WASHINGTON–The FDIC has announced two moves that will allow for the creation of a new industrial bank in Salt Lake City and then for the merger into that new entity by a federal credit union, essentially converting the credit union into a bank.
Ironically, the credit union began its life as a bank before converting to a CU charter 15 years ago.
The FDIC said it has approved federal deposit insurance for Thrivent Financial for Lutherans (TFL), which is based in Minneapolis, through a wholly owned subsidiary, Thrivent Financial Holdings, to create the new Utah bank that will merge in the $930.6-million Thrivent Financial Financial Credit Union, which is based in Appleton, Wis.
The result will be the new Thrivent Bank.
The FDIC said its approval for deposit insurance requires Thrivent Bank to be established within 12 months.
To Be Online Provider
In a statement, the FDIC said, ““TFL’s proposed business model would leverage the existing products, customers, infrastructure, and personnel of TFCU with all assets and liabilities of the former credit union transferring to Thrivent Bank. The newly approved Thrivent Bank will not operate physical branch office locations and intends to deliver all bank products and services exclusively online, offering a diversified loan portfolio centered in consumer loans and funded primarily by core deposits, following a traditional bank business model. Thrivent Bank will offer products and services without regard to religious affiliation.”
Seeking to Convert for Three Years
As CUToday.info reported earlier, the credit union has been seeking to convert to a bank since 2021. At that time Thrivent told CUToday.info that an FDIC-insured Thrivent Bank would “seek to operate nationwide via a digital platform. TFCU further said it chose to "pursue an industrial bank as opposed to another type of bank charter because it allows Thrivent to provide transparent, high quality banking services to clients and communities across the country while also enabling it to preserve its longstanding status as a fraternal benefit society."
Thrivent Financial Credit Union posted $949,253 in net income during the first quarter, with capital of 8.37%. It has 52,571 members as of March 31.
The credit union uses the tagline “Discover a Better Way to Bank” on its website.
"Not Subject to Federal Regulations'
"Industrial Loan Companies (ILCs) are very attractive because they do not have most of the traditional barriers between banking and commerce, much more flexibility in lending and risk concentration, and are not subject to federal regulations, which can save money," said Jason Stverak, chief advocacy officer with the Defense CU Council. "Plus, they invite fintech activity under the roof of the new institution. This a reminder that the credit union charter needs to be updated and expanded to fit the changing marketplace."
Added John McKechnie, a Washington advocate on behalf of credit unions, "At one time ILCs were a big topic of discussion in Washington. In my CUNA days most credit unions viewed them with skepticism if not actual hostility, because they were perceived as a lightly-regulated, souped up competitor. This issue has been dormant for awhile, but the Thrivent news is certain to bring it back to life.”
Converted to CU in 2007
The former Thrivent Financial Bank converted to a credit union charter in 2007, telling Twin Cities Business at that time, “Thrivent Federal Credit Union is a logical fit with Thrivent Financial for Lutherans’ history of aligning faith and finances. We will be able to offer a unique combination of financial expertise, competitive products and educational services, and shared values with our members.”
The affiliated Thriven Financial for Lutherans offers insurance, annuities and other services.