MIRAMAR, Fla. - For the better part of four or five years, the flow in credit union credit card portfolio sales has been only one way as some credit unions stopped issuing cards in favor of entering into an agent relationship with a credit card issuing bank. Sometimes they chose to do so because the credit card market appeared to have become too competitive. Other times they sold the portfolio in order to put the premium they earned in the sale to work in some other way. But as the oldest of those agent agreements begin to come up for renewal, at least one credit union has opted not to renew it and to get back into card issuing again. "As far as we were concerned, it was a matter of having control of the underwriting on these cards," said George Lanier, senior vice president for the $1.8 billion Eastern Financial Credit Union, the former Eastern Airlines Credit Union. "We were having members who were being turned down for cards when we perhaps might not have turned them down. It hurt the overall relationship." Four years ago, the credit union sold its credit card portfolio to the First National Bank of Omaha in a move which seemed to make sense at the time, Lanier said. Issues with the portfolio at the time included management and competition at a time when the credit union was preoccupied with other issues, Lanier explained. But soon after the credit union sold the portfolio it began to be aware of the downsides of its decision. "Fundamentally, this is a relationship product and having a relationship product means that the credit union really needs to be involved in how it is managed," Lanier said. "We were never really happy with the way the card product that still carried our name was being run." Lanier said the credit union never had a lot of confidence in how well FNBO knew its South Florida area or that the issuer paid attention to its opinion as the original issuer. "We have a heavily Hispanic local area," Lanier said, adding that there were aspects of that community that FBNO just had never appreciated. Ironically, some of the credit union's concern had to do with the underwriting that FNBO used in managing the portfolio, noting that it was in general too conservative from the credit union's point of view. The irony of this rests in the advice credit card experts frequently offer which holds that credit union's unwillingness to extend credit more frequently is a reason for credit union card portfolios often declining in value over time. A second irony is that this advice seems to hold true even in this case. According to Lanier, the card portfolio after four years of FNBO management stands at 30,000 accounts which, according to NCUA's records, is only slightly larger than where it was when the credit union sold it. But even if Eastern had been delighted with how the card portfolio had been managed, the overall card market has changed enough to make the credit union want to take another crack at it, Lanier explained. One of the biggest changes has been the development of the debit side and the increase in signature debit cards which are increasingly used much in the same way that credit cards are used. The growth in its debit card program made Eastern want to bring both together and to offer a comprehensive rewards program that will offer points for the use of both their credit and debit products. "FNBO put a rewards program onto the card, but we never felt it was comprehensive enough," Lanier said. "We wanted a more comprehensive program that we could integrate better with our debit card program." Lanier said the credit union also looked forward to being able to integrate its card programs into the rest of its products and services by, for example, being able to offer a 25 basis point discount on credit card rates if a member finances his or her car through the credit union and he also confirmed that it plans to process with Certegy to make these changes happen. Certegy declined comment pending the contract being finalized but Card Services for Credit Unions, the association of credit unions that process their card transactions with Certegy said it planned to approach Eastern about membership and was almost exultant about the credit union's return. "It's truly heartening to see this credit union getting back into the card business. Beyond providing a service to its members, issuing a credit card helps to retain members and strengthens member relationships with the credit union," said Robert Hackney, president of CSCU. "By issuing their own cards, they bring the relationship back in house. They determine the underwriting controls and risk tolerance for the credit union as well as the rate, credit limit and card for each member. I think it will help their overall relationship with their members. We've always said that with a little effort, credit unions can compete with the big guys," he added. FNBO did not return calls for comment about Eastern's departure. Meanwhile, the credit union's decision has reverberated across the market for credit card portfolios and led to some speculation that Eastern will not be the only credit union to get back into the card issuing business. "I expect that 95% of the credit unions whose agent programs come up for renewal will renew them," said William (Willie) Koo, CEO of Asset Exchange, the largest independent broker of credit unions' card portfolios. "But there will likely be some credit unions that will opt out and choose to start issuing again." Keith Floen, the manager of InfiCorp, a major credit card portfolio buyer, echoed Koo's comments and noted that such changes in direction are, more or less, regular in different aspects of a credit union's life. "When a credit union changes processors or changes some other third-party provider, it's not that big a deal," Floen said. "Things change, leaderships change, attitudes change. What fit four or five years ago might not fit as well now." Floen was careful to draw a distinction between InfiCorp and FNBO because they each have the same parent company. InfiCorp is owned by the First National of Nebraska, a multi-state, multi-bank holding company located in Omaha, Nebraska which also owns FNBO. Before InfiCorp came into existence, Floen explained, FNBO purchased credit card portfolios and was among their earliest buyers. But now that InfiCorp is handling credit union agent programs FNBO has pretty much left that market, he said. "That account [Eastern's] was never ours and we never handled it," Floen said. MBNA, the largest purchaser of credit union card portfolios, said that none of its agent credit unions had declined to renew its agreement with the Delaware card issuer and that the overall trend is still for credit unions to leave the management of card programs to firms that specialize in it. MBNA is every bit as busy acquiring credit union card portfolios this year as it was last, Hal Erskine, MBNA senior vice president said. [email protected]