ALEXANDRIA, Va. — NCUA said it has reviewed the offer by Wings Federal Credit Union to pay members of Continental Federal Credit Union $200 apiece if Continental merges with Wings, and has informed Wings that the payment is "impermissible" under the provisions of the Federal Credit Union Act.
In a statement released today, NCUA said it has advised Wings Financial that its proposal, made in connection with a campaign to encourage members of Continental to support a merger of Continental into Wings, would constitute the equivalent of a pre-merger dividend to Continental's members to accomplish a partial equalization of shares.
Furthermore, NCUA has informed Wings Financial that the FCU Act does not allow per capita dividend payments, and that no other legal authority exists for a Federal credit union to make this kind of payment. Additionally, "the unilateral promise of a dividend by the continuing credit union in a proposed merger, without the approval of the merging credit union, is not permitted," the agency said.
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NCUA has requested that Wings Financial discontinue the activity in question.
Since the $1.6 billion Wings Financial submitted its merger proposal to $182 million Continental on March 9, the Apple Valley, Minn.-based CU has continued to offer Continental's more than 25,000 members $200 each should a merger between the two CUs ever occur. Continental, which said it had rejected Wings Financial's merger proposals on three, separate occasions, turned down a fourth offer on March 20.
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