The largest U.S. fraternal benefit society plans to re-enter deposit gathering through a newly proposed merger between the credit union it sponsored and a Utah industrial bank it is seeking to establish.
Thrivent Financial for Lutherans transferred Thrivent Financial Bank's deposits and virtually all of its other liabilities and assets in December 2012 to the member-owned Thrivent FCU at a time a number of insurance companies were reconsidering their presence in banking due in part to Dodd-Frank Act rulemaking. The proposed series of transactions, as outlined in an FDIC deposit insurance application obtained by S&P Global Market Intelligence, would not necessarily unwind that transaction but rather facilitate the shift of the credit union's loans, deposits and branches into Thrivent Bank.
A provider of life insurance, retirement products, investment funds, trust services and other financial products and services to more than 2 million clients, Thrivent said in the application that the bank's formation is not dependent on the consummation of the credit union merger. But, it added, the bank will not become fully operational until the merger closes. The merger is contingent upon an evaluation by the credit union's independent directors, regulatory approval and a member vote, Thrivent said.
"Owning a bank would allow us to leverage our existing experience providing banking products and solutions that reflect our purposeful approach to finances, integrating them into modern, digital and holistic client experiences and channels that meet the needs of a broad range of consumers seeking financial clarity," David Royal, Thrivent's executive vice president of asset management, said in a statement.
Thrivent FCU had $763.5 million in assets and $627 million in shares and deposits as of Dec. 31, 2020, and the fraternal society said it will provide "a strong, proven foundation ... upon which the bank may grow and develop enhanced products and services." The former Thrivent Financial Bank now operates as Thrivent Trust Co., a limited-purpose, nondepository trust.
The new bank, which plans to offer a full suite of loan and deposit products, would appear to marry certain of the advantages possessed by both of Thrivent's approaches to the business.
Utah industrial banks are exempted from the technical definition of a bank under the Bank Holding Company Act, and as a result, their corporate parents do not necessarily need to be designated as bank holding companies. Thrivent said in the application that it has "no plans" to establish a holding company. In its former capacity as the owner of Thrivent Financial Bank, which was chartered as a federal savings association, Thrivent had been a savings and loan holding company.
The new Utah institution, like Thrivent Financial Bank, would provide the opportunity to offer banking products to current members and to other people and businesses. In so doing, Thrivent said, the bank would round out its current product offerings and expand the reach of its mission. Thrivent FCU customers must be a Thrivent client, affiliated with certain organizations or church bodies, or willing to become a Thrivent member, according to its website. Thrivent also said having a bank subsidiary will allow it to invest the necessary capital to grow its offerings and platform to serve a significantly broader range of clients.
The former savings association, the current credit union and the future Utah industrial bank all maintain or plan to maintain branch offices but primarily rely on digital banking.
Thrivent maintains no ownership in the credit union, but it donated $45 million in connection with the institution's formation. Both the credit union and Thrivent Trust maintain master service agreements with the fraternal society related to various operational functions.
The fraternal society joined an exodus of insurers from the banking business that occurred over the past 10 years as post-financial crisis regulatory changes and the evolution of corporate strategies led a number of companies, including Allstate Corp., MetLife Inc., Prudential Financial Inc. and State Farm Mutual Automobile Insurance Co., to close or dramatically limit the scope of their previously sizable banking units. But Thrivent has company among entities in the insurance and asset management realm that reconsidered previous decisions to pull back from banking.
Ameriprise Financial Inc. formed Ameriprise Bank FSB in 2006, converted to a trust company in 2013, then reverted to a thrift in 2019. Its deposits surged to nearly $7.41 billion by Dec. 31, 2020, from $3.79 billion on the same date in 2019.
Unlike many insurers, whose forays into banking coincided with the Gramm-Leach-Bliley Act of 1999, Thrivent's ties to the business began in the 1930s through credit unions linked to predecessor organizations: AAL CU and Lutheran Brotherhood Employees CU.
Amid the broader insurer-owned banking push, the Aid Association for Lutherans formed AAL Trust Co. FSB in 1998, and the Lutheran Brotherhood acquired Minneapolis-based Metro Community Bank FSB in 1999. The institutions would later merge as part of a broader combination of the two organizations under the Thrivent name.
