Seven credit unions in Michigan today announced today they have formally applied with the Michigan Department of Insurance and Financial Services to establish a new limited purpose financial institution that will provide trust services primarily to credit union members.
Formal acceptance of the application kicks off a review process by state regulators that can last up to 100 days, at which time the organizers anticipate approval.
“We have a long way to go and there’s much work to be done, but we’re very pleased and excited to be moving along in the application process,” said Scott McFarland, CEO of Honor Credit Union in Berrien Springs (south of Benton Harbor), and spokesman for the organizers of the proposed entity, Credit Union Trust. “We’ll be working closely with state regulators to meet all requirements and we look forward to being approved.”
The formal opening of Credit Union Trust is targeted for the first quarter of 2019, subject to regulatory approval. Robert Sajdak, who is named CEO on the application, brings more than 40 years of senior-level trust experience to Credit Union Trust, including 35 years at Comerica Bank where he served as senior vice president, group business manager, private fiduciary services.
The organizers are executives of the seven credit unions. The credit unions making the application are: Alpena Alcona Area Credit Union in Alpena with seven locations; Community Choice Credit Union in Farmington Hills with 20 locations; ELGA Credit Union in Burton with 11 locations; Frankenmuth Credit Union in Frankenmuth with 23 locations; Honor Credit Union in Berrien Springs with 24 locations; Members First Credit Union in Midland with 11 locations; and Team One Credit Union in Saginaw with 12 locations.
Upon approval, Credit Union Trust will become the first such entity in Michigan organized by credit unions established to primarily serve the needs of credit union members. It will be headquartered in leased facilities at 31155 Northwestern Highway in Farmington Hills.
“This is an important step for Michigan’s approximately 5.2 million credit union members and the industry as a whole. Over the years, many members have asked for trust services under the umbrella of our local, community-based credit union co-op model, and now we hope to be able to serve them. Presently those members are forced to go elsewhere,” McFarland says.
While credit unions routinely provide a range of wealth management services for their members, they were unable to directly provide fiduciary services such as trusts. Credit Union Trust will allow them to do so. It will offer investment, trust, and related services primarily to members of the shareholder credit unions, as well as members of other Michigan credit unions.
Though technically a bank (it will not make loans or accept deposits), it is also a credit union service organization that will be equally owned by the founding shareholders.
“The Michigan Legislature explicitly authorized the formation of such entities with amendments to the Banking Code and Credit Union Act in 2016. To our knowledge, ours is the first such application for a limited purpose financial institution — owned by credit unions to serve members — that has been made in Michigan,” McFarland says.
He adds that Credit Union Trust will be regulated by the Michigan Department of Insurance and Financial Services, Office of Banking. Advice on the application process was provided by Patrick M. McQueen, principal of McQueen Financial Advisors in Clawson.