PASADENA, Calif. — After what seemed like a very long anddifficult time, the $3.7 billion Wescom Credit Union has brought anew credit union-owned card portfolio purchaser to the market andmade a splash when it did so, landing one of the biggest CU cardportfolios to have sold in a long time.

Dubbed CU Card Association, the new organization is a jointeffort between Wescom and PSCU Financial Services, a leading cardservicing CUSO. CU Card Association's creation represents a longsought victory in a campaign that saw Wescom first seek to purchasea bank owned by an industrial loan corporation only to renouncethat effort when it stalled due to regulatory and politicalobstacles.

The credit union didn't give up, however, and relatively quicklyswitched to plan B–a strategy that led it to apply for and receivea charter that allowed it to serve members of other credit unionsaround the country by purchasing their card accounts.

Once the new charter was received, the CU moved quickly to getCU Card Association established and to finalize the purchase of itsfirst card portfolio.

That first portfolio belonged to the $136 million CoastlineFederal Credit Union. Headquartered across the country from Wescom,in Jacksonville, Fla., CU President Wayne Harubin said that his CUhad been looking to sell its portfolio since 2004, but had beenwaiting and hoping that Wescom would be the buyer.

“We believe that our card portfolio can be grown,” Harubin said,“but we weren't sure that we were going to be the best people to dothat. We needed the card expertise that Wescom and PSCU canprovide.”

But when Coastline started thinking about selling its portfolioand began working with an independent broker to evaluate it andseek bids, Wescom hadn't even revealed a plan to form a cardpurchasing group, Harubin explained. So Coastline went through theprocess and by the time the CU was getting closer to selling, theywere told of Wescom's effort and decided to hold off finalizing thepurchase to see if Wescom could offer another alternative.

Harubin admitted that it was a longer wait than the CU hadinitially thought it would be, watching as Wescom first tried hardto work with regulators to resolve their concerns and then finallyabandoned the attempt. Coastline wanted to see whether the optioncould come to light because it believed Wescom and PSCU could bringa strong set of options to the table.

First, because Coastline already processed with First Data andhad its card accounts serviced through PSCU, there would be aminimum amount of disruption to cardholders from the sale, Harubinexplained. Second, because it was a credit union, Coastlinebelieved Wescom could offer the deal that fit best with what Wescomwanted to do with the portfolio, Harubin added.

“We are the sort of credit union which took a smaller premium upfront in exchange for a bigger share of the interest andinterchange income going forward,” Harubin explained. The CU hadreceived bids from other card portfolio buyers earlier in theprocess, including from TNB Card Services, the card purchasing andservicing arm of credit union-owned Town North Bank, based inDallas, but in the end it was Wescom that was the best fit, hesaid.

But while Coastline may have been the most patient of Wescom'snewest client CUs, the biggest will almost surely be the $2.3billion Bethpage Federal Credit Union, headquartered in Bethpage,N.Y., which also sold its card portfolio to the Wescom division.Both Wescom and Bethpage have confirmed the sale that, according tothe credit union, will bring almost 14,000 active card accountsworth $30 million in outstanding balances, along with 10,000inactive accounts that Bethpage said it looks to Wescom for help inactivating.

The sale moves CU Card Association into the bracket of bigplayers in the card portfolio market. In the past, when it wasstill MBNA, FIA Card Services, indicated that it considered CU cardportfolios of that size to be its ideal market and one sourcefamiliar with the market said that all the card portfolio buyerswanted the Bethpage deal.

The fact that CU Card Association got up and running so quicklyand captured the Bethpage deal seems to portend it will take a verystrong position in the overall market for CU card portfolios,particularly on the smaller end where TNB has been the only CUplayer.

“As a buyer, Wescom provides a unique alternative to the currentbuyers in the market,” said William Coo, CEO of Asset Exchange, oneof the leading independent card portfolio brokers. “Their entranceto the market provides one more option for credit unionsconsidering a sale, which enhances a credit union's ability to finda partner that will be the best fit. We look forward to workingwith Wescom.”

Another broker, Tim Kolk, managing partner with BrookwoodCapital, said that his firm was also looking forward to workingwith the new firm. “We know the people involved with it and thinkthey are really going to bring a strong alternative for creditunions,” Koch said.

No one from TNB Card Services was available to comment on thelaunch of CU Card Association, but in the past the firm has said itthat welcomes the increased competition. –[email protected]