CoreStates Unit Buying Nationwide Remittance

CoreStates Financial Corp., making a strong bid for leadership in transaction processing for other companies, has announced an agreement to acquire Nationwide Remittance Centers Inc.

The acquisition would combine two of the 10 largest lockbox processors, vaulting CoreStates' Cashflex unit into second place in that business, according to industry sources. Mellon Bank Corp. ranks first.

Upon completion of the deal, terms of which were not disclosed, Cashflex will serve more than 60 financial institutions and process over 300 million individual and corporate bill payments a year.

"This acquisition is about becoming the leading provider of lockbox services in the United States and our strategy to make that a reality," said Lester E. Stockel, chief executive officer at Cashflex. "It will allow us to offer a network of processing locations that greatly expands our ability to provide service to customers."

Lawrence Forman, a consultant at Ernst & Young in New York, called the acquisition "a big deal" in the lockbox market, which is led by a few aggressive cash management banks. "This will make them one of the largest players in the industry and make them a very competitive player," Mr. Forman said.

Philadelphia-based CoreStates has a history of supplying payment and transaction services to other institutions and companies. It was the founder of Money Access Service, operator of the MAC automated teller machine network, now a joint venture of CoreStates and several other superregional banks.

CoreStates acquired Cashflex, an independent processor then based in Clifton, N.J., in 1992 and expanded it by opening new offices across the country.

CoreStates later established Transys, a supplier of check processing services to other banks, and Synapsys, a credit card processor.

The Nationwide Remittance agreement comes about three months after the last big move affecting Cashflex - its consolidation of CoreStates Bank of Philadelphia's proprietary lockbox operations.

The lockbox unit of the former Philadelphia National Bank was a pioneering user of video-image technology in the 1970s. Its consolidation with Cashflex served as an internal endorsement and reflected its commitment to be "a national retail and wholesale lockbox leader," said CoreStates chief technology executive Robert N. Gilmore.

Joseph Loughry 3d, president and chief executive officer of Nationwide Remittance, based in McLean, Va., said the acquisition will give his company and its customers access to state-of-the-art technology.

"We are looking forward to building on the strengths of both organizations to provide the highest quality wholesale and retail lockbox processing services available," said Mr. Loughry, who will become chief operating officer of the Cashflex lockbox division.

The acquisition will bring Cashflex new processing locations in Texas, California, Minnesota, and Georgia. In all, it will have 16 sites reaching from Rochelle Park, N.J., to San Francisco.

CoreStates clearly wants to set itself apart from less committed players.

"Given the challenges and opportunities being faced by the banking industry, many financial institutions realize that they cannot continue to justify investing across all their transaction-processing requirements," said Mr. Stockel of Cashflex. "We are committed to making the necessary investments to be the provider of choice in remittance processing."

The company recently started to install image-enabling systems at all operating locations, and Mr. Stockel said the initiative would continue at the new locations.

"Our goal is to meet customers' needs so well, through quality service and innovative products, that we will be the clear national leader in this business," Mr. Stockel said.

Nancy Bush, a bank securities analyst at Brown Brothers Harriman, said the acquisition is an extension of CoreStates' desire to remain strong in cash management services.

But, she indicated, the contribution of such services to the bank's bottom line remains cloudy.

"There has always been a culture at the bank that emphasizes the cash management business without providing details on the operation's effect on the bottom line," said Ms. Bush.

"These services provide a way for the bank to offset (declines in traditional) banking income, but to what extent we do not know."

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