TAMPA, Fla. and MADISON, Wis. – Nearly two years after developing a business plan for an entity that would offer coast-to-coast trust services and convincing regulators that such an effort could be realized, credit unions in all 50 states will now have access to the first nationally-chartered trust company owned and managed by credit unions. The revamped MEMBERS Trust Company received charter approval from the Office of Thrift Supervision on June 20 enabling it to begin offering an array of estate financial planning services to members through their credit unions. Suncoast Schools Federal Credit Union and CUNA Mutual Insurance Society formed the company and are founding shareholders. Suncoast Schools established its own MEMBERS Trust Co. in 1987 and the new operation will build from that foundation. “We’re excited to bring trust services to credit union members as a way to meet this important marketplace need, and to give credit unions one more tool for maintaining member loyalty,” said Francis Quinn, senior vice president, business development and investments for MEMBERS Trust. “No longer will members need to leave the relationship they have with their credit union to obtain trust services,” added Quinn, who will be responsible for helping credit unions implement trust services. MEMBERS Trust will offer credit unions two operational options: an agency office that establishes a trust presence in a particular state and requires a trust officer to be physically located in a credit union; and a representative office which entails an extension of the credit union’s existing financial services program. The latter option does not require hiring a trust officer but will utilize the services of trained representatives to consult and make recommendations for trust services. CUNA Mutual will assist in providing necessary training. Trust officers placed in credit unions must have five years of trust experience and will be employees of that credit union. Quinn said it would take at least 90 days to have an agency office up and running and 30 days for the representative office. Credit union members will have access to such services as consultative services for asset management, establishing trustees, long-term estate planning, estate settlement, personal custodian accounts, reverse mortgages and long-term care advisory plans. The concept of a national charter began two years ago when MEMBERS Development Co. – a partnership between credit unions and CUNA Mutual formed to develop new products and services – endorsed a strategy that would create a national credit union-owned trust cooperative. John Henry, CUNA Mutual senior vice president and CEO of MEMBERS Development Co., along with Tom Dorety, president/CEO of Suncoast assembled a team of “seasoned trust professionals” to turn that strategy into reality. Suncoast’s MEMBERS Trust formed in 1987 and has more than 1,500 member clients with $50 billion in assets under management. Quinn said those relationships will not be affected by the company’s new charter. The newly formed MEMBERS Trust organization, which will be headquartered in Tampa, has a new management team through its five employee executive trust and investment committee. The committee will oversee day-to-day operations of the trust company and report to MEMBERS Trust five- member board of directors. “We’ve been working diligently for many month and listening to many credit unions that have offered suggestions,” Dorety said. “What we have is a premier operation, functioning solely for the best interests and financial success of members and credit unions.” Besides CUNA Mutual and Suncoast, Quinn said a “significant number” of credit unions and industry-related entities have pledged to purchase shares. At least 12 credit unions are slated to have an established agency office or representative office by the end of 2003. Over the next few weeks, MEMBERS Trust will file additional OTS-required documents and the board will meet to approve policies and procedures. Henry said the efficiencies and economies of distribution that a national trust provides “will greatly benefit credit unions” in that the establishment of either office is a “true turnkey operation,” allowing for credit unions of any size to offer trust services. “By contracting with MEMBERS Trust, the credit union CEO can avoid committing capital and managing the complexities an individual trust program entails,” Henry said. Dorety said the entire application process was unique to regulators given its lack of precedent, which resulted in OTS officials asking hard questions about the logistics of it all. Suncoast Schools had originally applied for a national charter on its own, but a statute in NCUA’s Federal Credit Union Act allowing a CUSO to act as a corporation under state but not federal law posed an interpretation problem. In September 2001, NCUA took another look at the statute and the board determined that the statute does not prohibit a federal structure so long as the trust company is not a depository institution. In all, Dorety said they had an “excellent working relationship” with OTS officials and NCUA was “quick and gracious” to their query of reviewing the statute. All agree that the time is ripe for the industry to embrace trust services given the transfer of an estimated $12 trillion and $17 trillion in intergenerational wealth some economists predict will occur by 2017. “The demand will be monumental, reaching into the trillions of dollars,” Quinn said. “If credit unions are there to assist with estate transfer and tax planning, members won’t look elsewhere, he added, emphasizing that “trust services enable credit unions to become members’ life-long primary financial institutions by increasing their loyalty and retention.” -

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