TNB Card Services is selling its $300 million agent-issued card portfolio to Elan Financial Services, a subsidiary of U.S. Bancorp.
During an interview with Credit Union Times, Town North Bank CEO John Reap explained the bank's decision was based on the economic downturn. TNB Card Services is the card processing and issuing arm of credit union-owned Town North Bank.
"This was a very hard decision, a very difficult decision for us," explained Reap. "But these are very difficult and trying times economically for both the banking and credit union industries and we needed to do something to manage our balance sheet."
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Reap explained that the bank had lost $21 million in its portfolio of mortgage-backed securities and that its capital ratio had fallen to between 7-8%. He reported that the bank had not been approached by its regulator and told to sell assets but decided to do so on its own.
"As you know with that key ratio, you can improve by increasing the numerator or shrinking the denominator. We decided to shrink the denominator by selling some assets," he said.
TNB Card Services issues cards through agent issuing agreements with 168 credit unions, representing roughly 140,000 accounts.
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