Thrivent Financial Bank Converting to a Credit Union

Costly regulations associated with being a bank holding company appear to have forced another insurance company to give up its bank charter.

Thrivent Financial for Lutherans has filed an application with the National Credit Union Administration to convert its Appleton, Wis., thrift subsidiary, Thrivent Financial Bank, to a federally chartered credit union, several news outlets reported Friday.

Thrivent had been discussing a switch since late last year. In a letter to its members, Thrivent cited new regulatory demands on insurance companies that own banks among the reasons, according to a November article in the Credit Union Times.

Thrivent Financial for Lutherans, with dual headquarters in Minneapolis and Appleton, is a Fortune 500 conglomerate that offers a broad range of insurance and banking products to its more than three million members. Its bank holding company had been regulated by the Office of Thrift Supervision, but the elimination of the OTS under the Dodd-Frank Act means that thrift holding companies must apply with the Federal Reserve to become bank holding companies.

Todd Sipe, the president and CEO of the $543 million-asset Thrivent Financial Bank, told the Credit Union Times in November that when the bank was formed in 2001 through the consolidation of three affiliated credit unions, a trust bank and a community bank, officials opted for a thrift charter because it was the most flexible.

“Today, driven mostly by the Dodd-Frank legislation, there are new costs, restrictions and the introduction to the Federal Reserve as a regulator, which has caused us to rethink our model," he said.

Insurance giant MetLife Inc. came to a similar conclusion late last year and is largely exiting the banking business. It recently announced it was selling its depository to GE Capital and just this week said it was shutting down its mortgage origination unit after it was unable to find a buyer for it. Another insurer, Hartford Financial Services Group Inc., recently sold a Florida thrift it acquired in 2009 to qualify  for the Troubled Asset Relief Program, essentially ending its run in the banking business.

Thrivent, of course, will offer banking-type products to its members, but as a credit union. While it is fairly common for credit unions to convert to banks — and predictions are that many more will do so due to immense challenges credit unions face in raising capital — it is highly unusual for an existing bank to switch to a credit union. It is believed that the only other bank to do so was one founded for Eastman Kodak employees in the 1920s that converted to what is now ESL Federal Credit Union in 1996. The Rochester, N.Y., credit union has $4 billion of assets and about 300,000 members.