The turbulent economy and the financial fallout from a data breach contributed to a first quarter net loss of $2.5 million for Heartland Payment Systems Inc., which posted net income of $8.9 million during the same period a year ago. "The economy in the first quarter was worse than expected, and revenue suffered from the combined impact on attrition and [new merchant clients] from economic weakness and the processing-system intrusion," according to the Princeton, N.J.-based processor. Heartland announced in January that hackers breached its network last year and captured the credit and debit card numbers and expiration dates of an undisclosed number of cards (CardLine, 1/20). Heartland posted net revenue of $98.5 million for the quarter ended March 31, up 23.4% from $79.8 million during the same period last year. Card-processing volume grew 17.4%, to $15.5 billion from $13.2 billion. Heartland attributes that growth primarily to the addition of petroleum clients and modest increases in activity among small and midsize merchants. Same-store sales declined 7.6%, and new clients fell 9.7%, according to Heartland. The economy contributed to the decline in new clients, as did the impact from the breach, says Robert Dodd, an analyst with Morgan Keegan & Co., a Memphis, Tenn.-based regional investment firm. Merchants may not have felt comfortable signing agreements with Heartland in the aftermath of the breach when Visa Inc. removed the processor from its list of vendors compliant with the Payment Card Industry Data Security Standard. Heartland announced this month it regained PCI compliance and has returned to Visa's list of approved vendors (CardLine, 5/1). "It is not unexpected that [the breach] would have an affect on everything from sales, attrition, [information technology] expenses and legal," says Dodd. "Across the board, it affects things."