CU Times Senior Staff Reporter
ARLINGTON, Va. -- Credit unions with smaller card portfolios face a mix of challenges and opportunities, according to NCUA data.
First, according to analysis conducted by Asset Exchange, a card portfolio brokerage and consultancy owned by card processor Fidelity National Information Services, there is not a one-to-one correlation between overall asset size and portfolio size.
Even though slightly more than half of all credit union card portfolios are of $1 million in receivable balances or less, not all of them are owned by CUs of small asset size. According to Asset Exchange's analysis, 12% of CU card portfolios of below $1 million are owned by larger credit unions. In some cases this might be because the larger credit union still owns part of a portfolio that it had previously sold.
"Simply having more assets or resources is not a guarantee of card success," commented Asset Exchange President Frank Selker.
Second, it's no great surprise that small credit union card portfolios have remained small because they often lack the attention and resources they need. In the NCUA data, Asset Exchange pointed out these shortfalls often translate into smaller penetration and holding a smaller percentage of the CU's assets overall.
Finally, everything with smaller card portfolios is not grim. Even though smaller credit union card portfolios have smaller average balances, Asset Exchange pointed out that better card management and incentives such as reward programs can boost them. Further, even with their smaller size, smaller credit union card portfolios do not carry any greater degree of risk or delinquency, Asset Exchange pointed out.
The bottom line is that with proper management and portfolio enhancements and with some help from processors, small credit union portfolios have room to grow.