The economic downturn appears to have brought the market for credit union card portfolios flickering back to life, although brokers indicated that the market for CU card assets is no longer what it once was.
An analysis of credit union call report data from the first quarter of 2009 prepared by Asset Exchange shows seven credit unions sold their card portfolios since the first of the year. The two largest were the $101 million card portfolio sold by the $1.7 billion Kern Schools Federal Credit Union, headquartered in Bakersfield, California and a $53 million portfolio from the $647 million American First Credit Union, headquartered in La Habra California.
Both credit unions sold their portfolios to FIA Card Services, a card issuing branch of Bank of America.
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Both credit unions faced pressure on their balances sheets, with Kern Schools posting a net worth ratio of 5.44% and American First posting a ratio of 6.44% at the end of March. The sale of the five other smaller portfolios brought the total card assets sold for the quarter to $190 million, the brokerage and consultancy reported.
Even with the poorly performing economy, credit unions card portfolios continued to grow in the first quarter, albeit not as quickly. According to Asset Exchange's analysis, outstanding balances on credit union card accounts grew by 5.9% between March of 2008 and March 2009. This is down sharply from the 16% growth they posted in the first quarter of 2008. The number of card accounts also grew by 2.4% over the same period and this was also down sharply from the 21% growth they posted in the first quarter of last year, the card brokerage, which is owned by card processor Fidelity National Information Services reported.
The call report data also showed that an increase in CU assets overall led to decline of card assets as a percentage of credit union assets to 4.5%. They had been 4.7% in the first quarter of 2008.
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