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DENVER – More than a year after six credit unions along with the state’s league here launched one of the first industry trust firms to service members shut out from estate management services by larger competitors, Members Trust Company of Colorado is on track to be profitable despite a lagging economy. In spite of investors nervously backing off after the Sept. 11 tragedy and lackluster first and second quarters in 2002, Members Trust started to see a turnaround in business by early fall. The firm ended last year with $21 million in assets under administration. “It took us longer and later in the year for most of the assets to come in,” said Tim Kenczewicz, president/CEO of Members Trust. Not to be confused with Suncoast Schools Federal Credit Union’s subsidiary Members Trust Co. in Tampa, Fla., Kenczewicz said 2002 ended where “we hoped we would be,” and the upcoming year is poised for the firm aligning with more credit union partners to offer estate management services. The six Colorado credit unions – Bellco Credit Union, Public Service Employees Credit Union, Credit Union of Denver, U of C Federal Credit Union, Premier Members Federal Credit Union and Ent Federal Credit Union – have combined $3.5 billion in assets and 440,000 members. Colleague Services Corp., an affiliate of the Colorado Credit Union League also has a minority stake in Members Trust. Members Trust has eight employees, offices in Denver, Boulder and Colorado Springs and is poised to move further north including Wyoming with more representation. Colorado recently enacted a new law that allows firms to offer trust services across state lines. While the firm met its revenue goal last year, earnings will not be split among the six credit union partners until a profit, which has yet to be realized, is turned, Kenczewicz said. “Anything we make now is put back into operations,” he explained. “Our business plans call for us to be profitable within five years.” Kenczewicz said surprisingly business generated through non-credit union clients outpaced member business in 2002 with most of the referrals coming from attorneys and other professionals. Roughly 20% of Members Trust accounts are credit union-owned with the average account being $340,000. He added the firm has close to 200 “future appointment” documents – trust plans in place that become effective upon the holder’s death – and 75% of those are held by credit union members. Industrywide, banks and other financial houses typically require that trust owners have at least $1 million in assets to even be considered for estate management services. From the onset, Members Trust has targeted clients with at least $150,000 in assets and that barometer continues today. Kenczewicz said the firm has even taken accounts that fall below that threshold, deeming them “special needs trusts,” adding that several relationships do indeed have assets in the millions. “Historically, trust services have been marketed to the wealthy, but today with blended families and other factors, even someone with $150,000 in assets may have to make some hard decisions about how their assets will be distributed,” Kenczewicz said. Indeed, Members Trust is “constantly fine-tuning” its marketing initiatives because the challenge remains making members aware that wealth management services are accessible and available. Kenczewicz said the firm has started to pinpoint specific prospects within the credit union arena including continuing to conduct education seminars. “Trust services are brand new to the credit union marketplace, but more importantly, people need to understand what a trust can do for them,” he explained. One effort, the iFlex401k plan launched last summer, was targeted to roughly 700 select employee groups that are aligned with Public Service Credit Union of Denver. Public Service, a Member Trust charter member, along with First Trust Corp. of Denver, a subsidiary of Fiserv, Inc. and one of the nation’s largest administrators of self-directed retirement plans, partnered to offer the 401k plan that allows a credit union’s money market account to be added to a list of 120 different mutual fund options. The plan is also targeted towards self-employed persons and allows for a maximum deductible contribution of up to 25% of compensation. Reflecting the national investor trend that saw many pulling back the reins on stock market choices last year, iFlex401k business remained slow, Kenczewicz said. Still, the firm continues to pursue “excellent prospects” and are expecting a turnaround in the first two quarters. “People have been slow to make decisions,” he said. “A lot of folks wanted to wait until after the new year to make a move.” With new state legislation that allows trust services to be conducted across state lines, Kenczewicz weighed in on an effort underway from CUNA Mutual Group, Suncoast Schools Federal Credit Union and others to start a nationally-chartered trust firm. “It’s probably a more efficient approach, but one major hurdle may be because trust services are a very personal, one-on-one business, it would call for having office personnel in every state,” Kenczewicz said. “You can do some things on a short-term basis for a living trust, but for the long term, when those trusts mature, you have to be in a position to nurture.” It’s that type of intimate relationship that has fueled the Member Trust’s reputation locally, especially among some of its elderly clients. “Some people were very interested in seeing another alternative come on the local market because a lot of them had become frustrated with larger institutions that only provided a 1-800 phone number to those with less than $1 million,” Kenczewicz said. -

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