WINSTON-SALEM, N.C. -- Bank of America has rolled into the market for credit union card portfolios in a big way, picking up one of the largest CU credit card portfolios to have been sold in years.
The $1.1 billion Allegacy Federal Credit Union has sold is credit card portfolio to FIA Card Services, the newly christened name Bank of America has given to its subsidiary MBNA America Bank.
The sale shifts 23,000 card accounts worth $63 million in outstanding balances to Bank of America and away from card processor Fidelity National Information Services. Allegacy was a member of Card Services for Credit Unions, the association of credit unions that process their card accounts with FIS.
"Allegacy is extremely impressed with the dedication to member satisfaction and service that are an integral part of FIA's business practice," said Ike Keener Jr., CEO of Allegacy, in a prepared statement. "Our number one priority was to partner with a credit card organization that shared our commitment to providing exceptional service to our members--we are certain that we have found that commitment in FIA Card Services."
The credit union has not yet returned phone calls to ask about the sale.
Brookwood Capital, a leading independent broker of CU credit card portfolios, brokered the sale.
The purchase marks Bank of America's largest credit union card portfolio buy since the merger with MBNA and may mark the return of a potentially aggressive purchaser to the CU card portfolio market once again.
Prior to the merger with Bank of America, MBNA had said it was out of the market for portfolios under $10 million and then, after the merger, under $25 million. But Betsy Weinberger, spokesman for Bank of America, said FIA evaluates all portfolios on a case-by-case basis.
The parameters that FIA looks at include card portfolio size, Weinberger said, but also things like growth potential in the portfolio along with the CU's history of marketing cards, the number of branches it has, and the relationship it has with its members.
The purchase also marks the first real introduction of FIA Card Services, which is what Bank of America has chosen to name its MBNA subsidiary. The name change comes as something of a surprise since, when the merger was announced in July 2005, MBNA executives expected that their brand might continue under the Bank of America umbrella.
Weinberger, said that the name change had been linked to a formal charter change which was linked, in turn, to Bank of America moving its card operation to MBNA's headquarters in Delaware. She said the company had mentioned the name change in an announcement about the move in early 2006, but that the emphasis had been on the charter change.
She also explained that the move had been necessitated, in part, by the bank's agreements with affinity financial institutions that required the card relationship with Bank of America to remain transparent.
"We have been letting our affinity partners know about the charter change since May," Steinberg said, adding that the actual change had only taken place recently and there was no public announcement of it.
Robert Hackney, president of CSCU, said the association regrets seeing any credit union sell its card portfolio because the association views credit cards as primarily a strong relationship product. --firstname.lastname@example.org