Magazine article American Banker

Colorado Credit Unions to Form Trust Company

Magazine article American Banker

Colorado Credit Unions to Form Trust Company

Article excerpt

To the dismay of Colorado bankers the state's regulators have granted permission for a group of credit unions to open a for-profit trust company.

The Colorado Banking Board granted a charter this month to Members Trust Co., which is jointly owned by six Colorado credit unions with combined assets of $3.5 billion and Colleague Services Corp, an arm of the Colorado Credit Union League.

Doug Ferraro, the president of $1.1 billion-asset Bellco Credit Union of Englewood, Colo., said Members Trust will target credit union members not wealthy enough to benefit from traditional trust companies.

"Most trust companies go after people who have $1 million and over" or charge high fees to those who do not, Mr. Ferraro said. Members Trust, he said, will charge competitive fees to credit union members, who typically have more modest assets.

Though it is not unheard of for individual credit unions to operate their own trust subsidiaries, they rarely team up to do so. The Colorado credit unions are hoping that combining resources will give their trust company extra punch.

The company is to open its Denver corporate offices in November with an initial capitalization of $2.7 million from its co-owners. Trust officers will be dispatched, upon request, to credit union branches.

Jennifer Waller-Ditch, the senior vice president of the Colorado Bankers Association, said the new trust company "will allow the credit unions to do more traditional banking services without paying taxes. …

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