Magazine article American Banker

4Q Earnings: Despite Check Decline, Deluxe Profits Up

Magazine article American Banker

4Q Earnings: Despite Check Decline, Deluxe Profits Up

Article excerpt

Strong fourth-quarter earnings at Deluxe Corp. seemed to defy the decline in check usage over the past three years, as paper checks ceded market share to electronic payments.

Because payment tools such as debit cards save them money, banks have been pushing them over paper checks.

However, the largest check printer in the United States is also saving money electronically -- by processing orders over the Internet, which is less costly and results in fewer mistakes than doing so by telephone or mail. In addition, it has beefed up its check-customizing business.

Its fourth-quarter net income rose 9% from a year earlier, to $52.3 million, despite a revenue decline of about 3.7%, to $306.8 million.

Executives at the St. Paul company are confident that the profit growth will continue this year, because checks are still popular with consumers.

"Automatic and electronic payment methods are growing more rapidly" but are "a long way from replacing checks as Americans' favorite way to pay," said Lawrence J. Mosner, Deluxe's chairman and chief executive officer.

There are signs that the check-printing business will continue to shrink in the near future, though. Mr. Mosner and Douglas J. Treff, its chief financial officer, talked about them during an investor conference call Thursday.

Mr. Treff said the drop in revenues reflected fewer checks' being written, particularly during the weak holiday season. Mr. Mosner said Deluxe also "anticipates less conversion activity" -- reissues of checkbooks for customers of an acquired bank -- because the number of bank mergers and acquisitions has dropped significantly since the late 1990s. …

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