In what has become a relatively rare move, a Washington area credit union has sold its credit card portfolio to an agent-issuing bank.
The $518 million National Institutes of Health Federal Credit Union, headquartered in Rockville, Md., has sold its credit card portfolio to Elan Financial Services, a subsidiary of U.S. Bancorp.
NIH FCU members received a July 16 letter from the credit union announcing that new credit cards issued by Elan would be issued in August. The letter did not indicate why the CU made the change and did not reveal Elan's ownership by US Bancorp.
NIH FCU has not yet commented on the sale, but the credit union's financial reporting indicates its capital ratio had fallen from 8.67% in March 2009 to 7.82% as of March of this year. The credit union's peer group has an average of 9.64% in March of this year, according to the NCUA.
Analysis of NCUA data by CU card portfolio brokerages has indicated that the number of credit unions selling their card portfolios to agent-issuing banks have been at record lows since 2008 and suggested such sales have often been driven by issues on the credit union's balance sheet.
Editors Note: David Morrison is a member of NIHFCU.
