MINNEAPOLIS – U.S. Bank on Wednesday said its Elan Financial Services, one of the largest agent issuer credit card banks, bought a $700 million portfolio of credit card accounts in the name of 28 credit unions and banks from Bank of America, which is exiting the business.
Last year, BofA took a $10.4 billion write-down on its FIA card business in the third quarter, citing deteriorating credit quality and effects from the Dodd-Frank financial overhaul law. The charge helped drive the bank's $7.3 billion loss that quarter.
The accounts now will be serviced under an agent issuing arrangement by Elan Financial, which provides similar services to more than 500 credit unions, according to Terri Charest, spokeswoman for U.S. Bank.
Under the deal, credit union members will continue to see the brand of their credit union and U.S. Bank/Elan Financial will remain “completely invisible,” she told Credit Union Journal. “The financial institution will continue to do all the marketing while we do the behind-the-scenes support.”
Elan made a big expansion into the credit union market with the 2010 purchase of the cards business of credit union-owned Town North Bank, called TNB Card Services, which did business with 170 credit unions.
Elan has acquired more than 500 card portfolios over the past six years. Yesterday’s deal with BofA’s FIA Card Services unit is one of the largest credit card acquisitions Elan has made in its four decades.
Financial terms of yesterday’s deal were not disclosed.
