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CHANTILLY, Va. – Online Resources Corp. is giving back about $2 million worth of unclaimed checks, prompting the online banking and bill pay specialist to also restate two years’ worth of financial results. The company – which trades as ORCC on the Nasdaq – had been holding the funds but now will either return the money to the client financial institution or to the appropriate state escheat fund, according to Catherine Graham, executive vice president and chief financial officer. Online Resources has more than 700 clients, including more than 400 credit unions, using its online banking, bill pay and electronic cash management solutions. It serves more than this million end-users and expects to process more than $12 billion in payments this year. Although unclaimed checks account for less than one-tenth of a percent of bill pay checks a year, taking it out of company coffers is enough to delete a penny per share in earnings-per-share for the past two quarters (from the originally reported 11 cents in the first quarter and seven cents in the second quarter). The 2004 EPS was reduced five cents to 20 cents per share and 2003′s EPS from 17 cents to 13 cents per share. The checks average about $50 each and are made out to a wide range of recipients. “It’s hard to characterize them, really,” Graham says. “Some are to large merchants, others are to phone companies and other utilities. Some are to smaller merchants and local businesses, lawn services and stuff like that, or to a non-billing recipient, like a $5 check to Goodwill or something like that. “We find everything from a check that was left in someone’s wallet and never cashed all the way to a merchant correctly posting the check to the customer’s account but somehow never depositing it.” Graham says Online Resources decided to return checks of more than a year or two old, depending on the size, as a matter of policy after discussing the previous setup with legal counsel and accountants. “We determined that in retrospect we were not comfortable taking these funds going forward and decided it was better to give them back to the financial institutions or the states when appropriate,” the company CFO says. “To maintain consistency and accountability, we also needed to restate our prior financials, so we have, and we fully disclosed all the numbers in all the proper public filings,” she says. “I think people understand this is a policy change, that we’re trying to be more conservative, and that it really doesn’t change our business model dramatically.” Graham also says the problem of unclaimed checks is endemic to the bill pay industry and she expects it to lessen as more vendors accept electronic payments. “Everybody has this issue and how they deal with it is all over the map,” she says. “But the impact will be lesser going forward, because more and more bills are being paid electronically, without paper checks being issued.” [email protected]

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