First Financial Management Corp. said its merchant processing subsidiary, Nabanco, has purchased a $170 million portfolio from the Bank of New York.

The portfolio consists of 2,200 small and medium-size MasterCard- and Visa-accepting merchants in New Jersey.

Nabanco, the nation's largest processor for credit card accepting merchants, in May acquired a $700 million portfolio from Chase Manhattan Bank, which brought 5,000 merchants.

"One of our major goals in 1994 is to identify attractive tactical acquisition targets to build and expand our current franchises," said Patrick H. Thomas, chairman, president, and chief executive of Atlanta-based First Financial.

Buying Spree

Earlier this year, the diversified processing company acquired OTI, a Nashville-based data imaging company. It also bought Master Collectors, a credit collections business in Atlanta, and the data imaging division of AT&T Global Information Solutions.

Nabanco, which has its headquarters in Fort Lauderdale, Fla., provides merchant credit card authorization, processing, and settlement. It said it plans to pursue further acquisitions this year as banks continue to exit the merchant side of the card business.

Merchant processing is an economy-of-scale business, a Nabanco spokesman said. Banks, with smaller transaction volumes than nonbank service companies and greater profit margins from issuing cards to consumers, "have not looked at [merchant processing] as a profit center," the spokesman said. "For us, it's a business."

When banks choose to divest merchant portfolios, they rid themselves of costs associated with processing but keep the relationships they have with merchants, he added.

Last year, Nabanco handled more than $54 billion in credit card sales volume. Its two closest competitors are Card Establishment Services in Melville, N.Y., and National City Corp.'s National City Processing Co. in Louisville, Ky.

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