WASHINGTON -
The recent controversy surrounding the hostile takeover of Continental FCU by Wings Financial FCU, for example, was choreographed by long-time credit union advocates working at the Washington law firm of Venable LLP, who also designed the buyout of Nationwide FCU, paving the way for that $550 million credit union to be acquired by the Nationwide Bank. Both Bill Donovan, the chief lobbyist at NAFCU for 25 years who helped charter a credit union near his home, and Bruce Jolly, a former lawyer at CUNA and also a long-time credit union advocate, are being credited with developing the idea to pay credit union members for their equity, in order to dissipate some of the ill will surrounding some of these deals.
In last year's Nationwide conversion, the bank paid members of the credit union $79 million, an average of $2,000 each, helping tamper any dissent among members or from the organized credit union movement. Paul Parish, the president of Wings Financial, who has engaged Venable in his bid for Continental, acknowledged this in his approach that is being criticized by the credit union cognoscenti.
"There is a value built up in Continental's balance sheet that clearly belongs to Continental's membership," Parish told the Credit Union Journal of Continental's 17% capital, a $30 million cash horde. "The excess belongs to them (the Continental members). We're just looking for ways to (pay the excess to members)."
Wings Financial has offered to pay each Continental member $200-a total of $5 million from Continental's capital-if the merger goes through. "How many mergers are done where the difference is not paid out?" asked Parish.
