ST. PETERSBURG, Fla. -
A number of credit card portfolio analysts have long suggested credit unions should consider how credit cards can help retain and develop relationships with their members before selling them off to the highest bidder. Indeed, some have even predicted that some CUs that chose to sell in the past may be thinking about getting back into the cards business now, but several portfolio experts told Credit Union Journal they aren't ready to cite a trend toward retaining the card portfolio over selling it.
This is in response to statements recently released by AssetExchange in Portland, Ore. and Brookwood Capital in Peterborough, N.H., two companies that offer card portfolio advisory and brokerage services, which said there has been a significant decrease in the volume of sales over just one year ago, and that credit union cards may even be gaining strength in the market (CU Journal, Nov. 26).
"My team will be working with over 50 credit unions this year," said Tom Chandler, director of strategic portfolio consulting for PSCU Financial Services. "We may see some credit unions choosing to sell their portfolios for liquidity reasons, but that's yet to be seen."
Chandler said that in those cases, it tends to be the smaller credit unions, but there is always a chance of "one or two of the larger" CUs doing the same. "It depends on what type of market pressure they are under," Kurian added. "We'll have to wait and see what's happening in the overall market," he said. "I just think there is some hesitation, but not necessarily a decrease."
TNB Card Services, in Dallas, said they also partnered with about 50 credit unions this year, and expect to do the same next year.
"We don't have any real agreement or disagreement," said Jay Kurian, first senior vice president for TNB Card Services. "We've been able to grow a lot of credit unions' portfolios. We don't see it retreating. This is something longstanding-the growth of the portfolio. We've always tried to help credit unions grow their portfolio."
Ent Federal Credit Union, in Colorado Springs sold its card portfolio in 2001, and the $2.4-billion CU's director of ATM and card services, Marilynn Davis, said it was "a very good decision at the time and continues to be a solid plan."
Davis, who is also the director of card services for the CUNA Lending Council, said she is not surprised at the statistics seen by AssetExchange and Brookwood Capital, which show a dozen CUs with portfolios of more than $1 million selling their cards during the third quarter of this year. The statistics also show credit union cards gaining strength in the market, and card balances increasing.
"It stands to reason that smaller credit unions like to keep the relationship with members close to home," Davis said. "That is probably the top concern and complaint for credit unions selling portfolios."
"The credit union portfolio fit seems to have fallen into a 'middle' category, meaning larger credit unions with strong portfolios producing significant income and good marketing structure choose to retain their portfolio," she added. "That means the middle group of credit unions with mediocre portfolios take the business decision to sell."
CU JOURNAL ONLINE SURVEY
This holiday season, we anticipate:
Less credit card spending 21%
More credit card spending 58%
More small loans for holiday purchases 6%
No one will finance a partridge or a pear tree 15%
FOR MORE RESOURCES
Readers can learn more about credit card portfolio analysis at www.cujournal.com by typing the following bolded terms into the search function:
Credit Card Portfolio
Card Portfolio Sales Volume Down
For more info on this story:
* www.pscufs.com
* www.tnbcard.com
* www.ent.com
* www.assetexchange.com
* www.brookwoodcapital.net
