NetSpend will move some of its prepaid card business away from MetaBank.
In a filing today, NetSpend indicated that it has signed non-binding agreements with The Bancorp Bank (TBBK) and H&R Block Bank.
Since October 6th, NetSpend concluded that the OTS' Supervisory agreement restricted the ability of MetaBank to service any new relationships with MetaBank distributors. In other words, if NetSpend reached an agreement to put its cards in the offices of a retailer, they would not be able to use MetaBank as the issuer of that card. NetSpend has new distribution partnerships in the works, so the ruling
would have mean they would have to pass up about $1 million in annual revenue.
The Bancorp Bank is an $2 billion online commercial bank in Wilmington, Delaware. They have one branch, characterized by the FDIC as a full-service cyber office, with $1.9 billion in deposits. Bancorp's primary regulator is the FDIC. Bancorp has more assets than MetaBank and Block Bank, combined. Block Bank's has $770,000 in deposits, all located within a traditional bricks-and-mortar branch at Block's world headquarters in Kansas City. Block's primary regulator is the OTS.
The Bancorp Bank is an issuer of the RushCard. Block Bank issues the Emerald Card.
The letter of intent with Block does not mean that NetSpend cards will again have a line of credit. There is a line of credit, known as the Emerald Advance, available to customers of Block's Emerald Card.
Kathy Barney, President of Block Bank, said "the LOI with NetSpend only contemplates HRB Bank being an issuer of prepaid debit cards."
It puts a new spin on the prospects for tonight's NetSpend IPO.
The SEC filing says that the agreements are not yet definitive.