Worried over the outlook for its corporate, the Iowa Credit Union League is opting to buy a wholesale credit card bank in Arizona and has applied to the Federal Reserve Bank of Chicago to start the process.
The bold plan, which has been in the works since last spring, culminates ongoing concern among state-chartered Iowa CUs about acquiring basic clearance, investment and processing services should Iowa Corporate Central Credit Union, one of the smallest in the corporate network, be merged or consolidated with larger brethren under an NCUA schedule.
The Sept. 18 application, filed on behalf of the Iowa Credit Union League and its Members Group affiliate, seeks to acquire the $16 million CrediCard National Bank of Tucson allowing Iowa CUs the ability to expand into credit card processing as well as gain investment and lending services.
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Though Texas credit unions operate the Town North Bank of Dallas, the Iowa application could face a number of hurdles including banker objections.
For instance, the Iowa Bankers Association said Monday it "became familiar with the application a week ago and now we want to study its implications."
"We've had this controversy before where credit unions try to buy a bank and it has raised eyebrows," declared John Sorensen, president/CEO of the bankers group pointing to what he said was a bid several years ago involving University of Iowa Community CU of Iowa City.
Pat Jury, president/CEO of the Iowa League, said the trade group for months has mulled alternatives to providing low-cost services to Iowa CUs as the corporate crisis wore on and decided access to the banking port hole might be a solution. The league hired Sheshunoff consulting of Austin, Texas to do the research.
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