deals, and experts say they expect more before yearend.

On Friday, SunTrust Banks Inc. announced the sale of its $1.5 billion in card loans -- including the accounts of Crestar Financial Corp., which SunTrust bought last year -- to MBNA Corp.

Two days earlier, Huntington Bancshares said it had agreed to sell its $535 million of credit card receivables to Chase Manhattan Corp.

Both sellers are establishing agent bank relationships. Their names will remain on the cards, but the buyers will own and service the accounts.

The transactions are part of an exodus from the credit card business of banks with modest-size portfolios. Even large banks are finding it harder to compete with the marketing might of the 10 to 12 megabanks and monolines that have come to dominate the card business.

"There is a diminishing profit picture for anyone who doesn't have scale," said David Robertson, president of The Nilson Report, a credit card industry newsletter based in Oxnard, Calif.

"Now that there are a handful of super-portfolios that are reaching out and educating consumers to the possibilities available for added value in a card product, just having a deposit relationship with the customer is insufficient to make your card first in wallet," Mr. Robertson said.

So far this year, 18 portfolios have been sold, totaling about $11 billion in receivables, and more deals are "in the pipeline," said Robert Hammer, president of R.K. Hammer Investment Bankers in Thousand Oaks, Calif.

Mr. Hammer, who compiles an annual tally of card portfolio sales, counted 26 transactions and $32.29 billion of assets sold in 1998, and 22 transactions and $20.80 billion of assets sold in 1997.

"It is not uncommon that as people get to the fourth quarter, and they've gone through their Y2K analysis, and are now able to look at the lines of business they have, there are those who had put off the decision to sell that will now jump in," Mr. Hammer said.

The average premium, or the amount paid above book value for the assets, has been between 16% and 17%, up from last year's average of 13.1%, Mr. Hammer said.

Atlanta-based SunTrust said it expects a pretax gain from the transaction of about $300 million in the fourth quarter. SunTrust's business, corporate, and purchasing cards were not part of the sale.

Lori Appelbaum, senior analyst at Goldman, Sachs & Co., said SunTrust is a "very low-risk, focused company." In credit cards, "they weren't seeing a lot of growth and didn't want to wait for the consumer credit market to turn in terms of credit quality."

SunTrust was the 26th-largest bank card issuer at midyear, according to The Nilson Report. Huntington, of Columbus, Ohio, was ranked 33rd.

Gaylon Jowers, group vice president of sales and marketing at Total System Services Inc., a card processing company in Columbus, Ga., said banks with smaller portfolios usually do not invest in the latest tools. "There is more sophisticated technology available now to grow and manage a portfolio," Mr. Jowers said. "Smaller issuers usually have a smaller number of clients to spread the technology over, making it cost-prohibitive, which puts them at a disadvantage against the top 20."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.