PETERBOROUGH, N.H. — Seven more credit unions sold their card portfolios during the third quarter, bringing to 17 the number of CU portfolio sales through the first three quarters, according to TRK Advisors here. Those 17 portfolio sales represent $288-million in receivables.
The pace of portfolio sales is below that of 2004-07 when sales averaged between 60 and 70 each year, according to TRK, but the pace is an increase over 2008 when 22 credit unions sold (for less than $100 million in total balances). "It remains to be seen whether current year's pace will continue, accelerate, or decline after most of the requirements of the CARD Act are implemented in February 2010," said Timothy R. Kolk, president of the firm. "The CARD Act could lead to substantial degradation of portfolio values for those credit unions that do not adjust pricing for current levels of market risk or retain fixed rate products, either of which could make their portfolios potentially unsellable under CARD Act constraints. Conversely, the incremental management and expense burdens imposed by the Act may push even more issuers to make the sale decision should they have appropriately priced and managed portfolios."
Since 2001, one in six credit unions with receivables of greater than $1 million have sold their credit card portfolios, TRK reported. This amounts to more than 400 credit unions with card balances totaling approximately $3.3 billion.
