BELEVUE, Neb. – SAC FCU said this morning it has repurchased its Visa cards portfolio from Bank of America, joining the growing list of credit unions reentering the cards market, after exiting a few years ago.
As part of the banking giant’s exit from the card agent business, the $560 million credit union was given the right of first refusal to buy back its $12 million portfolio with 5,000 accounts, according to Bruce Schroeder, its senior vice president of lending. Considering that BofA had failed to grow the portfolio, SAC decided to repurchase it and launch its own cards program, he said.
“The main reason we sold it was that regulations kept expanding and we had trouble growing it,” Schroeder told the Credit Union Journal this morning of the 2006 sale to MBNA, which was later acquired by BofA. “We couldn’t offer some of the programs they could because of economies of scale, like rewards.”
Since then the credit union has grown to become Nebraska’s largest and branched out to additional counties, making its market and potential greater.
The price of the repurchase is unclear, but MBNA paid the equivalent of a 21.5% premium over the value of the portfolio’s receivables and SAC bought the portfolio back for a 3% premium, according to Schroeder.
Plans call for Iowa’s The Members group to service the accounts and to provide a rewards program. In addition, SAC plans to offer a lower risk-based rate on the cards than BofA, and charge a lower fee for cash withdrawals, 3%, compared to BofA’s 4%.
Yesterday, Eli Lilly FCU of Indianapolis announced it has also bought back its Visa cards portfolio from BofA.
