Case Study: Financial Partners Credit Union Sells $32 Million Credit Card Portfolio

In 2001, Rockwell Federal Credit Union re-emerged with a community charter and a new name: Financial Partners Credit Union. The $590 million credit union, headquartered in Downey, CA, had enjoyed success with its credit card portfolio, although growth was beginning to decelerate and the portfolio appeared to be nearing its peak.

The management team at Financial Partners recognized that it would be difficult and costly to compete against the billions of offers sent each year by large national card issuers. They also realized that their card products did not fully address the needs of unique groups within its membership, such as products and services for their Hispanic members or a student card for its Cerritos College affinity partner.

These challenges, combined with the new name and brand, led the Financial Partners management team to consider a credit card portfolio sale. After working with AssetExchange to complete an analysis and gather portfolio offers, the management team proposed to the Board that they consider selling the portfolio. The Board directed the team to conduct a further analysis, which, upon completion, supported the initial recommendation and resulted in the Board’s consent to sell the portfolio.

"AssetExchange did an outstanding job of representing our interests and helping us find the best partner,” said Orlandus Waters, Financial Partners’ Senior Vice President. "They worked directly with our executive staff and board and they never pushed us to keep or to sell our portfolio. They presented us with both options and left the decision to us. AssetExchange brought us five excellent partnership opportunities and helped us through the entire review and negotiation process.”

When reviewing the five potential partners, it was clear that each had unique strengths and capabilities and all were very competitive financially. Financial Partners’ primary focus was on selecting a partner that would provide the best products and services to their members. Plus, it was important to the management team that the resulting partnership be significant to whichever issuer they selected; they did not want to be a “small fish in a large ocean.”

Using these criteria, Financial Partners chose a partner who was able to offer Hispanic cards and services, cards to address the needs of Cerritos College students, and an array of nationally competitive card products.

As part of the partnership negotiations, Financial Partners made arrangements that would allow it to maintain a role in the marketing of the cards, a product the credit union believed was a key financial service.

“Our partner’s first card marketing budget of $800,000 annually was as much as my entire marketing budget for all my products,” said Waters. The credit union has since been able to focus its marketing resources into other product and services.

Since Financial Partners Credit Union formalized their partnership in early 2003, the card portfolio has been growing and the partnership has been considered a success. A common concern – member disruption and service issues – proved to be a non-event as virtually no cardholder accounts have been lost as a result of this transition.

Orlandus Waters has held a variety of positions at Financial Partners Credit Union in the past nine years, including SVP of Business Development (current), VP of Marketing, and Director and Manager of Business Development. Prior to these roles, Mr. Waters spent three years with the California Credit Union League and 11 years with Provident Credit Union (formerly California Teachers Association Credit Union.) Mr. Waters is a frequent speaker at credit union conferences and events, has been featured in major trade publications, and has won awards for his grant proposals. He holds a Bachelor of Arts degree in History and Politics from Sterling College and studied at Washburn University School of Law, Topeka, Kansas, as a Kline Memorial Scholarship recipient.