Executive Summary - 4/30/08

By Christian Mullins

Executive Summary:

In what should be categorized as a win for the banking industry, the Credit Union Regulatory Relief Act (CURRA), a watered down version of CURIA, was pulled from the House calendar and will not see a vote. Some congressional aides weren’t sure there were enough votes to pass the bill, but several lobbyists said the decision was reached because lawmakers didn’t want to go on record in selecting banks or credit unions.

That pesky text message scam has infiltrated another credit union. Mazuma CU of Kansas City, Missouri is the latest financial plagued by the messages, which are sent to individuals via their cell phones. At this time, it is unknown how many individuals responded to the message.  Previously attacked were Arizona Central CU and Oregon Community CU.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• Susan Blake of Huntington, West Virginia, was sentenced to three months in prison for the embezzlement of over $80,000 from a former employer. She admitted to stealing the money from 1998 to 2006 from seven member accounts while employed as a teller at Huntington Veterans Affairs FCU, now Star FCU.

Executive Summary - 4/29/08

By Christian Mullins

Executive Summary:

The first rebate checks were disbursed yesterday, four days ahead of schedule. About 800,000 checks were deposited electronically into bank and credit union accounts. The Internal Revenue Service plans to deposit about 800,000 per day until Friday, when that number will reach 5,000,000.

Announced last October, the merger of Midwest United CU ($164m in assets) into CommunityAmerica CU has been completed. The Kansas City, Missouri based CU now boasts over 160,000 members and $1.7 billion in assets.

An interview with JoAnn Johnson, Chair of National Credit Union Administration (NCUA) offers her thoughts on the reasons why credit unions have, in general, fared better than other financial institutions in the mortgage market and where the CU foreclosures are trending.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• Nothing to report today.

Executive Summary 4/26/08-4/28/08

By Christian Mullins

Executive Summary:

St. Mary’s Hospital CU of Green Bay, Wisconsin, has announced they will merge into Pioneer CU, effective May 1, 2008, giving their members additional products, services, and locations with the $325 million asset CU. Employees of the $2.5 million asset CU that aren’t retained by Pioneer CU will receive severance packages.

In 2003, the Credit Union Regulatory Improvements Act (CURIA) was introduced to Congress. Five years later, a watered down version of the bill, called Credit Union Regulatory Relief Act (CURRA) is headed to a Tuesday vote. The bills are similar, but two CURIA provisions facing stiff opposition from banks, a cap on member business loans and enactment of a risk based capital system, are absent.

Brian M McCue, of Warren, Ohio has been named President of Greater Warren CU. McCue previously held the positions of Executive Vice President, Vice President of Finance, and Controller. The credit union currently has over $60 million in assets and three branch locations.

Robbed:

• Mississippi Employees CU, Jackson, Mississippi, Friday. A former police officer entered the credit union, demanded money via a note that intimated he was armed, and fled with an undisclosed amount of cash. Lawrence Epps is believed to have escaped with about $8,000. No one was injured.

Arrested, Arraigned, Charged, or Sentenced:

• Three men were arrested and charged with the Friday robbery of Navigator CU in Theodore, Alabama. Daveron King, Daryl Davis, and Timothy King were charged with the crime. During the one hour manhunt, a nearby elementary school was placed on lock down, though the children were in no immediate danger.

• A Louisville, Kentucky woman was sentenced to 8 years in prison for embezzling $7,000,000 from now defunct Obelisk FCU. Patricia Helen Sherman, a former head teller at Obelisk, stole stacks of $100 bills from their vault from 2003-2007, spending much of the money on gambling. The credit union went into insolvency as a result and was taken over by Centra CU last summer. It is still unknown why she was able to hide the theft for so long.

Executive Summary - 4/25/08

By Christian Mullins

Executive Summary:

In Santa Fe, New Mexico, a former credit union manager was arrested and charged for identity theft and allegedly stealing $246,000 from Associated Credit Union of Texas. Previously charged with the theft of $25,000 from the CU, an audit of Edie Marie Minter’s transactions showed a cash loss of $122,000 and seven fraudulent loans totaling $124,000. The loans were made in the names of friends and family without their consent.

For the first time in six weeks, the national average rate for a 30 year fixed mortgage topped 6% at 6.03%. Holding at 5.88% for the previous three weeks, it is believed that financial institutions raised their rates in response to inflationary concerns. With those concerns in mind, the Federal Reserve is still expected to enact a rate cut of 0.25% next week.

Anyone that shopped at a Canton, New York WiseBuys store from December 5 through December 20, 2007 may have had their debit or credit card compromised. Fraudulent charges began appearing on accounts in early March, and the number of victims already numbers in the hundreds. The number of compromised cards is far fewer than the Hannaford breach several months ago, but the percentage of victims is higher. It is unknown at this time whether the theft is due to a data breach or employee theft, though the cards have been used primarily in New York City.

Robbed:

• Trades Building CU, Plainfield Township, Michigan, Thursday. A man wearing a face mask took an undisclosed amount of cash Thursday afternoon. No one was injured in the robbery.
• Score FCU, Tallahassee, Florida, Thursday. A man wearing plaid shorts walked into the CU Thursday afternoon, demanded cash, and fled on foot. No one was injured.
• Spartan FCU, Spartanburg, South Carolina, Thursday. An armed man robbed the credit union Thursday afternoon and fled with an undisclosed amount of cash. Because of the CUs proximity to a University of South Carolina campus, an email and text message alert was sent to students. No one was injured in the robbery.

Arrested, Arraigned, Charged, or Sentenced:

• Brent Labarron Pugh, 19, was sentenced to 19 years in prison Thursday for two July 2007 ‘takeover’ robberies in Alabama, including Mobile Postal Employees CU. He was acquitted of an unrelated carjacking charges, but still faces additional robbery and carjacking charges.

Executive Summary - 4/24/08

Executive Summary:

The tide seems to be turning on illegal internet gambling. The Unlawful Internet Gambling Enforcement Act (UIGEA) has come under fire due to its dependence on financial institutions to police electronic transactions to gambling sites. Legislation proposed last year by Rep. Barney Frank of Massachusetts and companion legislation to UIGEA would not only absolve financial institutions of their responsibilities under UIGEA, but regulate a legalized version of internet gambling for the purpose of tax revenue. PricewaterhouseCoopers estimates tax revenue generated from internet gambling could range from $8.7 billion to $42 billion in its first 10 years.

State Employees CU (SECU) of North Carolina partnered with Local Government FCU and the IRS to offer the Volunteer Income Tax Assistance Program (VITA), designed to help low to moderate income taxpayers claim eligible tax credits, and avoid costly preparation and refund anticipation fees. With two trained employees at each of SECU’s 217 locations, they assisted 15,000 qualifying members claim $8 million in tax credits, $14 million in tax refunds, and save $2.2 million in tax preparation fees.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• A man and woman have pleaded guilty to the robbery of a Simpsonville, South Carolina credit union in January. Alderio Andre McDaniel and Alexis Greer robbed Community 1 FCU by force, pointing guns at tellers before fleeing in a vehicle parked at a nearby vacant home. The two will be sentenced at a later date.
• A Floodwood, Minnesota couple has been charged with check forgery and theft by swindle for allegedly writing more than $60,000 in bad checks at Floodwood Area CU. The couple opened a business account for a fictitious future golf course, deposited large checks, then immediately drew down the account.

Executive Summary International 4/23/08

By Christian Mullins

Australia

• An estimated 30% of Australian mortgage holders are facing massive rate hikes in the coming months.  These mortgages were at a 3 year fixed rate of about 5.5%.  When their fixed term expires, the rate will shift to a standard variable rate ranging from 8.25-9.47%.  For many mortgage holders this will represent a 50% increase in their monthly payment.  There are options available to lessen the price shock, but the increase will remain substantial.

Canada:

• Many Toronto area businesses, including QuintEssential CU, are paying more for electricity to reduce their carbon footprint.  QuintEssential CU is currently paying an extra $500 per month after joining Bullfrog Power, which asks their clients to pay extra to fund wind turbine operations.  Their monthly bill includes a section displaying the amount of emissions saved by their investment in renewable energy.

Ireland

• The Ireland League of Credit Unions reports that over 3 million people across Ireland are members of a credit union.  In addition, loans were up 5% over 2006, savings were up 1.5%, and overall assets increased 2.7%.  Of the 521 CUs that fall under the ILCU, 82% paid a dividend to members of at least 2%.  Ireland CUs were also able to further reduce the amount of bad debt on their books.  This year also marks the 50th anniversary of the ILCU.

Jamaica

• According to the Bank of Jamaica’s annual report, the credit union movement in the island nation is strengthening.  The nation’s 48 credit unions now total about $44 billion in assets.  Savings increased 13% to $34 billion, while loans outstanding jumped 19.6% to $31 billion.  In addition, membership increased about 6% to 927,000.

United Kingdom

• The Treasury and Bank of England has announced that they will open a line of credit with financial institutions totaling £100 billion to offset liquidity issues with mortgage loans. Previously, financial institutions in the UK would sell their mortgages much as they do in the United States.  However, much of that debt proved to be bad, making it difficult to sell even the best loans. The result is there is no more money to lend. Allowing financial institutions to swap their debt for tradable debt is a short term fix, though, as new mortgage loans constituted about £108 billion last year.

Executive Summary - 4/23/08

Executive Summary:

After surveying 1,424 consumers with bank accounts and cell phones, Opinion Research has determined that individuals 18-34 are more than twice as likely (21% to 10%) to use mobile banking than older age groups. Not surprisingly, 85% of those surveyed say they wouldn’t use it if they had to pay a mobile banking fee.

In San Bernardino, California, Arrowhead CU has come under fire after inaccurate records and allegations by ‘bank associates’ led to the arrest of a prominent local pastor. After the pastor’s release, the credit union apologized in a letter as well as donating $3,000 to the pastor’s church. Allegations of underlying racism have been levied, and the pastor is debating whether or not to invite Al Sharpton or Jesse Jackson to speak out against them. The pastor is also looking at an ‘alliance’ with 100 other black pastors with the purpose of opposing Arrowhead.

Robbed:

• Azalea City CU, Mobile, Alabama, Monday. Two men in ski masks entered the credit union with handguns visible. They took money from the location and fled on foot. No one was injured.
• HealthCareFCU, Ocala, Florida, Tuesday. A man pointed a handgun at a teller and demanded money. The man was described as 6 feet tall, weighing 130 pounds, and fled on a small pink bicycle. No one was injured.

Arrested, Arraigned, Charged, or Sentenced:

• The ‘Grandpa Bandit’ (does everyone get a nickname these days?) pleaded guilty Tuesday to four financial institution robberies in Tennessee, including the robbery of Tennessee Members First FCU twice last November. Bobby Joe Phillips, 65, faces a maximum 20 year sentence for each offense.

Executive Summary - 4/22/08

Executive Summary:

With tightening credit standards, more borrowers are turning to peer-to-peer lending websites on the internet. Responsible for about $100 million in loans in 2007, P2P lending is expected to jump to $1 billion by 2010. Like many other financial institutions, P2P borrowers pay a rate that roughly corresponds to their credit score, though the lender market ultimately determines the rate.

Two Jacksonville, Florida credit unions have announced that they have merged, effective March 31, though final software integration is scheduled for July 1. Marketplace FCU, a $21 million asset financial, will merge into $81 million asset HealthAmerica CU. The resulting CU will have over 20,000 members.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• A Denison, Texas man was sentenced to 32 years in prison Monday after pleading guilty to four robberies, including Resource One CU in December 2007. Dubbed The Toboggan Bandit, Jim Wesley Davis carried a gun in all four robberies, pointing it in a threatening manner on three occasions.

Executive Summary 4/19/08-4/21/08

By Christian Mullins

Executive Summary:

Visterra CU and CU of Southern California have agreed to merge, with a completion date set for mid to late summer. The credit unions are about equal in size and will give the combined CU almost $1 billion in assets. CU of SC CEO Dave Gunderson will retain his title, while Visterra CU CEO Robert Cameron will serve as President. The combined CU will retain the name Visterra.

Text message phishing scams have found their way into Arizona Central and Oregon Community Credit Unions (separate article). Oregon Community CU estimated that 2,000 of their members were sent text messages before the CU opened, asking members to call a certain phone number. At this time, about 100 members are known to have called. Members averaged 2-3 fraudulent charges for about $200 per charge. Arizona Central CU statistics were not available.

In a move that should come as a surprise to no one, many financial institutions are tightening their credit standards as they face higher than normal loan loss. (Editor’s Note: Expect this trend to continue until those banks and credit unions face an unfavorable loan to deposit ratio, at which time policies should begin to ease.)

Robbed:

• Coastal FCU, Concord, North Carolina, Friday. A man entered the credit union Friday afternoon, demanded money, and fled on foot with an undisclosed amount of cash. No weapon was shown and no one was injured. This is the second robbery of a Coastal FCU branch three days.

Arrested, Arraigned, Charged, or Sentenced:

• Linda Zech of Spencer, Iowa, will serve more than five years in prison for the theft of $770,000 from Eaton Employees Credit Union. A former employee of the credit union, she was convicted of cutting fraudulent checks, disbursing fraudulent loans to family members and other third parties, and taking cash deposited by credit union members. The theft occurred between January 2003 and January 2007.
• The lollipop bandit has been arrested. After helping himself to a free sucker, Tyson James allegedly robbed the Transwest CU in Magna, Utah on April 14th. Tips from acquaintances who recognized his face in surveillance photos led to his arrest on April 18.
• On Friday, Daniel George Corring allegedly walked into a Kessler FCU in Mississippi with an automatic rifle, took two staff as hostages and led the police on a high speed chase. Driven by one of the hostages, Corring’s car lost control and went into a ditch. Corring was apprehended and no one was injured.
• John Snuggs was charged Friday with the October 2007 robbery of Lopatcong Twp., Pennsylvania Baker FCU. He was also charged with various additional robberies, including two banks.