ARLINGTON, Va. – While the final data for 2004 is not yet in, it appears that the number of credit unions selling their credit card portfolios is on par with last year even as an increasing number of CUs have been finding more success managing their card portfolios. According to three credit union card brokerage firms, Kessler Financial Services, the firm which usually brokers cards portfolio sales to card giant MBNA; Asset Exchange, the largest independent broker of credit unions card portfolios based in Portland, Oregon; and Brookwood Capital, a small credit union card brokerage firm based in Peterborough, New Hampshire, roughly 50 credit unions sold their card portfolios through the end of September, 2004. Brookwood Capital reported that through September 30, 2004, 48 credit unions with credit card portfolios of greater than $1 million in outstanding balances sold them, with nine of those having balances of over $10 million and Asset Exchange listed 47 credit union portfolios sold. “Those numbers are essentially accurate from our point of view,” said Steven Fuld, senior vice president with Kessler Financial Services, “though there is always a little bit of difference between numbers depending on how you count,” Fuld said, adding that he found it somewhat ironic that his firm does the majority of credit card sales each year that the other firms list in their statistics. Kessler claims to broker about 70% of the credit union card portfolio sales, the majority of which go to MBNA and Elan, the financial services firm which is a part of US Bancorp. Kessler listed 50 card portfolios sold through September 30, 2004. All three brokers agreed as well that the size of the portfolios sold has increased over last year. Brookwood Capital estimated that the outstanding balances for card portfolios sold in 2004 will likely outpace 2003′s by 30%. “On average, the size of the portfolios sold this year has increased from last year’s average of $7.1 million to $8.2 million each this year,” Brookwood said. “This may indicate a growing comfort level among the larger credit union issuers that such programs are proving themselves out among the earlier, smaller credit unions who lead the way,” the firm added. The continued active pace in portfolio sales might signify that more credit unions choose to sell their card portfolios for reasons other than just feeling unable to adequately compete in the field. An analysis performed by Asset Exchange on NCUA’s most recent data indicated that credit unions improved their credit card portfolio performance in at least one area. While credit cards remained unchanged as a percentage of credit unions’ total assets (4.1%) since September of 2003, a greater percentage of credit unions saw their card portfolios grow faster than inflation, the firm said. Thirty-two percent of credit unions saw their card portfolios grow faster than inflation in 2003, but 48% saw them do so in 2004. Penetration Numbers Fall Fewer credit union members carry their credit union’s credit card, however, as card penetration dropped from 19% in 2003 to 18.5% 2004 through the third quarter. “I am not particularly surprised that penetration rates have dropped,” noted Sue Chrzan, communications manager for Card Services for Credit Unions, the association of credit unions which process their card transactions with Certegy. “Membership has grown rapidly in many credit unions and credit cards tend not to be the first product a credit union member gets,” she said. Chrzan noted that the most recent data that CSCU collected indicates that their member credit union card portfolios do as well or better than average Visa portfolios in three of six parameters. CSCU member credit unions which issue Visa average 4.9 transactions per month versus Visa averages of 4.3 transactions per month. Credit union Visa issuers also have 61% of their accounts billing each month, compared to 55% for the accounts overall and 65% of credit union Visa accounts carry finance charges, compared to 60% for Visa overall. Credit unions lagged Visa averages in average outstanding balances ($1,908 vs. $2,616) average sales draft ($65 vs. $78) and cash disbursements ($355 to $955). Chrzan noted that CSCU and other credit union card issuers and consultants have started focusing on bringing credit unions up to speed on their card management skills and procedures as well as pointing out to credit unions that their credit card portfolios are probably a good deal more valuable than they realize. – [email protected]

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