July 31 — A group of seven Michigan credit unions have formally applied to 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 will begin a review process by state regulators that may 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 Berrien Springs-headquartered Honor Credit Union, and spokesperson for the organizers of the proposed 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 the trust is targeted for Q1-2019, subject to regulatory approval. Robert Sajdak — who has more than 40 years of senior-level trust experience, including 35 years at Comerica Bank where he served as senior vice president — has been named CEO in the application.
Credit unions making the application are Alpena Alcona Area Credit Union, headquartered in Alpena; Community Choice Credit Union, headquartered in Farmington Hills; ELGA Credit Union, headquartered in Burton; Frankenmuth Credit Union, headquartered in Frankenmuth; Honor Credit Union; Members First Credit Unions, headquartered in Midland; and Team One Credit Union, headquartered in Saginaw.
If approved, Credit Union Trust would become the first such credit union-organized entity in Michigan and would be headquartered in Farmington Hills.
“Over the years, many members have asked for trust services under the umbrella of our local, community-based credit union co-op model,” said McFarland, “… now we hope to be able to serve them. Presently those members are forced to go elsewhere.”
Though Credit Union Trust would technically be a bank, it will not accept deposits or make loans, and it would function as a credit union service organization, being equally owned by the founding shareholders.
“The Michigan Legislature explicitly authorized the formation of such entities with amendments to the Banking Code of 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 said.
The trust would be regulated by the Michigan Department of Insurance and Financial Services, Office of Banking.