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WILMINGTON, Del. – A new player has entered the already crowded market for credit union card portfolios, making it even more likely that credit unions seeking to sell their card assets may command even higher premiums for them. The new player is Juniper Financial, a card issuing bank which has recently been acquired by the Barclays group, a multinational banking company headquartered in the United Kingdom. Juniper has purchased the $700 million Oregon Community Credit Union’s card portfolio which had almost $45 million in receivables as of September 2004, according to NCUA data. The purchase marks Juniper’s formal entry into the very competitive CU card portfolio space, a development which can only be good for credit unions thinking of selling, according to Tim Kolk, managing partner with Brookwood Capital, a broker of card portfolios headquartered in Peterborough, New Hampshire. Brookwood brokered the sale to Juniper. Kurt Campisano, a managing director for Juniper, expected the sale will be the first among many for credit unions who will be drawn to a very personal style of card management and service that he said characterizes Juniper’s approach. “We know that credit unions expect a high level of service and that our competitors in the space provide a high level of service as well,” Campisano said. “But we expect that our tailored service will be better.” Campisano said Juniper will tailor marketing and promotional material about the credit union’s cards directly to the credit union. Some competitors, he explained, might put a credit union’s logo on a card promotion package which is essentially the same from credit union to credit union. But Barclay’s packages will seek to feel just like the credit union’s marketing approach. Juniper’s approach to tailored service might have a hard time getting underway, however. As part of the change over to Juniper, the credit union has agreed to switch its card portfolio over to MasterCard from Visa. “The Oregon Community Credit Union World MasterCard provides new payment flexibility and exclusive benefits to our members,” said Gordon Hoerauf, CEO at Oregon. “We continually strive to offer members the best financial services and the new MasterCard compliments our existing personal banking, investment services, home equity loans, mortgages and auto loan products. Oregon Community Credit Union is pleased to have teamed up with Juniper on this co-branded MasterCard.” Hoerauf said that the idea for switching to MasterCard was Juniper’s and said the card company has exhibited a preference for the nation’s second leading card brand. The credit union had decided that most of its members would not see a strong difference between the two, he also explained. “We discussed it here and determined that there really was not a notable difference between the acceptance and identification of the two brands,” Hoerauf said. “Twenty years ago there might have been, but not any more.” But Campisano said Juniper, which issues both MasterCard and Visa was firmly “agnostic” on which card brand was better and that it had simply made a presentation of different credit card options to the credit union. “Oregon decided to go with MasterCard after determining that the MasterCard option provided the best mix for their members,” Campisano said. “We remain severely agnostic about which brands our partners choose since we issue both. Oregon decided to make the switch.” Whether Oregon or Juniper decided to make the switch, it may be Juniper’s member service reps’ challenge to deal with members who might care whether they carry a Visa or MasterCard in their wallets. This may be an issue particularly for cardholders who have a rewards program on their cards and might not like a new one. The credit union uses Certegy’s rewards platform on their card which opt for rewards and Certegy has pledged to make the transition to the credit union’s new rewards program seamless. But a Certegy executive pointed out that there is no guarantee that the cardholders are going to like the new rewards program better or that all rewards values remain the same. “For example, 25,000 points in one program might not buy you the same things as 25,000 points in another program,” said Dennis Driscoll, a vice president for the card processor which recently moved its headquarters to St. Petersburg, Florida. Why Sell The Portfolio? Oregon decided to sell the card portfolio in a very small part because it had not grown as robustly as the credit union had hoped it would, Hoerauf said. But the primary reason for the sale was to get the capital the credit union wanted to begin to build some branches to serve a new field of membership around the Portland area. When Oregon and Portland Teachers CU broke off their merger talks in 2004, Oregon was left without branch access to serve what it estimated were 40,000 members in the metropolitan Portland area. Selling the card portfolio, Hoerauf explained, would give Oregon the capital it needed to build the branches it wanted to build. “This was more of a situation of the credit union needing capital to get achieve other goals it had,” Hoerauf said, “than of selling the portfolio because it was losing money.” With about 87,000 members and a little under 43,000 card accounts, as of September 2004, Oregon had a card penetration rate of roughly 50%, a high percentage for a credit union. -

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