CU News Briefs 3/29/08-3/31/08 (or stuff that didn’t earn a full blog)

Executive Summary:

• Here’s the entire 22 page Executive Summary of the Bush Administration’s Blueprint for Financial Regulatory Reform. If implemented, the Treasury Department believes that situations such as the sub-prime mortgage market crisis can be avoided.

• Illinois Governor Rod Blagojevich announced four new contributors, including Members Alliance CU, and an additional $100 million in funding for the Illinois Homeowner Assistance Initiative, a program designed to aid homeowners struggling to maintain their mortgage payment. The original program details, now funded at $300 million dollars, can be found here.

• Two bills making the rounds in Congress would make not only expand disclosures that better explain how and when credit card rates fluctuate, but would also ban the universal default clause. The American Bankers Association fears that such legislation would increase rates overall and, for some individuals, increase the difficulty of obtaining credit.

Robbed:

• Arrowhead Credit Union, Chino Hills, California. A man and woman robbed the CU Friday morning, taking an undisclosed amount of cash. The man demanded money from a teller while the woman served as lookout. They fled the scene on motorcycles. The man was wearing a ‘mohawk’ helmet. No one was injured.

Arrested, Apprehended, Charged, or Sentenced:

• Two of three men have been sentenced in connection with the April 7, 2007 robbery of Omaha, Nebraska’s Union Pacific Connection FCU. Jermaine Hickman and Deandre Bradley each received more than 9 year sentences, followed by probation. The third suspect remains at large.
• Eight bank and credit union robbery suspects have been charged in Gary, Indiana, for several robberies, including that of La Porte Community CU on Tuesday. Three of the six suspects currently in custody are the sons of a Gary Police Sergeant. The other two suspects remain at large.

CU News Briefs 3/28/08 (or stuff that didn’t earn a full blog)

Executive Summary:

• Two San Diego Credit Unions, each with more than $900 million in assets, announced their intention to merge Thursday. If approved, First Future CU and California Coast CU would serve over 130,000 members with 26 branches, and the second largest area credit union, after San Diego County CU. The move coincides with the retirement of California Coast CU CEO Jim McPheters.

• Contrary to the December 2006 TJX data breach, Hannaford Brothers Co stated that they were fully compliant with the Payment Card Industry (PCI) Data Security Standard, and were certified as compliant in 2007 and as recently as February, supporting their position that they are not responsible for financial institution’s reimbursement costs.

• The Federal Reserve may have cut interest rates eight times since August, but those cuts have not translated into lower mortgage rates for consumers. The benchmark federal funds rate has decreased by 300 basis points during that time, but 30 year fixed rates have only decreased by 50 basis points.

• Following up on a 3/26/08 Executive Summary brief, a successor has been named to replace retiring CEO Dick Williams of Member One FCU. Frank Carter, former Senior Vice President of the $1.9 billion Grow Financial FCU, will head the $350 million Roanoke, Virginia based credit union.

Robbed:

• Teachers CU, Indianapolis, Indiana. Two men entered the credit union Wednesday evening and demanded money. No weapons were shown, and no one was injured in the robbery.

Arrested, Apprehended, Charged, or Sentenced:

• Nothing to report.

CU News Briefs 3/27/08 (or stuff that didn’t earn a full blog)

Executive Summary:

• Kansas moved one step closer to restricting a state chartered credit union’s ability to expand. Previously passed by a vote of 35-2 in the State Senate, SB 535 was passed by a House committee, with both banking and credit union executives believing the bill will become law. Long term ramifications were discussed here Tuesday.

• Research has shown that appealing to an individual’s environmental beliefs is an effective way to promote services such as e-statements and online bill pay. Data compiled from Forrester Research Inc and Aspen Analytics showed that this type of promotion, rather than cash incentives, proved more successful in trumping traditional concerns over online products, chiefly security and reliance on paper statements.

• MidWest America FCU, based in Indiana, announced the retirement of CEO Charles Bitler, effective March 31. Bitler joined the CU in 1971 in the loan department, and assumed the position of CEO in 1995. During his tenure, the number of MidWest America FCU branches more than tripled to 17, and assets grew from $130 million to almost $400 million.

• A Golden West CU employee, in Farr West, Utah, found a note stating there was a bomb in the building. Closed for several hours, authorities, with the aid of bomb-sniffing dogs, found no signs of explosives.

• Hannaford Brothers Co. state they fulfilled their responsibilities regarding a series of data breaches that potentially compromised 4.2 million credit and debit cards over the past several months. At this time, the multi million dollar expense of replacing the cards will fall solely on the cardholders financial institutions.

• More than 100 credit unions nationwide have turned to VeriSign, Inc, offering their members an additional layer of security against identity theft when conducting online transactions. VeriSign’s EV SSL Certificates allow members using high security browsers to instantly recognize visible cues, assuring them they’re on a genuine website.

• In Oklahoma, a former Mayes County FCU employee has been sued by her former employer, alleging that she embezzled over $1.6 million dollars. Nine co-defendants, all family members, join Cynthia Jan Harris, who allegedly deposited the embezzled funds into their accounts.

Robbed:

• La Porte Community FCU, Michigan, Indiana. Three men entered the credit union Tuesday morning, demanding money. No members were in the building at the time, and no employees were hurt.

Apprehended, Arrested, Charged, or Sentenced:

• Or even arraigned. Derek Christensen of Lynn, Massachusetts, was arraigned Wednesday for allegedly robbing St. Jean’s CU four times in two months. Another alleged felon who chose not to wear a mask, he was recognized in a video surveillance photo by a Lynn Police Officer.
• Cory Mathis was sentenced to 12 years in prison for the robbery of First Central CU on August 6 of last year. The Waco, Texas man, was identified in surveillance photos by friends and family, and the pistol used in the robbery was seen on Mathis’ MySpace page.
• Jeremiah Garrett was arrested on several charges, including armed robbery, kidnapping, and carjacking in relation to a December 20th robbery of Richmond Community Credit Union in Augusta, Georgia.

CU News Briefs 3/26/08 (or stuff that doesn’t get a full blog)

Executive Summary:

• In Virginia, Dick Williams, CEO of Member One FCU since 1972, is retiring. His time as CEO saw the CU grow from 1 branch, 6 employees, and 1,500 members to 15 branches, 180 employees, and 52,500 members, and was one of the first credit unions nationwide to offer checking accounts.

• The Quad Cities (Illinois and Iowa) are holding Money Smart Week from April 5-12. Organized by the Federal Reserve of Chicago, MSW will feature classes, seminars, and activities for all age groups, educating them on money management and local financial education opportunities.

• Fairwinds Credit Union in Altamonte Springs, Florida apologized to local authorities after providing them with incorrect ATM images of robbery and fraud suspects. One woman was falsely arrested after going to the police station to clear up the misunderstanding.

Robbed:

• Patelco Credit Union, San Ramon, California. Two men and a woman used a BMW as their getaway vehicle.
• Security FCU, Burton, Michigan. Police say this robbery is not related to a recent string of FI robberies in the area. No one was injured and no weapon displayed.

Apprehended, Arrested, or Charged:

• Alaskan Ian Lee Pagel, with the robbery of Credit Union One in Anchorage on March 16, 2008. He chose not to wear a mask, and his surveillance photo was identified by members of the community.
• In West Des Moines, Iowa, police arrested Sandra Donn Jorgensen Tuesday, about one hour after she allegedly robbed the Greater Iowa CU. Also committing felonies without a mask, CU employees recognized her from previous credit union transactions.

Has The Tide Turned On Credit Union Expansion?

By Christian Mullins

The expansion and growth of credit unions, either through mergers or additional branches, has been a staple of the industry since the 1970’s. Community charters became common, and those charters grew by the county. Others, with a common, yet dispersed membership (think Navy Federal or an airline credit union) added branches where and when they could. Coupled with shared branching, there appeared to be almost no limit to a credit union’s reach. But the days of mass expansion may be coming to an end for some credit unions.

With a State Senate vote of 35-2, Kansas moved one step closer to enacting expansion restrictions that will curtail that state’s credit unions future growth opportunities. The measure, Substitute for SB 535, restricts credit union expansion to one metropolitan area (Kansas has three). And while it allows credit unions in metropolitan areas to expand to adjoining counties, that privilege end ends when the aggregate population reaches 1,000,000.

According to tradingmarkets.com, should the bill become law, nine credit unions in violation of Substitute for SB 535 would be able to keep existing branches, but would not be allowed to add new facilities or members outside their metropolitan area or not in the credit union’s original occupational mission.

While the bill was proposed by the Kansas Bankers Association (KBA), it is being touted as a compromise between the KBA and the Kansas Credit Union Association (KCUA). However, a spokeswoman for the KCUA said that her association would neither support nor oppose the compromise. As well they shouldn’t, since this will be the kind of legislation that Banker’s Associations will attempt to enact in their own states.

Should this bill pass the House Legislature and become law, the banking industry will have, for the first time in recent memory, an anti-credit union issue they can not only challenge, but win.

Best (and Worst) Cities For Shared Branching

By Christian Mullins

Shared branching has exploded in popularity in recent years, leveling the ‘brick and mortar’ war with America’s largest banks. The concept is simple: If a credit union is one of the 1,200+ participants, their members may go to any one of over 3,000 shared branching locations nationwide* and conduct basic transactions as though it were their own credit union. While vacationing members utilize shared branching, it is primarily a member generation and retention product, promoting itself as the best of both worlds: credit union savings/loan rates and thousands of locations.

But not all cities are created equal. According to population estimates, there are 259 cities in the United States with a population of 100,000 or greater, with shared branching locations ranging anywhere from a “stones throw” to “short flight”. Because these cities vary greatly in population, from 100,148 (Billings, MT) to 8.25 million (New York City, NY), they have been separated into three population categories: 500,000+, 200,000-499,999, and 100,000-199,999. The rankings were determined by the number of branches within 10 miles of the city divided into the city population.

There are cities and metropolitan areas that are well represented by shared branching networks, but there are also cities that have little to no representation at all. In fact, 27 cities currently have no shared branches within 10 miles, including Billings, MT (210 miles to nearest location), Sioux Falls, SD (140 miles), and Midland, TX (110 miles). As long as these cities and others like them are not or underrepresented, their credit unions will remain vulnerable to competition from banks and, in some cases, other credit unions. Furthermore, relocated members that are used to a shared branching system may feel disenfranchised, limiting their choices to credit unions with several branches or joining a bank for convenience.

Shared branching is a win-win for credit unions. For small credit unions, a merger becomes less likely, as the number of their branches become competitive. Large credit unions retain additional members, minimizing lost assets and loan revenue. No one enjoys the process of switching from one financial institution to another. Shared branching gives members a reason to stay with your credit union wherever they may go.

*All statistics regarding shared branching were compiled on March 5, 2008 using creditunion.net.