MasterCard Offers Windfall To Its CU Stockholders

 

PURCHASE, N.Y.-MasterCard, one of just two stocks owned by credit unions, announced a major windfall for credit unions with the conversion of closely held Class B shares to commonly traded Class A shares.

The company, which issued Class B shares to its credit union and bank owners as part of its 2006 initial public offering, announced that 7.5 million Class B shares will be eligible for conversion under a four-week program. Effective June 1, all of those Class B shares were converted to Class A shares on a one-for-one basis and now are eligible for sale on the open market.

Class A MasterCard shares, under siege recently because of proposed legislation to lower card interchange fees, closed up 63 cents last Wednesday at $201.02 in the wake of the announcement.

Hundreds of credit unions received Class B shares in the IPO and were forced to hold a large portion of those shares for three years. Credit unions also received Visa shares as part of Visa's 2008 IPO. The two issues are the only common stocks credit unions are permitted to own.

 

CU Card Card Portfolio Sales Likely To Hit New Low In '10

 

PETERBOROUGH, N.H.-Credit unions appear to be on track to make 2010 the year of the fewest sales of credit card portfolios.

During the first quarter, just two portfolios of more than $1 million in outstandings were sold, according to TRK Advisors, LLC. Both of those portfolios were small, with outstandings of between $1 million and $2 million. Since the company began tracking the data, TRK Advisors reported that 2008 and 2009 averaged 22 portfolio sales by credit unions. In 2008, the average portfolio sold was approximately $4.5 million. In 2009, the average portfolio sold was $15 million.

"A portfolio sale takes two willing partners, a buyer and a seller. Both appear to be in short supply," the company said. "Keeping in mind that portfolios sold in the first quarter would have had to start the process in 2009, many credit union issuers were so consumed with CARD Act compliance burdens and mounting charge-offs that they had no energy to do much else with their card portfolios. For the same reasons buyers have become scarce, with only a few active portfolio buyers available today. Uncertain consumer economics and the burdens of the CARD Act have permanently reduced credit card program values and increased risks to all issuers; in short, buyers have become more careful than ever that they are not buying someone else's mistakes.

"TRK Advisors estimated that approximately one-in-five credit union card programs currently are losing money.

 

Failed CDCU Merged Out

 

MARKS, Miss.-First Delta FCU, a community development credit union run under conservatorship by NCUA since last October, will be merged into Shreveport FCU.

First Delta, which has negative net worth, has worked over the years to bring homeownership initiatives, small business services and other lifeline financial services to the Delta Region of northern Mississippi. It originally was named Quitman County FCU.

Under the deal, the credit union's footprint in this new region will be identified as the Delta Division of Shreveport FCU, which is an $82 million Shreveport, La., CDCU with 10% net worth.

 

CU Extends Reach Into Hospitals

 

BROOMALL, Penn.-Franklin Mint FCU, which has branches in nine area hospitals, said it has agreed to acquire Main Line Health Employees FCU, a $52 million credit union serving the local health insurance provider.

Franklin Mint President John Unangst said the roots of the merger were planted in January 2007, when Riddle Health System became part of Main Line Health. He said Franklin Mint is the credit union for employees at Riddle, as well as the Crozer and Mercy health systems. But Main Line Health already had its own credit union, so the two sides began negotiations.

Main Line Health Employees President Frank Dougherty will stay with the combined entity and will be in charge of the three Main Line Health locations as well as a free-standing location Franklin Mint plans to add in the coming year.

The $600-million CU was chartered in 1970and has 28 branches, nine in local hospitals and five in local high schools.

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