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.” Members Trust itself will pay taxes, she said, but the credit unions will not.

It is “an extremely unfair advantage.”

Ms. Waller-Ditch also complained about the credit unions’ joining together to increase their competitive strength. But Tim Kenczewicz, the new president and chief executive officer of Members Trust, countered that “there’s nothing prohibiting a group of community banks from doing the same thing.”

Barbara Walker, the executive director of the Independent Bankers of Colorado, said the state Division of Banking had set itself up for conflict with the National Credit Union Administration by claiming jurisdiction over the new trust company. The federal agency has jurisdiction over credit union service organizations such as Members Trust, she said.

“If there’s any kind of regulatory concerns, I would venture to say that the division will have a hard time exercising their regulatory authority in the face of NCUA,” Ms. Walker said. “It’s a recipe for regulatory disaster.”

Credit unions are increasingly banding together to offer bank-like services. Groups of credit unions in Iowa and Florida have joined forces to create trust subsidiaries. And several Wisconsin credit unions in 1999 formed a for-profit corporation to offer small-business loans to members.

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