McDonald formally took the reins after the retirement of the bank's 15-year CEO John Reap.
"Steve's strong financial background and close ties to the Dallas community made him the ideal candidate to take over the reins at Town North Bank." said Jesse Gutierrez, chairman of the board of Town North Bank and president of Texas Bay Area Credit Union. "We have every confidence that he will continue John Reap's legacy, which has been instrumental in empowering credit unions with the ability to compete against national card issuers through its TNB Card Services division."
The Dallas-based bank's card processing subsidiary, TNB Card Services, is a leading processor for CU credit and debit cards. TNB Card Services was also the leading credit union-owned CU card portfolio buyer until earlier this year when balance sheet pressures at the bank forced the sale of its entire agent-issued portfolio to Elan Financial Services.
McDonald said that the bank had retained its own card portfolio and would continue to grow that for the near term. It also remained firmly committed to helping credit unions better manage and grow their own portfolios, McDonald said, and added that the bank would likely reevaluate the possible purchase of card portfolios again in the future.
"Buying card portfolios was never our primary focus," McDonald pointed out," it was just something we started because we thought we could help credit unions retain some relationship with their members and keep their card assets."
McDonald past experience had included senior executive positions with both public and private financial firms, including a term as chief financial officer of Household International, a leading card issuer that was merged with Household Finance Corp. to become HSBC Finance Corp., a subsidiary of the multinational HSBC Bank Group.
McDonald came on board as executive vice president and chief financial officer of Town North in September 2008 with the plan to assume the CEO position once Reap left. The only question mark had been the precise timing of Reap's departure, but McDonald and other TNB executives insisted that the transition was no secret in the institution, which has kept a noticeably low media profile for years.
McDonald and TNB Card Services executive vice president Scott Wagner insisted that Reap's departure had been long planned and was not at all tied to any question of the bank's performance. But McDonald acknowledged that Town North had been having a rough time, economically, as had other banks and credit unions, even as he remained optimistic overall about Town North's prospects.
According to the bank's reports to the FDIC, Town North's income took a hit of almost $30 million as of the end of 2008, with negative returns on both assets and equity, and the situation did not look that much better as of June 30, 2009. According to the bank's second-quarter report, Town North is running almost $21 million in the red.
But McDonald expressed confidence that Town North had a fundamentally sound position in a community which has been fairing better than others through the economic downturn.
"The area we have our primary presence, the North Dallas corridor, is doing very well even in the downturn, and we anticipate our loans there will keep on performing well," McDonald said, adding that the banks own cards and card processing business continued strong.