AFCU Cracks $800 Million in Assets, Earnings Top $8.2 Million in '09

by Gwen Moritz  on Monday, May. 10, 2010 12:00 am  

Arkansas Federal Credit Union's total assets were bumping up on $800 million at the end of 2009 and had surpassed that milestone by the end of the first quarter of 2010, according to call reports filed with the National Credit Union Administration.

(To see the list of the state's credit unions, ranked by assets as of Dec. 31, 2009, click here. A spreadsheet version is also available.)

AFCU, of Jacksonville, is the largest of 63 credit unions currently chartered in Arkansas, more than three times the size of No. 2 Telcoe FCU of Little Rock and representing almost a third of the state's $2.2 billion in credit union assets as of Dec. 31. It was also by far the most profitable, with 2009 net income of $8.27 million. But even that has been restated downward from an initial report of $8.6 million, a write-down ultimately blamed on credit rating agencies.

CFO Terry Borreson explained in an e-mail to Arkansas Business:

"AFCU along with most credit unions in the state are members of Southwest Corporate Federal Credit Union. Southwest Corporate is one of our links to the Federal Reserve so that we can operate efficiently. In order for us to do business with them, we have to be a member and invest in their capital accounts. 

"The NCUA has taken over and has placed under conservatorship two of the largest corporate credit unions for bad investments including US Central Corporate Credit Union. They invested in what were AAA investments that were not what the rating agencies rated them and that turned into bad investments. 

"When US Central has a loss, they pass it along to their owners - the other corporate credit unions that pass it along to natural person credit unions, including Arkansas Federal."

AFCU has essentially doubled its assets since Walter L. "Larry" Biernacki became its CEO five years ago. Its assets, $806 million as of March 31, make it bigger than all but 10 banks chartered in the state. In 2009, those assets grew by more than 14 percent, a bit above the statewide trend of 11.5 percent assets growth among credit unions.

But Telcoe, led by Sarah Mosley, did even better last year, growing its assets by 16 percent. And at the beginning of this year, Telcoe absorbed what was the state's smallest credit union at the end of 2009, Phillips County Self-Help Federal Credit Union at Helena. That merger was approved by the NCUA in December, and the reason given for its approval was "poor management." Phillips County Self-Help had just $287,520 in assets and $272,243 in deposits at the end of the year, and it recorded a net loss of $9,283.

The state's roster of credit unions was reduced by three during the course of 2009: UARK FCU of Fayetteville acquired Franklin Electric Employees FCU of Siloam Springs, Arkansas Employees FCU of Little Rock acquired Replacement Parts Employees FCU, and United Arkansas FCU of Little Rock acquired Grocers Financial Services FCU subsequent to the bankruptcy of Affiliated Foods Southwest of Little Rock.

Net losses were not uncommon among credit unions last year: 24 of the 64 credit unions on this year's list ranked by assets reported losses last year, the largest being a loss of $389,946 by Dillard's Federal Credit Union.

Dillard's FCU originally served employees of Dillard's Inc., the Little Rock retail chain, but has expanded its "select employee groups" of potential members to include several geographic areas of Pulaski County. Dillard's FCU has three offices: a main office in the Indian Hills Shopping Center in North Little Rock and branches at the Dillard's Inc. corporate headquarters and in the Otter Creek area of Little Rock.



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