The Independent Bankers Association of America has received approval from the Office of the Comptroller of the Currency to charter a credit card bank.

TCM Bank is designed for banks too small to fund and service their own card portfolios, said Linda F. Echard, president of IBAA Bancard Inc., the trade group's credit card processing company. The bank would be a subsidiary of that unit.

TCM-the letters stand for "total card management"-would fund a bank's credit card portfolio, make credit decisions, and offer back office services.

The trade group hopes to have the bank in business by March.

"We live in a society that demands credit cards," said IBAA president Bill Sones, a Mississippi. "It is a financial product customers are demanding, so we need to have it."

IBAA Bancard provides back-office support for 2,000 banks that offer credit cards. The onus is on the bank to fund the portfolio and decide which customers deserve credit.

Ms. Echard said TCM would target 4,451 IBAA members with less than $50 million of assets each. Of that group, only 12% are now involved in the IBAA's Bancard program.

"This is a chance to get our smaller members more involved," Ms. Echard said.

TCM would underwrite and administer Visa and MasterCard credit cards that banks can offer under their own name. TCM and community banks would share interest revenue under a formula yet to be worked out.

IBAA officials are also pitching the proposed service as a way members can offer credit cards without giving large correspondent banks or nonbank companies access to their customers.

"This removes the risk of exposing your customer base to a competitive entity," said David Ballweg, president of Community State Bank, Union Grove, Wis., and chairman of the IBAA committee organizing the TCM Bank plan.

Mr. Sones, president and chief executive officer of State Bank and Trust in Brookhaven, Miss., said he stopped offering credit cards through larger banks partly for fear of losing customers.

The $120 million-asset bank had worked with two larger banks to offer a credit card until both cross-marketed other products to his customers.

Banks that don't want to use nonbanks or larger banks as their card providers sometimes turn to bankers' banks, which act as third-party issuers.

For example, Ken Vaughan, president and chief executive officer of $57 million-asset First State Bank of Clay County in Lineville, Ala., uses Bankers Bank, Atlanta, to service its credit card portfolio and approve credit. In turn, First State Bank earns a small fee from each card.

"We don't do enough business to justify marketing the card," Mr. Vaughan said. "But it is here if people want it."

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