Ion Bank set to acquire Cheshire auto loan company

The parent company of Naugatuck-based Ion Bank is buying an independently owned and operated finance company specializing in automobile lending.

Officials with Ion Financial announced Wednesday the company has entered into an agreement with Cheshire-based BCI Financial. Terms of the deal, which is expected to close later this year, weren’t announced.

David Rotatori, president and chief executive officer of Ion Bank, said Thursday that the mutual financial institution already has a business relationship with BCI.

“We have bought loans from them before,” Rotatori said of BCI. “We’ve only done a handful of our own each year.”

One of the challenges in establishing an auto loan business, he said “is you need to do fair amount of volume and have relationships with dealers.”

“They (BCI) have relationships with dealers already,” Rotatori said.

BCI has been in business since 1998, said Timothy Rourke, the company’s president and chief executive officer.

“We expect to continue with no change in our operations and we look forward to a mutually beneficial relationship with Ion Financial,” Rourke said. BCI is licensed to do auto loans in Maine, Massachusetts,

New Hampshire, Rhode Island and Vermont, in addition to Connecticut.

Rotatori said BCI originates many auto loans, which the company then turns around and sell to mutual banks and credit unions. When BCI become a division of Ion Financial, “we expect to capture some of that servicing income.” he said.

“We’re looking for other sources of revenue,” Rotatori said. “Our plan is to hold on to some loans that we can’t sell and service as many as we can.”

Because Ion is a mutual bank, it is limited on how much it can grow by the amount of capital it has on hand, he said. Holding on to more of the loans would require having more capital on hand.

Ion Bank has 19 branches in Connecticut and two branches in New Jersey.