SACRAMENTO, Calif.–Even as it says it plans to appeal to state regulator should the vote not meet state requirements, SAFE Credit Union has officially opened voting to members on its proposed merger with Seattle-based BECU with a message that says casting a vote also means the opportunity to direct $250,000 in donations.
If approved, the combination would create a CU of approximately $35 billion in assets.
Members can vote either by phone, online or at a special member meeting scheduled for Oct. 27, which is the final day to cast a ballot. One person who opposes the merger has shared with the CU Daily screenshots from a Reddit forum in which their posts urging a vote against the combination were removed (see related story).
As the CU Daily reported here, the proposed merger includes nearly $15 million in payouts to five members of management.
Plan is to Sidestep Voting Requirement
While the member vote is now open, as the CU Daily also reported, SAFE CU has said it intends to sidestep California law, which requires state-chartered CUs seeking to merge to get an affirmative vote by a majority of members, of which SAFE CU has nearly 250,000. But under California Financial Code Section 15201(b), a credit union’s board may apply to the California Commissioner of Financial Institutions “for approval of a merger inaccordance with a plan of merger approved by a majority of the board ofdirectors of each credit union that is a party to the merger, even thoughless than a majority of the outstanding members of a disappearing credit union has voted to approve the merger.”
In the disclosures it provided to members and to NCUA, SAFE CU said it intends to pursue that path.
“…This is to advise you that the Board of Directors will make an application under California Financial Code Section 15201(b) for approval of the Merger in the event that a majority of all members of SAFE do not vote to approve the Merger, in person at the meeting, or by mail-in or online ballot,” SAFE said in its statement to members.
The Financials
As of mid-year, SAFE CU, founded in 1940, had $4.417 billion in assets and 246,000 members. SAFE CU reported $21.39 million in net income as of mid-year, with net worth of 10.82%. The $29.62-billion BECU, which was founded in 1935 and which has 1.59 million members, had $86.1 million in net income at mid-year, with net worth of 12.57%.
The merger plan calls for BECU to be the surviving institution, with BECU CEO Beverly Anderson leading the combined operation. SAFE CU CEO Faye Nabhani would serve as Sacramento region market president.
‘Meaningful New Benefits’ Touted
In a message on its website encouraging members to vote, SAFE CU said, “SAFE & BECU are proposing to come together to offer meaningful new benefits for you and your family and strengthen the support we provide in the communities we proudly serve. If approved, you keep all the benefits you enjoy with SAFE today, plus receive the extra value that comes with combining with BECU, Washington state’s most trusted credit union.”
Under the headline “Your Vote Supports Local Non-Profits,’ the announcement goes on to state, “SAFE and BECU share a strong commitment to the community and supporting local non-profit organizations. This value is woven through both purpose-driven organizations and you have the chance to help demonstrate and direct this commitment as part of your vote.”
“When you cast your ballot, you will be given the option to help decide how a $250,000 community donation will be distributed among four SAFE non-profit partners supporting education, financial wellness, affordable housing, and workforce development. Regardless of how you vote on the proposed combination, you can still participate in the vote to help direct this donation.
“It’s another way your voice can help make a difference in the communities we call home.”
Additional Benefits
The site also states the merger will provide SAFE members with:
- Fewer fees, more savings
- More support for first-time homebuyers
- More opportunities to save on loans
- Access to relationship-based benefits
- More access to lending.
The CU Daily has received several analyses from readers who have compared savings and loan rates at the two credit unions and said the data show SAFE CU’s pricing for both is superior to that of BECU. Additional details will be provided in future reporting.
The merger has already received regulatory approval.
4 Responses
The official member merger notice from the SAFE CEO discloses the credit union’s intent and the regulator’s authority, under California Financial Code Section 15201(b) to approve this merger in event not enough members vote. This is a REQUIRED disclosure.
“The Merger must be approved by the affirmative vote of at least a majority of the members of SAFE, or by such lesser vote of the members of SAFE as may be approved by the Commissioner of the California Department of Financial Protection and Innovation (the “California Commissioner”) pursuant to applicable law.”
The website they just posted has entire page about voting and an extensive voting FAQ. To the question, “What happens if I don’t vote”, they have the following specific language:
“If you are eligible to vote and do not submit a ballot, your vote will not be counted in the member vote on the proposed combination. The outcome will be determined based on the ballots properly received. ”
This is confusing and deceptive. Will the outcome will be determined by the ballots properly received, or will the outcome be determined by the SAFE Board ignoring the will of the members and voters and ask the regulators to approve it directly?
In an extensive Q&A and detail about the voting process, why are they not re-disclosing the same thing in the member letter? The specific answer is they aren’t required to as the website is not the official notice of merger. But in a merger that was hid from members and has no apparent benefit to them, instead of doing the right thing, SAFE sticks to the letter of the law and conveniently leaves that disclosure off the website and then leads members to believe the outcome will be decided ONLY BY THEIR VOTE.
SAFE seems to be overtly deceiving their members. The Execs are already counting their money, but I hope SAFE members vote no and take this decision out of the hands of their CEO and Board who have sold them down the river for a payday.
very vague “benefits” that lack any specifics. Really – what do they really gain?
Fewer fees, more savings
More support for first-time homebuyers
More opportunities to save on loans
Access to relationship-based benefits
More access to lending.
SAFE does have higher fees, but as they adopt BECU fees some members will save money, but BECU rates ate way worse so not sure how they are selling the rest of the benefits with any credibility. But no matter what SAFE members get, a financially strong credit union can offer all of it to members now. No reason to wait. No reason to merge. Their own talking point claim they have been recognized for their financial strength, but they can only afford 500,000 to help their members buy homes if they merge with a $30 billion credit union? Who does that make sense to? SAFE members should be pressing their Board and CEO on this question.
Both CU’s are being shady AF about the whole thing. They have personal interests in mind not being a very good fiduciaries of their members and their members money. Really gross for both cooperatives to be acting in this fashion. At this point when is BECU becoming a bank? Because of I had a dime for every time I heard BECU EVP’s say “well would it be so bad if we were more like a bank” I’d probably be walking away with the same amount as these SAFE executives.
BECU’s new leadership has ruined them and tarnished their reputation as a quality organization for banking or as a quality local employer into the ground. Literally people booing them at an event I attended when they were announced as a sponsors, they are and will do the same to SAFE.
SAFE members and employees – GET OUT NOW! Or figure our leverage for your severance. BECU likes to shut people up who could expose the truth with money.