Nearly eight years after its launch through Boeing Employees Credit Union, BECU Trust Co. is moving in a much bigger direction.
On July 7, BECU Trust announced its plans to merge with MEMBERS Trust Co. Under terms of the merger agreement, BECU Trust will gain an ownership interest in MEMBERS Trust. Headquartered in the Seattle area, BECU Trust has over $165 million in assets under management. The Tampa, Fla.-based MEMBERS Trust has over $700 million in assets under management.
If approved, the merger would create one of the industry’s largest credit union-owned trust companies. The $4.3 billion Alaska USA Federal Credit Union said it has $13 billion in assets under management and administration with the bulk of its business coming from institutional investors rather than members.
BECU Trust will retain its name and become a division of MEMBERS Trust. The operational element will be transferred to the Florida office, said Gary Oakland, president/CEO of the $9.6 billion BECU. While there will be no layoffs, some staff may relocate, he added. Linda Davenport, senior trust officer, will oversee BECU Trust in Washington.
Through the trust company, members and nonmembers of the credit union with assets of $500,000 or more have access to investment management, trust administration, life and estate planning and settlement services, according to the BECU website. Oakland said unlike some trust companies that require higher thresholds for assets for service, BECU Trust offers flexibility.
Meanwhile, the search for merger candidates did not come from BECU Trust having shaky financials, Oakland said. The trust company had met all of its projections since opening for business in 2003 and remained on solid footing on its growth path. Rather, it was management turnover at BECU Trust that prompted the firm to want to maintain its successes through stable leadership.
“The original CEO retired about two years ago,” Oakland said. “Her replacement came in but had to head back to the East Coast because of family issues. We were without a CEO.”
Serious discussions about BECU Trust’s next steps followed with a review of local and national trust companies as potential merger partners, including MEMBERS Trust, Oakland said. Those talks also included the option of remaining independent.
In the end, BECU Trust felt that an alliance with MEMBERS Trust was the right one for several reasons. Oakland said the organization was in keeping with the cooperative model and the merger would still give BECU Trust the ability to design its local presence in a way that would benefit members the most. Their investment criteria were also very similar. Having like minds was key when it comes to serving members’ unique estate planning and investment needs.
“Any time you start talking about investments especially after the [market] hits since 2008 and 2009, I think there has been more of a value placed on the recognition of what trust companies can bring,” Oakland said. “Most places wont’ talk to someone with under $1 million in assets; at other places, it’s $5 million. We don’t do that.”
For its part, if approved, the BECU Trust merger would be the second one for MEMBERS Trust. In 2007, a Members Trust Co. of Colorado merger brought in $100 million in assets. Launched in 2003, it had 49 agency offices and 21 representative offices as of March. Its credit union owners had a collective $80 billion in assets.
“When I think of this merger, I think of the American consumer who is looking to put service back into financial services,” said Tom Walker, president/CEO of MEMBERS Trust. “Consolidating the two entities is good for members, our respective credit union owners and the credit union industry as a whole.”
Walker said MEMBERS Trust has no immediate plans to engage in other mergers. The next step is for the company to file a request with the Office of the Comptroller of the Currency, said Parker Cann, senior vice president and corporate counsel at BECU. Oakland said is hopeful the merger will be approved this year.