Analysis: Card Portfolios Shrinking; Assets Stable

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Most credit union credit card portfolios continue to shrink, although total assets remained stable during the first quarter, according to a new analysis.

AssetExchange, a credit card consulting and brokerage firm for credit unions, said several trends are worthy of note from the first quarter, including;

* 59% of credit card portfolios were smaller in March 2003 than in March 2002, continuing the trend of portfolio shrinkage among a majority of credit unions.

* Total card assets grew about 2.5% since March 2002, an indication that growth from a minority of portfolios offset the shrinkage experienced by the majority.

* Reflecting the normal Q1 seasonal drop (due primarily to consumers that pay down debt accumulated over the holidays), 95% of credit union card portfolios shrunk in Q1 2003, with larger portfolios shrinking the most.

Card penetration is gradually falling.

* Penetration has been gradually dropping (in figure above, curves shifting to left over time) due to intense card competition.

* Most CUs have a 10-30% cross-sell penetration of their card into the membership.

* Large CUs exhibit higher card penetration.

* An estimated 10 CU card portfolios were sold in Q1 2003, with total value of about $80 million.

* Portfolios sold ranged from $1 million to $32 million.

* This pace matches the 2002 pace in number sold, but average portfolio size and total dollars is about 50% larger. Almost all transactions were facilitated by brokers.

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