LITTLE ROCK, Ark. — On a campaign to solicit more members and boost auto loans, the Arkansas Credit Union League disclosed last week it is making plans to enter the indirect field through its own CUSO.
The proposed CUSO, whose structure and financing are yet to be finalized, could be patterned after similar ventures undertaken by leagues or CU groups in Georgia, Texas and Colorado, said Arkansas League officials.
"Of the 40 states reporting, Arkansas ranks 40th in auto loan penetration and on that I think we can do better," said Larry Biernacki, president of the $500 million Arkansas Federal Credit Union, Little Rock, and the state's largest.
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Biernacki, whose CU already is an active indirect lender and supports the CUSO idea, is a member of a League CUSO Task Force which reported on progress of the project during the trade group's annual convention two weeks ago in Hot Springs.
"Our hope is to have something up and running by Sept. 1," said Becky Brosius, chair of the league and president/CEO of Alcoa Community Credit Union of Benton.
The 10-member Task Force, she said, has been assembled to come up with an operational plan and investment formula for participating CUs. Head of the task force, which started fielding information on a suitable CUSO framework during the last six months, is Dee Edie, president/CEO of Diamond Lakes Federal Credit Union, Malvern.
"I know some other leagues are well along in this in maintaining partnerships or arrangements with dealers but for us this is all brand new," said Reta Kahley, president/CEO of the league. "We're neophytes trying to find the best route."
In contacting attorneys, the league staff and task force members have been looking at whether to form a limited liability corporation or some hybrid vehicle suitable for Arkansas with a mission to generate a higher ratio of members using CUs "at the point of sale."
There are a number of vocal skeptics among Arkansas CEOs as to the viability, the need and the expense of CUSO formation based on performance in other states.
"They sure want my investment money but it's all kind of gray to me as to how this is all going to work and make us money which is why I'd like some more details before I commit," said Sarah Mosley, president/CEO of Telcoe Credit Union of Little Rock.
Mosley said she has been studying Callahan & Associates statistics trying to determine profit and loss records of existing indirect CUSOs and so "I've been asking lots of questions." Her daughter, Michelle, a Telcoe operations/marketing staffer, is also a member of the task force.
Biernacki and other CUSO supporters maintain Arkansas CUs need to be more closely linked to auto dealers to get a greater volume of good loan business while at the same time adding productive member tie-ins.
Biernacki said he understands the concerns of doubters, but his own CU's "18 month record with 50 Arkansas dealers" is a testament that "some kind of CUSO model" can work to build member penetration.
Beside Biernacki, Edie, Brosius and Mosley, other members of the task force include: Gina Williams, UARK FCU, Fayetteville; Dwayne Ashcraft, Arkansas Superior FCU; Warren; Allen Brown, Mil-Way FCU, Texarkana; Scott Sparks, Dillards FCU, Little Rock; and Tom Hodge, League Service Corp., Dallas. –[email protected]
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