All the talk about merger and "bank-raiding" acquisition of CUs is another sign of an industry in search of answers and not getting them, leading some to wonder if we're going to see a credit union version of "The Great Escape."

BENTONVILLE, Ark. – Seeking to put another controversy behind, Weal-Mart Stores announced Friday it has withdrawn its application for a U.S. bank charter. The company, embroiled in numerous fights over its labor practices, made the decision after the FDIC decided last month to extend its moratorium on all new industrial loan company charters, the kind of bank charter the retail giant was seeking, for another year. Wal-Mart, which is building a retail bank branch network in Mexico, insisted throughout it has no plans to develop its own branch network in the U.S., but wanted access to the Federal Reserve payments system in order to process its own transactions at significant cost-savings. Critics, lead by the nation’s community bankers, worried the company had future plans to kick out the 300 banks and credit unions operating 1,300 branches in Wal-Mart stores and establish its own retail banking operation. There worries were fueled by Wal-Mart’s continued expansion into financial services, as the company has created one of the nation’s biggest check cashing networks, has expanded its credit cards operations, and is building its own ATM network. The decision to pull its bank aplication comes as five credit unions are opening in-store branches in Wal-Marts this month, Service CU, Granite CU, Desert Schools FCU, Members CU and Members Alliance CU.

High School Gets CU Gift of TechnologyOAHU, Hawaii – The University of Hawaii FCU donated 13 personal computers and a color printer to Campbell High School last week. The computers will help students practice for college exams, research colleges and apply for scholarships. The gift will help the school develop its own computer lab.

MADISON, Wis. – The vanishing small credit unions could compete better by outsourcing to third parties, or franchising of critical services like compliance and internal audit, consumer lending and marketing, human resources and facilities management, according to a new study released Friday by the Filene Research Institute. With credit unions, most of them smaller institutions, disappearing at a rate of almost one a day, “franchising or strategic outsourcing may be a way for smaller credit unions to alleviate staff resources expended on routine, time-consuming functions,” suggested the authors of a ‘Preliminary Study on Credit Union Franchising.’ Under one scenario, small credit unions could collaborate on routine back-office activities to gain economies of scale and focus their energies on activities involving member contact. However, such sharing of resources may be premature because for a franchising system to work, credit unions first need to consolidate their IT systems into a common platform, concluded the author, Professor Steven Michael, of the University of Illinois at Urbana-Champaign.

CLEVELAND, Ohio – Taleris CU said last week it has agreed to sell its credit card portfolio to Elan Financial Services, a wholly owned unit of U.S. Bancorp. The portfolio consists of 1,400 accounts and $2.6 million in receivables. U.S. Bancorp has become one of the most active purchasers of credit union credit card accounts, having acquired more than 50 portfolios over the past two year

TALLAHASEE, Fla. – A 24-year-old man desperate to pay his bills was arrested last week and charged with an armed robbery at Tallahassee Memorial CU. Police said Steffano Roberts used the ill-gotten cash to pay his rent and insurance bills. Roberts was arrested after a dye pack exploded in the bag of cash and was police said he scrubbed his hands raw to try to erase the telltale signs of the hold-up. A gun believed used in the robbery was also recovered.

DENVER – First Data Corp. announced Friday it has agreed to acquire Wells Fargo’s Instant Cash Services unit, which provides electronic funds transfer services for 500 financial institutions in 20 states–including 175 credit unions. First Data, which owns and operates the STAR network, plans to retain the Instant Cash brand, which includes no-surcharge services and deposit-taking ATMs. As a result, users of the brand will continue to access Wells Fargo’s 6,700 ATMs around the country. Financial terms of the deal were not disclosed.

ROSELAND, N.J. –Bisys Group reported a 36% decline in net income for its fiscal second quarter ended December 31, mostly as a result of its ongoing securities litigation. The company, a provider of back-office services to credit unions and banks, reported net income for the second quarter of $14.3 million, or 12 cents a share, down from $22.3 million, or 19 cents a share for the same period last year. As a result, net income for the first six months of the year fell 21% to $28.3 million, or 24 cents a share, even as revenues for the second quarter climbed 7% and for the first six months by 5%. The drop in net was caused by $11.2 million in excess corporate expenses during the first two quarters, including $7.3 million in litigation expenses, as well as professional fees and severance associated with the restatement of the company’s financials. In October, Bisys agreed to pay shareholders $66 million to settle civil fraud claims over the mistatement of earnings, and in September the company agreed to pay $21 to the Securities and Exchange Commission to settle fraud charges that it made illegal kickbacks to brokers that were recommending its mutual funds to customers.

TACOMA, Wash. – The once-volunteer directors of Rainier Pacific Financial Group, once known as Rainier Pacific CU, last week reported large increases in compensation for 2006, just three years after taking their former credit union public in an initial stock offering. Documents filed with the Securities and Exchange Commission show Edward Brooks, chairman of the board who headed the credit union conversion, earned $107,654 for his services last year, including $54,432 in restricted stock awards, $28,800 worth of stock options and $21,600 in directors fees, as well as $2,822 in “other” compensation. Other former credit union volunteers who partcipated in the switch to public bank also saw major hikes in compensation last year. They were: Stephen Bader ($63,372); Brian Knutsohn ($63,072); Charles Cuzzetto ($61,822); Alan Somers ($59,322); Alfred Trevelen ($59,172); Robert Combs ($58,922) and Karyn Clarke ($58,322). In the three years since the credit union-convert went public the directors have built up significant financial stakes through their stock holdings, with Brooks accumulating 82,800 shares worth $1.7 million; Bader, Somers, Combs, Knutson and Treleven building stakes of 67,000 shares worth $1.4 million; Cuzzetto 42,000 shares worth almost $900,000; and Clarke 27,000 shares worth $550,000.

IRVINE, Calif. – Autobytel Inc., a carbuying service for more than 250 credit unions, reported last week fourth quarter losses of $7.3 million, compared to a slight profit for the fourth quarter of 2005, amidst an 8% drop in revenues. As a result, the company reported a $31.5 million fiscal-year loss, compared to a $6.3 million loss for fiscal 2005, as revenues declined 9% for the full year, to $111.1 million. Fiscal year 2006 financial include last year’s sale of the company’s Automotive Information Center business. Autobytel operates the CarSmart.com, Car.com, Autoweb.com, and Autobytel.com carbuying websites.

LAKE SUCCESS, N.Y. – DealerTrack Holdings said last week it has received a new U.S. patent for its online credit application process and added it to an expanding legal dispute with RouteOne LLC and Finance Express LLC, two other providers of indirect auto lending finance services for credit unions and banks. DealerTrack has filed a patent infringement suit against the two firms in federal court in California, claiming the two competitors are using the company’s patented technology for computer-implemented applications for routing and managing credit applications and decision making for auto financing. A hearing on the widening patent dispute is scheduled for June in the U.S. District Court for the Central District of California. RouteOne, which has been expanding its credit union market, is a joint venture of DaimlerChrysler Services LLC, Fort Motor Credit Corp., General Motors Acceptance Corp. and Toyota Financial Services. In its suit, DealerTrack claims that RouteOne has induced its client financial institutions to also infringe on the company’s patents because of the sue of the RouteOne system.

APPLETON, Wis. – A member of Fox Communities CU thought his number came in when he received a check in the mail for $36,624 from a mutual fund company Thrivent Financial Services. The only problem was the check should have been sent to a Thrivent customer with the same name, Michael Hansen, who had sent the funds to Thrivent after cashing in his 401 (k) retirement when he left his company. By the time Thrivent realized the mistake and went to collect the mis-directed funds, they learned Hansen and his wife had spent the unexplained windfall. Thrivent, which repaid the funds to the proper Michael Hansen, is currently working on a repayment schedule to recover the money. Kevin Wilkinson, chief of police in New London, Wis., where the credit union branch that cashed the misdirected check resides, said he doubted the wrong Hansens were liable for any criminal charges because of their behavior, but suggested that Thrivent could pursue them through civil litigation if the did not voluntarily give back the money. But that could be complicated by the number of jurisdictions involved in the case, where the Michael Hansen lives in Minnesota, Thrivent is in Missouri and Fox Communities CU in Wisconsin. “The whole question of venue has to be explored here,” Wilkinson told The Credit Union Journal.

EATON, Ohio – An 18-year-old senior at Eaton High School was arrested Wednesday and charged with last Saturday’s armed robbery of $23,000 from Freedom First FCU. Police said Jacob Cullers had no prior arrest record. About half of the stolen loot was recovered, police said.

NEW YORK – NCUA reported yesterday it has approved a request from Lower East Side People’s FCU to expand into two low-income neighborhoods covering more than 270,000 residents. The $17 million community development credit union, already serves the Lower East Side of Manhattan, Central Harlem and several select groups that provide services to the poor. NCUA also reported yesterday it has approved underserved requests for Greater Texas FCU to serve 330,000 residents in part of Harris County (Houston); and from Sharonview FCU, to serve 240,000 residents in southern North Carolina.

BENTONVILLE, Ark. – Wal-Mart Stores, which has been insisting it has no plans for retail banking, acknowledged this week it has changed the standard agreements with its credit union and bank partners to enable it to more easily terminate lease agreements. This week’s acknowledgment came after a congressional opponent of Wal-Mart’s bid for a bank charter, disclosed an email he obtained with the new language in it. The news comes as dozens of credit unions are advancing with plans to open Wal-Mart branches, with five, Service CU, Granite CU, Desert Schools FCU, Members CU and Members Alliance CU, opening branches this month, alone. In the new leases, Wal-Mart reserves the right to offer services on its own, like mortgages, home-equity loans and investments and insurance it currently offers through third-party vendors like credit unions and banks. In the past the company has insisted its application for an industrial loan company charter, a so-called back-door bank, would only be used to gain access to the payments systems so Wal-Mart could process its own transactions. The world’s largest retailer said it has no plans to create its own branch network, but will continue to partner with more than 350 banks and credit unions on 1,300 in-store branches. A company spokesman downplayed the change in the leases, saying the company still has no plans to offer those other financial products directly to customers. The FDIC has agreed extend for another year its ban on all new ILC charters for Wal-Mart and other non-financial companies. Meantime, Wal-Mart has obtained a bank charter in Mexico and is proceeding with plans to develop a network of branches south of the border.

ALEXANDRIA, Va. -- The NCUA Board yesterday approved the first dividend from the National CU Share Insurance Fund in six years--albeit a small one. The $52 million payout will amount to a 1% return on federally insured credit unions' 1% NCUSIF deposit and importantly, demonstrated that credit union's accounting for the 1% deposit as an asset is valid because of the potentially for earning a return on it, said NCUA's CFO Dennis Winans. NCUA will be sending out dividend checks to all federally insured credit unions this week. The average credit union, of $20 million in assets, will receive a $2,000 check, while a $1 billion credit union will receive $100,000. Winans had told the NCUA Board last month he hoped to be able to pay a dividend of as much as $110 million, but higher than expected growth among credit unions diluted the reserve level further, preventing the larger payout. The last NCUSIF dividend was paid in March 2001, for fiscal 2000, and was $99.5 million. It was the last of six straight years NCUA paid a dividend on the insurance fund.

McLEAN, Va. – Long-term mortgage rates held steady this week at their lowest level since mid-December, according to Freddie Mac. The average for the 30-year, fixed-rate loan was 6.14%, unchanged from last week; while the average for the 15-year, fixed-rate mortgage moved slightly higher, to 5.88%, from 5.86% last week. ARM rates were mixed, with the average for the five-year ARM unchanged at 5.90%; and the average for the one-year ARM declining to 5.42%, from 5.47% last week. Mortgage rates moved little in the past week, as the latest economic news gave no reason for change, said Frank Nothaft, chief economist for Freddie Mac. The economy added 97,000 jobs in February, in line with consensus expectations, while the unemployment rate dipped to 4.5%. But the promising employment situation did not materialize at the cash registers, with retail sales only growing by 0.1% in February, falling short of the 0.3% gain that had been predicted.”

WASHINGTON – A new version of the credit union regulatory relief bill introduced yesterday could helm stem the increasing numbers of credit union conversions by setting a minimum member participation in any conversion vote. The latest version of the CU Regulatory Improvements Act, better known as CURIA, would require at least 30% of all eligible members participate in the ballot–a threshold few of the 40 credit unions that have switched to banks so far have met. The ballot to convert $1.2 billion Think FCU concluded Wednesday is believed to have garnered just shy of the 30% mark, for example. The new bill would also require credit unions to hold a special meeting to discuss the charter switch before the board agrees to pursue the conversion, not after the vote is concluded, as is currently done. The bill would also: enact a risk-based capital system for credit unions; raise the limit on member business loans from the current 12.25% of assets to 20%; allow all credit union types to add underserved communities to their fields of membership; and allow credit unions to retain their select groups after converting to community charters. The bill was introduced by Reps. Paul Kanjorski, D-Pa. and Ed Royce, R-Calif., ans has 10 other cosponsors from both parties. The bill was also introduced in each of the last two congresses but has never been voted on.

ALEXANDRIA, Va. -- For the second time in two months, the NCUA Board yesterday set a hard-and-fast standard on community fields of membership, barring two Ohio credit unions from serving almost 2 million people surrounding Cincinnati. In rejecting separate from CinFed FCU and Emery FCU for charters covering eight counties in the three-state region (Ohio, Kentucky and Indiana), the NCUA Board ruled the disperse area does not meet NCUA requirements that a community FOM be well-defined and local. Yesterday’s ruling came just three weeks after the NCUA Board rejected a request from Del-One FCU to serve the 800,000 residents of Delaware, ruling that the tiny state does not qualify as a local community, either. The Board appeared ready to approve the two Ohio charter requests as Gigi Hyland said she believed they each qualified under NCUA regulations, and Rodney Hood said he was also persuaded. But Hood said he decided to vote against it, saying he would do more for the credit union system. In recommending rejection of the two Ohio charter requests, NCUA staff said the broad area, which covers three states, eight counties and 40 different municipalities, does not qualify as a single FOM with interaction between residents with common interests.

MT. LAUREL, N.J. – In the latest round of credit union takeovers, PHH Corp. announced yesterday it has agreed to be acquired by GE Capital for $1.8 billion, then to sell the company’s vast mortgage portfolio to private equity fund The Blackstone Group. The PHH mortgage assets include those acquired in November 2005 from CUNA Mutual comprised of 100,000 residential mortgages and a $12 billion servicing portfolio. The unusual deal comes a year after PHH was spun off from Cendant Corp., a deal which has left its financial records a mess and prevented the company from filing its quarterly and annual financial statements with regulators and investors. PHH Mortgage is the nation’s 11th largest mortgage bank, with a servicing portfolio of around $150 billion. The deal for the CUNA Mutual mortgage assets comes amidst a reshuffling of the credit union outsourcers, with recent takeovers of Open Solutions, Digital Insight, John H. Harland Co., and the pending acquisition of Corillian Corp.