2 Lending ATM Networks Form Superregional Giant

Honor and Most, two of the nation's largest electronic banking networks, have agreed to merge.

Together they will serve much of the eastern part of the country with 19,200 automated teller machines and will process 45 million transactions a month, Honor and Most officials estimated Friday.

Those numbers would place the combined system third in ATMs - behind the California-based Star System and the MAC network in the Middle Atlantic region - and second only to MAC in volume through their central computer switches.

The Honor-Most merger - mirroring the big deals driving banking consolidation - would be among the biggest in the world of multibank ATM and point of sale networks.

Earlier examples include the merger last year of northeastern powerhouses NYCE and Yankee 24; Star's 1994 acquisition of the Cactus debit card program in Arizona; and a passel of MAC transactions dating back to the 1980s.

"We believe bigger will make us more powerful," said David A. O'Connor, president and chief executive officer of Internet Inc., the Reston, Va.- based company that runs Most. "Scale and scope are going to be needed to grow our menu of services and build an infrastructure that can support that growing menu," which he said is likely to include chip cards and home banking.

Mr. O'Connor is to become vice chairman of the post-merger corporation, focusing on long-term strategy.

Thomas O. Bennion, president and chief executive of Southeast Switch Inc., the Maitland, Fla.-based operator of Honor, would keep those titles in the new entity, which is expected to be in place late this year after shareholder and regulatory approvals.

Corporate headquarters will be in Maitland, with offices in Reston, Va., Columbia, S.C., and Altamonte Springs, Fla.

The future name of the company has not been decided, but at least in the short run the two marketing identities will not change.

"Both brands have strong market awareness and consumer loyalty," said Mr. O'Connor. "Any plans to alter the brands will be carefully considered and reviewed by the new board of directors."

Despite the remaining loose ends - decisions also have to be made on whether to self-process transactions, as Honor does, or continue Most's reliance on Deluxe Data Systems - the companies have consummated a courtship that Mr. Bennion said began in 1988.

Early the following year, four contiguous networks - Honor, Most, Relay, in the Carolinas, and Avail, in Georgia - announced a blockbuster merger agreement that would have created the largest ATM network at the time. Most later pulled out of the group, leaving the other three to join forces.

But Honor and Most were still regarded as highly compatible. Both had diversified into member-support services that went well beyond transaction processing and generic advertising, and the superregional banking phenomenon created overlaps in membership and geographical coverage.

Network officials pointed out that each company has 24 equity owners, but only First Union Corp. and NationsBank Corp. are in both groups.

Mr. O'Connor stressed that the merger had complete board support and was not driven solely by the two North Carolina-based superregionals and their desires for simplification.

The new corporation's board is to be evenly divided between current directors of Internet and Southeast Switch. Officials would not disclose the distribution of equity ownership in the combined entity, but suggested it could be gleaned from the board memberships.

The merged company will serve an area stretching from Florida to Connecticut, and west to Arkansas and Louisiana. It will have more than 1,600 financial institution members and 40 million cardholders, plus 120,000 point of sale terminals handling 11 million transactions a month.

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