AFCU CEO Larry Biernacki Plans to Triple Assets

by Gwen Moritz  on Monday, Oct. 3, 2005 12:00 am  

Attention, retail bankers: If Arkansas Federal Credit Union has been a burr in your saddle, get ready for a full-blown blister.

Walter L. "Larry" Biernacki, who succeeded Hank Klein as president and CEO in June, came from a credit union in San Antonio with assets of $1.8 billion — roughly equal to Bank of the Ozarks. And while AFCU, with assets of $405 million, is Arkansas' largest credit union, Biernacki envisions a far larger institution 10 years from now.

How much bigger?

"Triple," he said.

And he won't do it, as some large credit unions have, by venturing into commercial lending. Nor is he focused on dramatically expanding AFCU's membership, although its marketing department will certainly seek out new "SEGs" - select employee groups - to add to the list of Arkansans eligible for membership.

"You can't be all things to all people," he said in a recent interview in his Jacksonville office. "To identify the whole market space and say we want to own it? Nah."

Instead, Biernacki - say "Ber-knock-ee" - is aggressively seeking to expand AFCU's "share of the existing wallet" by making it easier for credit union members to do more of their business with him.

That means hiring more tellers to speed up AFCU's notoriously long lobby and drive-through lines, financing cars at the lot, simplifying loan products, and offering "gap" insurance and credit cards that compete with the most attractive on the market.

1,700 Résumés

Klein let AFCU's board of directors know of his retirement plans two years in advance, so the board had plenty of time to look for his successor. The board hired a headhunter firm, D. Hilton & Associates of Houston, which reviewed 1,700 résumés and applications, according to board chairman Phillip Boudreaux of Conway.

The tremendous interest in the job was, Boudreaux said, a testament to Klein's reputation in the credit union industry and the financial soundness of the institution.

Hilton eventually narrowed the field to eight top candidates, and the directors went on to interview four.

"All four of them were top-notch individuals," Boudreaux said. At his instructions, the directors did not discuss their impressions of the candidates until all had been interviewed.

"When we finally came together, there was no doubt that everyone felt that Larry was the one. He kind of stood out," Boudreaux said.

He was offered the job on May 4 and reported for duty on June 13.

During the first two weeks of his new job, Biernacki said, he spent about 10 hours in his office. The rest was spent acquainting himself with AFCU's five branches: the main office in Jacksonville and one each in Little Rock, North Little Rock, Fort Smith and Conway.

While he found much to admire, he also determined that the teller lines were "terrible." He quickly asked the board to approve the hiring and training of 10 new employees - something Boudreaux said the board had been asking Klein to do for years.

"Hank ran a pretty lean ship. He was pretty much known for that," said Boudreaux, a senior staff attorney with the Bureau of Legislative Research who has been on the AFCU board since 1992. While acknowledging that "you couldn't really quibble with Hank's results," Boudreaux said, "There's something to be said about customer service, too."

Biernacki also found some strange pricing strategies. For instance, AFCU had offered a promotional interest rate on a 72-month car loan that was lower than the rate available on shorter loans. He immediately ordered his staff to reprice the dozen or so shorter loans closed during the promotional period to the same lower rate as the 72-month loans and apply any extra interest the borrowers had paid to their principal balance.

Last month members received notice that AFCU now offers gap insurance to motorists whose cars are worth less than they owe on them. It's a standard product at most larger credit unions, Biernacki said.

"I was surprised that we didn't offer it, and I was pleased to be able to offer it to the membership," he said.

Another early action by Biernacki: flattening the management structure by eliminating the position of executive vice president Craig Savell, a former president of Arkansas Credit Union League who had joined AFCU as senior vice president in early 2001.

Savell will start work this month as a vice president of HEB Federal Credit Union in, curiously enough, San Antonio. It is a $112.5 million credit union for employees of HEB Grocery Co. and their families.

"Good for him," Biernacki said of Savell's new position. "I'm really glad that he's finding a good opportunity, and they'll be fortunate to get him."

'Hear That?'

That Savell will be moving to Biernacki's former hometown to work for a credit union is a reminder that San Antonio is a credit union mecca. Even at $1.8 billion, San Antonio Federal Credit Union was only the third-largest in the San Antonio metropolitan area. The largest, Security Service Federal Credit Union, has assets of $3.8 billion, while Randolph-Brooks Federal Credit Union at Universal City has $2.3 billion.

During his time at San Antonio FCU, Biernacki became known as an industry expert on point-of-sale or "indirect" lending. He has been a frequent speaker on the subject at industry conferences - on Saturday he is scheduled to moderate a panel discussion called "Innovations in Lending" at a meeting of the Georgia Credit Union Affiliates.

POS, Biernacki said, is "the ability to deliver the financing for an item at the point the item is being sold." POS lending is the secret to San Antonio FCU's 139 percent loan-to-deposit ratio; it is something that AFCU, with a 77 percent loan-to-deposit ratio, has not done. But it will soon, Biernacki said.

"Hear that? My member is doing business with another organization. Perfectly legitimate. Darn it, I hate it when I can't be there," he said.

By Nov. 1, Biernacki said, a few car dealerships will be able to offer on-the-spot financing to AFCU members. He wouldn't identify the dealers.

"Our members buy cars every day of every month of every year," he said. "And they finance elsewhere because I haven't made it easy for them."

Dealers will be able to add AFCU to the mix of financing they can offer, and not having to wait till the next business day to get a draft from their credit union may be enough to keep some customers from walking off the lot without consummating the deal.

Eventually, he will expand POS financing to other consumer items like large appliances.

"If I can do the things the others do, I will garner a piece of that market space," Biernacki said.

Batter Up

Biernacki is originally from Chicago but moved with his family to Phoenix in time to finish high school there in 1970. He earned a Bachelor of Science in mathematics from Northern Arizona University at Flagstaff and has spent the past 26 years in financial services. His résumé includes stints with banks (First Interstate, now part of Wells Fargo, and Citigroup) and thrifts (First Federal Savings & Loan of Phoenix, now part of Bank of America). He has run a medium-sized credit union, Western Horizons FCU of Mesa, Ariz., and was one of eight direct reports to the CEO of San Antonio FCU, Jeffrey Farver.

Married for 31 years, Biernacki has one son and four grandchildren. He is an avid golfer (he lives at Greystone in Cabot) and a certified baseball umpire. "I've have umpired everywhere I've lived, and I will umpire here," he said. He is a member of First Baptist Church at Cabot and is considering joining the Jacksonville Rotary Club.

He is even trying to become a Razorbacks fan, although he acknowledged that this year's football team wasn't making it easy.

Boudreaux said Biernacki made a commitment to stay at AFCU long term. Biernacki said he expects his current job to be his last.

"I do not have any desire to go anywhere else. I like all the opportunity and challenges I can see us facing in the next 10 years," he said.

AFCU By the Numbers
Click here for a chart of AFCU finances. (Chart requires Adobe Acrobat viewer. Click here for a free copy.)

 

 

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