WASHINGTON - A Wisconsin thrift serving mainly Lutheran customers has received federal approval to broaden its product line and has decided to fold its two credit unions into the expanded company.

The Office of Thrift Supervision on April 3 approved AAL Trust Co.'s request to become a full-service federal savings bank. The company was formed in 1998 when the agency granted a thrift charter to the Aid Association for Lutherans, a fraternal benefits society in Appleton, Wis., that offers insurance and financial services to members.

Two AAL-sponsored credit unions, AAL Member Credit Union and the AAL Credit Union for employees, are likely to be folded into the new thrift, which is to be renamed AAL Bank and Trust, by the end of June. Both organizations' boards of directors have recommended dissolving the credit unions and have encouraged members to transfer their assets to the thrift.

The two state-chartered credit unions combined have assets of $210.6 million and 52,000 members.

"We wanted to aggressively grow our banking services," said Kristi Matus, managing director of the member credit union and the transition's project manager. "We wanted to bring all our banking facilities together. The only way to accomplish that was with the thrift charter."

The AAL transition is the most recent example of a credit union converting to a thrift - the 17th to do so in the past five years.

Geoff Bacino, a board member of the National Credit Union Administration, said that this latest conversion does not alarm him. As long as members are fully briefed on the implications of ceding their credit union charters, he said, he views the change as a business decision. The numbers are relatively small, he said.

Yet the conversions come just as some are voicing concern about the strength of credit union charters.

And the Credit Union National Association formed a commission last year to study potential changes in credit union laws, as well as improvements in federal and state charters. Its recommendations should be released to lawmakers soon.

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