EL SEGUNDO, Calif. -
"This is an industry issue," said Tom Glatt, president of the $182- million credit union. "We'd much rather have a regulatory answer, than a legal one."
"This is not about Wings, and not about Continental, it's about the credit union industry," he emphasized.
Glatt's remarks came after Continental's lawyers sent Wings Financial a letter urging the $1.6-billion credit union to "cease and desist" its campaign to woo Continental members, and threatening legal action of they did not.
Glatt Cheered By NCUA Announcement
But Glatt said he was cheered by NCUA's announcement the week before that it will review the merger rules to see if they should be amended to cover hostile takeovers, such as the Wings Financial bid. He said he hoped some kind of relief from the federal regulator could be forthcoming, such as an order for a moratorium on the Wings Financial entreaties.
But the NCUA Board, after meeting with top officials from CUNA and NAFCU last month, refused such a recommendation.
Wings Financial representatives summarily rejected the Continental lawyers' request and insisted they will continue to solicit support from Continental members for their takeover offer, which includes a $200 payment to each of Continental's 26,000 members.
"We're going to continue to make our case to the members," said John Wagner, spokesman for the credit union, which formerly served Northwest Airlines employees and now, like Continental FCU, serves all employees in the nation's air transportation industry.
Both parties crossed paths without knowing it at Newark International Airport last week, site of a major Continental branch and a hub of avid credit union competition. Newark, like Houston and several other U.S. airports, is where credit union giants American Airlines FCU and Chartway FCU also maintain outposts, and another credit union competitor FAA First FCU has a branch nearby.
Wings Financial representatives were there to pass out fliers explaining their offer and to solicit support from Continental FCU members for a petition drive urging the Continental board to put the takeover offer to a member vote, according to Wagner.
Glatt, the long-time industry consultant who took the pilot's seat at Continental last August, was visiting credit union members, as he has in Houston and elsewhere in recent weeks, to also solicit member input and to build support for his plans to turn around the credit union, which has had declining financials amid the torrid competition among airline credit unions.
Putting Capital To Work
Those plans include using the credit union's built-up of capital-17% or $30 million-to finance the addition of services and products and new branches, including a low-balance money market fund aimed at blue-collar workers scheduled to debut in the next few weeks.
First quarter financial indicate the plan may be starting to bear fruit, according to Glatt. He cited a 3% ($6 million) increase in both deposits and assets in the first three months of the year, and growth of "a few hundred members". Net income was virtually nil, as funds were expended on both the expansion plans and on defending against the Wings takeover bid, he said. "We had budgeted for expansion of products and services," said Glatt.
