Banking and Finance Law Daily Wrap Up, DEPOSIT INSURANCE—FDIC approves deposit insurance and merger plan for new Thrivent Bank, (Jun 24, 2024)

By Steven Melendez

The new Utah industrial bank plans to merge with an existing Thrivent Federal Credit Union and operate online.

The Federal Deposit Insurance Corporation has approved deposit insurance and merger applications to create a new Thrivent Bank and merge an existing Thrivent Federal Credit Union into it. The new bank will be chartered as a Utah industrial bank and will take deposits and offer loans exclusively online, according to the FDIC. The applications were submitted by a nonprofit called Thrivent Financial for Lutherans, and its Thrivent Holdings unit will be the immediate parent of the bank. While the credit union focused primarily on members of various Lutheran denominations, the new bank won't limit its customers based on religious affiliation, according to the FDIC.

“TFL proposes to establish the Bank primarily to broaden its reach within the general population and attract new clients beyond the existing credit union’s restricted field of membership,” said FDIC Chairman Martin J. Gruenberg in a statement. “The Bank will be able to attract customers nationwide without regard to customers religious affiliations.”

Gruenberg said he would vote to approve the bank's applications, saying it met legal requirements the FDIC is required to consider. Michael J. Hsu, Acting Comptroller of the Currency, similarly issued a statement supporting the merger application. “The proposed bank would look a lot like a community bank,” said Hsu. “The organizers have developed a comprehensive and diverse business plan outlining an operating strategy that is supported by reasonable financial projections. The bank would be sufficiently capitalized, and Thrivent Financial would execute a capital and liquidity management agreement to serve as a source of financial strength to the Bank.”

Independent Community Bankers of America (ICBA) had opposed the transaction. The organization claims industrial loan companies (ILCs) like the new Thrivent Bank use that corporate form, which only exists in a few states including Utah, to circumvent banking regulations that apply to other types of lenders. “ICBA and the nation’s community banks strongly oppose the approval of deposit insurance applications from industrial loan companies, which present outsized risks to the Deposit Insurance Fund, financial stability, consumers, and taxpayers,” said ICBA President and CEO Rebeca Romero Rainey in a statement. "The FDIC should deny ILC applications to prevent firms from skirting full regulatory oversight and violating U.S. policy separating banking and commerce through the ILC charter.” The association also called on Congress to pass pending legislation that would impose stricter rules on industrial banks.

The FDIC approval requires the new bank to be set up within 12 months.

Companies: Thrivent Bank; Thrivent Federal Credit Union; Thrivent Financial for Lutherans

RegulatoryActivity: BankingOperations DepositInsurance FinancialIntermediaries FinancialStability GCNNews MergersAcquisitions UtahNews