Continental is significantly undercapitalized and is hemorrhaging money. Because of its troubled financial status, the members of Continental will not vote on the merger, which is expected to be completed on January 28, 2011.
This got me wondering about what could have been.
Back in early 2007, Wings Financial (Apple Valley, MN) made a hostile bid to takeover Continental FCU after management and the board of Continental rejected previous advances from Wings.
Wings directly solicited the members of Continental FCU. Wings stated that members of Continental would be $1200 better off, if Wings and Continental merged given the lackluster performance of Continental, and Wings proposed to pay members a pre-merger dividend.
Wings withdrew its offer after NCUA ruled that the dividend would violate the Federal Credit Union Act.
This unsolicited bid caused many within the credit union industry to rally to the defense of Continental FCU's management and board. Credit union trade associations adopted anti-takeover resolutions. (At the end of this post is the resolution adopted by the Arizona Credit Union League).
However, in retrospect, was opposing this hostile bid in the best interest of the members of Continental FCU?
I agree. Once again credit unions, at the urging of their trade associations, got behind the "movement" instead of what would have been best for the members.
ReplyDeletetrade associations arent behind the movement, theyre behind themselves...at the expense of the cu and its members. from the continental story to posture on merger to 10 year shell game of regulatory relief to ignoring capital reform in favor of mbl cap to trying to close the only option that could keep them and ncua honest, charter change.
ReplyDeleteClearly the merger with Wings was in the best interests of Continental FCU's members. The resistance to the merger was simply an attempt at self preservation on the part of the board and management of Continental FCU.
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