The Credit Union National Association said it has borrowed about $4.5 million from member leagues to support its credit card unit.
Peter Crear, interim president of the trade group, said this week that the financing would let it continue credit and debit card processing until the card services division finds a new owner.
CUNA announced in March that it was looking to sell all or part of its card unit. Its board will meet this weekend to approve a request for proposals, Mr. Crear said, which will then be sent next Wednesday or Thursday to the more than 20 companies that have expressed interest in buying the unit or becoming a partner. A letter of intent is expected to be signed in the third quarter, he said.
About 20 credit union leagues have filed letters of commitment to CUNA Service Group, Madison, Wis., for bridge loans totaling $4.58 million. "Bridge financing is coming along much better than I had anticipated," Mr. Crear said.
He added that five or six other leagues would consider commitments before the April 30 deadline, which could bring the total near $6 million.
Iowa League president Tom Griffiths said, "It's encouraging to see how leagues have banded together to help ensure that credit unions will continue to receive top-quality credit card service."
CUNA Service Group had estimated that it needed about $8 million to stay in business. But cost-cutting it adopted at the recommendation of First Annapolis Consulting will produce $3.1 million of annualized savings.
The nation's top processor for credit unions is part of the trade group's for-profit subsidiary, CUNA Service Group. The unit services $5.5 billion of receivables and 4.85 million accounts for about half of the roughly 4,800 U.S. credit unions. It ranks fifth among card processors nationally.
Bank One Financial Card Services, a unit of Banc One Corp., Columbus, Ohio, is now processing 2.2 million credit union accounts.
CUNA said the card unit's first-quarter gross income was 13% above the total for the same period last year. It will not release the dollar number until next week, a spokesman said.
During the quarter, credit unions added about 75 card programs, CUNA said, bringing to 3,000 the number of card programs offered through the unit.
The CUNA Services Group board has named two new ex-officio members: Iowa League president Griffiths and Oregon League executive vice president Sarah Canepa Bang. They replace New York League president Chuck Whitney and executive vice president Frank Capaldo, who resigned after the league decided to move its card program to a competing processor.
