One of the Largest Credit Union Portfolios in the Country Sold off to MBNA as CU Card Portfolio Market Stays Red Hot

RICHARDSON, Texas – The $1.3 billion Texans Credit Union has sold one of the nation’s largest credit union credit card portfolios to card issuing giant MBNA. This is the largest credit union portfolio sale in at least the last two years, according to Kessler Financial Services, MBNA’s portfolio acquiring arm. “This sale is yet another sign of the ongoing strength of the market for credit union card portfolios,” said Steven Fuld, senior vice president with Kessler. “In the first six months of this year,” Fuld added, “we will buy as many portfolios as we did in all of 2003.” According to Asset Exchange, a leading broker of credit union’s card portfolios, 50 credit unions in the U.S. have card portfolios worth over $50 million. Kevin Stewart, executive vice president with the credit union, characterized the sale as strategic, noting that the portfolio had not begun to lose money or otherwise falter. “It seemed to us that credit cards have become increasingly a commodity and we wanted to put our resources into other things while still offering our members a card,” Stewart said. “We went through a process of discerning our needs and soliciting bids and we went with MBNA because theirs was head and shoulders above the others,” he added. Gary Barth, a senior vice president with Asset Exchange who worked on the sale observed that strategic concerns on the parts of some credit unions had always played a role in evaluating whether or not to sell their card portfolios. “Credit unions offer a mix a products and services and have to decide where cards fall in terms of that mix,” Barth added. In addition to its size the sale is also notable as a blow to TNB Card Services, the card processing arm of credit union owned Town North Bank, headquartered in Dallas, Texas. Rollie Penn, executive vice president with TNB Card Services acknowledged that Texans is one of the firm’s largest clients and that the loss was a disappointment. “I think there is always a disappointment whenever a client moves to another firm,” Penn said, “but we understand the underlying reasons they made their decision and we anticipate that we will continue working with our other clients and acquire other portfolios.” Penn said that Texans was actually one of the founding credit union shareholders in Town North Bank, 27 years ago, but he expressed confidence that the credit union and credit union owned-bank would continue a relationship in the future. Stewart agreed, going out of his way to explicitly praise TNB and reiterating that the decision had nothing to do with any problem with the credit union owned firm. Texans has numerous relationships with Town North, Stewart said, and he didn’t anticipate any of those changing any time soon. Penn also acknowledged that, had Texans chosen to sell its portfolio to TNB Card Services, that it would have been a sale that dwarfed other purchases that the firm has made. “We do make bids in the bigger deals,” Penn said, “but it’s true that we haven’t yet been able to bring any of them to completion.” Stewart hinted that the increased resources MBNA could bring to both expanding the portfolio and making the card a first choice of credit union members had played a role in the decision. Under the terms of the 10-year agent agreement, the credit union will share in the program’s ongoing revenue, Kessler said. -