus the typical 12-15 seconds in a dial-up environment.Details
OK-based Precis Smart Card Systems, Inc. and FL-based Entertainment Smart Systems, Inc. announced Friday they are rolling out a smart card system for the travel and tourism industry. The first phase will provide ‘VentureCards’ for use at attractions in Orlando, Florida; Cancun, Mexico and Ixtapa, Mexico. Initially, the ‘VentureCard’ will be available with values of $100 and $250 U.S. dollars. Merchants at the various travel sites will use a VeriFone ‘Omni 1250’ smart card terminal for the program. The smart card system will utilize ‘PrecisCache’, a stored-value application, developed by Precis. ‘VentureCards’ will employ Schlumberger smart cards for the initial program roll-out. Precis will implement the smart card system as well as develop and monitor transaction processing, retrieval and reconciliation. The agreement between Precis and ESS calls for 200,000 ‘VentureCards’ to be issued. Additional regions in Mexico and the U.S. are being targeted for expansion of the program.Details
The InterCept Group, Inc. , a provider of fully integrated electronic commerce and Internet banking products and services for community financial institutions, Friday announced the mergers of two InterCept subsidiaries with SBS Corporation and SBS Data Services, Inc.. Based in Birmingham, Alabama, SBS provides automated technology products and services, including Internet banking, to community financial institutions nationwide. Founded in 1989, SBS serves more than 1,000 community financial institutions in over 27 states, and has more than 135 customer agreements for use of its Internet banking solutions.
The mergers with SBS will help make InterCept one of the most complete providers of banking technology solutions, including Internet banking for community financial institutions across the United States. InterCept plans to integrate SBS’s Internet banking business into its Internet banking subsidiary, significantly improving its position in the rapidly growing Internet banking field. If InterCept completes the previously-announced potential acquisitions of The Bankers Bank’s and TIB-The Independent Bankers Bank’s Internet business operations, which currently are the subject of non-binding letters of intent, InterCept would have over 270 customer agreements for the use of its Internet banking solutions.
“We believe our merger with SBS brings additional strength to our full line of products and services and will greatly enhance our Internet banking business,” stated John W. Collins, chairman of the board and chief executive officer of The InterCept Group, Inc. “Our acquisition strategy continues to focus on finding solid companies that bring the latest technology solutions to our customers so they can remain competitive and better serve their communities. SBS has experienced strong growth over the past few years, in part through the delivery of advanced products like Internet banking. We are excited about joining forces with SBS and believe, through this combination, our Internet banking subsidiary will become a market leader in delivering Internet banking solutions to consumers. In addition, these mergers bring additional geographic coverage and an expanded customer base for InterCept.”
“We are very excited to be associated with The InterCept Group,” commented David W. Brasfield, SBS president and chief executive officer. “SBS’s core vision and corporate mission to help community banks remain competitive through the latest technology mirrors InterCept’s focus and operating strategy. Now that we are associated with InterCept, I believe, together, we can grow our business and better serve our valued customers with the products and services they need to remain competitive now and into the next century.”
SBS provides a complete line of sophisticated software products and services and related hardware to community financial institutions including Internet banking, core data processing, check imaging, telephone banking and disaster recovery planning, all designed to help financial institutions reduce expenses and increase productivity.
The InterCept Group, Inc. is a financial technology and services company that provides community financial institutions a single source for a variety of services including EFT/ATM processing, debit card programs, core banking software & processing, data communications management, Internet banking, equipment sales & service, and merchant portfolio management. It also offers InterCept Switch, “The Surcharge-Free Network” to member financial institutions wishing to provide surcharge free ATM services to their customers. Each of these products and services helps community financial institutions remain competitive in today’s marketplace. Additional information about The InterCept Group can be found on the Internet at [www.intercept.net].
San Diego-based Cubic Corp. reported Friday that Shanghai Metro Corp.’s new automated fare collection system has generated sales of more than one million magnetic tickets and 100,000 contactless smart cards during its first 90 days of operation. Currently, the Shanghai Metro is handling approximately 320,000 passengers a day on the recently opened Line 1. When Line 2 is completed next year, transit officials expect this to increase to between 600,000 and 700,000 passengers a day. Cubic says there are more than 30 major cities in China with populations exceeding one million. The contactless smart card will be used initially by daily commuters, but the system is designed to eventually include intermodal applications such as bus-to-commute train or commute train-to-railway travel.Details
CompuCredit Corporation announced Friday that it will not proceed with its previously disclosed plan to offer up to $100 million of convertible preferred stock.
“The deterioration in market conditions, especially when contrasted with our strong business fundamentals, makes an offering unattractive at this time,” said David Hanna, CompuCredit’s Chairman and Chief Executive Officer. “The proposed offering as originally contemplated was an opportunistic transaction designed to raise additional capital and fund growth in excess of that contemplated by our business plan,” added Hanna.
Additionally, Hanna said that “our current growth plans remain very strong. We continue to add 20,000 to 25,000 new customers each week. In addition to our traditional growth channels, we launched our internet site for applications, [www.AspireCard.com], and we think this will allow us to add more customers through alternative channels.” During the second quarter of this year, CompuCredit added over 277,000 new customers, placing it in the top ten credit card companies in the country for new account origination.
CompuCredit Corporation is a credit card company that uses technology based analytical techniques it has developed to identify credit-worthy consumers who it believes are not currently being served by more traditional consumer credit providers. CompuCredit completed its initial public offering in April 1999. CompuCredit markets Aspire(R) Visa(R) credit cards to these consumers on an unsecured basis. CompuCredit also markets life insurance, card registration, telecommunication products, membership in buying clubs, travel services and debt waiver programs to its cardholders. Aspire Visa cards are issued by Columbus Bank and Trust under an agreement with CompuCredit. CompuCredit was included in the Russell 2000(R) Index in July of this year.
Providian released figures yesterday showing an explosion in Web traffic and activity for its E-Commerce division. Providian claims its aria.com web site has attracted 1.5 million visitors since it May launch and that its getsmart.com web site has doubled its web traffic since Providian’s acquisition. In retail deposits, through providian.com ,the company has generated over $225 million in deposits to date, an increase of 300% from year-end 1998 levels. The increased traffic has come at a cost. Providian says it is investing $75-$100 million in infrastructure, technology, brand and staffing. During 1998, getsmart.com, a loan brokerage, spent $13 million to draw 8 million visitors which produced 435,000 loan applications for credit cards and home loans. Providian purchased getsmart.com for $33 million cash on February 18, 1999. Providian also announced yesterday that it has successfully launched an Internet-linked customer upgrade program for its card base using the ‘WebCard’ brand.Details
Continuing to expand its international presence, Total System Services, Inc. announced plans to open an office in London within the next few weeks. TSYS Vice President Bruce Bacon will lead the European expansion initiatives, serving as Managing Director, European Operations, and will be responsible for business development, strategic planning, and client relations in Europe.
“Total System is enthusiastic about establishing a permanent presence in Europe, and we are confident that card issuers and acquirers will find tremendous value in our processing solutions and approach to the business,” said TSYS President Philip W. Tomlinson. “TSYS has devoted significant attention to the European market, and we have initiated action to prepare our processing platforms for the unique requirements of this market. In addition, Bacon’s significant international expertise, leadership qualities, financial experience and customer service focus provide TSYS with excellent representation in Europe.”
Representing a significant step in TSYS’ international expansion strategy to become the global processor of choice, the European initiative builds on TSYS’ growing international business in Mexico, Canada, Puerto Rico, the Caribbean and most recently Central America.
“I am excited about TSYS’ commitment to the European market,” said Bacon. “Increasingly, card organizations are demanding flexibility and innovation, and these are hallmarks of TSYS in the markets we currently serve. TSYS’ products and services will present European card organizations with exciting new opportunities to better manage and grow their portfolios.”
An MBA graduate of Columbus State University and graduate of the ABA National School of Bank Card Management, Bacon has 20 years experience in international business, financial, administrative, and project management. He joined Total System Services in 1996 as Vice President, Interchange Accounting, International Services Division. In that position, he worked closely with the TSYS de Mexico joint venture and initiated the study on international clearing and settlement system which led to the development of TSYS’ global interchange accounting system.
Plans are underway for the TSYS European office. Bacon said, “We will soon complete the site selection for our European office. Our UK presence will provide us with convenient access to major card markets throughout Europe and position us to provide excellent customer service, leading-edge technology and support.”
TSYS’ accounts on file more than doubled from June 1998 to June 1999. Currently, TSYS processes 192 million accounts representing 269 million cardholders of which almost 20 million are international consumers. From Columbus and its three international offices, TSYS processes one-third of the credit cards issued in Mexico, has gained a market share of 21 percent in Canada within six months, and recently added accounts in 15 countries in the Caribbean. In addition, TSYS entered the Central American market with the signing of Honduras’ second largest bank.
TSYS is one of the world’s leading information technology processors of data, transactions and payments for domestic and international issuers of credit, debit, commercial and private-label cards. TSYS’ sophisticated systems offer online accounting, data processing, electronic commerce services, portfolio management, account acquisition, credit evaluation, risk management and customer service. Through our family of companies, TSYS services the entire lifecycle of card accounts making it possible for more than 192 million accounts enabling an estimated 269 million cardholders to use their cards any time, anywhere. Headquartered in Columbus, Ga., TSYS, ([http://www.totalsystem.com] ) is an 80.8 percent owned subsidiary of Synovus Financial Corp. (NYSE: SNV) ([http://www.synovus.com]) named the Best Company to Work for in America by FORTUNE magazine.