KANSAS CITY – H&R Block, the nation’s leading tax preparation company, said this week it still cannot find a buyer for its troubled subprime mortgage lender, Option One, and has written down the company’s mortgage portfolio by another $29.2 million. The company said it expects to receive as much as $1.3 billion, the book value of the unit, but the ongoing crash of the subprime market makes that projection look too rosy. H&R Block reported this week the reduction in the residual value of the unit’s loan portfolio pushed the company’s losses for its fiscal third quarter ended Jan. 31 to $60.3 million. The company said as of Jan. 31, Option One had violated some of the minimum net income requirements in some of its short-term financing agreements, but received temporary waivers from lenders through April 27.

SAN FRANCISCO – Dozens of credit unions around the country are struggling to untangle their finances from a local mortgage lender that filed for bankruptcy, the first sign of contagion for the credit union industry from the meltdown of the subprime mortgage market. Last month’s Chapter 7 filing by LoriMac Inc. has caused the U.S. Bankruptcy Court to freeze millions of dollars in credit union funds and left thousands of credit union borrowers who had their mortgages serviced by the lender in the dark. “I see this as the start,” Mike McHale, president of Steinbeck CU, told The Credit Union Journal, of the potential for credit union exposure in the melting mortgage market. Steinbeck, which had more than $500,000 in mortgages serviced through LoriMac and $6,000 of its funds frozen by the courts, was one of more than 30 credit unions–most of them small- listed as creditors for the failed mortgage lender. The biggest credit union customers of LoriMac were: Transit Employees FCU, which had $17.2 million of its loans serviced by the company; Queens Postal FCU, $5.8 million; Kings FCU, $3.5 million; and GE Employees FCU, $3.6 million. GE Employees CU and three other credit unions have filed a breach of contract against the failed lender, but there appears to be few assets to recover, as LoriMac listed just $735,000 in assets and $5.7 million in liabilities in its bankruptcy filing. Credit unions all over the country are listed as unsecured creditors, including Transit FCU, in Washington, D.C.; School District Employees 40 FCU, in Moline, Ill.; Idaho Falls Teachers FCU; Health Associates CU, in Orange, Calif.; Cessna Employees CU, in Wichita, Kan., and many others.

ROCHESTER, Minn. – Members of Think FCU, founded to serve employees of IBM Corp., last night approved the conversion of the $1.2 billion credit union to mutual savings bank, one of the largest credit union conversion yet. About 51% of the 24,000 voting members favored the charter switch. The credit union said 30% of the 82,600 eligible members participated in the vote. Almost 200 members showed up for last night’s special meeting culminating the 90-day ballot, with 67 of those members casting their votes at the meeting, a non-controversial one-hour affair held at the Mayo Civic Center. The switch to bank represents a major evolution for the state’s second largest credit union, chartered in 1960 as IBM Mid America Employees FCU. Over the past decade the credit union, like two dozen others founded around the computer giant, have changed membership bases, merged or switched identities; one is now known as Coastal FCU, another as Amplify FCU, another is Visions FCU, and still another is Meriwest CU. But the Minnesota credit union has clung to its heritage, changing its name in 2003 to Think FCU to reflect the admonition of IBM founder Thomas Watson and invoke the IBM laptop computer, known as the ThinkPad. Tom Floyd, a spokesman for the credit union, told The Credit Union Journal last night, plans do not call for selling stock in the thrift. The vote must now be certified by NCUA. The credit union is the third largest, behind $1.4 billion Community CU and $1.3 billion OmniAmerican CU, to convert to mutual savings bank.

HARRISBURG, Pa. – Michael Judge, who served as president of the Pennsylvania CU League (now Association) from 1966-91, died March 9, at 80. Judge was an active leader at both the state and national levels, leading the effort to win share draft powers for credit unions, among many other accomplishments and was the 1998 winner of the Herb Wegner Memorial Award forLifetime Achievement. Judge was also a founding member of the Filene Research Institute and, and after retiring served as chairman of the National Association of Retired CU People

BROOKFIELD, Wis. – Fiserv announced yesterday it has acquired NetEconomy, an international provider of financial crimes management and compliance tools. NetEconomy, which is based in the Netherlands, provides systems to combat money laundering, fraud and to assist in compliance. Financial terms of the deal were not disclosed.

EUGENE, Ore. – SELCO Community Community CU announced yesterday it has hired Bob Newcomb, president of Indiana University FCU, as its new president and CEO. Newcomb succeeds Ava Milosevich as CEO of the $720 million credit union, who retired Feb.1 after 17 years in the corner office. Indiana University FCU has $500 million in assets.

ROCKTON, Ill. – Wal-Mart Stores opened its second high-efficiency Wal-Mart Supercenter yesterday, which is expected to use 20% less energy that one of its typical Supercenters. The high-efficiency store, the second of four to be opened this year, will include a Members Alliance CU branch. As many as four other Wal-Mart opening this month will also include credit union branches, including Service CU in New Hampshire, Granite CU in Utah, Desert Schools FCU in Arizona and Members CU, in North Carolina. The high-efficiency store features integrated heating, cooling and refrigeration systems and lighting to conserve energy.

RALEIGH, N.C. – State Employees CU, sponsor of the largest credit union scholarship in the nation, said yesterday it will award $15,000 in college scholarships annually to children of public sector workers who were fatally injured in work-related accidents. The scholarships, one of $10,000 and one of $5,000, will be awarded through the credit union giant’s SECU Foundation, which provides more than $6 million a year in funding to public college students in North Carolina. The recipients will be chosen by the Kids Chance scholarship committee in conjunction with the North Carolina Industrial Commission.

WASHINGTON – Members of the House and Senate have introduced bills to expand Individual Development Accounts, which have provided matching deposits for thousands of credit union members across the country. The bills would build on the 50,000 IDAs created so far and add another 900,000. The program provides tax credits to participating financial institutions that match the savings of low-income participants, up to $500 a year. In introducing the House bill, Rep. Stephanie Tubbs Jones cited several credit unions in her homestate of Ohio for blazing a trail on the fledgling low-income savings program, including Faith Community United CU, Midwest Family CU and Fiberglass FCU.

FAIRFIELD, Calif. – Thuy Nguyen, a Vietnamese immigrant single mother celebrated Valentine’s day this year by moving from subsidized Section 8 housing into her own home, thanks to Travis CU. The $1.6 billion credit union teamed with the city of Fairfield and a variety of state and government agencies to provide funding for the mother of two to buy her own two-bedroom condo in this high-cost city. Under the Section 8 program, qualified participants are provided grants from a variety of sources, in this case, the State CalHome Program, the federal Community Development Block Grant Program and Housing American Families, and the credit union will provide a traditional mortgage loan for the rest. In Nguyen’s case, the grants provided more than 80% of the $364,250 cost of the home and Travis CU provided a first mortgage for $40,000. The Section 8 loan, the credit union’s fifth, was so successful that three surrounding California counties have hired the credit union to finance their loans.

BROOKLYN, N.Y. – A former member of Central CU was convicted on federal fraud charges in obtaining a $300,000 member business loan for a neighborhood bar he called ‘Dream Café’, the first case of a multi-million dollar member business-loan-scheme-gone-bad that sunk the $75 million credit union. Daniel Eleftheriades, a Greek immigrant who opened his diner in his hometown of Norwalk, Ct., faces more than 10 years in jail when he is sentenced May 29. The Eleftheriades loan is one of $17 million worth of questionable MBLs brokered for Central CU by a local figure in the Greek community, Theodore Georgacopoulos. Losses on the 33 loans, estimated in the millions of dollars, forced the credit union to merge last year into Progressive CU. Prosecutors claim Georgacopoulos helped qualify the borrowers by filing false loan applications and documentation.

ALEXANDRIA, Va. – The NCUA Board is expected to approve a dividend on the National CU Share Insurance Fund this morning, the first NCUSIF payout in six years. This year’s dividend is expected to be around $100 million, reflecting the amount the fund is over-reserved. The last NCUSIF dividend was a $99.5 million payment in March 2001 for the 2000 fiscal year.

PALO ALTO, Calif. – In the largest deal of its kind, Stanford FCU said yesterday it has acquired $12.8 million of student loans for Stanford University students from Nelnet, the well-known student lender. The Lincoln, Neb.-firm will continue to service the purchased loans, for about 500 current and former students. Nelnet will also continue to serve Stanford University. The deal represents an expansion of the $800 million credit union’s relationship with Stanford students, part of an effort to forge lifelong relationships with the members. Financial terms of the deal were not disclosed.

WASHINGTON—The credit union trades are pushing NCUA to step in on Apple Valley, Minn.-based Wings Financial FCU’s appeal to members of Continental FCU to try to bring the El Segundo, Calif.-based CU’s board back to the merger negotiating table. Suggesting that NCUA has the authority to act in this matter, NAFCU’s Fred Becker said, “[the agency’s] silence would, in fact, be a decision. No action from NCUA is a decision.” Industry insiders have suggested it is imperative for the regulator to carefully consider the precedent that Wings’ actions—described by Continental as a “hostile takeover”—could set, and what that could mean, not only for the cooperative spirit of the movement but even the ultimate safety and soundness of the National Credit Union Share Insurance Fund. “Look at how credit unions and the NCUSIF reacted after Katrina,” one credit union advocate suggested. “They stepped up to the plate. That didn’t happen in the banking industry. It happened among credit unions because we cooperate. The NCUSIF is, in fact, dependent on the cooperative nature of credit unions, and this strikes at the heart of that cooperative spirit.” Though NCUA has clarified that any merger proposal brought before the agency must have the blessing of both credit unions’ boards before the regulator would give its approval (after which, the proposal would be put to a membership vote of the CU whose charter would die), NCUA has not indicated any intention of intervening in Wings’ appeal to Continental’s membership.

MADISON, Va. – John Ferguson, who was hired by Fort Myer FCU as a work-out specialist, then ran the credit union for 28 years, died March 6 of skin cancer at his home here, at 79. Ferguson was hired as treasurer at the credit union in 1966 while its charter was under suspension, then turned-around the credit union’s finances and served as its president until his retirement in 1994. Fort Myer FCU was merged into Pentagon FCU three years ago.

FREDERICK, Md. – Police apologized this week and dropped bank robbery charges against a man they wrongfully charged with last August’s robbery at Spectrum FCU. James Jones, 40, sat in jail for four months after he was identified by witnesses as the man seen robbing the credit union in a surveillance video. But Jones was released and the charges dropped after another man confessed to the crime. Jones told police he was miles away form the scene helping a family member move at the time of the hold-up, but they didn’t buy his alibi. The wrongfully accused man is considering filing a suit.

FISHERS, Ind. -- Forum CU said yesterday it will pay $26,000 over the next three years to help renovate the Hall of Champions wings in Hamilton Southeastern’s two high schools. School officials said they will work with Forum CU to determine what signs will be placed in or around the Hall of Champions. The Hall of Champions is where the high schools celebrate their past heroes.

SOUTHFIELD, Mich. – Central Corporate CU said yesterday it is partnering with Ceto and Associates to offer cash vault management to credit unions. The Ceto Cash Calculator, known as C3, is a web-based software application that helps credit unions and banks to minimize the amount of non-interest earning cash on hand and to maximize the timing of vault cash ordering. Ceto said more than 900 locations now use its C3 system.

DENHAM SPRINGS, La. – LA DOTD FCU said yesterday it has signed with TNB Card Services to move all of its credit and debit card processing to the credit union-owned bank. The deal covers the $85 million credit union’s 4,000 credit and 5,400 debit cards. The credit union is converting its PIN and signature debit and credit card processing to TNB. TNB is a unit of credit union-owned Town North Bank.

ALEXANDRIA, Va. – Credit unions have apparently avoided the crisis spreading through the subprime mortgage market, according to NCUA. David Marquis, chief examiner at the credit union regulator, said yesterday credit unions have little exposure to subprime mortgages, even as more credit unions have expanded into the market in recent years. “It should be a very rare event,” said Marquis, the director of NCUA’s Office of Examinations and Insurance, of credit union losses caused by subprime lending. Reports from field examiners and the regions bare this out, he added. In addition, credit union exposure on the investment side—in mortgage backed securities—should also be limited because most MBSs held by credit unions “tends to be A and B paper,” said the credit union regulator. Marquis’ remarks came as growing numbers of subprime mortgage companies and banks are reporting spikes in delinquencies and charge-offs and related liquidity troubles.