DALLAS — Five years ago, TNB Card Services, the card management and now purchasing arm of credit union-owned Town North Bank, was among the staunchest opponents of credit unions selling their credit card portfolios to banks. No longer. Times, as they say, have changed.
As of last week, the former sale opponent announced that it has purchased more than 120.
"Our goal is to grow credit unions and their membership," said Jay Kurian, first senior vice president of TNB Card Services. "The growth of our agent program is evidence that our approach is working. We appreciate those initial credit unions that trusted us in 2002 to purchase their portfolios. Today we own the portfolios of more than 120 credit unions and our program is growing stronger every day." The most recent five come from the $52 million Potelco United Credit Union, headquartered in Pocatello, Idaho; the $38 million BRECO Federal Credit Union in Baton Rouge, La.; the $59 million Northern Tier Federal Credit Union in Minot, N.D.; the $36 million KEMBA Louisville Credit Union in Louisville, Ky.; and the $13 Salmon Falls Community Credit Union in Somersworth, N.H.
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TNB's purchase of the five programs netted some 5,500 card accounts with nearly $7 million in outstanding balances, the firm said.
All of the CUs listed being able to offer a credit card program that offered their members more value than they believed they were able to do on their own as reasons for the sale to TNB, according to the firm.
"We want to give our members a rewards program, which they have been asking about, yet we couldn't afford to do it on our own," said President Brian Osberg. "We liked what TNB had to offer and the fact that the company is credit union-owned."
Osberg said the sale will make higher credit limits and varied rates available to Potelco cardholders, making the credit union's card more attractive to them. Proceeds from the sale, he added, will go toward other loan products and help finance a fourth branch.
BRECO Federal Credit Union echoed some of Potelco's reasons. The credit union had been thinking about selling its card program for a couple of years, because it just couldn't generate a competitive product, said Ronnie Stephens, president and CEO. "We couldn't offer low transfer rates, teaser rates, or high credit lines," Stephens said, and as a result the card portfolio grew stagnant. "Compliance was also becoming a burden, making it difficult to manage the program in a manner in which we could also grow it."
Stephens said members will benefit from TNB's ability to offer broader and more competitive products. He added that because TNB is owned by credit unions, "that gave us a real comfort level from a non-compete standpoint. Also, we know they'll treat our members the same way we do."
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