Hostile Takeover Or Market Forces: You Decide

WEST PALM BEACH, Fla. – Hostile takeover or market forces at work. Last week we asked you what you thought Wings Financial FCU's unsolicited bid to merge with Continental FCU does–or doesn't–mean to the credit union movement as a whole and where credit unions are going from here. This week, we share your responses. Keep reading to find out what you and your peers thinks the future has in store for credit unions. Tell us what you think. Click on the "letters to the editor" link to send in your thoughts on these or other important issues credit unions are facing.Credit Unions are all about serving members. What makes up member service is in the eye of the beholder. No credit union should worry about a hostile takeover if they are providing to the members what the members want. If someone else can do a better job of providing to the members what they want, more power to them.Bernard Brixius, COOCentral Minnesota Federal Credit UnionI suppose this kind of activity could be legitimate but the Wings offer is certainly not. Neat if you can pull off a deal where you use the target credit union’s money to pay for votes and still have millions left over for your own coffers. A legitimate bid in this case would be north of 9 million dollars. But you do have to choke when 5 dollar members are being offered 200 bucks for a vote–who will say no? The money is just falling in their laps. Sorry but we should challenge the ethics of this kind of chicanery.If this offer were to force a merger it would simply be more of the "confiscation of earnings" we decry in conversion attempts and another blow to the credit union movement. NCUA should step in and make sure all the things that are being said are true and inclusive. Subjective statements "it's a $1,200 advantage" based on hypothetical suppositions should not be allowed. Figures lie and liars figure. A comparison of fees for services should be included. This is often overlooked but the 5300's appear to show much less reliance on the part of Continental. Translation: Wings members pay more for services. Additionally a "failure fee" of something like $100 a member should be imposed and refunded directly to the target credit union if the strategy does not work. Just my thoughts.Dennis Moriarity, CEOUNITY Credit Union, Warren, MI.I find the Wings/Continental merger saga fascinating. I think the Continental FCU board of directors had better have their accounting hats on because if they turn down this very public and apparently financially beneficial offer then I don't think that the class action suit (vs. the Continental Board on behalf of the Continental members) will be too far in the distant future. Has the “Carl Icahn Era” been introduced to the world of credit unions?Thomas J. Powers, Jr., CEOHudson River Teachers FCU, Cortlandt Manor, NYOne of the great myths of the cooperative system is that these institutions should not be run as real businesses. A widely held belief is that the so-called "cooperative spirit" should trump any decision that entails competitive behavior. But this attitude protects mediocrity. It's part of the problem with credit unions generally, and why so many of them disappear each year out of irrelevance. housands more are merely treading water.In Canada, where most successful credit unions have a community field of membership, many of them compete head-to-head with each other in towns and cities across the country, even though their primary competitors are the country's big banks (RBC, TD, Scotia, CIBC, and BMO). What's wrong with that if it produces greater benefits, in service and convenience, for their members. Why should there be a gentleman's agreement that prevents any credit union from being the best it can be?Yet some of the more prominent industry leaders in the United States have decried the direct overture by Wings Financial to Continental's members. Do they actually think the average consumer gives a hoot that their credit union is a good team player in the cooperative system if it means passing up profitable business opportunities in order not to step on anyone's toes?George E. Scott, PrincipalLevel Five Strategic Partners Inc.The Wings attempt to accomplish a hostile takeover will certainly lead to further division in the industry. It won't cause us to START looking over our shoulders...we are already doing that. This incident, coupled with the aggressive approach to facilitate industry consolidation, has us already distrusting large credit union motives, looking over our shoulders for the next merger move and preparing contingency plans. The division is only getting greater.We used to have one front–credit unions vs. the bankers. Now, we have three–credit union in-fighting surrounding mutual conversions, this new hostile takeover approach coupled with the aggressive and sometimes “scare-tactic” merger proposals, and our non-ending, banker front. Maybe the bankers can stop and just watch. We used to be able to focus on member service, industry growth and cooperative spirit, but now, we can hardly trust each others’ motives.I think a hostile takeover could force a credit union to 1) seek out a better offer with a friendly merger (who won't throw management and the board completely out) or 2) consider conversion to a mutual, where the laws to govern the fairness of a takeover already exist. After all, why would we want to be affiliated in the credit union industry and call ourselves a cooperative movement when such things occur.Bottom line, there are a number of us that won’t sit still and will have a contingency plan in place to ensure the hostile partner will not prevail–it won’t be worth their effort to merely drive us into the arms of a more friendly partner or an environment in which this is acceptable practice and has monetary implications on both sides.Sundie Seefried, CEO/PresidentEagle Legacy Credit UnionShiver, shiver. The thought of hostile takeovers in credit union land sends chills up and down my spine. Very few things can be considered further from the cooperative spirit than this.What were they thinking? (Or smoking?)Keep up the good work.Daryl Tanner, PresidentShare One, Inc.