On February 6, the $612 million Thrivent FCU announced that its members had approved the credit union’s purchase by the Utah licensed Thrivent Bank (in formation).
More than 33% of the credit union’s 52,000 members (47,872 eligible to cast a ballot) voted with 79% in favor of the charter change. NCUA regulations require that at least 20% of the membership must vote on this charter conversion. The “merger” is scheduled to be completed by May 31, 2025.
Special Dividend Distributes Net Worth
The member-owners will receive a special dividend of $76 million which is the credit union’s fair value as determined by an independent appraisal. This amount equates to a 12.2% “dividend” on the shares owned at the time of the announcement. As described in the Members’ Notice:
The TFCU Board of Directors has determined that in conjunction with the Merger, the members will receive a total distribution in the amount equal to the full (credit union) valuation of $76,000,000.
Members also have full access to their $617 million (December 2024) in shares should they choose not to keep them at the newly chartered bank. The Thrivent FCU board had previously assured members there would be no changes in rates or terms on loans and savings transferred to the bank.
The First Sale Since 2006
A full description of Thrivent’s proposal is in my December 3, 2024 blog . It provides the credit unions financial standing as of the announcement in June 2024
The last time a bank bought a credit union was the sale of Nationwide FCU to its sponsor, Nationwide Insurance. In that 2006 transaction the members received their entire net worth back resulting in a special “dividend” on shares of approximately 15%.
Depending on the financial position at the time of closing, both “merger” transactions valued the credit union at approximately 1.0 to 1.3 times book value. For example Thrivent’s total GAAP capital was $80.8 million at December 2024. However, if the $26.5 million decline in the market value of investments is recognized the net equity falls to $54.3 million.
Background on Thrivent FCU
Credit Union Times published a history of the credit union and the newly formed Thrivent bank’s business plan in a June 25, 2024 report: Thrivent FCU to Merge Into Thrivent Bank. The article states the new bank will offer digital service only from one location in Salt Lake City. The primary reason for this conversion was to access the capital resources of the sponsor, Thrivent Financial.
The Times article pointed out that since the December 2012 date of Thrivent’s initial conversion from a bank, the credit union’s assets had doubled from $478 million to $930 million. Loans had increased from $341 million to $635 million.
As of December 2024 Thrivent FCU’s shares, loans, members, and assets have declined compared to the 2023 year end results. The most recent December call report shows net worth at 10.3% and ROA of.46%. Delinquency is only .29%.
Extending the Credit Union’s Mission
In Thrivent’s press release reporting the vote, Board Chair Beth Lewis states: “The merger opportunity with Thrivent Bank will extend the mission of our credit union and provide our members with simple and competitive banking products, easy-to-use digital experiences and direct access to human support. Our board of directors is pleased that a majority of our members came to the conclusion that this merger is in their best interest.”