merger-puzzle
The $788 million Thrivent Federal Credit Union in Appleton, Wis., will complete its merger with Thrivent Bank on May 31 after members voted in favor of the consolidation.
The credit union said last week that of the more than 33% of Thrivent Credit Union (TFCU) eligible members who voted, 79% voted in favor of the merger.
Twenty-one percent of eligible members voted against the consolidation. By regulation, a quorum of 20% participation of the credit union’s members was required for the vote to be valid and a simple majority of that group determines the outcome, TFCU said. At the end of last year, the credit union had 51,450 members.
Thrivent Bank and TFCU have already obtained all necessary approvals and/or non-objections from the NCUA on any necessary and related applications or filings.
Last June, the FDIC approved deposit insurance for Thrivent Bank and the merger of TFCU into the newly chartered industrial bank that is based in Salt Lake City. Over the last 24 years, the financial institution has undergone three charter changes.
In 2001, Thrivent Financial Bank was formed out of two credit unions. By December 2012, the financial institution announced that it switched to a credit union charter. TFCU’s sponsor is Thrivent Financial for Lutherans (TFL) in Minneapolis, a faith-based financial services firm that primarily offers insurance and investment products. The organization manages more than $113 billion in assets with a net income of $513 million, according to TFL's audited Dec. 31, 2023, financial statements.
When it opened for business as a credit union in December 2012, it posted $478 million in assets, $341 million in loans and served 44,871 members. By the first quarter of 2024, the credit union’s assets increased to $930 million, while loans grew to $635 million, and its membership expanded to 52,471, according to NCUA financial performance reports.
Since the first quarter of 2024, however, TFCU’s assets, loans and membership have declined.
At the end of 2023, the credit union posted loans of $642 million, which fell to $635 million by the first quarter of 2024. Loans continued to slide to $628 million by the second quarter, $618 million in the third quarter and $612 by the end of the year, NCUA financial performance reports showed. While TFCU’s assets increased from $831 million at the end of 2023 to $930 million in the first quarter of 2024, the credit union’s assets plunged to $799 million in the second quarter while ticking up to $805 million in the third quarter and dropping to $788 in December, NCUA financial performance reports showed.
TFCU’s membership has declined by 2,225 from 53,675 in December 2023 to 51,450 in December 2024, according to NCUA Call Reports.
Nonetheless, the credit union ended last year with a net income gain of $3,926,925 and posted a net worth of 10.25%.
TFCU’s charter change to an industrial bank came with some controversy.
An industrial bank, which is also known as an industrial loan company (ILC), is a state-chartered financial institution that will be regulated by the state of Utah and the FDIC.
However, the new bank is wholly owned by Thrivent Financial Holdings, which did not seek to qualify for status as a bank holding company. The Bank Holding Company Act provides an exception for companies to own an industrial bank, which enable those companies to avoid the Bank Holding Company Act regulations that apply to other traditional banks, according to the Independent Bankers Association (ICBA) in Washington, which opposes ILCs.
"In addition to creating conflicts of interest, the commercial activities of ILC applicants pose risks to the FDIC's Deposit Insurance Fund, the financial system and consumer privacy," ICBA said in a prepared statement. "Further, with only Utah and a few other states granting ILC charters, this handful of states shouldn't dictate U.S. banking policy or serve as safe havens for companies that are unwilling to comply with the same set of rules and regulations that otherwise apply to the traditional bank charter."
Nevertheless, TFCU apparently believes it can do better as an industrial bank in reaching more people.
“As a financial services company that puts generosity at the heart of saving and investing, Thrivent is forming a bank as another way to bring its client-centered financial point-of-view — that money is a tool, not a goal — to more people,” the credit union stated. “Thrivent Bank will provide cash management solutions and purpose-based guidance to help clients achieve their long-term goals and financial well-being.”
Beth Lewis, Thrivent Credit Union’s board chair, said in a prepared statement that the merger opportunity with Thrivent Bank will extend the mission of the credit union and provide members with simple and competitive banking products, easy-to-use digital experiences and direct access to human support.
Thrivent Bank will not operate branches. As a credit union, Thrivent operated a corporate office in Appleton, Wis., and an operations center in Minneapolis.
The CEO of Thrivent Bank is Brian Milton of San Diego, who joined Thrivent in March 2021 to develop the financial institution.
“It’s been a very busy four years of hard work behind the scenes for the banking and credit union teams at Thrivent as we have been heads down preparing to bring our unique perspective to more people through banking,” Milton wrote on his LinkedIn page after last week’s member vote.
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