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Credit unions on solid ground: Jacksonville-based credit union leads state with $131.9 million in assets.

Arkansas' credit unions "are definitely doing well," says Hank Klein, the chief executive officer of Arkansas Federal Credit Union of Jacksonville, the leader in assets of all the state's credit unions. Arkansas Federal Credit Union, with $131.9 million in assets, is in the midst of "a growth mode with a lot of potential," Klein says.

Once known as Little Rock Air Force Base Federal Credit Union, it merged with five smaller credit unions and changed its name in October. It serves government employees -- city, state, federal, Fort Chaffee, National Guard, National Reserve -- throughout Arkansas.

With the expansion, Arkansas FCU serves members in Little Rock, North Little Rock, Jacksonville and the Fort Smith area. The Jacksonville office is being enlarged.

"We're not going out looking for this. They're knocking on the door," says Klein, who is chairman of the National Federal Credit Union Association.

Arkansas FCU numbers 36,976 members, more than three times the second-largest union.

Its return on assets is 1.38 percent (credit unions consider 1 percent or higher good). The capital/asset ratio, or equity, is 9.79 percent. Credit unions regard 6 percent or higher a solid figure, Klein said. The figure is a credit union's "safety factor," the amount it can lose before going in the red.

Plenty Of Perks

Arkansas FCU offers checking and credit cards with no fee. It recently added a full-time automobile advisor "whose sole purpose," Klein says, "is to help members understand car-buying procedures" and arrange for a purchase "without sales hassles."

Second on the list is Crossett Paper Mills Employee Federal Credit Union, serving Georgia-Pacific Corp. employees and their families. The membership totals 7,460.

"We're as sound as we can be," says Gary Rogers, the CEO since 1990. "We're in a good environment here. The paper industry is good right now. There's a solid base with GP. It's a good situation as long as the paper industry is going well."

Rogers says his credit union is growing "but without doing anything special." The union doesn't offer checking accounts. It offers savings accounts and loans. Rogers says the union has a good loan demand.

"Crossett being a small town, we have a good relationship with the banks," he says. "We've got one across the street and another a block away. We never saw the need for checking accounts. Our members have their checking accounts at the banks and get their loans from us."

In times when depositors aren't sure where to place their money, a credit union seems a solid choice.

Many credit unions are increasing in size and equity level. The safeguards set up for credit unions leave them very solvent. Unlike banks, they are owned by their members.

"They are different than anything else in the financial world," says Don Deems, president of the Arkansas Credit Union League. "They have shown excellent growth because there's need for what they do."

This week's list is a look at the state's top 25 credit unions ranked by assets. Also included in the list are total deposits, number of investors, return on assets and ratio of capital to assets.

Figures were provided by Callahan and Associates of Washington, D.C.

Credit unions, Deems says, are insured by the strongest financial insurance fund -- the National Credit Union Share-Insurance Fund. Credit unions put 1 percent of their assets into the fund.

"Its rate is $1.28 for every $100, as compared to the FDIC, which is 23 cents, and the FSLIC, which is at a negative figure being funded by taxpayers," Deems says. "If a credit union goes under, the other credit unions are paying for it."

Investing by credit unions is limited by law. The investments must be federally insured. The unions can't invest in speculative stocks or bonds. There are tight restrictions on business loans.

"You don't find any who own shopping centers or real estate," Deems says.
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Author:Harris, Jim
Publication:Arkansas Business
Article Type:Industry Overview
Date:Aug 10, 1992
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