ST. PETERSBURG, Fla. – Hundreds of credit unions who have PSCU Financial Services process their Visa transactions will be getting checks totaling $20.5 million next month as a result of the Visa initial public offering last month.
The largesse was paid by Visa to PSCU as part of the redemption of shares being issued to all of its members in the IPO. Hundreds of credit unions who were considered principal Visa issuers–they had their own Bank Identification Numbers–received their own payments earlier this month directly from Visa.
But hundreds of other credit unions have their Visa accounts processed by PSCU, resulting in IPO shares for the CUSO, according to PSCU spokesman Merry Pateuk. "In our case, what we’ve decided to do is send that $20.5 million back to credit unions," Pateuk told The Credit Union Journal Friday. "All of the credit unions that are associate members of Visa through us will get checks."
As part of the Visa IPO, all of its issuers, mostly credit unions and banks, but also processors, received shares, then Visa promptly redeemed 39% of the shares at $42.77 each, the price at which the shares hit the market. PSCU received a total of 1.2 million shares. Visa is holding everyone’s remaining shares in reserve to capitalize a fund for potential litigation settlements.
The PSCU board decided at its annual meeting last week to distribute all of the $20.5 million in proceeds from the Visa IPO to its members that issue Visa. "All of the Visa proceeds will go back to our members," said Pateuk.
PSCU still holds 545,000 Visa shares valued at $38 million.
PSCU treated the MasterCard shares it received in 2006 the same way, paying a total of $7.1 million of proceeds from MasterCard stock redemption, $2 million in 2006 and $5.1 million in 2007, to its credit union MasterCard issuers. PSCU still holds 80,000 MasterCard shares valued at $19 million.
Credit unions all over the country scored big gains form their Visa shares. North Carolina State Employees CU received $4.1 million; Patelco CU $2.5 million; Inova FCU, in Elkhart, Ind., received $200,000.
But the biggest winners were the largest banks who conduct the brunt of the Visa transactions. JP Morgan Chase, the largest Visa shareholder, got a $1.5 billion check from the IPO. US Bancorp received a $492 million gain; Citigroup a $349 million gain; Wells Fargo $334 million and National City Corp. $230 million.
Some credit unions that have issued both cards will be able to claim a payment from the Visa IPO, as well as the MasterCard deal. An even smaller number of number will also receive shares directly from Visa, then again from PSCU, because of the timing of the processing agreements with PSCU.
Other credit union card processors are expected to make payout from the Visa IPO as well. Card Services for CUs said Friday it plans to make an announcement this week.
Visa shares closed up $2 Friday at $69.
