But sources in the card industry said the bank has concluded that the agent card-issuing business is no longer imperative to its core operations and has decided to discontinue it.

Credit unions that currently issue cards with Bank of America have also been told that their contracts will not be renewed after they expire.

Card industry sources estimate that the move will leave between 40 and 50 credit unions around the country with the need to either find another agent issuer or to start reissuing cards themselves.

For its part, the bank explained that it had come to find agent issuing unsatisfactory because it inherently limited the bank to only the credit card business with cardholders.

In a statement about its strategic shift, the bank appeared to allude to this conflict.

“In many cases, our agent-bank business has serviced predominantly single-service card customers with limited opportunity for Bank of America to do more business with them,” the statement said.

Traditionally, Bank of America, like other agent issuers of CU-branded credit cards, has agreed not to cross sell credit union cardholders other banking products and services, and the bank decided that those cross-selling opportunities were those that made the business worthwhile.

“We decided earlier this year that the agent-bank relationship, where we issue cards on behalf of other financial institutions, was not core to our goal of building deeper relationships and we began the process of exiting those relationships,” wrote Bank of America spokesperson Betty Riess in an email.

Industry sources explained that it would be difficult to tell what the former BofA agent credit unions would do in the wake of the bank's departure, since each CU's contract was different. In addition, some of the credit unions were no longer in agent contracts with the bank since the contracts had already lapsed, the sources said.

Essentially, the credit union could buy its portfolio or card accounts back from BofA and take them in-house, sources said. But they added that the bank was a charging a $1 million deconversion fee and often at a premium so that option tended to be expensive.

Jeff Russell, CEO of TMG Financial Services, the card portfolio purchasing and management arm of payment CUSO TMG, confirmed that TMG had heard from roughly 15 of the credit unions that had been with Bank of America, but he declined to discuss individual CU circumstances, citing nondisclosure agreements. A few of the CUs, he said, had opted to start reissuing credit cards with TMG as a processor.

Several former Bank of America agent CUs confirmed Bank of America had informed them the relationship was ending, but they declined to comment on their plans.

Elan also did not return calls or emails seeking comment before press time.

Ondine Irving, founder of Card Analysis Solutions and long a skeptic of CU agent-issuing, applauded the news.

“I think it’s great,” Irving said. “I think the CUs should see it as a gift. They should spend 2012 bringing their staff up to speed and get back into card issuing. Three thousand card-issuing credit unions can't be wrong.”

The Bank of America move comes as the overall market for CU card portfolios remains significantly below where it once was but seemed on track to do better than last year, according to an analysis of CU call report data.

The analysis indicates that only two more credit unions sold their credit card portfolios and entered into agent-issuing programs with the purchasing banks, according to Tim Kolk, president of TRK Advisors, a CU card portfolio brokerage and consultancy.

Kolk reported that, according to the NCUA data, seven credit unions had sold their credit card portfolios as of the end of the third quarter. The two sold in the third quarter represented balances of roughly $23 million, taking the year-to-date total balances sold to $85 million. This puts the total balances sold for this year at over $100 million for the first time since 2009, Kolk said.

“Sales volumes are expected to remain below the high-water marks of 2004-2007 when over 60 portfolios per year were sold. It is uncertain if sales will rebound further from current levels,” Kolk wrote in his analysis. “Potential sellers continue to evaluate the strategy and benefits of such sales, but the desire to generate loan volume and put to use excess liquidity lead many to determine that sale is not prudent at this time.”