Consider It Calm Before the Storm

Even though recently released statistics (CU Times, Aug. 26) note that credit card programs are performing well and only three credit unions sold their portfolios in the second quarter of 2009, these numbers don’t tell the whole story. Currently, there are a significant number of credit unions actively engaged in conversations with agent issuers like TMG Financial Services despite the fact today’s marketplace provides an enormous opportunity to grow accounts. However, credit unions are taking a hard look at where their core competencies lie. They explain resources are already stretched too far, and they express concern about compliance with upcoming CARD Act regulations. For an increasing number of credit unions, selling their portfolios to a trusted partner simply makes sense. The long-term benefit includes a better credit card program that encourages greater card loyalty that aids future growth across all product lines. Just in the past month, we were presented with more than $130 million in credit card portfolios to evaluate. These are geographically diverse credit unions of all sizes, representing portfolios as large as $70 million and as little as $2 million. The majority fell in the $15 million to $20 million range. We acknowledge some credit unions are selling because it is a way to increase capital or shrink their balance sheets, but most credit unions we talk to are looking at this option because it fits their long-term strategy. When you look at the insignificant number of portfolios sold in the second quarter, realize it doesn’t tell the whole story. Credit unions are looking to leverage relationships and partnerships to ensure their members receive the best products-even if it means selling their credit card portfolio. This philosophy will certainly result in bigger numbers to come.