Telcoe's Sarah Mosley on the Role of Credit Unions in the Modern Banking Industry

by Arkansas Business Staff  on Monday, Aug. 5, 2013 12:00 am  

Sarah Mosley

Sarah Mosley is CEO and president of Telcoe Federal Credit Union of Little Rock, the second-largest credit union in Arkansas with total assets of $318.7 million and 25,838 members as of June 30.

Mosley started at Telcoe in 1973 as a lender and in 1975 moved to assistant manager. In 1978, she was promoted to her current position as chief executive officer and president. Before Mosley’s move to Telcoe, she worked in supervisory roles in the grocery industry with Kroger in Atlanta and Malone & Hyde Inc. in Memphis.

Q: Telcoe has continued to see strong growth. What has been your growth strategy?

A: Our strategy has always been to offer competitive pricing for both loan and savings products to our member/owners.

The Great Recession saw some big changes in how banks conduct their business. What has been its long-term effect on credit unions?

I would say the shift in expenses related to monitoring and reporting that is mandated with the many new or changed regulations, along with special assessments charged by our regulator. The financial crisis caused the Federal Reserve Bank to accommodate or basically to lower rates to zero. The successful credit unions seem to have chosen to adapt to the economy rather than wait for it to recover. That being said, if and when rates start to rise, there will be challenges for all institutions.

Banks resent the tax-exempt status of credit unions, their competitors for retail loans. How do you justify that tax-exempt status?

The defining characteristics of a credit union, no matter what the size, remain the same today as they did in 1934: Credit unions are not-for-profit cooperatives that serve defined fields of membership, have volunteer boards of directors and cannot issue capital stock. Credit unions are restricted in where they can invest their members’ deposits and are subject to stringent capital requirements. A credit union’s shareholders are its members, and each member has one vote, regardless of the amount on deposit, while a bank has stockholders.

If this changed, then we would likely see some conversions to bank-type charters. Credit union tax exemption can be compared to Subchapter S banks that pay no federal income tax, and in both cases the shareholders receive dividends and/or interest that is taxed rather than the institution. On average, credit unions have paid higher dividends/interest to their shareholders while offering lower loan rates. In the end it comes back to competition, and if there were no credit unions, then the banks would have the monopoly and consumers would pay the price.

Women seem to have an easier path to the top position in credit unions than in banks. Do you have any ideas about why that is?

In the early days, the hours were long and the pay was short, which didn’t attract that many males, thus giving the females a niche in the industry. I believe 10 to 15 years ago we began to see a shift as credit union growth opened more upper-level positions while allowing compensation to become competitive. Today, we have a lot of really qualified women heading up some of the largest credit unions. The moral of this story could be that when the hours were reduced and the pay and benefits increased, the guys started applying.

What attracted you to this line of work?

I was a long-time member of two other out-of-state credit unions. Upon moving back to Arkansas in 1973, a lending job was available at Telcoe Federal. Over the years I have performed all of the jobs.



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