First Union Corp. has settled a lawsuit filed by Credit Management Solutions Inc. against the Money Store division and has agreed to buy its credit automation software.

With the settlement, First Union - which bought Money Store in June- gives its relationship with Credit Management, a Columbia, Md., technology company, a fresh start.

As part of the accord, First Union licensed CreditRevue and CreditConnection, the same software for automating vehicle loan processing that Money Store had bought in April 1997 for $1.5 million.

"The CreditRevue software will enable First Union Auto Finance to replace two mainframe-based loan and lease systems," said a bank spokesman. "CMSI's CreditConnection on-line service, which can connect First Union to auto dealers" nationwide, gives customers various access and delivery channels.

First Union is "one of the banks we had targeted as a good prospect," said Nancy L. Weil, senior vice president of marketing at Credit Management.

Until the Charlotte, N.C., banking company announced its intention to buy Money Store in March, conversations between First Union and Credit Management had gone slowly, Ms. Weil said.

In the settlement, the bank's Money Store division agreed to pay Credit Management $283,750, an amount to be credited to First Union's contract. Together with the $375,000 already paid by Money Store, the sum is in line with Credit Management's work on the system, said chief financial officer Robert Vollono.

Though Credit Management officials declined to state the value of the First Union contract, the software company's systems typically range from $500,000 to $2 million, Ms. Weil said.

Though its flagship CreditRevue software is mostly used for direct and indirect auto lending, the 11-year-old company has broadened the product to facilitate loan decisions and processing for recreational vehicles, boats, home equity loans, student loans, and credit cards.

Its CreditConnection service includes a network electronically connecting auto dealers with financial institutions.

The arrangement with Money Store began to sour in January, a month before delivery of the system. Officials from Money Store told Credit Management they wanted to void the contract and refuse delivery of the system.

"We said we had fulfilled our part of the agreement," Ms. Weil said, "and that we expected them to fulfill theirs."

This was not the first time a contractor complained against Money Store. Resolution Providers Inc., an insurance carrier for financial institutions, once sued Money Store for breach of contract.

Credit Management has struggled with declining revenues and increasing losses. Its revenues declined to $3.1 million for the three months ended June 30, compared with $3.3 million last year, and losses grew to $2.6 million, from $1.4 million.

Company officials announced they had hired investment banker Friedman, Billings, Ramsey & Co., Arlington, Va., to "assist us in evaluating strategic opportunities and the potential sale of the company," said James R. DeFrancesco, Credit Management's president and chief executive officer.

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