GARDEN CITY, N.Y. -- An air of mystery surrounds Command Credit Corp.

Described at various times as a credit card processor, credit card servicing company, and marketer of secured cards, Command Credit seems to be in the process of creating still another new identity.

Command is calling itself an international financial services company. It has offices in New York, Florida, and the Netherlands, and has just completed a six-month flurry of public announcements ranging from affinity card contracts to corporate acquisitions.

"We're definitely doing it with a vengeance," William G. Lucas, Command's chairman, said in a recent interview.

But exactly what is it?

Image Problem

Despite the words and appearances, Command has few cards in force, little money in the bank, and a troubled reputation it can't seem to shake.

"Command does not have a very good reputation throughout the industry," said Don Burman, president of Cardholder Management Services, a card servicer on Long Island. "They are constantly changing their marketing perspective. That in itself creates a problem."

"It's difficult to understand what they do," said Robert M. Bouza, president of Key Federal Savings Bank's card operation in Maryland, and one of the top marketers of cards with credit lines secured by bank deposits.

"They've been around a long time marketing secured credit cards," Mr. Bouza said of his aspiring competitor, "but they never really got a foothold."

Capital-Raising Ability

Analysts and industry observers are particularly struck by Long Island-based Command's ability to raise capital.

Command has not released its earnings for the most recent quarter. In the March quarter, the third of its fiscal year, the company reported $14,736 in revenues and an $811,287 net loss - which was better than the $1.04 million loss a year earlier. For the nine months through March 31, revenues were $105,935 and the net loss was $2.43 million - $275 million more red ink than in the comparable 1992-93 period.

J. Michael Pinson's Investment Digest, a Clearwater, Fla.-based newsletter with 15,000 subscribers, issued a "sell" recommendation on Command in February. It cited the company's continuing losses and its failed attempt last year to acquire Suburban Bankshares, a Florida holding company that was supposed to make it easier for Command to issue and process credit cards.

Taste for Risk Required

A few months after Mr. Pinson weighed in, Tom Fendrich, president of Fendrich Associates Institutional Research Corp. in Lawrence, N.Y., issued a speculative "buy" rating. He said Command's stock was "extremely cheap," with a huge potential for risk-oriented investors.

Mr. Fendrich estimates Command's earnings per share will be 25 cents in June 1995 and 50 cents a year later. To make that, stock would have to trade at $2 or more, while the high in January was 53 cents.

Shares of the stock were trading at midday on Wednesday at 28 cents, up 3 cents from the previous day's close.

At no time since the company began trading on the Nasdaq market in 1990 have shareholders been paid a dividend.

Investors have taken substantial losses: On Sept. 22, 1992, the company did a reverse, 1-for-20 stock split, which bumped the share price up to $5 - the high that year, well up from the 16-cent low. But the price didn't hold for long.

"When a company does a reverse stock split," Mr. Pinson said, "99% of the time it's not in the best interest of the shareholder." But, he added, it can bring the stock up to a level comparable with other small-capitalization firms, which helps attract new investors.

Stock Buyback Plan

This past April, Command Credit announced that it intended to purchase its own stock from time to time. Independently, the company's officers and directors said they would also purchase shares.

To raise money, Command has been issuing a lot of stock. In June 1993, the company had 9,838,580 shares outstanding. By December, that jumped to 16,064,824, and has exceeded 20 million.

Command Credit has relied heavily on foreign investment. Mr. Lucas confirmed the company has sold a small amount of Regulation S stock, typically bought at a discount, to overseas investors, as well as Regulation 144 stock.

The Dutch venture capital firm Noro Group has invested millions in the company and seems willing to continue to bankroll it.

With the June acquisition of Prime Source, a Salt Lake City-based health care service provider, Command believes it may have a return for its investors. It was described as a leveraged buyout, in which Command bought 88% of the company for a stock swap and $5 million in cash.

"One of the things you look at [is] how can I improve the position of the shareholders?" said Mr. Lucas. "How can we make money?

"Well, Prime Source looked like an excellent way to do that."

Medical Credit Cards

The two companies plan to issue private-label medical cards.

Prime Source said it will testmarket cards in September with 20,000 of the patients in its global billing system.

Eventually, Mr. Lucas expects Prime Source to dwarf Command Credit in cards issued, even though Command has signed contracts with 18 affinity groups with 20 million members. Mr. Lucas expects at least 200,000, to sign up for cards.

"With the acquisition and merger, we're going to try to make [health care] their primary business," Mark Kramme, president of Prime Source, said of his new owner.

Command has tried unsuccessfully to issue medical cards before, and has a pending contract with the Teamsters.

Mr. Lucas says little about that deal because many other parties are involved, but he can barely contain his enthusiasm for other pending deals. Most of them come back to Command's core business: secured cards and affinity cards.

"All the big banks are realizing the secured card is not just a niche," Mr. Lucas said. "I think it's the market."

Middle-Class Focus

He said 80% of all consumers are rejected for cards. Therefore, "the only method of getting people into the mainstream is with a secured card. We've gone back to old-fashioned banking."

"More conservative banks are skeptical about areas we go into," he said. "We think the real market is truly the middle class.

"We further defined that market by going after specific groups" for affinity cards, Mr. Lucas added.

Command has contracts to issue secured and unsecured cards to Native Americans through the United Indian Credit Union, African-Americans through Liberty Bank and Trust of New Orleans, and Polish Americans, through Wawel Savings Bank, Wallington, N.J. He is talking to Greek and Irish groups as well.

This type of business could be profitable - if people sign up, said Mr. Fendrich, the analyst. Command will receive a portion of the annual fee, a sign-up fee, plus other financing fees.

In his May newsletter, Mr. Fendrich concluded, "It is not unreasonable to assume Command receives an average $30 per year of operating income for each card."

Bank Sees Magazine Affinity Card Deal as

In signing a deal with Command Credit to issue an affinity card with Essence magazine, Liberty Bank and Trust Co., of New Orleans, hopes to elevate its credit card profile.

But more importantly, said executive vice president Gregory St. Etienne, a deal with a national magazine aimed at black women allows the minority-owned bank to serve the financial needs of groups often overlooked.

"We have similar marketing demographics," he said in an interview. "It was a natural fit and gives us entre from a local-perspective transition to a national audience."

The New York-based monthly will advertise the affinity card in its December issue, said Lorna Gaskin, assistant fulfillment manager.

Terms of the Visa-branded secured card and unsecured card have not been set. Mr. St. Etienne said, noting that both will have an annual fee.

Nationwide Opporatunity

Liberty has a year-old credit card program that has grown to 1,000 customers in Louisiana. This will be the bank's first opportunity to market nationally.

"Hopefully, because it is an Essence credit card, readers and African-Americans will feel they have a better chance of getting credit," Ms. Gaskin said.

Essence offered credit cards in 1987, but the program ran into credit-quality problems, she said "We have to be very selective this time."

The 25-year-old magazine has 950,000 readers.

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