First Western Bancorp of New Castle, Pa., has agreed to sell its credit card portfolio to MBNA Corp., the second-largest MasterCard and Visa issuer.

Terms of the deal were not disclosed. It is expected to close this quarter or next.

First Western said it expects a net after-tax gain of $6.5 million to $8 million from the deal that covers 72,000 cardholders with an estimated $50 million of outstandings.

The $1.8 billion-asset community bank said it had decided to sell the portfolio because of growing competition in the card business and flat profitability.

Experts said the sale epitomizes a trend among regional and community banks unable to achieve the scale needed to stay competitive with larger issuers that offer more comprehensive customer services and value-added products.

Credit card investment banker Robert Hammer said community and regional banks are selling portfolios because "loan losses are creeping up and cutting into yields, and now is the time to sell. Banks are looking for marketing money to do other things in the company internally."

An MBNA spokesman confirmed it had bought the First Western portfolio but would not comment about specifics. He said First Western would continue to market cards in an agent bank capacity under a five-year agreement. MBNA has 850 such arrangements.

Mr. Hammer, president of R.K. Hammer Investment Bankers, Thousand Oaks, Calif., said there have been 21 deals this year for portfolios greater than $15 million; the total amount sold is $7 billion. Between 50 and 60 portfolios worth less than $15 million each also have been sold.

Over-$15 million sales this year totaled seven times last year's and also exceeded the total in 1989, which Mr. Hammer called "the banner year," when $6.6 billion of loans were sold.

Robert H. Young, executive vice president and chief financial officer at First Western Bancorp, said its card business had been earning 1.2% to 1.3% on assets. The bulk of the portfolio, he added, had been in 57 affinity programs - MBNA's specialty.

"We will redeploy proceeds for local lending opportunities in commercial and consumer areas," Mr. Young said. The bank has "found small-business lending (and) middle-market commercial lending to be more profitable," he said.

An area of primary interest to First Western is indirect auto lending, which David B. Sochol, an analyst at Legg, Mason, Wood, Walker Inc., said has taken a beating lately.

The after-tax gain from the portfolio sale might be used to set up special reserves for the auto loan program, Mr. Sochol said, or for other areas.

The credit card portfolio, he said, was "not terribly material to the company. They've had more success in the commercial and residential markets" and now have "a desire to focus on those and de-emphasize some of the consumer markets."

"They probably didn't feel they had the mass to compete," said Kenneth F. Puglisi, managing director at Sandler, O'Neill and Partners, "and now would be a good time to sell."

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