Credit Union-Run Iowa Trust Bank Shows Steady Growth

DUBUQUE, Iowa – It’s a rare, probably unique breed among credit union entities – a national bank for CU trust services – but its organizers contend the venture, now in its third year, is succeeding surpassing $160 million in fiduciary assets under management. “This is a company that has gone very well while the stock market has been down,” boasted Francis A. Murray, the president of First Community Trust NA, a limited purpose national bank whose 10-member board consists of top executives from six Iowa and Illinois CUs. First Community, capitalized at $4.2 million in January 2001, has been offering a wide array of services to CU members ranging from trust estate administration to corporate cash management. Its client list include “individuals from age 1 to 96″ plus a variety of local corporations, non-profits and municipalities. “This is an area that credit unions up to now have not been much of a player, and we think it’s important that we are pro active,” explained Murray, noting also on the service list are qualified retirement plans and rollover IRAs. Part of “the myth about trust services is that it is a sleepy, lazy area” of the financial provider, he said, but “the successful, contemporary investment” firm knows that is no longer the case. For banks, “it was nice to simply have the income,” but in today’s environment, CUs must seek out the business and actively service the member, said Murray, a former manager of St. Louis-based Mercantile Bank-Midwest’s trust division. All of FCT’s client base, it was noted, receive professional investment management advice from the bank’s nine-member staff with three of its officers located at the main headquarters here and the remaining six housed on the premises of six participating CUs in five different communities. The five Iowa CUs include: Dupaco Community Credit Union of Dubuque; University of Iowa Community CU, Iowa City; Collins Community CU, Cedar Rapids; John Deere Community CU, Waterloo; DuTrac Community CU, also of Dubuque, and IH Mississippi Valley CU, in Moline, Ill. Among the clients of FTC, said Murray, is the City of Dubuque which keeps its investment account for excess funds with the firm. FTC, said Murray, also has made presentations to other Illinois-Iowa communities which traditionally keep such funds with local banks. FTC, he said, has also received favorable reception from charitable and philanthropic foundations in Dubuque, Waterloo and Iowa City. “We’ve been able to land Boys and Girls Clubs and the Humane Society, for example,” he said noting there are some “deals yet to be closed.” Overall success of FTC has also been attributed to some large employer benefit plans that were initially moved to the Dubuque firm once FTC was chartered by the U.S. Comptroller of the Currency, the agency that regulates national banks. Rick Benhart, president and CEO of the $330 million Collins Community in Cedar Rapids, said FTC entry into the market proved highly beneficial to his 52,000 members following Rockwell International’s year-ago spinoff of its Collins Radio Division in Cedar Rapids. “We saw tremendous activity at the time,” recalled Benhart as members were faced with a changing benefit program and a diversification of assets following the stock spinoff. “Our members, many of whom did not have a broker, knew they had a trusted partner and could come to talk to us,” said Benhart. Dennis Hall, president of the $470 million IH Mississippi Valley CU in Moline, said the trust service is something his members “have demanded from us and now is something we can offer.” In the past, “if something happened to a member, they would approach the bank and a trust officer there who would cross-sell the member checking and other services and we would lose out,” said Hall In reviewing its success to date, FTC notes that 50% of its trust clients are non-CU affiliated “which gives the credit unions the opportunity to cross-sell membership.” FTC also has cash management accounts with four of the CUs which were not identified and it has completed two “successful national regulatory examinations.” FTC concluded that it maintains “a strong educational commitment to credit union members with over 60 seminars conducted in five different markets.” -