TAMPA, Fla. and DENVER -- In a move possibly demonstrating thecontinued upheaval of trust services within the credit unionindustry, two of the movement's largest trust companies haveannounced their plans to merge.

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CUNA Mutual Group and credit union-owned MEMBERS Trust Co., thenation's first nationally-chartered trust company for creditunions, and Members Trust Company of Colorado are joining forces.MEMBERS Trust would be the surviving entity and Tom Walker, MEMBERSTrust Company's president/CEO, would serve in that role followingthe merger, according to both companies. Members Trust Company ofColorado would convert to an operating division and Tim Kenczewicz,current CEO of Members Trust Company of Colorado, would serve aspresident of the division under terms of the merger plan.

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In addition to $5.2 billion Suncoast Schools Federal CreditUnion and CUNA Mutual, MEMBERS Trust is owned by 33 credit unions.The firm has $202 million in assets and serves 51 credit unionsthroughout the United States. Members Trust of Colorado is owned bynine Colorado and Wyoming credit unions, Credit Union StrategicPartners (a subsidiary of the Credit Union Association ofColorado), and SunCorp Corporate Credit Union. Members Trust ofColorado has $120 million in assets and provides trust services toseven credit unions in Colorado.

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Boards at both companies have approved the merger, but it isstill subject to approval by shareholders, the Colorado Division ofBanking, the Federal Deposit Insurance Corp. and the Office ofThrift Supervision. At press time, the application had not beensubmitted to regulators and as a result, few details are beingreleased about the motivation behind the proposed merger and thelogistics of it all. Discussions to merge began in January and"economies of scales" prompted the two entities to align, accordingto Tom Walker, president/CEO of MEMBERS Trust. While Kenczewiczwill remain on after the merger, Walker could not talk about whatwould happen to other Members Trust Company of Colorado executivesand whether they would have to relocate to MEMBERS Trust'sheadquarters in Tampa. "[The merger] will strengthen the industry,"MEMBERS Trust said in a statement. "It's fairly clear that thebenefits are you're taking two different companies--one on the Eastcoast and one on the West coast--and combining experienced staff tocontinue the mission of serving credit unions."

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The seven credit unions currently being served by Members TrustCompany of Colorado will be eligible to receive services from thenew entity, according to Walker.

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Meanwhile, due to the standard regulatory application process,MEMBERS Trust is not expecting any concrete movement on the mergerplan this year, Walker said. It's likely that the merger could beapproved in 2007. Pending approval, Walker said it would takeapproximately six months to roll Members Trust of Colorado'soperations into MEMBERS Trust.

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It's been a rocky road for trust services in the credit unionindustry. Some experts say the slow acceptance among credit unionsand members, for that matter, is tied to breaking down the myththat trust services are only for the ultra wealthy. Others contendthat the five- to seven-year stretch that it often takes to buildrelationships is also a hindrance. Last year saw the shutdown ofseveral notable outfits. The $996 million Arrowhead Credit Unionclosed the doors on its subsidiary, Arrowhead Trust Inc., after a10-year run. The CUSO had experienced back-to-back years of slowedprofits. The Delaware Credit Union League's CUSO ended itspartnership with INA Trust, fsb after four years mainly because thestate's credit unions were not gravitating towards bringing trustservices to members. Other credit unions have quietly said trustservices' growth has been "modest" at best.

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Still, for the most part, credit unions continue to believethere is a viable segment of their memberships that desire trustservices given the trillions of dollars that will transfer from onegeneration to the next over the next decade. It is estimated thatthe personal net worth of Americans over age 50 is between $12trillion and $15 trillion, which amounts to 70% of all personalwealth. A 2004 study from the National Institutes of Health foundthat a substantial number of people expect to leave a bequest ofsignificant value--68% are inclined to believe they will leave$10,000 or more and 62% are inclined to believe they will leave$100,000 or more. [email protected]

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