Thrivent bank becoming credit union [Star Tribune, Minneapolis]

Jan. 14--Thrivent Financial for Lutherans is converting its for-profit bank subsidiary into a nonprofit credit union as soon as it gets the OK from regulators, company officials said Friday.

The Minneapolis-based insurance giant that caters to Lutherans nationwide will change the name of its Thrivent Financial Bank subsidiary to Thrivent Federal Credit Union, provided it first gets approval from the National Credit Union Administration.

If approved, as expected, the credit union will open this summer in the same locations as its banks. Customers will notice a name change and possibly better loan and savings rates because unlike banks, credit unions are nonprofits and not taxed. Account numbers are expected to remain the same.

Todd Sipe, who now heads Thrivent's bank, will become president, CEO and chairman of the new credit union. He said changing into a credit union was necessary because recent regulatory changes under the Dodd-Frank Act raised the regulatory burden and costs for banks that are owned by insurance companies.

Previously, banks owned by insurance companies were regulated by the Office of Thrift Supervision. Under new rules, they are regulated by the Office of the Comptroller of the Currency and the Federal Reserve.

The changes intensified bank accounting methods and capital requirements and gave "us one more regulator at our doorstep," Sipe said. "We felt that the migration to a credit union would be a better model for us."

The move means the insurer's credit union will not be subject to the Federal Reserve's more stringent requirements.

Sipe said becoming a credit union was a better remedy than abandoning the bank's customers altogether as other insurance firms have done. Allstate and several other insurance companies that owned banks decided to dissolve or sell their banks last year rather than deal with the additional regulatory oversight. Allstate refunded all customer deposits when its bank was dissolved last month. Hartford Financial Services Group Inc. sold its Federal Trust Bank in May.

Thrivent's insurance business is based on a member-ownership model similar to the field-of-membership model used by credit unions. So the shift was "a logical fit," said Thrivent spokesman Brett Weinberg.

'Crushing' regulation

Joe Witt, CEO and president of the Minnesota Bankers Association, said Thrivent's move "make perfect sense to me. Capital requirements for anything that wants to call itself a bank became much more challenging after Dodd-Frank. And the ... regulatory requirements are just absolutely crushing for the industry."

Thrivent opened its bank in Minneapolis about 10 years ago. It now serves more than 40,000 clients from across the country via online services, two brick-and-mortar bank branches in Minneapolis and two others in Appleton, Wis.

In addition to the bank-to-credit union conversion, Thrivent also will separate its personal trust business from its bank. The trust business, which caters to about 1,200 to 1,500 clients, will become Thrivent Trust Co.

Dee DePass --612-673-7725

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