Town North Bank of Dallas, which is owned by credit unions and issues credit cards on their behalf, has agreed to sell that business, including $300 million of receivables, to U.S. Bancorp's Elan Financial Services.
John Reap, Town North's president and chief executive, said it is selling the business to reduce assets and generate capital to offset losses taken last year on the bank's investment portfolio. It posted a $5 million loss for the first quarter, after eking out a $81,000 profit for 2008.
Elan would become the issuing partner for 168 credit unions. It already has such relationships with more than 350 credit unions.
Financial terms of the deal, which was announced this week, were not disclosed. Transfer of the agent accounts from Town North's Nevada subsidiary to Elan is expected to be complete in November. The $1.3 billion-asset Town North has built its agent-issuing portfolio since 2002 by purchasing the portfolios of credit unions.
At the end of the first quarter it had $487 million of credit card loans. The bank would keep a multimillion-dollar portfolio of credit cards issued to its customers.
