SOURCE: TransUnion

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October 24, 2016 09:00 ET

TransUnion's Prama(SM) Analytics Finds Energy-Reliant States Still Underperforming the Nation, While Recent Vintage Credit Card Loans Performing Worse

CHICAGO, IL--(Marketwired - October 24, 2016) - New data powered by TransUnion's (NYSE: TRU) Prama℠ analytics found that more recent vintage credit cards are performing worse than those issued earlier. Serious credit card delinquencies for energy-reliant states also continue to see larger yearly percentage increases. The latest findings, including data through the end of September 2016, were released at the Money 20/20 Conference in Las Vegas.

"The third quarter of 2016 is only a few weeks past, yet we are already able to see Q3 trends in the credit card marketplace via our Prama environment that could impact the lender-consumer dynamic," said Paul Siegfried, senior vice president and credit card line of business leader at TransUnion. "In particular, we see underperformance of newer vintage cards compared to those from past years, despite the general improvement in the economy over time. We believe these increases are being driven in large part by the recent expansion of card credit by issuers to non-prime consumers, and the related growth of balances on those cards."

TransUnion's Prama Insights Vintage Analysis shows that the 90-day delinquency rate of credit cards six months after origination stands at 2.95% for 2015 originations, in contrast to 2.18% for the 2014 cohort and 1.50% for 2013.

As recent vintage delinquencies rise, the national average for serious credit card delinquency across all cohorts increased to 1.53% in Q3 2016. This is the highest level observed during the third quarter since a Q3 2012 reading of 1.65%. TransUnion analyzes year-over-year metrics to account for seasonality. "While we are seeing a slight uptick in credit card delinquencies, it should be noted that the current reading is nearly half of the almost 3% delinquency rate of Q3 2009," added Siegfried.

Energy States Continue to See Rising Delinquencies

Earlier this year, TransUnion conducted an analysis of energy state performance, which found that states such as Oklahoma, Texas, West Virginia and Wyoming were experiencing elevated levels of delinquency compared to the rest of the nation. Six months later, credit card delinquency rates for these energy-sector states continue to grow faster than the rest of the U.S.

Energy State Credit Card Delinquency Performance --
Yearly Serious Delinquency Percentage Increase/Decrease

Credit Product  
Years
 
U.S.
 
Oklahoma
 
Texas
 West Virginia  
Wyoming
Serious Credit Card Delinquency % Change  Q3 2014 - Q3 2015  
6.7%
 
15.9%
 
11.4%
 
9.5%
 
9.7%
 Q3 2015 - Q3 2016  
6.3%
 
11.9%
 
10.2%
 
15.6%
 
20.4%

Energy states have also seen debt levels rise up to 5% between Q3 2015 and Q3 2016 -- higher than the national average. National credit card debt per borrower rose 1.8% from $5,229 in Q3 2015 to $5,323 in Q3 2016.

"The yearly percentage increase in credit card delinquencies continues to rise for energy dependent states," said Siegfried. "Many of these states may see continued pressure on their delinquency rates for at least two or three quarters after oil prices finally rise significantly. There is generally a lag for energy sector companies to ramp up their hiring, and for those newly employed to gain the benefit from their paychecks in catching up on past-due debt service obligations."

"These two trends -- the vintage dynamic and the energy sector delinquency effect -- are a great illustration of the diverse forces that impact the consumer card market," continued Siegfried. "The former is due largely to strategic choices by card issuers, while the latter is a result of economics. It is the interaction of these types of forces that make the lending marketplace challenging to understand without the right data and analytical tools."

Prama Analytics Allows Lenders To Explore Latest Credit Trends

Given the constantly evolving lending market, earlier this year TransUnion launched Prama, a groundbreaking suite of solutions changing how companies explore data and act on insights. Prama puts the power of broad, deep depersonalized data and the reliability of superior analytics at the customer's fingertips -- giving them the information they need to make better decisions at the speed their business demands.

The Prama suite of solutions currently consists of Prama Insights and Prama Studio. Prama Insights includes two modules -- Market Insights and Vintage Analysis. The Market Insights module provides quarterly views on key lending metrics at a state, regional and national level. The Vintage Analysis module allows users to view seven years of their own depersonalized performance data spanning the life of each loan (i.e. delinquency, charge-offs, bankruptcy) and to benchmark their performance against the industry and their peers.

TransUnion recently began offering its first module for Prama Studio -- Attribute Manager. Attribute Manager allows customers to develop attributes, modify attribute definitions, and centralize the development and management of attributes. This allows them to achieve efficiency through standardization and reuse of attributes across various models and lines of business.

"A recent study found that seven in 10 lenders wish they had direct, immediate self-service visibility into their analytics, and we believe the Attribute Manager module will help lenders better determine how they can react to new data sets such as our latest findings about energy reliant states," said Steve Chaouki, executive vice president and head of TransUnion's financial services business unit. "Attribute Manager gives all types of lenders the ability to better compete against their peers by extracting more value from data to meet their growth, risk and compliance goals."

Additional information about Prama can be found here. To learn more about the TransUnion data analytics study please visit http://solutions.transunion.com/analytics.

About TransUnion (NYSE: TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

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