Only two of the 2,150 U.S. credit unions with credit card receivables of $1 million or more sold portfolios during the third quarter ended Sept. 30, as many buyers still remain wary about overall credit union health, according to AssetExchange, a Portland, Ore.-based credit union card broker.
The two portfolios sold for a combined balance of $12 million, which is relatively low, William Koo, AssetExchange CEO, tells PaymentsSource, a Collections & Credit Risk sister publication. During the same period last year, seven portfolios sold with a combined balance of $93 million, Koo adds.
Credit union card-portfolio sales generally have been adversely affected by the recession. Just 22 credit card portfolios sold during all of 2009, the same as during the previous year.
Indeed, buyers since the beginning of this year have been cautious because of reduced values and increased risk (see story).
Buyers still are carrying over concerns from the previous quarter and are “worried about the overall health of the institution as a whole,” Koo says. “Many credit unions interested in selling are selling because of financial reasons, not strategic reasons, which is a concern for most buyers,” he notes.
During the third quarter, outstanding balances in credit union card portfolios grew by 4.5%, to $35.2 billion from $33.7 billion during the same period last year, reflecting a slower growth rate compared with 7.9% last year. Credit union total assets, which include the sum of all outstanding loan balances, grew by 4.6%, to $794.8 billion from $760 billion, according to AssetExchange.
The number of credit union card accounts during the third quarter grew by 1.6%, to 13.1 million from 12.9 million a year earlier. Cards as a percentage of total assets held steady at 4.4%.
Additionally, the percentage of consumers carrying a credit union credit card remained flat at 17%, primarily because many consumers are cutting down on card use or are unable to open an account because of stricter credit criteria, Koo says.
Credit union card delinquencies decreased 37 basis points, to 1.64% from 2.01% during last year’s third quarter as credit unions began to manage them at a much more aggressive rate while offering consumers better rates, Koo notes.
Overall, credit unions in general are “doing well and are continuing to grow at a healthy rate. But it’s too soon to tell how well they will bounce back until the economy fully recovers,” Koo contends.