Shifting consumer attitudes, compressed margins, new competitors and everchanging technology provide impetus for credit unions to drive their assets. Such as with TMG Financial Services’ innovative credit card portfolio investment opportunity.
Des Moines, Iowa-based CUSO TMGFS created an option for credit unions considering the sale of their credit card portfolios. The Collateralized Advance Program allows credit unions of all sizes to invest capital into credit card assets through a collateralized loan to TMGFS. Credit unions can also ensure critical card assets remain in the credit union industry.
With funding from CAP, TMGFS purchases credit card receivables while collaborating with the seller to maintain a healthy, sustainable and cardmember-friendly program. CAP investors receive competitive yields based on soundly underwritten assets.
Without such a program, large national banks, which rarely manage the portfolio with card members’ best interest in mind, can snatch up the accounts, according to Ben Rempe, vice president of business development for TMGFS.
TMGFS’ creation in 2007 developed from a separate but collaborative partner, TMG, a technology-driven card processing and payment solutions company. TMG, in business since 1986, provides services for credit unions and community banks across North America. The TMGFS origin resulted from an increasing desire by credit unions to evaluate the sale of their portfolios with a partner that shared their people-over-profits philosophy.
“When we were started 10 years ago, there were a lot of different ways we could have structured ourselves, we could have decided to become a bank, credit union, corporate credit union,” Rempe said. “What we decided to do was set ourselves up as a non-depository financial institution with a lending license in all 50 states.”
Rempe explained over the last ten years TMGFS went from not having any credit card balances that they issued to today as one the 65 largest credit card issuers in the country. “We have portfolio balances of over $220 million and we’ve utilized that $220 million worth of credit card portfolio to use as collateral to borrow $220 million from credit unions.” TMGFS is a MasterCard issuer, and processes through First Data.
Read more about collateralizing credit card assets in the April 12, 2017 print issue of CU Times.
