PORTLAND, Ore. – Asset Exchange, the largest independent broker of credit union card portfolios, headquartered in Portland, reported that approximately 21 credit unions sold their card portfolios to banks in the first quarter of 2005 and entered into agent relationships with their bank purchasers. This squares well with Brookwood Capital's report, from Peterborough, New Hampshire, that 22 credit unions sold their portfolios over the same period. The reported card assets that changed hands also coincides well with Brookwood Capital counting $147 million in assets sold while Asset Exchange put the number at $144 million. Asset Exchange also reported that this represents a 17% increase in sales over the same quarter in 2004 and a 14% increase in asset volume over a year ago. Brookwood Capital also noted that the average size of a portfolio bought in the first quarter is slightly smaller than portfolios purchased in 2004, $6.7 million so far in 2005 versus $6.9 million in 2004. Interestingly, Asset Exchange reported that three banks, InfiCorp, TNB Card Services, and Elan divided up the 21 or 22 portfolio sales with other firms, including industry leader MBNA, taking only one. Jim Donahue, spokesman for the Delaware-based card issuer, confirmed that MBNA had only purchased one portfolio in the first quarter of 2005 and said that this was because the monoline issuer had only bid on three portfolios. "We don't bid on every credit card portfolio that comes up," Donahue said. "We only do it when it's good for us and good for the credit union. Sometimes that means only one portfolio might come up or sometimes significantly more." As far as card performance, the usual first quarter dip in card activity in the wake of the strong holiday season cast a pall over a lot of first quarter numbers that the brokerage firm reported. "If you look at card data over the years you will see a wave that has a peak in the fourth quarter which represents Christmas and the holidays," said Frank Selker, president of the card brokerage firm. In the universe of roughly 2,100 credit unions with portfolios of over $1 million, the penetration of card programs into credit union membership continued to drop, likely reflecting the steadily increasing number of new credit union members. In March of 2004, 18.8% of CU member households had their credit union's card. By March 2005, that number had dropped to 18.1%. Since credit cards are usually not the first product new credit union members take, credit card penetration generally lags new member growth, card executives have pointed out. Credit unions' card portfolios continued to decline as a percentage of total CU assets as well, as credit unions continued to move into other loan areas that carry larger assets, such as mortgages. In March 2004, card portfolios represented 4.00% of credit union assets, the firm reported, and by March 2005 the number had dropped to 3.96%. The percentage of card portfolios that grew faster than the rate of inflation in the previous year fell from 46% in the first quarter of 2004 to 44% in the first quarter of 2005. Still, there was a bright spot amidst the overall gloom. Even though the first quarter is the time when cardholders generally draw down their card balances in the wake of Christmas, total card assets in credit union portfolios grew overall over one year ago – although by only1% – from 20.1% in the first quarter of 2004 to 20.9% in the first quarter of 2005, Asset Exchange reported. -

[email protected]