Credit Card Chief Quits At&T; Post Clash Over Unit’s Direction Blamed For Hunt’s Departure

David K. Hunt has resigned as president and chief executive of AT&T Universal Card Services, signaling turmoil in the telephone giant’s credit card business.

Although AT&T said Hunt’s resignation was a mutual decision, sources outside the company said Hunt, an experienced and respected credit card executive, left because he differed with the parent company on the direction of the credit card business within AT&T. As of June 30, it was the nation’s seventh-largest credit card issuer, with $13.2 billion in outstanding charges and 18 million cards issued.

The resignation of Hunt, 50, was not a surprise within the credit card industry and was actually decided last July, although kept quiet until Wednesday, said Mitchell Montagna, a spokesman for the Jacksonville, Fla.-based credit card subsidiary of AT&T Corp.

Montagna said Hunt, whose resignation was effective immediately, was traveling Wednesday and could not be reached.

In a July meeting with Alex J. Mandl, then president and chief operating officer of AT&T, the two discussed “the direction of the business and David’s personal career directions, and AT&T reached the decision to make a leadership change at AT&T Universal,” said Eileen Connolly, a financial spokeswoman for the parent company.

Mandl resigned in August to start his own company, Associated Communications, which has bought radio spectrum licenses for wireless data transmission in 31 major cities. Connolly said there was “no connection” between the two resignations.

Hunt is succeeded on an interim basis by Gerald A. Hines, executive vice president and chief operating officer. AT&T is looking outside the company for a permanent successor, and Hines is not in the running, Montagna said.

Connolly said AT&T would look for someone with experience in financial services but who shared the parent company’s view that the credit card operation should augment AT&T’s core communication business and not be run as a stand-alone company.

Questions about growth and independence have dogged the company since 1991 when AT&T, using its calling card customers as a marketing base, launched the Universal Card which allows holders to charge more than just long-distance calls.

Hunt joined AT&T Universal Card Services as president and chief executive in May 1993. He had spent virtually all of his prior career at Signet Banking Corp. in Richmond, Va., where he rose to head Signet’s credit card operation. Signet has since spun off its credit card business as Capital One.

During Hunt’s tenure, AT&T launched incentive programs offering lower annual percentage rates on non-telephone charges plus free long-distance calls for using the card. It also began to target marketing at college campuses.

Last April, the company began a controversial program sending unsolicited MasterCards to AT&T card holders. Following industry and consumer criticism, Hunt stopped the mailings in July.

None of the marketing efforts was sufficient to stop AT&T Universal from losing market share. In 1995, AT&T had 7 percent of all cardholder debt owed to the 10 largest credit card issuers, down from 7.9 percent in 1994, said James J. Daly, associate editor of Credit Card News.

The charges on AT&T’s cards grew by a robust 17 percent in 1995, but that was far below its competitors. Growth at First USA, for example, was 59 percent, while MBNA’s grew 38 percent, and Capital One grew 41, Daly said.

AT&T Universal has also been hit, along with the rest of the credit card industry, by a rise in late payments and uncollected debt. For the five months ended in June, AT&T Universal charged off 5.97 percent of the total debt owed by cardholders, up from 4.76 percent in 1995 and 3.24 percent in 1994.

AT&T’s 1995 chargeoffs were about on par with the rest of the industry, Daly said, but the early 1996 figure of nearly 6 percent is on the “high end of normal.”