MINNEAPOLIS - (03/07/06) -- U.S. Bancorp said last week its ElanFinancial Services unit purchased 35 credit union credit cardportfolios with a total of $138 million in receivables, putting itamong the leading managers of credit union portfolios. Theportfolios ranged in size from under $1 million assets to up to $11million assets. Elan was particularly active in the fourth quarterwhen it purchased 18 credit union card portfolios. Elan says the2005 results reflect a trend toward credit unions outsourcing theircard programs. In 1999, for example, eight credit unions sold cardportfolios that had total receivables of $92 million. Last year, 64credit unions sold card portfolios with $466 million inreceivables, according to NCUA. So far this year, Elan has acquiredfour portfolios including the $24 million portfolio of HarborstoneCU in Lakewood, Wa. After buying a credit union's portfolio, Elanissues cards in the credit union's name, markets the cards,approves card applications, and performs all back-officefunctions.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
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Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
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Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
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