PR - Credit Union Card Portfolios Sell at Steady Pace

Brookwood Capital has completed its research on credit union credit card portfolio sales activity for the first three quarters of 2007. In total, 47 credit unions with credit card portfolios of over $1 million in outstanding balances sold their portfolios through September 30. Third quarter sales, at 11 portfolios, is down a bit from the pace of the first half of the year. Total balances sold for the year stand at approximately $273 million. On average, the size of the portfolios sold in the first half were $5.8 million. This figure is lower than in previous periods, mostly driven by relatively small portfolios being sold in the third quarter. The third quarter’s largest individual sale was slightly larger than $10 million in receivables. Credit card portfolio sales over the past several years have been as follows:

                   Credit Union           Total                Average
    Year       Portfolios Sold     Outstandings             Size

    2002             41                $285 million         $7.0 million
    2003             59                $419 million         $7.1 million
    2004             67                $459 million         $6.9 million
    2005             65                $481 million         $7.4 million
    2006             69                $466 million         $6.7 million
    Sep 2007       47                $273 million         $5.8 million

Since 2002, more than 14% of all credit union credit card issuers with credit card portfolios of over $1 million in receivables have outsourced their card programs to third party partners, a figure that has been increasing steadily.

Overall, year-to-date results put credit union portfolio sales slightly below the results of the past several years, though last year’s fourth quarter saw heavy sales volume. Similar trends this year could result in sales results which end up being consistent from year-to-year, but that will not be known for another three months.

These trends continue to indicate that credit unions of all sizes are continuing to take a strategic look at their credit card product lines. While these portfolios are nearly always profitable, many smaller issuers are trying to find ways to issue a stronger product set, lowering their institutional credit risk and fraud exposure and improve the bottom line. In some cases outsourcing partnerships can provide such an outcome, but determining if this is so in each individual case requires a thorough and careful analysis.

Peterborough, N.H.-based Brookwood Capital specializes in assisting credit unions in the financial analysis and strategic review necessary to properly consider these decisions.