LAS VEGAS -
When Tom Glatt took to the stage here he said he had no notes and would speak "from the heart." By the time he was finished his audience all but had their hands over their own hearts, but they were too busy applauding.
Glatt was one of three speakers at the National Directors Convention here to discuss and debate "Unsolicited Mergers: A New Playing Field." Glatt, already well-known to many in credit unions from his career as a speaker and consultant, watched his name recognition only rise further when his credit union was the target of what is believed to be the first "hostile takeover" attempt in credit union history earlier this year. In that case, the El Segundo, Calif.-based Continental FCU, of which Glatt is CEO, was targeted by Minnesota-based Wings Financial FCU for a merger, even though Continental's board had already rejected the overture. Wings attempted to take its message directly to CFCU members, including setting up a website and offering a $200 payment to every member from the Continental's capital when the merger was completed.
"It was a hostile takeover in every sense of the word," Glatt told the more than 1,500 attendees. "People say 'Tom, it was a merger proposal.' We turned down their merger proposal three prior times. We said 'no' in person and in letters. When we got their letter they made it very clear 'We have asked you to merge with us, and this time you need to be warned that if the answer is "no" we have already begun a petition drive to force you to hold a special meeting on merging with us.' They said, 'We are prepared to have a special meeting to have your board removed.' If that isn't hostile, I don't know what is."
Reverberations Still Being Felt
Reverberations from the Wings Financial bid for Continental FCU are still being felt, with NCUA recently issuing a proposal aimed at addressing future takeover bids. Glatt said the takeover attempt led to "thousands" of e-mails and calls of support from credit unions around the country, and he drew more applause when he said, "what the bankers would call competitors, we call friends. That's the very nature of a cooperative industry and the very thing that Wings missed all along."
Glatt also pulled no punches. Referring to Wings Financial FCU CEO Paul Parrish, Glatt alleged that "he had all these great things he could do for our members. It was never about the great things he could do for our members-it was about what we could do for him. He can deny it, but I think he had every intention of turning his credit union into a mutual savings bank and into a stock bank and selling that branch system to a Bank of America or whoever would buy. The primary reason they came after us was we have 16.5% net worth, and that is an obscene amount of net worth, especially since we got it by quitting serving our membership."
Glatt had been CEO for just five and a half months when he was alerted to the takeover bid by a letter overnighted to him at a hotel in Florida at which he was staying at the time. Since taking over as CEO Continental FCU, which serves the airline of the same name, he has been plowing much of its excess capital back into expanded product and service offerings. Glatt stressed that there has been some misconceptions about the credit union's refocused direction.
"Exactly what I was afraid of is that people have said you're doing this in response to Wings," Glatt said. "No, this is part of our strategic plan. What I would thank Wings for is that our plan was based on a 36-month timeframe; we now realize we have to do it much faster."
Glatt, who said he supports mergers in cases where it benefits both groups of members, also had this advice:
* "If you want to protect yourself from a hostile takeover, focus, focus focus on your members. We weren't serving our members well, but we have since I got there."
* "Take a hard look at your bylaws. I know that at most of your credit unions if you pull them off the shelf everyone would sneeze from all the dust."
* "You better have a really good strategic plan. It needs to say 'Here's what we have in store for our membership and here's what we're rolling out.' Part of that is a good marketing plan and a good communications plan. And that includes some media training. I am supposed to be a professional speaker, but when a hostile reporter sticks a microphone in your face and says 'bark,' I tell you it's a different world. You better have a spokesperson; you don't want multiple points of view."
