Associates Buys Exxon Travel Club

United States Auto Club, Motoring Division, Inc., a subsidiary of Associates First Capital Corporation , announced Tuesday it has acquired all membership contracts of the Exxon Travel Club and the right to offer services under the Exxon Travel Club name. The transaction closed on March 30, 1999. Terms were not disclosed.

The Associates auto club operation has administered a range of auto club management services to Exxon Travel Club since 1979. “We have enjoyed a long history with Exxon and are proud to move our relationship to the next logical step. USAC/MD is proud that Exxon Travel Club would entrust its members to our service and care,” said John Hunter, president of USAC/MD.

“This agreement builds on our existing relationship with USAC/MD,” said Exxon Travel Club President Don Taylor. “Exxon Travel Club members will continue to experience the very best auto club services. And USAC/MD plans to broaden the offerings, providing more benefits to ETC members,” he added.

Exxon Travel Club, Inc., based in Houston, Texas, is a subsidiary of Exxon Corporation, based in Irving, Texas. The Exxon Travel Club is a full-service auto club with more than 198,000 members nationwide.

Formed in 1968, United States Auto Club, Motoring Division, Inc. is one of the nation’s largest providers of auto club services and emergency roadside assistance. The Associates auto club operation serves more than 12 million households.

Associates First Capital Corporation, 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 15 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 [www.theassociates.com][1].

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

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Bank Plus Sub-Prime Update

Bank Plus Corporation, and its subsidiaries, which include Fidelity Federal Bank, FSB , Tuesday reported net earnings of $2.0 million, or $0.10 per diluted share, for the first quarter of 1999 compared to net earnings of $1.1 million, or $0.06 per diluted share, for the 1998 fourth quarter and net earnings of $3.5 million, or $0.18 per diluted share, for the first quarter of 1998.

First Quarter 1999 Results of Operations

Net interest income and net yield on interest-earning assets in the 1999 first quarter increased to $27.5 million and 3.08%, respectively, compared to $26.6 million and 2.93% for the fourth quarter of 1998 and $21.0 million and 1.94% for the 1998 first quarter. The increase in net yield is due primarily to higher average yields and balances in the Bank’s credit card portfolio and a lower cost of funds as maturing certificates of deposit roll over at significantly lower rates.

The 1999 first-quarter provision for estimated loan losses was $13.0 million as compared to $15.0 million for the 1998 fourth quarter and $2.0 million for the 1998 first quarter. The increase in provision levels over the 1998 first quarter reflects the rapid growth of the Bank’s credit card portfolio in the second and third quarters of 1998 and the high levels of delinquencies and charge-offs experienced in that portfolio.

Net noninterest income for the quarter was $14.4 million as compared to $18.6 million and $5.3 million for the 1998 fourth and first quarters, respectively. Noninterest income decreased from the fourth quarter primarily due to lower credit card fee income realized from deferred origination fees resulting from the curtailment of the MMG Direct Inc. (“MMG”) credit card program in 1998.

Operating expenses decreased $2.2 million from the 1998 fourth quarter to $26.8 million and increased $6.7 million from 1998 first-quarter levels. The decrease over the 1998 fourth quarter reflected $3.8 million in expense savings partly offset by a $1.6 million increase in deposit insurance premium costs, while the increase over the 1998 first quarter was due to servicing costs relating to the growth in the Company’s credit card portfolio.

Asset Quality

Classified assets decreased to $111.8 million at March 31, 1999, from $133.1 million at December 31, 1998, primarily due to a $10.9 million decrease in classified credit card balances and a $10.1 million decrease in classified mortgage loans. Overall loan delinquencies decreased to $76.8 million at March 31, 1999, from $103.2 million at December 31, 1998, primarily due to a decrease in credit card loan delinquencies.

Delinquencies in the mortgage loan portfolio decreased to a historically low level of below 1%, and utilization of the allowance for loan and lease losses (“ALLL”) for mortgage loans was less than $1.0 million for the quarter. For the twelve months ended March 31, 1999, the mortgage loan portfolio experienced net recoveries of $2.8 million to the ALLL.

Credit Card Operations

At March 31, 1999, outstanding credit card balances were $310.6 million, a net decrease of $39.5 million, or 11.3%, from the December 31, 1998, balances primarily due to charge-offs in the quarter. As anticipated, delinquencies under the program with MMG peaked during the first quarter and then declined as a consequence of charge-offs, including first payment defaults, and increased collection efforts, decreasing from 31.9% at December 31, 1998, to 23.7% at March 31, 1999.

The Company has recently experienced certain limited success in resolving certain litigation related to the termination of the MMG credit card program. The Bank has filed an amended claim in arbitration seeking damages against MMG in excess of $13 million as of December 31, 1998. The Company’s motion to compel arbitration filed in California Federal Court was granted. MMG’s action against the Bank in Texas State Court which the Bank removed to Federal District Court in Texas was dismissed without prejudice. The McCarthy Advertising v. MMG Direct Inc. case, in which the Bank was a third party defendant, was abated pending the outcome of the Company’s arbitration claim against MMG.

Deposit Repricing and Conversion Program

During the quarter the Company’s cost of deposits continued to decrease as maturing certificates of deposit were rolled over or replaced at lower rates. As of March 31, 1999, the total cost of deposits had decreased to 4.32% from 4.53% at December 31, 1998. Additionally, total deposits decreased $163 million.

Senior Note Debt Service

During the quarter, the Company made its scheduled interest payment on its Senior Notes. The liquidity for the interest payments for the remainder of 1999 is expected to be provided by preferred stock dividends from the Bank and currently projected liquidity at the holding company.

The Bank has an agreement with the Office of Thrift Supervision (“OTS”) which permits the payment of dividends on the Bank’s preferred stock so long as the Bank remains adequately capitalized. The agreement with the OTS does not constrain the OTS from restricting future dividend payments based on safety and soundness considerations or future examination findings, and no assurance can therefore be given that the OTS will permit future dividend payments by Fidelity to Bank Plus. The Bank has received no indication from the OTS that it will object to the continued payment of preferred dividends.

Sale of Auto Loan Portfolio

In March 1999 Fidelity sold $10.5 million, or 64%, of its auto loan portfolio, and the buyer, who will service the balance of the portfolio still owned by the Bank, has a 90 day option to purchase an additional $2.3 million of the portfolio. No gain or loss was recognized on this transaction.

Sale of Deposits

The Bank has solicited bids from a broad group of potential purchasers to sell $140 million of deposits and three branch offices. Bids have been received and the high bidders have been notified of the Bank’s intention to proceed with these sales, subject to the negotiation and execution of definitive agreements and regulatory approval of these potential transactions. Successful bidders will purchase the deposits for an aggregate purchase price which includes a deposit premium, the net book value of furniture, fixtures and equipment and the appraised value of the two owned branch offices. The buyer of the leased branch will assume that leasehold. The Bank anticipates closing the sale of deposits by June 30, 1999, although no assurances can be given that the sale will be completed, or if completed, will be completed at the sales prices indicated or by June 30, 1999.

Although no assurances can be given, based on current projections, including the completion of the deposit sale by June 30, 1999, the Bank anticipates that its regulatory capital ratios will exceed the minimum level required to be considered “Well Capitalized” at June 30, 1999.

Regulatory Capital

The Bank’s core and risk-based capital ratios as of March 31, 1999, were 4.61% and 9.21%, respectively, compared to 4.36% and 8.95%, respectively, as of December 31, 1998. Under the most restrictive of the regulatory capital ratio measurements the Bank had an excess of $21.7 million above the minimum level required to be considered “Adequately Capitalized”, compared to an excess of $13.5 million at December 31, 1998. Common stockholders’ equity of the Company totaled $130.1 million at March 31, 1999, with a tangible book value per common share outstanding of $5.98.

Status of Exploration of Strategic Alternatives

At the end of 1998, the Company, with the help of its financial advisors, initiated a process to explore a potential sale with parties interested in an acquisition of the Company in whole or in part. Information on the Company was distributed to interested parties and expressions of interest, including preliminary non-binding offers, were received from several parties. Certain of those parties have performed due diligence on the Company. The Company continues to evaluate the preliminary offers received and to negotiate the terms of the preliminary offers to improve their overall value. To date no definitive offers have been received. There can be no assurance that any definitive offers will be received or, if received, will be determined to be adequate by the Board of Directors of the Company.

Bank Plus Corporation is the holding company for Fidelity Federal Bank, FSB, which offers a broad range of consumer financial services, including demand and time deposits and mortgage loans. In addition, through its affiliate Gateway Investment Services, Inc., a NASD-registered broker/dealer, Fidelity provides customers of the Bank with investment products, including mutual funds, annuities and insurance. Fidelity operates through 38 full-service branches, 37 of which are located in Southern California, principally in Los Angeles and Orange counties.

FOR MORE 1Q/99 FINANCIALS ON BANK PLUS VISIT CARDDATA ([www.carddata.com][1])

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

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NetPack’s PC-card reader

NetPack Inc. () Tuesday said that it will release beta versions for two of its e-commerce packaging systems designed for the offline sale of Internet products and services, and announced plans for a home-PC card reader.

A beta version of NetPack’s “NetPackage” system will be released by July 31, Nils-Eric Svensson, NetPack’s vice president of marketing, said. The beta version will serve as an electronic delivery system for publishers of informational online-type textbooks, and will be sold only in retail bookstores or software stores.

“The `NetPackage’ version of NetPack’s First Internet Access Card family will fully demonstrate the feasibility of this unique e-commerce delivery system,” he said.

Svensson also announced that the newly developed NetPack “Special Application Package” (SAP) system will be released for beta testing in October, and also will be sold only in retail stores.

The SAP, a five-inch by six-inch card with a magnetic strip along its back, is drawn through an existing card reader at the merchant’s register for validation. The card supports the vendor’s canvas area on the front and back of the card as well, similar to a traditional hard- cover book jacket.

Svensson said NetPack has plans to integrate card readers with the Internet, and will offer home-PC card readers. A version will be available in January. The card can also be used for obtaining future updates as well.

Explaining how the system would work, Svensson said once in the customer’s possession the NetPack card would be drawn through a home- or office-computer card reader. The code automatically unlocks the Internet site specified on the card’s magnetic tape and grants the user access to the material or product being offered.

“Card readers for home and office computers are less than $200 away from piggyback-type serial ports, and we have already facilitated room on our card for the code,” he said. “The NetPack SAP card can be utilized for any purpose whatsoever with the highest degree of security. The SAP version of NetPack’s First Internet Access Card is specially encoded.”

Credit cards, checks or bank participation will no longer be useful, mandatory or necessary to retrieve services or goods from the Internet using NetPack’s system.

“Most recent announcements concerning Internet cards `stand on the shoulders of banks’ to underwrite the process at 21 percent interest to the consumer,” he said. “NetPack will put its dollar back into the retailers’ and consumers’ hands.”

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Go2Net MasterCards

Seattle-based Go2Net, Inc. and Fleet Credit Card Services officially unveiled a suite of ‘Go2Net’-branded MasterCards yesterday. (Both firms signed a credit card marketing agreement in December.) Fleet also revealed yesterday it will now compete, via the Go2Net deal, with First USA’s ‘Titanium’ card. The Go2Net cards will initially come in three basic versions: ‘Silicon Investor MasterCard’; ‘MetaCrawler MasterCard’ and the ‘Go2Net Personal Titanium MasterCard’. Fleet said a fourth card, the ‘HyperMart Business MasterCard” will be introduced later. Applications for the new cards are available online via their respective Websites. Fleet’s ‘Customer Service Online’ will provide online access to available credit balances and to review past transactions. Cardholders may also request balance transfers and credit line increases online. All the Fleet/Go2Net cards offer a five month 3.9% intro APR. The ‘Titanium MasterCard’ offers an annual year-end transaction summary, $1 million in travel accident insurance, doubled manufacturers’ warranties, and purchase protection. The individually-branded MasterCards offer program-specific benefits such as 10% discounts on Silicon Investor’s annual and lifetime memberships.

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I-Banking Explosion

A new report by CA-based Netroscope shows that over the next few years, the number of banks that consider Internet banking as an integral part of their direct banking will dramatically increase. However fewer than 10% of corporate banks either have or are building highly competitive and advanced transaction Web sites. The majority of banks currently use their Websites primarily for disseminating information to their customers and prospects and advertising their products and services through the Internet. Netroscope’s research also indicates that most banks evaluate their Internet presence by the generated online transactions and revenues. The study concludes that consumers’ demand for easy to use, access, configure, and manage financial services will drive visionary banks to offer true Internet banking branches loaded with innovative functionality and services.

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SEBA Extends FDC

Under a new six-year agreement, First Data will continue to provide credit, debit and merchant processing services for the Southeast Bankcard Association, which represents over 70 member financial institutions. More than 680,000 credit and debit card accounts on file and 38,000 merchant locations will be processed by First Data Resources Inc. through the agreement. First Data has provided SEBA with credit and merchant processing services since 1975. In addition, SEBA recently partnered with First Data Direct Banking to provide an Internet site where member institutions’ cardholders can view and download account information.

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ATM Fees Work

BankBoston told the Massachusetts Legislature’s Joint Committee on Banks and Banking that since the implementation of ATM surcharges last September, consumer behaviors have adjusted accordingly. The bank presented evidence showing that transactions by non-customers at BankBoston ATMs have decreased by almost 20%. Also, immediately after BankBoston began assessing the $1 surcharge, nearly 64,000 non-customers canceled their transactions after learning they would pay an extra fee. However, transactions made by BankBoston’s own customers at its ATMs have increased by nearly 10%. BankBoston also testified that it has received very few comments from either customers or non-customers regarding the fee. In fact, fewer than 20 comments were recorded by phone or in writing since September 1998. The bank said it cost nearly $100 million to develop its ATM network, which includes 1,200 ATMs in Massachusetts.

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WebPurchasing

Microsoft, MasterCard and Clarus Corp announced Tuesday that support is growing among financial institutions, suppliers and technology providers for the ‘WebPurchasing’ program, a joint effort, announced last month, to deliver end-to-end, integrated Web-based corporate purchasing solutions to both buyers and suppliers. New companies involved include Bank One, USWeb/CKS and Office Depot. Select MasterCard members, including Cardservice International, The Bank of Montreal, The Fifth Third Bank, First Chicago, First of Omaha Merchant Processing, Harris Bank, Paymentech and Wells Fargo Bank plan to market ‘WebPurchasing’ solutions and services to corporate customers and prospects and to integrate the solution into their respective MasterCard ‘Corporate Purchasing Card’ programs.

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EMS Picks Skipjack

Electronic Merchant Systems, a national merchant service provider operating in over 100 U.S. cities, chose Skipjack Merchant Services to provide secure, automated Internet credit card processing and virtual storefront implementation for its EMS E-Commerce services. Skipjack Merchant Services is a service of Bradley Madison Company with corporate offices in Cincinnati, Ohio.

In just a few months, the EMS and Skipjack combination has attracted a wide variety of retailers who specialize in such diverse products as pre-packaged foods, automotive products, online auctions, software products and martial arts books. “This illustrates how our new E-Commerce suite appeals to a range of interest categories. We’re very excited about the rate of acceptance and the resulting volume,” said Josh Felber, EMS Director of E-Commerce.

“This gives our merchants the ability to immediately increase their profits in the virtual world,” Mr. Felber remarked. “The relationship is a good fit,” adds Scott Valetti, SJMS Technology Channel Manager. “Both companies have similar philosophies. Both are dedicated to fast, reliable service. Both have a similar vision with regard to the selling power of the Web.”

In addition to the core transaction service, SJMS also consulted with EMS on the hosting solution. “We located, recommended and integrated all the best-of-breed components with regard to the needs of their particular system,” said George M. Farnell, Jr., SJMS Chief Technology Officer. The system was built utilizing Compaq ProLiant servers with the DISA (Distributed Internet Server Array) architecture running an electronic storefront solution powered by INEX Corporation. It enables quick and easily setup of electronic commerce sites online without additional software.

Skipjack Merchant Services supports Visa, MasterCard, American Express, Discover Card, Diners Club, JCB, and debit cards. It features real-time authorization and settlement as well as email receipts for customers and fulfillment entities.

For further information with regard to EMS and its services, contact Josh Felber at 1-800-726 2117 or visit

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Advanta 1Q/99

Advanta Business Cards reported yesterday net income of $4.0 million for the first quarter. The average yield on the company’s business credit card portfolio, including fee income, increased this quarter to 20.36% from 19.85% last quarter due to increases in rates and higher fee income. This was partially offset by an increase in the net managed charge-off rate on business credit card loans of 5.61% this quarter compared to 5.46% last quarter. Managed receivables for ‘Advanta Business Cards’ at the end of the quarter were $832 million, up 2.1% from last quarter and 18.8% from the same quarter last year. For more details on Advanta’s 1Q/99 financials visit CardData ([www.carddata.com][1]).

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

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Innovis Sold

First Data Corp. yesterday completed the selling of the stock of Innovis, a small credit bureau, to CBC Companies, Inc. of Columbus, OH. The transaction will result in net proceeds of approximately $20 million. FDC says by selling Innovis rather than discontinuing operations, certain tax benefits not previously available will be realized, making an after-tax gain of approximately $37 million.

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Onsale Deal

Onsale, Inc. signed an exclusive multi-million dollar marketing agreement that includes a co-branded credit card with First USA. The agreement includes advertising, promotions and merchandising programs designed specifically for Onsale customers. First USA advertisements will appear at ‘Onsale atCost’ and ‘Onsale atAuction’. Onsale has over 1,000,000 people registered to bid. In the first quarter, the company served more than 1.2 million daily page views, and averaged 161,000 unique visitors a day.

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