COLORADO SPRINGS, Colo.-While CUs were gaining credit card market share, some needed to pay closer attention to portfolio management.
Bill Vogeney, SVP-chief lending officer at Ent FCU and treasurer of the CUNA Lending Council, suggested that the topic of credit unions not properly monitoring their portfolios "does not get enough attention. I think credit unions took the attitude that people will pay them and that their members had a great deal of economic pressure on their shoulders. That hurt them two ways."
Many credit unions did not get the advanced look they needed into potential problems in their card base, and they could not recognize when members needed and deserved higher limits, noted Vogeney, whose $3.1-billion CU sold its credit card portfolio earlier in the decade. "So you don't have the portfolio growth and you still have the cardholders that will cause loss. It's a double whammy. You have all the delinquencies without the balances."
In Ft. Lauderdale, Fla., Lloyd Gill admitted the $280-million City County CU has learned to more closely monitor its $24-million credit card portfolio after experiencing higher than normal charge-offs. "Last July we pulled updated credit scores plus bankruptcy scores for the entire portfolio and adjusted credit limits and closed lines," said Gill, EVP and COO. "We were very proactive and that was one of the biggest lessons we learned about minimizing losses."
To make up for the losses, CCCU raised its credit card rates across the board by 100 basis points and instituted risk-based pricing. The bigger rate has not deterred the CU's ability to gain market share from banks through its aggressive marketing, noted Gill, who chairs the CUNA Lending Council. "We are still a much better deal than our competitors."
