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A Thing HPS Buys Out Heartland Bank

HPS Buys Out Heartland Bank

     Heartland Payment Systems has dissolved its relationship with Heartland Bank. On May 9 the two organizations agreed to end their partnership on all levels, except to establish a servicing agreement for mutual merchant customers and to develop an agent bank servicing relationship between the two parties. Princeton, NJ will be HPS’s new headquarters.

     Bob Carr, CEO and chairman of Heartland Payment Systems said, “Yesterday we were a 50/50 partner with Heartland Bank in terms of the management and ownership of the company. Our board of directors was made up of members from both organizations. Today, and into the future, our board is made up entirely of a management team and investors that are all an integral part of Heartland Payment Systems. Today HPS is 100% owned by our management team and employees.”

     Heartland Bank will own about 40% of HPS’s portfolio, as part of payment for ending the relationship, but Carr stressed, “Our intent is to continue to service the portfolio until we raise the funds to buy it back later this year. We will continue to service each of these customers and continue to make residual payments to our sales team without any change to our existing program.”

     Over the past months the bank and HPS concluded that the basis on which HPS was formed three years ago did not provide a compelling enough reason to continue to move forward together. Carr stated, “Our rapid growth could not be supported and our position as a significant industry player demanded that our governing board be more focused on the needs of our customers and employees.”

     Heartland’s first steps in creating this new organization began late last year when they sold a portion of their portfolio to finance operating expenses and clear loans with their former partner. At that time, some believed this was a signal that Heartland planned to sell their entire portfolio. According to Carr, “All of our competitors who thought HPS would be sold were wrong. The malicious rumors were false and very frustrating to all of us who had to put up with them.” In fact, on May 20 the company had already replaced 100% of the portfolio volume sold to NPC.

     “I recommend to each of our 14 larger competitors to be prepared to move aside as we move past them one by one over the coming decade, as we charged past the small guys in the last two years.” Carr continued, “Our new structure will allow Heartland to continue our dramatic growth rate well into the future.”

     HPS’s goals include becoming bigger, more efficient, a recognized technological leader in the industry, and one of the best managed and operated companies in the nation. In Carr’s words, “We intend to be the best company in this industry for our customers, employees, and owners. We will never reach perfection, but we will never stop trying to reach that goal.”

     Carr told us that HPS will be acquiring several small and valuable companies, forging new banking relationships, and developing new technology products. They will be adding investors to the company and “hope to make them as much money as we did for Heartland Bank, and that will be no small challenge.”

     Carr continued, “When we first entered this industry in the mid ‘80s I think we would have been surprised to think that before the end of the following decade we could build an infrastructure and organization that could support a $10 billion merchant portfolio. Now, after all these years and experiences, I am convinced that we can grow beyond a $50 billion portfolio, and that is exactly what we intend to do.”

     Carr concluded, “Today is truly a new day, now let’s get to work”

     Heartland Payment Systems provides solutions for payroll processing, traditional and Internet credit card processing, and fraud prevention programs. Heartland Payment Systems began in March 1997 as Heartland Card Services and is now the fifteenth-largest merchant acquirer in the U.S. and the largest, privately held merchant acquirer.

     HPS has 800 employees in 6 large operational and 36 local sales offices across the US. The company provides transaction processing for credit card and payroll products to 40,000 merchants.

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