industry attention, but some noteworthy growth can be detected at the lower echelons.

Some smaller issuers, particularly those that focus on the subprime market, made their presence felt in American Banker's annual ranking of the 50 largest bank card lenders.

Despite the conventional wisdom that only large-scale issuers can survive and prosper, two nontraditional card lenders had moved into the top 50 as of March 31 this year. Both specialize in courting customers with blemished or nonexistent credit records.

One, Cross Country Bank of Wilmington, Del., had $881 million of credit card loans, according to the compilation of first-quarter call report data. That amounted to a 120% increase over the same date in 1998.

The other, Conseco Inc., an insurance company in Carmel, Ind., augmented its modest card holdings in June 1998, when it acquired Green Tree Financial Corp. Conseco's $386 million of receivables was more than double the $136 million reported as of March 1998. (See the rankings on pages 17 and 18.)

Some better-known issuers in the subprime category recorded strong growth in the year as well. Metris Companies Inc. grew 41%, to $5 billion, and Providian Financial Corp. grew 37%, to $13 billion.

"The fastest-growing segment in the industry right now is subprime," said Jerry D. Craft, president of InfiCorp, a consulting firm in Atlanta that manages credit card portfolios. "Issuers that are not figuring out how to serve more of that market are going to continue to be disadvantaged relative to market share."

Though some companies have found opportunities in the subprime or other niches, the overall growth in the industry has been easing.

Managed card loans of all top-50 issuers increased by 5.51%, to $443 billion, over the 12 months through March this year. That was down from 6% and 10% in the two prior years.

To counteract that trend, issuers have been adding Internet products and services, stepping up marketing efforts, expanding overseas, or attempting to squeeze more revenue out of existing customers by tacking on lateness and other penalty fees.

"It is no longer enough just to have a relationship and a competitive product," Mr. Craft said. "If you aren't marketing with targeted efforts to the individual segments, you probably are losing market share significantly."

One target marketer, Banco Popular of San Juan, Puerto Rico, grew 21%, to $793 million in managed loans. The bank courts Hispanic customers in the continental United States and issues -- among other things -- American Express cards in Puerto Rico, where Visa and MasterCard rules against nonbank brands do not apply.

Donald Simanoff, general manager of credit cards and mortgages, based at Banco Popular's office in Orlando, Fla., said card issuers that lack focus have a harder time competing for customers. Serving the Hispanic market is what we do "for a living," he said. "This isn't a part-time hobby for us."

Many of the largest card issuers have set up Spanish-speaking customer service lines and have translated marketing materials into different languages, but Banco Popular says its has a leg up.

Banco Popular has 250,000 card accounts, and does not plan to expand beyond 500,000 to one million accounts, Mr. Simanoff said. "Our plan isn't to be as large as Citibank or Capital One."

Industry experts said they are not surprised to see niche-oriented companies thriving as some generalists leave the business. This year, Chevy Chase Bank sold its $4.9 billion portfolio to Bank One Corp.; Citigroup Inc. bought Mellon Bank Corp.'s portfolio; and MBNA Corp. purchased the bulk of PNC Bank Corp.'s card receivables.

In a measure of continuing consolidation, the top 50 again increased their share of the credit card pie. As of March 31, these issuers accounted for 83.5% of all U.S. card loans, up from 81.3% at March 1998, and 79.7% a year before that.

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.