Outside Credit Unions Expand in Arkansas

Whirlpool Corp. abandoned Arkansas in 2012, but the Michigan credit union that originally served its employees is still here and growing.

United Federal Credit Union of St. Joseph, Michigan, opened its fifth Arkansas branch at 630 Hwy. 71 N. in Alma on April 23, barely a month after opening its fourth inside the new Walmart Supercenter at 4870 Elm Spring Road in Springdale. United completed a major renovation of its original Arkansas branch, at 8900 Jenny Lind in Fort Smith, in April as well.

United is one of 11 credit unions chartered outside Arkansas that operate branches inside the state. (See table below and graph above.) Most are still associated with specific employers — think FedEx Employees Credit Association in Harrison, Eaton Family Credit Union in Searcy and L’Oreal USA Federal Credit Union in North Little Rock — but some are expanding their membership and their branch networks.

Hope Credit Union of Jackson, Mississippi, for instance, plans to open a branch in Little Rock, its third in the state.

“I am looking for an office,” CEO Bill Bynum told Arkansas Business last week, using the words that warm the hearts of commercial real estate brokers. “We hope to have that office open by the end of this year, or if not by the end, then shortly thereafter. We have raised the resources, and we’re looking for staff.”

Arkansas has never been a hotbed of credit union activity. The largest, Arkansas Federal Credit Union of Jacksonville, broke the $1 billion mark in assets last year — $1.03 billion as of Dec. 31 — making it the eighth-largest financial institution in the state. Telcoe FCU of Little Rock is a distant second, with assets of $320 million. Together, Arkansas and Telcoe have a hair more assets than the other 58 credit unions chartered in the state combined.

The largest in the country, meanwhile, is Navy FCU of Vienna, Virginia, with assets of almost $67 billion. There are 50 individual credit unions in the country that have more assets than all 60 credit unions in Arkansas combined.

United FCU, which recently cracked into the top 100 credit unions, has reached out well beyond its former Whirlpool employee base, and Noel Sanger, VP for the market that includes Arkansas and Oklahoma, says it’s working. United’s assets in Arkansas are just shy of $250 million, he said, making it the third-largest credit union in the state.

United, with $1.83 billion in assets in six states, has only about $125 million in Arkansas deposits. He claims almost 25,000 members in the state, a number that has been growing by double digits in recent years. Some of them are employees of corporate members — Baldor Electric, Graphic Packaging, the Hardscrabble and Fianna Hills country clubs — but employment at a corporate member is not a requirement for membership.

“Here in Arkansas and Oklahoma, we actually have a broad [membership] base. Anyone who lives, works or worships in Arkansas or Oklahoma, we can take care of them,” Sanger told Arkansas Business last week. (United does not have any physical locations in Oklahoma.)

The new branch in Alma was a branch of First Community Bank of Crawford County, which was folded into First Bank of Hampton (Calhoun County) in February 2014. It was a First Bank branch for about six months; now First Bank has only one branch in Crawford County, at 2925 Alma Highway in Van Buren.

“This branch presented itself, and we were able to slide in there, and it’s growing by leaps and bounds,” Sanger said.

The new branch in Springdale has five employees, but it also offers 3D Omni-Suite virtual banking connection with loan officers in Michigan — a hologram-like experience that Sanger compared with Max Headroom, the supposedly computer-generated British TV host from the mid-1980s, about the time Sanger, 36, was starting school.

Sanger said United FCU is not finished growing in Arkansas — “That’s what I’m here for,” he said — possibly through acquisition.

“We’re always willing to talk,” he said, pointing out that in 2011 United became the first credit union to acquire a commercial bank — actually the assets of Griffith Savings Bank in Griffith, Indiana.

United FCU earned net income of $16.4 million in 2014.

Growing Hope

Hope Credit Union — it is federally chartered but does not use “federal” in its marketing — entered Arkansas in 2008 by acquiring tiny College Station Community FCU in Pulaski County, which had less than $1 million in assets. Hope then opened a branch in West Memphis in 2010 and one inside the University of Arkansas at Pine Bluff’s Business Support Incubator & Office Complex in December 2013.

Hope targets the “unbanked and underbanked” population, and Arkansas has a big one, Bynum said: 72 percent of African-Americans in the state are using high-cost financial services like online payday lenders and pawnshops.

“We try to provide those people with affordable, responsible financial services,” he said.

Hope has $181.4 million in assets, and Bynum said about a quarter of those assets are in Arkansas. The credit union had net income of $1.8 million in 2014, according to its call report filed with the National Credit Union Administration.

Membership in Hope is open to anyone, and the credit union currently has members in 49 states.

Both United and Hope credit unions are actively seeking out commercial loans, encroaching into the bread and butter of banks.

Hope Credit Union has had a commercial lender, Gary Webb, in Little Rock for 12 years, Bynum said. He works out of the Arvest building downtown. The northeast part of the state is serviced by lenders in West Memphis and Memphis.

Hope is a Small Business Administration lender, but Bynum said it also makes direct loans to micro and small businesses — and to larger ones, like financing the Husqvarna plant in Nashville (Howard County).

Instead of competing with commercial banks, Hope Credit Union likes to partner with them, he said.

“A lot of banks don’t target the communities we do, particularly those in the Delta and lower income areas, so when we find loans that they might participate in, probably a third of our commercial loans have banks participating in them.”

Out-of-State Credit Unions With Branches in Arkansas
Ranked by total assets as of most recent call report

*Branch planned for Little Rock by end of 2015    

Sources: Cornerstone Credit Union League, National Credit Union Administration, the credit unions