NCUA Steps In, Finds $200 Payment Offer From Wings to Continental's Members 'Impermissible'

ALEXANDRIA, Va. — True to its word of not taking a passive role in the oversight of mergers, NCUA said after reviewing the offer by Wings Federal Credit Union to pay members of Continental Federal Credit Union $200 apiece if Continental merges with Wings, the regulator has found that the payment is “impermissible” under the provisions of the Federal Credit Union Act. In a statement released April 17, 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 said it 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. NCUA has requested that Wings Financial immediately discontinue the activity in question. Wings Financial said “While we are continuing to evaluate the NCUA’s position, the larger point is that the Continental FCU belongs to its members and that money is rightfully theirs.”