NEWARK, N.J. -
On the same day the CU held its annual meeting, CU Journal traveled to Newark to see what some members thought of the unsolicited merger bit. Almost none of the four-dozen members interviewed here last week by Credit Union Journal know the details of the credit union movement's first hostile takeover battle.
Several of the members referred to the credit union as their "bank." Few were aware that they were owners of their credit union, but those who were expressed a desire to see the credit union not be merged.
"I haven't heard about it, and I'm here all the time," said Connie Hellake, a Continental member who added the credit union is "just like any other bank. You bounce a check, they charge a fee; it's no different."
This, despite broad coverage in the CU press and even the mainstream media of the credit union movement's first hostile takeover attempt, with both sides pledging to gauge and engage members in their efforts.
Representatives of Wings Financial, the $1.6-billion, Apple Valley, Minn.-based credit union for Northwest Airlines employees, said last week they had been canvassing Continental FCU members at airports in Newark, Houston, Tempe, Ariz., and at Continental's El Segundo, Calif., headquarters, with offer sheets urging members to view the special Internet website the credit union has produced to publicize their bid.
Continental FCU representatives said they have also worked to explain the Wings offer to members, while Tom Glatt, CEO of the $180-million credit union, has begun visiting the credit union's branches to meet with and listen to employees. "To me, that's what a CEO should do," said Glatt.
But the efforts by both sides appear to have had little impact on members, so far. Approximately 75 members showed up for Continental FCU's annual meeting, where the Wings offer was discussed, triple the normal number, according to Glatt.
None of the members interviewed at Newark were aware of the $200 being offered by Wings to members of Continental FCU should the merger be approved, nor were they aware of the rates and services promised.
"I haven't seen anything and I go there nearly every day," said Carlos Aquino, a worker in Continental's air postal service at Newark. Several members said they participated surveys by Continental representatives over the telephone in recent days but were never asked about the Wings offer.
Newark Liberty International Airport, one of the main hubs for Continental Airlines, has become a microcosm of credit union competition, as increasing numbers of credit unions have entered the market to serve the hundreds of thousands of airline and security workers over the last three years. Since then, three credit unions, including the giants such as Dallas-based American Airlines FCU and Virginia Beach, Va.-based Chartway FCU, as well as FAA First FCU, have established a presence on the ground either here or nearby. The $4-billion American Airlines FCU has more than 40 branches coast-to-coast and Chartway, with more than $1.2-billion in assets, is building a branch network along the eastern seaboard and in Texas.
The growing competition has put Continental, which has seen a decline in membership over the past five years, in the thick of the competition, according to some of the credit union's own members and ex-members. But Continental is not alone in seeing membership numbers slide; Wings Financial FCU has also also seen numbers decline from a high of 119,207 at year-end 2003 to 100,803 at year-end 2005.
"I used to have all my accounts there, but I went over to Chartway," said Jose Coste, an airport worker. Chartway has expanded to Newark, Cleveland and Houston airports. He said he was particularly dissatisfied with Continental's member service, which required him to contact the headquarters in California every time he had a dispute, he said.
Gladstone Hall, another ex-Continental member, said he moved his accounts to Chartway because he was disappointed in the fees he paid at Continental FCU. Christian Cepeda, another Continental FCU member, said he opened a Chartway account to get a new iPod, even though he likes the service at Continental, but now he can shop the better rate between the two credit unions.
Robert Bilheimer, another employee of the airline, said he left the credit union five years ago. "I live so far away that it wasn't worth it for me. And to use an ATM they just hit you with fees," he said.
Several Continental workers cited the open access to American Airlines FCU's new branch in the baggage area of Terminal A, as opposed to the secured entry at the Continental branch in Terminal C, which limits access to members.
Many other credit unions without a physical presence, except for ATM networking, also vie for the allegiance of Continental employees, they said.
All of the members interviewed said they use the Continental FCU services for secondary financial purposes, having their paychecks direct deposited or maintaining minimal balances in checking or savings accounts. "I only have direct deposit. I have a checking account with my husband's business," said Geri Gelens, a Continental Airlines worker for 18 years who didn't know of the Wings proposal.
"I just have a minimal account. I don't do much business there," said Natalie Fonseca, who also wasn't aware of the Wings offer.
Still, several of the Continental FCU members are strongly against the Wings offer and for the retention of their own credit union. "As a Continental employee I think it's better to have our own credit union, run by Continental," said Oscar Bahama. "If it gets taken over I'm going to take my money out."
"I think we should keep our own credit union because we're Continental," said JoAnn Pfiefer, who doubted Wings promises to provide better rates and service. "That's baloney. The bigger they are, the worse they are."
"I was talking to my husband about it and he seems to think that we'll get better service and better rates with a bigger credit union (if Wings acquires Continental)," said Stephanie Macleod. "He might be right; but still I like it here (the Continental credit union)."
"I'm against Wings taking over. Tell them we love our credit union," said Cheryl Menifee.
Wings officials were undeterred last week by the apparent lack of enthusiasm and vowed to continue their campaign to sway Continental members, in hopes of getting the members to force the board to change positions on their offer. "The reception we have gotten has been positive, so far. They (members) do see the value we can provide," said John Wagner, spokesman for Wings.
Glatt, the long-time credit union consultant who took over the pilot's seat at Continental FCU last August, said the CU has already seen a payoff from its comprehensive plan to expand services and the board is committed to remaining independent. The plan includes the introduction of full brokerage services through XCU Capital, expansion of its branches through Financial Service Centers Cooperative's shared branch network, and addition of ATMs by joining the CU24 network. A new CD promotion helped produce $6 million in new deposits in the first two months of the year, pushing the credit union's assets up to $182 million.
"We're doing a lot of the right things because we listen to our membership," said Glatt. "Our credit union is not for sale."
Wings CEO Paul Parish has indicated he'd be interested in other merger partners, as well. NCUA rules would only allow the CU to merge with one of the four CUs with similar TIP charters, shown at left.
