|
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.
© Copyright 2000; The Green Sheet, Inc. |
