Citi Card Earnings Up 80%

Despite a softening in earnings among other bank segments Citigroup reported Monday its consumer business produced record fourth quarter results. Citi’s credit card business realized an 80% increase in earnings to $277 million attributable to pricing changes, lower funding costs, declining charge-offs and growth in charge volumes. Citi’s U.S. card portfolio grew 40% last year due to its acquisition of the Universal Card portfolio. Internationally, Citi said its Latin America consumer business experienced a 49% quarterly earnings decrease to $29 million because of a declining contribution from Credicard, a 33%-owned Brazilian card affiliate. For more 4Q/98 data on Citigroup please visit CardData ([][1]).



AmEx TRS Up 16%

American Express reported Monday its TRS division produced record fourth quarter net income of $326 million, a 16% increase over the $281 million reported a year ago. For the year TRS reported record net income of $1.36 billion, up 17% from a year ago. AmEx says TRS’ net revenues increased 8% from the prior year, reflecting higher billed business in the U.S. and internationally, as well as growth in cardholders loans, wider interest margins and higher travel commissions and fees. Higher spending per cardholders and growth in average cards outstanding led to the increase in billed business. The number of total cards in force at year-end reflects substantial growth in cards outside the U.S., offset by the cancellation of 1.6 million U.S. Government cards, effective Nov. 30, due to the company’s decision to withdraw from the U.S. Government Card business. For more detailed 4Q/98 financials on AmEx please visit CardData ([][1]).

                          4Q/98        4Q/97         CHNG
Total Cards               27.8m        29.6m        -6.1%
Q Volume                 $44.2b      $40.7b        +8.7%
Card loans               $16.7b      $14.6b       +14.9%
Delinquency               3.1%         3.5%          NA
Net Chargeoffs            6.2%         6.3%          NA
Net Int Yield              9.5%         9.4%          NA



CheckFree & Countrywide

CheckFree and Countrywide Home Loans, Inc., the nation’s largest independent mortgage lender, announced an agreement that will provide nearly 2 million Countrywide customers access to online electronic billing and payment through a central Web site of their choice.

Since 1998, Countrywide has offered its customers automated debit via the Countrywide Electronic Payment Service — powered by CheckFree’s robust payment infrastructure.  With this new agreement, Countrywide customers will also be able to receive their monthly mortgage statement electronically on their personal computers and pay it with a click of the mouse.

![][1]     Countrywide’s Web site () currently allows borrowers to access their personal account information online. In early February, Countrywide customers will also have the ability to electronically pay their mortgage via the Countrywide Web site.  In the next few months, consumers will be able to send their Countrywide payment electronically by visiting the CheckFree E-Bill(sm) Web site ( or the many other financial service providers’ Web sites that offer electronic bill presentment and payment.

“Countrywide prides itself on the technological prowess that has made us one of the top mortgage servicing companies today,” said Tom Boone, managing director of Countrywide.  “We continue to adopt the latest innovations, like CheckFree E-Bill, to offer our customers as many options as possible — not only for paying their mortgage, but for managing their overall finances.”

As part of its ongoing commitment to customer service, Countrywide will work to install the self-care component of CheckFree’s third-generation E-Bill product, announced at the recent Retail Delivery Systems trade show in Las Vegas.

According to Matt Lewis, senior vice president of Electronic Commerce Product Management and Marketing for CheckFree, “Bill presentment turns the traditional monthly bill into another powerful tool that can be used to communicate with customers.  Billers are able to brand their electronic bills according to their needs and use them to learn as much as they can about their customers via an interactive environment.”

With the signing of Countrywide, CheckFree now has contracts with more than 40 of the nation’s top 100 billers, including Ameren, American Electric Power, AT&T, BellSouth, Boston Edison, Chase Credit Card & Chase Mortgage, Columbia Gas of Ohio, Consumers’ Energy, CUNA Mutual Group, First USA, Florida Power & Light, GPU Energy, HomeSide Lending, International Billing Services, Northeast Utilities (Connecticut Light & Power and Western Massachusetts Electrical Company), Northern Illinois Gas (Nicor), Public Service Company of New Mexico, PGE, Small Business Administration, Southern California Edison, Southern Co., Total System Services Inc. (TSYS), and Washington Water Power.

In addition to billers, CheckFree works with financial service providers such as First Union and Intuit’s Quicken to offer integrated bill presentment and payment.  Future Web site launches for CheckFree E-Bill include Bank One, Chase Manhattan Bank and PNC Bank.

About Countrywide

Founded in 1969, Countrywide Credit Industries, Inc. originates, purchases, sells and services loans for single-family homes through its primary subsidiary, Countrywide Home Loans, Inc. The company is headquartered in Calabasas, Calif., and has nearly 11,000 employees with more than 500 offices across the nation.

About CheckFree

Founded in 1981, CheckFree (), the operating subsidiary of CheckFree Holdings Corp., is the leading provider of electronic commerce services, software and related products for more than 2.5 million consumers, 1,000 businesses and 850 financial institutions. CheckFree designs, develops and markets services that enable its customers to make electronic payments and collections, automate paper-based recurring financial transactions and conduct secure transactions on the Internet.

[1]: /graphic/countrywide/countrywide.gif


ECHO Up 316%

Electronic Clearing House Inc. reported fiscal 1999 first quarter net earnings of $258,000, compared with net earnings of $62,000 for the same period last year, a 316 percent increase, resulting in basic net earnings per share of $0.0163 and diluted net earnings per share of $0.0113, compared with $0.004 and $0.003 per share, respectively, for the same period last year.

Revenues for the first quarter of fiscal 1999 totaled $5,469,000, a 29.8 percent increase over revenues of $4,212,000 for the same period last year.

Electronic Clearing House provides credit card processing, check guarantee, inventory tracking services and various Internet services to more than 17,000 retail merchants and U-Haul dealers across the nation.

Through its subsidiary, Computer Based Controls, ECHO designs, develops and manufactures software and point-of-sale hardware that is utilized as credit card processing terminals, automated money order dispensers, utility bill payment systems, and inventory tracking devices.


Back of the Card

Citigroup is spearheading efforts to move VISA and MasterCard logos to the back of the card in order to strengthen its own card branding. Citi’s co-CEO, John Reed, also indicated yesterday, he would eventually prefer to see VISA and MasterCard brand names removed from his bank’s cards. Reed says he wants VISA and MasterCard out of the marketing business and believes the development of a communal association brand over the past 20 years has cost big banks market share in the credit card business. He believes the current structure has enabled card specialists such as MBNA to build large market shares at the expense of the systems’ founders. Reed predicted that given recent mega-mergers in the U.S. and the explosion of the Internet, the bank credit card landscape for VISA and MasterCards could break up into four brands: ‘Citi’, ‘Bank One’, ‘BankAmerica’ and everyone else. The branding issue was reportedly broached at a special VISA board of directors meeting earlier this month. Reed’s comments were immediately condemned by the IBAA yesterday which said VISA and MasterCard logos only make up 10% of the card’s face and the removal of the logos would create confusion among consumers and would also be detrimental to merchants.



MasterCard and Symmetrical Resources Inc., announced Monday the formal launch of a new joint venture: Transactional Data Solutions. TDS will provide aggregate and other non-consumer specific marketing information from anonymous card transactions for use by merchants in better managing their businesses. Rather than using individual name and address information, the new discipline of transactional research collects anonymous information from previously conducted transactions to aggregate buying behaviors based on demographic, lifestyle, and media preferences. TDS’ first information product, ‘Merchant Advisor’, uses data that does not connect cardholder names, addresses, phone numbers or e-mail addresses to any transactions. ‘Merchant Advisor’ clients will have access to market intelligence including analysis of competitors’ sales trends; customer share, and customer duplication; consumer segments that do not shop at your store; relative spending and frequency of consumer segments; relative contribution of total revenue to industry, category, and store; and consumer segment product usage, brand preference and lifestyle characteristics.


HNC – OSI Merger Off

HNC Software Inc. announced Monday that it has commenced negotiations with Open Solutions Inc. to establish a strategic alliance with OSI.

The proposed alliance would be implemented in lieu of the parties’ previously announced plans to merge and is expected to involve a cooperative marketing relationship and a minority equity investment in OSI by HNC. HNC believes such a strategic alliance is preferable to a merger at this time, due to current uncertainty in the small to medium-size banking business environment.

OSI, a privately-held company based in Glastonbury, Conn., develops and markets client/server software that addresses core processing functions of small and medium-size banks and credit unions. HNC believes that the proposed strategic relationship will enable HNC Financial Solutions and OSI to exploit synergies between those of their products that address complementary applications.

“OSI’s products fit very well with some of our retail banking solutions,” said Michael A. Thiemann, HNC Financial Solutions Group president. “We intend to move full-speed ahead to integrate the FTI GL product into OSI’s The Complete Banking Solution(R), while also exploring which of our predictive products will be of most benefit to OSI’s market.”

Douglas K. Anderson, chairman & chief executive officer of Open Solutions Inc., commented, “There’s no doubt that introduction of HNC’s predictive modeling and analytical tools will provide community banks with technology that previously only large institutions could employ. However, although we initially contemplated a merger, both management teams have come to believe that at this time a strategic alliance is the best way to keep our respective organizations focused on making the right product decisions.”

OSI has its headquarters in Glastonbury, Conn., with several sales offices throughout the United States. OSI’s products, The Complete Banking Solution(TM) and The Complete Credit Union Solution(TM) are sold and installed in community banks and credit unions for complete core data processing in a pure client/server environment.

Features include deposit and loan processing, teller and platform automation, electronic forms, investor reporting, office automation and a marketing-style CIF. Additional information can be obtained by contacting Michael D. Nicastro, vice president of marketing, or via the Internet at [][1].

HNC Financial Solutions, an HNC Software business group, provides a powerful set of predictive business solution modules that address the mission-critical, customer-lifecycle management needs of financial institutions. HNC Software Inc. (Nasdaq:HNCS) is a world leader in the development and delivery of predictive software solutions in client/server environments.

With headquarters in San Diego, HNC Software Inc. provides innovative predictive software systems in the financial services, retail, insurance information, electronic commerce, and telecommunications markets.

For more information on HNC, contact Jane Leonard, HNC Software Inc., 5930 Cornerstone Court West, San Diego, Calif., 92121, 619/546-8877. For investor relations hotline, call 800/396-8052.



Card System Gold

Diebold introduced ‘Card System Gold; yesterday which enables campus administrators to deploy a one-card system capable of managing an array of transactions, including meal plans, access control, entitlements, stored value, vending, point-of-sale retail and remote management of other computer-based services.The University of North Carolina at Chapel Hill began taking advantage of CS Gold’s features at the beginning of the 1998-99 school year as a test user. Nearly 45,000 UNC campus cards were issued, giving cardholders access to services in 75 buildings across the campus.


CCM in Beta

Greenland Corporation announced that on January 7, 1999, it had installed its first production ready, automated check-cashing machine in Santa Ana, CA for beta testing.  This machine is a freestanding kiosk with automated payroll check-cashing capability, full ATM functionality, and money order dispensing services.  The machine was installed in a multi-service food market.

The Company said that the beta testing has been successful and that testing will continue for a total of 60 days.

The Company anticipates that another test site will be established in the next ten days and that information being gathered will support demographic data regarding the selection of site locations.

Lee Swanson, CEO and President of Check Central, the wholly-owned subsidiary of Greenland that is developing this technology, stated, “The response to the new machine and technology has been very positive.  The storeowner and customers have been very enthusiastic about having this service available to them.  Potential distributors and purchasers who have visited our beta site have been very complimentary of the unit’s appearance and the simplicity in which it provides financial services.  Based on the success of these beta tests, the Company should begin to deliver production units by the end of the first quarter 1999.”