CEO of $4.3B SAFE CU Says Proposed Merger With $29B BECU is Not an ‘Efficiency Play’

SACRAMENTO, Calif.–With the $4.3-billion SAFE Credit Union asking its members to vote in favor of a merger in the $29-billion BECU In Seattle, SAFE CU’s president and CEO, Faye Nabhani, has made his case in local media for why the combination should be approved.

As the CU Daily reported here, one member has challenged who owns SAFE CU’s equity in the event the two CUs do merge. 

“This isn’t about an efficiency play,” Nabhani told the Sacramento Bee. “The intention is to grow in California. The intention is to make this an even stronger area and region.”

SAFE has nearly 700 employees and about 244,000 members, while BECU employs roughly 3,200 people and serves more than 1.5 million members, according to the Bee. Under the proposed agreement, Nabhani would become BECU’s Sacramento region market president and said she would advocate for the needs of members in the region.

‘Drive More Value’

“I have 30-some odd years doing everything I do to try to help drive more value, better value, better opportunities, faster service to the members that I serve,” Nabhani told the Bee. “That doesn’t stop just because my role changes slightly. I will continue to be that voice. I will continue to represent our members’ needs.”

Nabhani said members could see lower fees following the merger, along with expanded lending options and stronger investments in technology, including fraud protection tools and digital banking platforms. SAFE recently upgraded its mobile banking app and plans to add the Zelle money-transfer platform, though Nabhani told the Bee the pace of change in financial technology is accelerating.

 “Our ability to continue to provide for consumers and our members … will only continue to get more challenged — just to keep the status quo,” Nabhani said.

‘Fragile Institutions’

Luis Dopico, partner and chief economist at the Washington, D.C.-based advisory firm CUCollaborate, told the Bee that credit unions today bear little resemblance to the small institutions of the mid-20th century, sometimes called “shoebox credit unions” because their paperwork could fit in a shoebox.”

“Those rules created fragile institutions,” Dopico told the Bee, referring to early geographic and membership restrictions placed on credit unions. “If there is a problem in the local economy, then people can’t repay their loans there, and the bank is not diversified, and the bank will go belly up.”

James Wilcox, a professor at the University of California, Berkeley’s Haas School of Business, told the Bee that rising regulatory costs and technology demands have made it harder for smaller institutions to compete, even for credit unions the size of SAFE.

“There’s a huge impetus to get bigger,” Wilcox told the Bee. “There are all kinds of pressures. Cost pressures. Diversification pressures. Regulatory costs… I think there’s just no end in sight.”

‘Shifts’ in Decision-Making

Still, some analysts told the Bee that mergers can shift decision-making and charitable giving toward the city where the larger credit union is headquartered. Nabhani told the Bee the structure of the agreement is designed to preserve the Sacramento region’s voice.

“The merger is structured to ensure that California is heard,” Nabhani told the Bee.

Under the agreement, SAFE would receive two seats on BECU’s board, and Nabhani said she expects philanthropic giving in the Sacramento region to increase following the merger.

“The intention is to grow in California,” she told the Bee.