Magazine article American Banker

Church Groups Setting Up Their Own Trust Companies

Magazine article American Banker

Church Groups Setting Up Their Own Trust Companies

Article excerpt

Add churches to the list of nonbanks that want a piece of the trust business.

A handful of religious organizations have established trust companies in recent months. The churches want to manage their own foundations instead of relying on outside trustees, and in some cases to offer trust services to their parishioners and others.

The Aid Association of Lutherans, for example, filed an application with the Office of Thrift Supervision on Dec. 30 to charter a trust-only federal savings bank. The Appleton, Wis.-based fraternal benefits society has $17.7 billion of assets and 1.7 million members nationwide.

"It's just a different form of a mutual insurance company," said Robert M. Taylor 3d, a partner at Day, Berry & Howard, Hartford, Conn. "It's probably no different than an insurance company that focuses on retired persons. The needs of the clients are no different."

The Presbyterian Church (USA) Foundation, Jefferson, Ind., opened a national trust bank, New Covenant Trust Co., on Jan. 2. And the Baptist Foundation of Texas in Dallas opened a trust company in December 1996.

Churches are only the latest group of nonbanks that want to become professional trustees, whose ranks once included only banks. Brokerage and law firms, mutual fund companies, investment advisers, and insurance companies have all applied or received trust powers under federal thrift or state bank charters.

Mr. Taylor, the Lutheran society's attorney, said the religious organization's motivation is the same as that of insurance companies-it wants to offer an array of financial services.

The proposed AAL Trust Co. would be owned by AAL Holdings Inc., a for- profit stock subsidiary of the society that already owns a registered investment adviser. It also has insurance policies with a face value of $78 billion as of Sept. 30.

The Presbyterian trust company, New Covenant, is designed to manage the church's $1. …

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