CUNA Mutual Group, Suncoast Schools FCU align with others to form first national, `credit union-owned' trust services company

<p>MADISON, Wis. – In what would be a first for the credit union industry, concrete efforts have begun to form a trust services company that would be available nationwide and potentially carve a niche within the millions of member households that seek estate management. A business model for the company has been developed and an application for a national Office of Thrift Supervision (OTS) charter is being finalized, according to CUNA Mutual Group. It is anticipated the application will be filed by early July. Charter applicants include the CUNA Mutual Group and Suncoast Schools Federal Credit Union (SSFCU) in Tampa. If the charter is approved, the new company will merge with Members Trust Co., a wholly owned subsidiary of SSFCU. Alaska USA Trust Co. and other stakeholders, which are not being named at this time, are also assisting in the development of the new organization. Tentatively named MEMBERS Trust Company, the organization would work with credit unions in providing traditional offerings such as estate planning, will preparation and fiduciary services. SSFCU intended to apply for a national charter but that effort was held up until NCUA could address statute 12 CFR 712.3 (a) of the Federal Credit Union Act which allowed a CUSO to act as a corporation under state but not federal law. NCUA changed that provision last September. SSFCU chose to begin discussions with CUNA Mutual in December to align to form a national trust services operation, said Sydney Lindner, CUNA Mutual Group’s director of public relations. The charter applicants plan to work with MEMBERS Development Co., LLC, and other credit union groups to further develop plans for the company. If a charter is granted, company ownership will be open to credit unions and credit union organizations. Currently there is no credit union-owned, “large-scale, cohesive” national trust services organization but there are at least nine individual CUSOs that offer trust services to members, according to Callahan & Associates, Inc. The distinction of being credit-union owned has much to do with forming alliances to deliver trust services without the risk of losing their members to non-credit union competition, said John Henry, CUNA Mutual senior vice president member services, and president of MEMBERS Development Co. “A credit union-owned entity will benefit the movement as control and management of these long-term services will be in the hands of credit unions and credit union entities rather than credit union competitors or individual shareholders, Henry said. “Non-industry partners represent significant credit union risk, and the retention of our most affluent members is at stake,” he emphasized. While it’s still to early to tell which member financial demographic the new firm will target, there is a growing need within the industry that hasn’t been tapped on a large scale, Lindner said. It’s estimated that more than nine million credit union member households fall within the `mass affluent’ category, which means their net worth falls between $250,000 and $2 million, Lindner said. She emphasized that this data is not necessarily the demographic being sought, but just an illustration that there is a need for trust services. Just as important as keeping up with the competition is seeing trust services as a core credit union responsibility, said Tom Walker, president/COO, of Suncoast Members Trust Co. “Assuming the responsibility to help members and their families with special needs is a duty credit unions perform daily in some way,” Walker said. “This national trust cooperative, owned solely by credit union entities, would make available to credit unions trust powers to meet fiduciary and investment needs, further expanding their opportunity to respond to their member’s special needs,” Walker said. Meanwhile, Lindner said it’s still too early in the process to discuss logistics such as where representatives will be disbursed and what will happen to members who are currently doing business with Suncoast Members Trust Co. -</p> <p>[email protected]</p>