LITTLE ROCK, Ark. — It's been nearly a year on the drawing board, but the Arkansas Credit Union League began 2008 with its own indirect lending CUSO aimed directly at attracting new business and members for small credit unions, which are often cut out of the market.
"I like the numbers I'm seeing already," declared Allen Brown, the chairman of ARCUSO, llc, which began operating Jan. 4 with a six-member staff in a business plaza in suburban Bryant.
Brown, who also is president of the $65 million Mil-Way FCU in Texarkana, said the reception among CUs and dealers has been gratifying with 65 loans processed the first two days.
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CUSO managers are projecting $25 million in auto loan volume in three years and $35 million when plans for motorcycle, RV and boat paper are implemented.
Among national CUSOs, ARCUSO is distinctive as a co-op investment venture since it is specifically targeted toward helping small CUs reach auto buyers who often gravitate to the captives or banks.
Serving as president/CEO of the new CUSO is Mike Anderson, a former Ford Motor Credit loan officer hired last September. There are currently 32 CU participants in ARCUSO along with 55 central Arkansas dealers.
Brown said ARCUSO would be competitive with banks and the captives offering a 5.7% rate on A-Plus, 60-month paper with an introductory 0.25% discount for 60 days.
League officials have long said ARCUSO was vital to halt the member erosion across the state and to "bring back loan business."
"You know we were in shock to see that apart from Toyota and GM, the Bank of Oklahoma ranked tops in indirect," observed Brown, stressing the need for Arkansas CUs "to be competitive and get that business back."
While similar indirect CUSOs are operated by individual banks or consortiums, league officials said ARCUSO was modeled after Credit Union Loan Source, an indirect vehicle lending CUSO run by Georgia Credit Union Affiliates together with three CUs, which processes more than $425 million in loans.
Formation of ARCUSO follows formal recommendations approved by Arkansas League members last spring at the trade group's annual convention in Hot Springs and is based on the work of a 10-member task force which has been formally studying the CUSO idea since last March.
Larry Biernacki, president/CEO of the $532 million Arkansas Federal Credit Union of Jacksonville, has been a vocal advocate of the CUSO. He maintains that Arkansas CUs are behind other states in penetration of indirect loans and are missing an expansion opportunity.
Biernacki, also vice chairman of ARCUSO, noted last year that of 40 reporting states, Arkansas ranked at the bottom in auto loan penetration, stating, "I think we can do better."
Biernacki said he is pleased with the "very positive response we're getting from the dealers and that's a good sign."
Anderson, president/CEO of ARCUSO and previously a loan officer at San Antonio Federal Credit Union, said the growth plans for the CUSO include dividing the state up into five regions as it signs up more of the roughly 350 dealers and draws in small CUs to participate.
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