Michigan Gives OK to Credit Union Trust
The special-purpose bank will allow founding credit unions to better serve aging members.
Michigan regulators have approved the formation of Credit Union Trust, a special purpose bank that will allow a group of seven credit unions to provide investment and trust services directly to members, its organizers announced Monday.
While credit unions routinely provide a range of wealth management services for their members, they were unable to directly provide fiduciary services such as trusts until a 2016 change in Michigan law allowed the creation of this new type of limited purpose financial institution.
The seven credit unions applied in July under the new law to the Michigan Department of Insurance and Financial Services’ Office of Banking. When it opens late in the 2019’s first quarter, it will be the first such entity in the state.
Credit Union Trust, which will also be a CUSO, will operate from a leased office in Farmington Hills, Mich.
“We’re pleased and very excited to be moving forward,” said Robert Sajdak, who will be Credit Union Trust’s president and CEO.
Sajdak, an attorney with over 40 years of trust experience, said the approval marks an important advance for Michigan’s 5.2 million credit union members and the credit union movement across the nation. Baby boomers are expected to transfer $30 trillion in assets to their heirs over the next few decades and a trust provides them a way to avoid the time and expense of probate court, as well as a way to minimize estate taxes.
“At a time when many traditional banks and trust companies are raising minimum requirements to more than $1 million dollars, Credit Union Trust is focused on serving all members and will administer a much fuller spectrum of trust accounts and balances,” Sajdak said.
“We will begin immediately implementing a tightly-focused business plan to serve the needs of our founding credit union members, and all Michigan credit union members who previously had to go outside the familiar credit union family for trust services,” Sajdak said. “This is a service whose time has come and it’s one our members need.”
The seven Michigan credit unions had $4.5 billion in assets and 429,578 members as of March 31. They are: Honor Credit Union, Berrian Springs ($878.8 million in assets, 78,620 members); Community Choice Credit Union, Farmington Hill ($1.1 billion in assets, 97,672 members); Alpena Alcona Area Credit Union, Alpena ($339.2 million in assets, 28,375 members); Elga, Burton ($596 million in assets, 69,943 members); Frankenmuth, Frankenmuth ($602.5 million in assets, 42,639 members); Members First Credit Union, Midland ($488.2 million in assets, 62,268 members) and Team One Credit Union, Saginaw ($515 million in assets, 50,061 members).