Fifth Third Processing Expands Reach Into CU Market With Acquisition Of TNB Card Services

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CINCINNATI-Fifth Third Bancorp last week said its Fifth Third Processing Solutions, LLC unit had acquired the assets of credit union processor TNB Card Services from credit union-owned Town North Bank of Dallas.

Town North Bank, once one of the biggest credit card processors for credit unions, said yesterday's announced sale of its TNB Card Services serving 370 credit unions will help the credit union-owned bank rebuild its dwindling capital base, diminished by losses the past two years.

The bank, which sold its credit card portfolio to another big bank a year ago, U.S. Bancorp's Elan Financial Services, said the latest deal was engineered to boost its declining capital, which was at just 1.75% at the end of the first quarter. "We are managing the bank for capital adequacy and liquidity," said Steve McDonald, CEO of the $950 million bank, "The sale of the TNB Card Services division represents significant progress toward our plan to restore capital."

The banking parent reported it lost $29.3 million in 2008 and $73.8 million in 2009, most of it due to losses on its securities. Town North reported $52 million in securities losses in both 2008 and 2009 and a $7.7 million loss on securities in the first quarter of 2010. The bank lost $9.6 million in the first quarter.

TNB Reports Shrinking Assets
Over the last year the credit union-owned bank has gone from $1.4 billion in assets and 263 employees to $955 million in assets and 217 employees.

At one time, TNB was one of the biggest agent-issuers of credit union card programs and provided card services for more than 550 credit unions, as many credit unions preferred to do business with an entity owned by credit unions. The bank was chartered in 1972 by some three dozen credit unions at the advent of the credit card boom to ensure that credit unions could offer cards to their members.

Under the deal, the credit union operation will now be owned by Fifth Third Processing Services LLC, an operation jointly owned by Cincinnati banking giant Fifth Third Bancorp and Advent International, which already services 400 credit unions nationally for ATM and debit card transactions. TNB Card Services will remain in Dallas, where it employs about 135 workers.

More Than One-Million Accounts
The acquisition extends Fifth Third's reach into the credit union market. TNB Card Services currently provides credit, debit, and prepaid cards, loyalty, consulting and ATM driving with a full suite of back-office services to more than 370 credit unions in 27 states and the District of Columbia. Since 1976, Town North Bank, through its TNB Card Services division, has grown to service roughly 1.4 million credit and debit accounts.

TNB Card Services becomes part of FTPS, which is headquartered in Cincinnati, and is one of the payments industry's oldest and largest providers of transaction processing and acceptance solutions for merchants, businesses and financial institutions around the world. Financial terms of the deal were not disclosed. "The combination of TNB Card Services' deep understanding of credit unions and their members with FTPS' commitment to industry-leading technology will deliver an exciting choice to credit unions who are looking for a partner to help them achieve their program goals," said Jesse Gutierrez, president and chief executive officer of Texas Bay Area CU and chairman of the board of Town North Bank.

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