Industry's first CU-run bank for trust services showing slow but steady progress

<p>DUBUQUE, Iowa – Its growth has not been exactly earth shattering but backers of First Community Trust NA, the nation’s only national bank operated strictly to provide trust services to credit unions, say the project is showing “steady progress” with plans afoot to expand into nearby states. “We may be a little ahead of the curve when it comes to offering our members trust services, but we think this is the right approach to take advantage of what we see will be a tremendous transfer of wealth in the next few years,” observed one of the prime movers in the venture, Robert Hoefer, president and CEO of Dupaco Community Credit Union, Duguque, Iowa. First Community, with $100 million in assets under management, was chartered in Jan. 2001 by the U.S. Comptroller of the Currency as a limited purpose institution to serve trust and fiduciary services to a CU clientele. Founders of First Community include Dupaco and four other CUs in Iowa and one in Illinois. The group includes: University of Iowa Community CU, Iowa City; Collins Community CU, Cedar Rapids; John Deere Community CU, Waterloo; DuTrac Community CU, Dubuque; and IH Mississippi Valley CU, in Moline, Ill. First Community said it has had interest by CUs in Minnesota, Wisconsin, Illinois and Texas to sign up with four or five looking at an affiliation perhaps later this year. “Down the road we expect to add more credit unions but the board felt we should be methodical about this and walk before we run,” said John Disterhoft, CEO of U of I Community CU. Disterhoft is not a board member of First Community since under Comptroller rules governing national banks he cannot become an officer or director. First Community does have the potential to expand into all 50 states and is being eyed as a possible model for national CU trust services, sources said. In the meantime, First Community, originally capitalized at $4.2 million, is projecting growth will surpass $160 million “by this time next year,” said its CEO, Dale P. Repass, a former regional president for the old Firstar Bank in Dubuque, since merged into U.S. Bancorp, Minneapolis. Many of the trust staff in First Community, housed in headquarters here or assigned to each of the CUs, have been drawn from Firstar and Mercantile Bank-Midwest. The president and chief operating officer of First Community is Francis A. Murray, a former senior vice president of Dupaco who previously served 15 years in a trust division for Mercantile Bank. Repass, an attorney, has served as president/CEO of two banks and previously managed trust departments. First Community is offering its Iowa/Illinois client base a full range of services including IRAs, 401K plan trustee, estate planning, executor under will, corporate cash management for non-profits, and conservator for minor children. Repass said First Community with a 10- member board and which started with 38 shareholder investors currently has 275 accounts which vary in size from $10 million in assets to $100,000. “This is a relationship service that needs to be built up over time and so far our members seem quite pleased with the service they’ve been getting though I suppose I had expected a slightly higher growth rate,” said Jean Trainor, president and CEO of the $700 million John Deere Community in Waterloo which has $5.5 million trust assets under management.. The CU’s membership, she said, has to be “educated” about the services and to “differentiate between financial planning and trust services.” Hoefer of Dupaco which has $15 million in trust assets under management said he has been working on First Community for five years “since I felt credit unions were missing a major element of the marketplace.” Hoefer said he was particularly pleased that First Community “received a passing grade in its first exam” from the Comptroller within 90 days of its chartering and that the chief regulator of national banks “loved” the Dubuque firm because its diversification and “its potential as a growing entity.” The Iowa CU executive forecast that within the next 10 years “there will be a tremendous transfer of wealth from the current generation to the baby boomers” and thus CUs need to be ready to take advantage. First Community represents the latest move by CUs to enter the trust field in a major way following on the heels of the formation last year of the state-chartered Members Trust Co. setting up shop in Denver under the aegis of the Colorado Credit Union League and a group of Denver and Colorado Spring CUs. -</p> <p>[email protected]</p>