Credit unions which own the $955 million Town North Bank may face a call for additional capital to support it going forward, according to analysts asked to review the bank's financial reports.
The financial analysts stressed that they based their observations of the bank's financial health solely on its reported data and each acknowledged that the bank's true condition, as revealed in an on site audit or exam, might be better than it appeared on paper. Nonetheless, each said Town North's financial condition dictated its sale of both its large agent-issued card portfolio to Elan Financial Services in 2009 and its card transaction processing unit last week.
The Dallas based, credit union owned bank had reached the brink of being undercapitalized when it sold it card processing business on July 6.
The processing sale represented a sharp change of direction for the bank. After the sale of its agent-issued card portfolio in May of 2009, the bank went on the record insisting that it planned to stay in the card processing business. It sold the card processing operation to Fifth Third Processing Solutions just over one year later.
Credit unions formed a CUSO to purchase the bank in 1974 and have owned and run it ever since. Thirty-six credit unions were part of the CUSO that owns the bank in 2007, but the bank has not revealed if that number has changed.