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SAFE Credit Union members will begin a two-month voting process Monday that will determine whether the credit union can proceed with a proposed merger with BECU, based near Seattle, in a deal that would create the nation’s fourth-largest credit union.
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SAFE members, who collectively own the credit union, will begin voting online and by mail on the plan to combine with BECU, a much larger institution formally known as Boeing Employees’ Credit Union. Members will then hold a special meeting on Oct. 27, the final opportunity to cast a ballot.
The combined credit union would operate under the name and CEO of BECU, and SAFE CEO Faye Nabhani would serve as the Sacramento region market president. The organization would be based in Washington, and SAFE’s main office in Folsom would become a regional headquarters.
The credit union will spend almost two months encouraging more than 240,000 members — by mail, email and online banking alerts — to vote. The merger requires approval from a majority of eligible SAFE members.
“This is our members’ organization. It’s important. I want to hear their voices,” Nabhani said in an interview. “This is their time to say what they think is our best next path.”
The number of credit unions has dwindled to around 4,500, from 24,000 in 1969, largely through mergers. The successive combinations, industry experts have said, have been driven by desires to diversify economically, and keep up with expensive technology investments that have become necessary in the finance industry. Plus, member-owned credit unions must compete with banks — for-profit institutions owned by shareholders.
Mergers can come with drawbacks. Philanthropy and decision-making, for instance, can shift to the region where the larger institution is headquartered.
SAFE leaders have argued that combining with BECU would strengthen the institution, allow for lower fees and needed technology investments in areas such as fraud and customer-facing banking services, and extend BECU loan programs to SAFE members. They have committed to increasing the institution’s charitable giving in the Sacramento region.
In ahead of the vote, the credit union said it would invest $1 million in philanthropic initiatives that reflect SAFE members’ interests, in addition to the $500,000 that SAFE traditionally gives each year.
SAFE restated its arguments in the notice, detailing loan repricing programs, first-time homebuyer grants and lower fees.
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If the deal closes, two SAFE executive retirement and retention plans would be “essentially extinguished,” Nabhani said, because BECU does not offer equivalent programs. As a result, some SAFE executives would receive payments related to supplemental executive retirement plans, or “SERPs,” and retention plans previously offered by SAFE.
The documents say Nabhani, for instance, would be eligible for $3.2 million related to the retirement plan and about $1 million under the retention plan. The amounts are equivalent to the value of the plans SAFE offered, she said, and don’t represent an increase. Her future annual compensation would decrease.
The benefits are contingent upon continued employment for a period after the merger, the documents say.
“These are highly professional people, that are desired,” she said. “We’re all excited. But we also need to be practical: I need all of my people to be here with me on that journey.”
The credit union’s board also approved one-time $50,000 bonuses last year for several SAFE executives for the work required to set the merger in motion, the documents say.
The credit unions received approval from state and federal regulators earlier this month. Under the terms of the merger agreement, two SAFE directors would serve on BECU’s board, expanding it to 11 members from nine. The BECU board is interviewing nominees, and the appointments should be determined in the coming weeks, Nabhani said.
SAFE has about 244,000 members, while Tukwila, Washington-based BECU has more than 1.5 million. Under a state process, the merger could receive approval if participation is too low for a majority of all eligible SAFE members to approve it, provided a majority of ballots cast support the merger.
Members can vote online, by mail or at the Oct. 27 meeting. SAFE members can find details about the merger and voting on the credit union’s website. In addition to the merger question, members will vote on the distribution of $250,000 to four charities.
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