Online Resources counts the cost of First Virginia takeover
22 January 2003 | 2756 views | 0
Internet banking and bill payment vendor Online Resources says it expects to lose approximately $1.8 million in annual revenue from First Virginia Banks if the proposed takeover by BB&T Corporation goes through at the end of the year.
BB&T Corporation yesterday announced its intention to acquire First Virginia, subject to regulatory and shareholder approval, with the transaction tentatively scheduled to close in the third quarter of 2003.
First Virginia is one of Online Resources’ largest clients, utilising the company’s Internet banking and bill payment services. The current contract between bank and vendor expires on 31 December 2003, and will not be renewed should BB&T migrate First Virginia to its own IT platforms.
Online Resources, which says that it has received no definitive notification from First Virginia as to the impact of the acquisition, derives approximately $450,000 in quarterly revenue from First Virginia, or five percent of total revenues.
In a statement, the firm says: "If First Virginia migrates off of Online Resources’ platform, both revenue growth and margins would be affected."
Given the expected timing of this transaction and the duration of the existing contract, any First Virginia migration will likely have little or no effect on earnings guidance for 2003.