Executive Summary 30 May 2008

By Christian Mullins

Executive Summary:

The Federal Bureau of Investigation (FBI) is investigating the theft of over $100,000 from the vault of Houston Police Federal Credit Union, Houston, Texas. The vault cash was verified on Friday, January 25. Employees noticed the discrepancy on Tuesday, January 29, the next time the cash was counted. The FBI suspects the theft was likely committed by a current or former employee.

With an increase in ‘plastic’ use globally, MasterCard Inc announced they expect annual net income growth of between 20% and 30% in 2009, 2010, and 2011. These numbers were revised upward from 15% to 20% growth. In 2008, the company expects to see double digit revenue growth. Note: While this positive news for MasterCard and their stockholders, it will not help their case regarding The Credit Card Fair Fee Act, legislation aimed at curbing what some have called ‘excessive (interchange) fees’ by companies like MasterCard and Visa.

Mortgage rates rose for the first time in four weeks, but remain lower than this time last year, according to mortgage backer Freddie Mac. The 30 year fixed mortgage rate crept over the 6% mark, averaging 6.08% nationally, rising on fears of Federal Reserve rate hikes later this year and a continued deterioration of the housing market. Last year at this time, the 30 year fixed mortgage rate averaged 6.42%.

The FDIC has released a report stating bank profits are down 46% after the first quarter of 2008. Cumulatively, banks earned $19.3 billion during the first quarter of 2008, compared to $35.6 billion in the first quarter of 2007. The $19.3 billion represents a substantial increase, however, from the $600 million profit reported in the fourth quarter of 2007. In addition, the number of banks at financial risk has risen from 53 at this time last year to 90 this year, representing 1.1% of FDIC regulated banks.

International Summary:

Canada

Garth Warner has been named interim CEO of Alberta’s Servus Credit Union, taking over the day-to-day operations from president and CEO Steve Blakely. Warner was previous the Senior Vice President of Operations at Servus. Blakely will focus his efforts on the mega-merger of Servus, Community Savings, and Common Wealth Credit Unions, scheduled for November 1st. Blakely has been named the CEO of the merged credit unions, which will have $9 billion in assets, 1,925 employees, and 92 locations throughout Alberta.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• Susan A. McLain, 26, of Jackson, Michigan was sentenced Thursday to 90 days in jail and ordered to pay $17,612 in restitution for stealing $36,000 from the accounts of mostly elderly members at Jackson Community Credit Union. She had been a teller at the credit union.
• A woman in Worcester, Massachusetts was indicted Thursday for allegedly embezzling over $40,000 from the Norfolk County Employees Federal Credit Union in Dedham. Elizabeth Ann Starkey, 47, was the office manager and only full time employee of the credit union at the time of the alleged theft, a seven month period in 2006 and 2007.

Executive Summary 29 May 2008

By Christian Mullins

Executive Summary:

The number of Americans filing bankruptcy in 2007 increased 38% from the previous year.  Despite a 2005 law increasing the difficulty of the filing process, over 800,000 Americans filed either Chapter 7 or Chapter 13 last year.  Peter Morici, an economist at the University of Maryland at College Park, said “Americans have been spending 105% of their income for the past three or four years”, contributing to the increase.

International Summary:

• Nothing to report today.

Robbed:

• United Labor Credit Union, Kansas City, Missouri, Wednesday.  A man armed with a handgun walked into the branch at 11:15am.  He approached a teller and demanded money.  The perpetrator left with an undisclosed amount of cash.  No one was injured.
• First Choice Community Credit Union, Knoxville, Tennessee, Wednesday.  A man brandishing a long, thin blade entered the credit union, took an undisclosed amount of cash, and fled into a waiting minivan driven by another individual.  No one was injured.
• Jax Federal Credit Union, Jacksonville, Florida, Tuesday.  Walking into the credit union with a gun in one hand, bag in the other, and wearing a ski mask, a man approached two tellers while pointing his weapon at them and demanded cash.  No one was injured.

Arrested, Arraigned, Charged, or Sentenced:

• Nothing to report today.

Executive Summary 28 May 2008

By Christian Mullins

Executive Summary:

It seems that each day, there’s additional information regarding the mortgage market. And for every positive story, there’s five stories like this: U.S. home prices dropped 14.1% in the first quarter of 2008 compared to a year earlier. This is the sharpest drop since the Standard & Poor’s/Case-Shiller index was started in 1988. Las Vegas fared the worst of major cities, with home prices falling 25.9% over the past year, while Charlotte, North Carolina stayed above water with an increase in home prices of less than 1%.

Financial institutions may be missing their best opportunity to clear bad mortgages off the books before those homes go into foreclosure. Known as a short sale, a homeowner who cannot keep up with their payments asks the lender to take a dollar amount less than what is owed on a home’s mortgage, and forgive the remainder of the unpaid debt. While this isn’t an ideal situation for either side, lenders, on average, lose 19% of a mortgage’s value on a short sale but 40% on a foreclosure. Unfortunately, many short sales are stalled for months, and the home is foreclosed before the short sale is approved.

International Summary:

• Nothing to report today.

Robbed:

• RTP Federal Credit Union, Raleigh, North Carolina, Tuesday. Two men entered the branch at about 10:30am, wearing ski masks and carrying handguns. They demanded money and left without further incident. No one was injured.

Arrested, Arraigned, Charged, or Sentenced:

• A man in York, Pennsylvania was charged Saturday in the robbery of White Rose Credit Union in Springettsbury Township. Angel Manuel Pomales, 39, allegedly walked into the CU Friday and demanded money from a teller. No one was injured in the robbery.
• Former Jackson, Mississippi police officer Lawrence Epps, arrested for allegedly robbing Mississippi Employees FCU on April 25, had his bond reduced from $125,000 to $25,000. The lawyers for Epps and the State are currently debating whether he should be charged with robbery (maximum sentence of 15 years) or armed robbery (potential life sentence). No weapon was seen during the robbery, though he indicated that he was armed.

Executive Summary Weekender 24-27 May 2008

By Christian Mullins

Executive Summary:

Nestled deep within the $300 billion mortgage relief package passed 19-2 by the Senate Banking Committee last Tuesday is a provision requiring lenders to submit to fingerprinting, which will be kept on file at the Federal Bureau of Investigation. The provision requires any State-licensed loan originator to submit to a background check, with fingerprint identification a stipulation. The exact wording can be found on page 41, line 22 (.pdf file).

Navy Federal Credit Union, the worlds largest CU with over $35 billion in assets and 3.1 million members, has announced they will expand their charter to include members of the Army, Air Force, and Defense Department. The charter change is part of a larger overall expansion that will more than double the number of full service branches (currently 150) by 2012.

Educational Community Credit Union ($42m in assets) in Everett, Washington, will merge into MountainCrest Credit Union (formerly Snohomish County PUD CU) on May 31. The combined credit union will have $90 million in assets and almost 15,000 members. According to MountainCrest CU’s President and Chief Executive, Bob Schumaker, there will be no job losses from the merger, though one location will be closed.

Despite lower fixed rates on mortgage loans and an increase in mortgage applications, month-to-month home sales were down 1% in April. In addition, year-to-year home sales are down 17.5%, falling from an annual sales pace of 5.93 million units in April 2007 to 4.89 million units in April 2008. This, in turn, led to a 10.5% increase in homes available for sale, or 4.55 million units, representing an 11.2 month supply on the market at the current sales pace.

International Summary:

Antigua

Jennifer Browne, floor manager of Community First Co-operative Credit Union, was abducted from her home, stuffed in the trunk of her car, taken to the credit union, and forced to open the ATM to her kidnappers, who took an estimated $200,000. Browne was not seriously injured in the kidnapping/robbery. It is believed to be the first kidnapping/robbery of its type in the 49 year history of the country’s credit unions.

Robbed:

• TransWest Credit Union, Sandy, Utah, Friday. An elderly man walked into the CU Friday and waited for two members to leave before asking to see a manager. When he sat down, he displayed a handgun and gave robbery instructions to the manager, who proceeded to take an undisclosed amount of cash from four teller drawers. No one was injured.

Arrested, Arraigned, Charged, or Sentenced:

• A former manager from Allied Credit Union in Mobile, Alabama, pleaded guilty to approving and funding about $60,000 in loans to herself from 1991 until 2005. Records indicate Pamela Fogelman Gwin, 67, altered files a total of 634 times, including rewrites and payments, to maintain the fraud.

International News Integrated into Executive Summary

By Christian Mullins

Beginning today, Executive Summary International will be integrated into Executive Summary, creating one daily summary of credit union relevant articles from the United States and around the world.

Previously, Executive Summary International articles were compiled and posted weekly, but several articles were found to be stale or outdated after being withheld for several days.

International articles will be listed in Executive Summary format under the section International Summary.

Executive Summary 23 May 2008

By Christian Mullins

Executive Summary:

Anchor FCU, or Warwick, Rhode Island, will merge into Wave FCU (also of Warwick) no later than August 31, after 87% of Anchor’s participating membership voted in favor of the proposal. The combined credit union will support 9,000 members and $90 million in assets. Wave President/CEO Paul Archambault will retain his position, and Anchor’s CEO David Dupéré will assume the title of Executive Vice President/CEO. Three of Anchor’s Board of Directors will join the Wave FCU Board.

Cal State 9 CU, of Concord, California, has found a buyer in Patelco CU one of the nations largest credit unions, with assets over $4 billion. In 2007, $330 million asset Cal State 9 sustained losses in excess of $60 million, and has suffered losses of $50 million in the first quarter this year. The National Credit Union Association (NCUA) assumed control over the ailing financial institution last November, and had been searching for a buyer. The deal is expected to be completed by the end of June.

Home funding company Freddie Mac released survey results showing that 30 year fixed mortgage rates have fallen for the third consecutive week, from 6.01% to 5.98%.  15 year fixed rates also declined, from 5.60% to 5.55%.  One year ago this week, the 30 year fixed rate was 6.37%, while the 15 year fixed rate was 6.06%.  Adjustable Rate Mortgages (ARMs) rose slightly on the speculation that the Federal Reserve Board would not cut rates over the short term.

New York Governor David A. Patterson signed into law legislation that aims to close several loopholes that will strengthen the state’s identity theft laws.  Among the highlights are restrictions to how employers may use and store employees personal information and outlawing ’skimmers’, in addition to other changes.  In addition, identity theft victims now have the right to seek compensation for time spent correcting the damage caused by perpetrators.

Robbed:

• Pen Air FCU, Gulf Breeze, Florida, Monday. A man entered the credit union, approached a teller, displayed a gun, and left with an undisclosed amount of cash. No one was injured.
• Sterlent Credit Union, Sacramento, California, May 12. The ‘new to us’ robbery was committed by the ’straw hat’ bandit, who is responsible for at least three other robberies in the Sacramento area over the last several weeks.

Arrested, Arraigned, Charged, or Sentenced:

• Nothing to report today.

Executive Summary 22 May 2008

By Christian Mullins

Executive Summary:

US Alliance CU in Denver, Colorado, will merge into Ent FCU effective May 31.  The merger, viewed as a positive for both institutions, will increase Ent’s presence in Colorado’s largest city while giving US Alliance members greater security after weathering a 13% delinquency rate and posting a $7.7 million loss in 2007.  In joining Colorado’s largest credit union ($2.4 bn in assets), all 35 US Alliance ($56 million in assets) employees have been offered employment following the merger.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• Nothing to report today.

Executive Summary 21 May 2008

By Christian Mullins

Executive Summary:

A redesign of paper currency in the United States may soon be underway…again. A federal appeals court ruled Tuesday that the uniform size, shape, and feel of currency discriminates against the blind and visually impaired. The Bureau of Engraving and Printing is already studying alternatives, with results expected by early 2009. The suit was originally filed in 2002.

In a ‘new to us’ article, Beacon FCU of La Porte, Texas has named (on April 14) Jack V. McAdoo as President/CEO. McAdoo had previously spent 11 years as President/CEO of StarTrust FCU, which grew from $21 million in assets to over $100 million during his stewardship. Beacon FCU is a $90 million asset financial institution with about 15,000 members.

If there could be a silver lining in declining home values, it’s an increased ability for households earning the national average to afford homes in their market. Currently, 53.8% of homes sold during the first three months of 2008 were affordable to families earning $61,500 per year, the national median. The article includes a chart depicting this aspect of the home market for the top 223 population centers in the United States.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• Richard James Ditzel, 41, of North Natomas, California has pleaded guilty to embezzling $409,000 over a period of 6 1/2 years from Sacramento’s SAFE CU, while serving as their financial record keeper. The funds were used to pay personal credit accounts and invest in coins and other valuables. Ditzel is scheduled to be sentenced on August 5.
• Daniel Grams, 53, was sentenced to six years in prison for robbing the West Michigan CU on January 9, 2008. He was arrested and confessed to the robbery while attempting to rob the same credit union on January 29.

Executive Summary 20 May 2008

By Christian Mullins

Executive Summary:

Officials from the United States and Romania announced that 38 individuals have been charged with computer and internet fraud relating to the theft and illegal use of personal account information. In all, 34 institutions, including 20 credit unions, were victimized by the perpetrators, who used spam to lure unsuspecting individuals onto fraudulent websites designed to obtain their account information.

The Senate Banking Committee will move forward with bipartisan legislation aimed at curbing the rash of foreclosures that have previously crippled the mortgage market. If signed into law, the bill will allow the Federal Housing Administration (FHA) to back up to $300 billion in new loans to debt-ridden homeowners currently facing foreclosure. It is believed that the program could assist up to 500,000 borrowers, and has been crafted to protect taxpayers from footing the bill.

It was reported yesterday afternoon that Southern California home sales, previously ravaged by foreclosures, are up 22% from the previous month, with the highest monthly sales total since August of last year. Of those sales, 38% represented homes that were in some state of foreclosure in the last 12 months. Even with the surge in sales, year-to-year sales were down 19%, representing the lowest total since 1995.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• Two teenage boys, 15 and 16, were arrested after attempting to rob Communitywide FCU in South Bend, Indiana Monday. Each boy slipped a note under the security glass to a different teller, but the transaction took too long and they fled the building as police arrived. One boy was taken to the hospital after suffering a minor bite from a police dog.

Executive Summary Weekender 17-19 May 2008

By Christian Mullins

Executive Summary:

Bellweather Community Credit Union of Manchester, New Hampshire reported the loss of a disc containing private information on 3,000 of their members, including account and Social Security Numbers. Currently, there is no evidence of wrongdoing, and none of the information on the disc has been used. CU officials believe that the disc was likely misfiled or inadvertently thrown away. To prevent further losses, the discs, sent from an outside vendor, have been replaced by a secure data transmission.

Robbed:

• Harvesters FCU, Pensacola, Florida, Friday. Two men, one armed with a silver handgun, entered the credit union and demanded money. The men fled on foot with an undisclosed amount of cash. No one was injured.
• Financial Center CU, Manteca, California, Saturday. In a rare Saturday robbery, a man entered the credit union, demanded cash from one teller, waited for the member in the next window to leave, and took money from that teller as well. The man fled on foot, and no one was injured.

Arrested, Arraigned, Charged, or Sentenced:

• Nothing to report today.