Continental Federal Credit Union Board of Directors Rejects Takeover Proposal by Wings Financial Federal Credit Union

EL SEGUNDO, Calif., March 20 /PRNewswire/ -- The Board of Directors of Continental Federal Credit Union (Continental FCU) today voted unanimously to reject the most recent proposal from Wings Financial Federal Credit Union (Wings Financial) to merge the two credit unions under Wings Financial's management. The vote was 7-0 against the proposal.

After careful consideration, the board of Continental FCU, a credit union of more than 25,000 members who primarily are employees of Continental Airlines and US Airways, rejected the Wings Financial takeover because "it is not in the best interests of our members," and "clearly does not bring any compelling value to our membership," said Allan Cooper, chairman of the Continental FCU board.

"Continental FCU is a well-managed credit union with over $176 million in assets, more than 16-percent in capital reserves and a strong multi-state network of branches. We offer our members very competitive financial products and services through a personal relationship with a not-for-profit member cooperative that shares their values and history," said Cooper. "The responsibility of this board is to protect the interests of our entire membership, both short-term and long-term. The dilution of our members' independent voice, the risks associated with this proposal and its questionable value proposition led us to determine that Wings Financial's proposal is not in our members' best interests," said Cooper.

Wings Financial -- formerly Northwest Airlines FCU -- submitted its fourth unsolicited offer in the last year and a half, on March 9, to merge the two credit unions in a letter to the Continental FCU board of directors. "Simultaneously, Wings Financial used its members' monies to launch an unprecedented, aggressive and misleading campaign, including a promise to pay $200 to each Continental FCU member if the deal was approved, in a self-serving attempt to lobby Continental FCU members to support their offer," said Cooper.

"The board saw the Wings Financial offer for what it was -- a blatant attempt to buy our members' votes and convince them to hand over our network and members' sizeable assets, without any real value in return. The fact that Wings Financial has made repeated attempts to acquire Continental FCU, has been quoted by the media as studying "other acquisition targets" -- and that they have studied converting to a mutual savings bank -- led us to conclude that the uncertainties and risks involved in this merger are far too great for our membership," said Cooper.

Many in the credit union community have been publicly outspoken in their support for Continental FCU, including the California Credit Union League. Its President and CEO, Bill Cheney, said "Continental Federal Credit Union's board of directors is responsible for making decisions in the best interest of members. The board and CEO Tom Glatt have reviewed the proposal from Wings Federal Credit Union on more than one occasion, and each time after careful consideration they have declined the offer. It's time for Wings to accept the decision and discontinue this unsolicited and unprecedented action."

In discussing the negative impact of this takeover attempt on the broader credit union industry, Fred R. Becker, the president and CEO of the National Association of Federal Credit Unions, said, "The National Association of Federal Credit Unions believes that cooperation is not only vital to the integrity of our industry and its continued safety and soundness but is also crucial to the safety and soundness of the National Credit Union Share Insurance Fund and its unparalleled record. In that regard, hostile mergers may threaten the very heart of the credit union system."

"Right now there is a complete regulatory vacuum pertaining to unsolicited takeovers. Credit unions are the only segment of the financial services industry that has no rules of the road in place," said Daniel A. Mica, president and CEO of the Credit Union National Association, the nation's largest credit union trade group. "The current situation arbitrarily places target credit unions in jeopardy with no firm guidance on what their options are and what defenses are at their disposal."

Credit unions serve a unique role in the financial system of the United States, providing consumers with a choice to be served by not-for-profit mutual benefit organizations. "We are not influenced by Wall Street and our profits are spent on member services, higher dividends on savings accounts, lower loan rates or are kept in reserves to provide safety and stability in good times and bad," said Cooper. He added, "The recent actions of Wings Financial have been a costly distraction for our employees and volunteer board of directors, and to others in the credit union system who would instead prefer to remain focused on delivering a cooperative credit union experience and competitive products and services to their members."

About Continental Federal Credit Union

Since its charter in 1952 by a group of Continental Airlines employees, Continental Federal Credit Union has been a place for members to obtain low-cost loans and build their savings. Since then, Continental FCU has grown into a full-service credit union, offering its members a wide array of products and services, including no-fee ATMs, 24-hour telephonic access, competitive mortgage, home equity, auto and consumer loans, Visa credit and check cards, and a broad spectrum of complementary services that members would expect from their primary financial institution. Membership in Continental FCU is available for employees of its primary sponsoring airlines, Continental Airlines and US Airways, as well as employees of all other entities engaged in the air transportation industry who work in the United States, members of their immediate families or households, and organizations of such persons.

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