As reported earlier, card portfolio sales activity for 2012 saw a large jump from recent years, noted industry expert, R.K. Hammer-Card Knowledge Factory®. A number of factors have contributed to that activity, stated company Founder and CEO, Bob Hammer. “In addition to rising deal prices, the most interesting thing about card market sentiment now,” notes R.K. Hammer, “is that the rising deal flow has for the first time in a long time cut across all card segments: prime deals, subprime, private label, and even prepaid card portfolios – all stand to benefit.
In the past, the prime card segment seemed to be the only active one, with more pre-sale fairness opinions and valuations and portfolio sales being done in that category.”
“Today, the current street talk is more widespread. Prices for various deals will of course vary significantly by segment characteristics, but will be generally based upon historic & current patterns in portfolio stability, portfolio seasoning, credit quality, active rates, average balances, whether there will be an ongoing agent program post-sale or not, the enterprise viability and brand loyalty of the cardholders involved, the geographic region where card members are located, and the size of the portfolio, among other known factors sought by many buyers.”
“The economic recovery is still improving; issuers’ balance sheets and capital strengthening; lower defaults rates and corresponding loan loss provisions; new marketing; stated buyer interest in doing deals; and rising deal prices - all point to a more active market for card deals again in 2013,” notes R.K. Hammer-Card Knowledge Factory®.
Based upon their current econometric model, the R.K. Hammer forecast for the continued revival of the financial institution community, client discussions, and inquiries from potential card portfolio sellers, Hammer sees broad deal flow by enterprise segment this year (not counting many additional charged-off debt deals).
Unknown future M&A deal flow is exceedingly difficult to forecast precisely very far in advance. “Yet, contained in our deal flow “factor impact list” are the following: in addition to the foregoing, are sellers/advisors expectations realistic; are those expectations equal or above their hurdle rate to in fact attempt a sale; will the current segment interest expansion continue to widen; will funding costs remain stable and low; will charge offs/defaults further moderate; and will card portfolio buyers still see the need to supplement their organic account growth with additional distribution channels like acquisitions.
For more complete card portfolio deal price information for the year on an expected “per-account” sale price basis (within each of the four main credit card business segments), go to rkhammer.com
More about R.K. Hammer
R.K. Hammer has been a leading supplier of valuation/brokerage services for card portfolio sellers and agent card programs for over 22 years - plus as a senior executive officer over ten years with large card companies before that - participating/leading 149 such proposed sale or purchase transactions, representing buyers and sellers. Their due diligence tools and techniques have been cited by leading issuers, processors, regulators and both Houses of Congress, among other regulatory agencies, and used by issuers from the U.S. and 50 countries abroad. Credit card veteran and company CEO Bob Hammer has been in the consumer payments space for over 32 years, and also serves as expert witness for those involved in valuation and contract disputes, and provides interim portfolio management for issuers in transition, in addition to representing card portfolio sellers. For more detailed information, go to rkhammer.com or cardknowledgefactory.com