Longtime customers of Thrivent Financial Bank, an Appleton,Wis.-based bank with credit union roots, may experience confusionand feelings of déjà vu in the coming months as the bank returns tobeing a credit union.

The $550 million bank is a subsidiary of Thrivent Financial forLutherans, the largest mutual insurance company in the country andhas been since 2001, when the insurer formed it out of two existingcredit unions.

“In today's environment, a member-owned and member-governedcredit union is a natural fit for Thrivent,” Jim Thomsen, seniorvice president of member services for the insurer, wrote to TFLmembers in a company newsletter.

“Through this credit union, we will be able to offer even morecompetitive products and services, build value for our membershipand reinforce the benefits that come from being a ThriventFinancial member,” he concluded.

The bank has declined a request for an interview until it getsmore into the charter change's regulatory process. But a long message to members laid out some of the parameters forwhat the insurer has planned for the bank and the new CU.

Essentially, what is being planned is less of a charter changethan a charter launch. In a charter change, the entire entitychanges with the charter. Aspects of the institution that might not fit the new charter model are either sold ordissolved.

But in this circumstance, TFL plans to continue to have the bankas a subsidiary, reserving to itself. Regular banking products andservices, the checking, savings and lending that make up retailbanking will move to a newly chartered and launched credit union.Current bank depositors will be grandfathered in as members of thenew credit union, but most new depositors would have to becomemembers of TFL in order to participate in the CU, the insurersaid.

TFL cited three reasons for making the move now. First, memberswill benefit from having a CU, and a credit union “will beconsistent with Thrivent's focus on member ownership,” the CU saidin its message to customers.

Second, the insurer cited advantages of being a credit union,but did not lay out what they were, that it said would allow the CUto offer “more competitive products and services to Thriventmembers.”

Finally, the insurer alluded to regulatory changes that it saidmade starting a credit union make more sense.

“Recent financial services regulations now place new and costlyregulatory burdens on insurance companies, like Thrivent, that ownand operate banks. By establishing a new credit union that is notsubject to some of these regulations, we will be better able tomaintain and build value for Thrivent's membership.”

The insurer said it anticipated the new CU would be launchedsometime in the first half of 2012 but acknowledged it had a numberof different steps to take and hurdles to cross to make ithappen.

One of those will be moving from the FDIC for deposit insuranceto the NCUSIF for share insurance and to NCUA for examinations, aprocess that the agency acknowledged it has not had to oversee thatoften.

“The process is much the same as if you were chartering a newcredit union,” explained NCUA spokesman David Small. “Once afederal credit union is organized and NCUA’s Office of ConsumerProtection issues a charter, then it would acquire the relevantparts of the other institutions that are allowable under the FCUAct.

"This would likely occur through a purchase and assumption. Ifthe former institution had assets that are not allowed under theFCU Act or under NCUA rules, such as investments, then they wouldhave to be liquidated or sold prior to consolidation."

The latest bank-turned-credit union prior to Thrivent is the now 301,000 member $4.1 billion ESLFederal Credit Union, headquartered in Rochester, N.Y.

ESL started life as a federally chartered Eastman Savings andLoan Association in 1920. George Eastman, founder of Eastman Kodak,founded the bank to serve Kodak company employees, particularly inobtaining mortgages, according to the credit union's website.

In 1996 the bank, which had always operated like a credit union,went ahead and changed charters, in part to expand is appeal to thecommunity beyond Kodak employees.

After at least one major CU merger in 2002, the CU took on theemployees of the Wegman's supermarket chain as well, and the CU nowhas 19 branches and 40 ATMs in the Rochester area.

Reaction to the Thrivent news has been muted. NAFCU CEOFred Becker said it was “always great to have a new credit union,especially one that recognizes the value of the credit union modelover other alternatives.”

CUNA CEO Bill Cheney said his trade group also welcomed themove. “We welcome their steps in offering credit union services totheir members and invite other banks with an interest in providingtheir customers a better value to consider such a move as well,”Cheney said.

The Wisconsin Credit Union League did not have a commentprepared as of press time.

Alan Theriault, president of CU Financial Services, a consultingfirm which helps credit unions change to bank charters, refrainedfrom making any comments about the Thrivent move and the CU charterbut put the move in the context of a broader trend he had noticedamong insurance companies and banking.

Many insurance companies had started banks and then been forcedto back off after they found that the business model had not beenas easy to adapt as they imagined, Theriault explained. Inaddition, the margins on the banking business were not as favorableas they had been, he added.

He also observed that the insurer had not mentioned how itplanned to capitalize the CU. “When they dissolved those two CUs in2001, the capital went back to the members, so I would be curiousabout how the plan to capitalize it now,” he said.