July 07, 2010
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News: Fifth Third Acquires TNB Card Solutions
Smaller banks and financial institutions have a more difficult time managing credit card portfolios over the past couple of years and many have begun to drop poor performing businesses. It's no secret that credit card portfolios have not been the most appealing portfolios to maintain. Worldwide, individuals have cut credit card spending and turning to other methods of payment. One of the more popular and growing methods have been debit card usage. Although electronic payment processing companies have been losing income from the reduction in credit card spending, there has been a significant increase in debit card payment processing income. This switch in payment methods across the globe has made payment processing companies more appealing in terms of future earnings.
Most recently, realizing the potential for growth, the Fifth Third Card Processing announced the acquisition of the Town North Bank's credit card processing division. Town North Bank is a credit union-owned bank and is one of Texas's largest independent banks. Royal Cole, President of Fifth Third's Financial Institution Division, stated that the bank's intention in acquiring TNB's Card Services is to grow the credit card business and current TNB Card Solution employees do not need to fear any layoffs. Plans are in the future to re-brand TNB Card Solutions into Fifth Third Card Processing Solutions.
It is speculated that TNB sold its card solutions division to generate income after a loss of $73.8 million last year. Things haven't gotten much better as the bank reported a $7.7 million loss on securities in the first quarter of 2010 and a total loss of $9.6 million in the first quarter. TNB's credit card unit has been the most lucrative part of the bank's business producing $118 million of the institution's $175 million in revenue during 2009. TNB Card Solutions services over 370 credit unions throughout Texas. With these added customers, Fifth Third Processing Solutions' card portfolio will grow to over 770 clients.