Trust Trend in Alaska
In the latest move within the industry's wealth management space, Alaska USA Trust Co., a subsidiary of the $5.5 billion Alaska USA Federal Credit Union, is set to be acquired by Alaska Trust Co.
The two entities entered into a letter of intent whereby ATC will acquire all the outstanding stock of Alaska USA Trust from Alaska USA FCU in Anchorage, the credit union said in a statement. The stock's dollar amount was not provided.
The transaction is subject to the negotiation of a definitive stock purchase agreement, approval by the Alaska Division of Banking and Securities and approval by the respective boards of directors.
The parties are targeting a closing and effective date of July 31, according to Alaska USA Trust.
Institutional trust services will continue to be provided to credit unions, public entities and other institutional clients through the newly formed CU Trust Co., wholly owned by the credit union, said William Eckhardt, president of Alaska USA FCU.
When CU Times contacted Alaska USA FCU for more details about the sale, including the motivation behind the transaction and the launch of its new CU Trust Co., the credit union declined to offer further comment.
“Due to the complexities of the transaction we will pass on responding to your questions,” said Dan McCue, SVP for corporate administration at Alaska USA FCU.
Alaska USA Trust has been providing investment custody and securities lending services to institutional investors since 1997. According to the latest figures available, the trust company had more than $55 billion in assets under management.
Alaska Trust Co. is an independent, Alaska-chartered trust company offering trust administration and wealth management services nationwide. The company administers more than $5 billion of assets and has been operating in Anchorage for more than 17 years, according to the credit union.
“The combined resources of these two experienced Alaska-based trust companies, with similar commitments to local service and value, will provide even greater benefits to individual clients in the future,” said Glenn Cipriano, president of Alaska USA Trust. “The commitment to individual trust clients and excellent service are values both companies share.”
In addition to expanded investment management and trust administration options, the transaction will also result in trust-related job opportunities in the local area, said Douglas Blattmachr, president of Alaska Trust Co.
This acquisition is the most recent shakeup in the trust services sector.
In July 2013, BECU Trust Co., the wholly owned subsidiary of the $12.6 billion BECU in Tukwila, Wash., merged with MEMBERS Trust Co., the Tampa, Fla.-based, nationally-chartered, credit union-owned trust firm. The firm's new name became BECU Trust Services.
In 2007, Members Trust Co. of Colorado also merged into MEMBERS Trust bringing in additional $100 million in assets and an increase in trust officers available to credit unions.
Meanwhile, Alaska USA Trust's pending stock sale is likely a sign of the times.
“The merger and decision by the credit union to focus on institutional business reflects the current economics of managing a trust company,” said Tom Walker, president/CEO of MEMBERS Trust.
Among those factors are achieving economies of scale to cover legal and compliance costs and the compensation for highly professional and experienced staff, he added.
When contacted by CU Times for reaction to the Alaska USA Trust deal, BECU Trust had not been following the deal closely enough to comment, said Todd Pietzsch, BECU manager of public relations. CUNA Mutual Group, which owns its broker-dealer affiliate CUNA Brokerage Services Inc., also chose not to comment for the same reason, said spokesperson Jess Noelck.
Meanwhile, trust services continue to have moving parts with firms seeking out new models to generate sustainable streams of revenue. According to the study, “Benchmarking Bank Wealth Management Services: Alternative Sales Models,” from research firm Kehrer Saltzman & Associates, financial institutions that enlisted advisers from their brokerage units to source business for their trust and investment managers enjoyed greater growth in assets under management.
Data collected from 21 bank trust, investment management and private banking businesses found the amount of business sourced by advisers was 18% on average and affected the overall asset growth and new revenue.