Specialty finance companies dominated securitization of credit card receivables and home equity lines last year.
As was the case with other asset types, well-capitalized banks were willing to keep high-yielding loans on the books.
The market for credit-card-backed receivables saw explosive growth in 1994, reflecting a continued boom in the use of credit cards by consumers.
But top issuers were MBNA Corp., First USA Inc., and Sears, Roebuck and Co. The top commercial bank was Citicorp, which ranked fourth.
"This has been a good year for consumers, and that is reflected in credit card trends," said Scot Kaufman, chief financial officer of MBNA in Newark, Del.
Issuance totaled roughly $33 billion, up from $20 billion in 1993, according to Ed Bancole of Moody's Investors Service Inc. He predicted that growth would continue, barring an unexpected economic downturn that could slow credit card borrowing and increase delinquencies.
MBNA, a specialist in affinity card marketing, brought 10 issues to market to raise $5.08 billion, representing a 16.4% market share, according to Securities Data Co.
Mr. Kaufman said MBNA uses securitization for about half of its funding needs. One-third of its funds are raised from deposits, and the rest from medium-term notes, subordinated debt, and purchased funds.
First USA Bank, another credit card specialist, ranked second, with 13% of market share and $4.04 billion of proceeds. Sears, which operates a huge store-card program, ranked third, with $3.25 billion of proceeds.
Among commercial banks, Citicorp, which has the largest portfolio of MasterCard and Visa credit card accounts, raised only $2.32 billion.
The securitization of home equity loans by banks remained flat in 1994, according to Stuart Feldstein, president of SMR Research. Only CoreStates Financial Corp. securitized such loans last year, totaling nearly $270 million in issues.
"Banks are a small part of the market," Mr. Feldstein said. "It's an arena dominated by finance companies. Household Financial alone has a big piece, $4.4 billion."
Banks currently have enough capital to fund these loans without having to securitize them, he noted, echoing experts' explanation of the lack of bank activity in credit cards.
Also, the cost of securitizing loans can be prohibitive, anywhere from $200,000 to $400,000 per deal, said David Olson, a consultant in Columbia, Md.
"The fundamental rule is, you do it a $100 million block at a time," he said.
This year home equity lines of credit did not grow as rapidly as second mortgages at banks, Mr. Feldstein said.
Home equity lines are revolving credit lines that offer homeowners flexible payment schedules. Traditional second mortgages are loans with a fixed amount paid in equal installments every month.
Banks still own about 60% of the market in home equity lines of credit, or $72.9 billion in outstandings, up slightly from 1993, according to Mr. Feldstein.
"It is true that, although at banks the revolving lines are still a larger product by far, there has been more real growth in the closed-end portions than the open end," he said.