The dominant concerns for consumers in all the elections now underway are affordability and corruption. These are also the top issues in SAFE’s merger vote now underway.
SAFE’s board and senior executives have not addressed either with facts or transparency.
Affordability
In both posts and commentator analysis, if SAFE’s members relationships are turned over to BECU’s business model, they will pay more for loans, receive less interest on savings and incur an overhead expense structure over a third higher than SAFE’s operating expense ratio.
These are the facts documented in this post using June 30 call report data. In addition, there are multiple public rate comparisons in this blog showing that SAFE’s current rates are better for members than BECU’s. (Link) and here
Why should members want to pay more for financial services, especially loans, when all are facing the challenge of making ends meet? On all key metrics of financial performance, SAFE is superior to BECU, which is over seven times larger in assets. Why should members want to transfer their relationships, pay more and give up all of the local control of the resources that they have accumulated and produce their clear advantage?
Higher costs, high loan rates, lower savings returns make no sense. But SAFE’s leadership has avoided addressing this factual disparity in rates and performance which should be the first requirement for any change of this magnitude.
Corruption by Seven Insiders
So how could such a deal so harmful to the immediate and future interests of SAFE members ever get considered?
The only set of factual disclosures tells the whole story. The Member Notice says the SAFE Board in 2025 awarded SAFE’s top five compensated employees (before the merger details were disclosed) bonuses of $50,000 each. Upon closing, these same five will receive almost another $15 million in accelerated SERP payments and bonuses.
The CEO Faye Nabhani’s will continue to draw an annual salary and benefits on top of the total merger gain of $4.0 million. The other signatory of the Member Notice, board chair Martha Lofgren, is one of the two volunteer and unpaid SAFE directors who will now be paid an annual salary of $125,000. Her benefit was not disclosed in the Notice she signed.
Yet the board and senior management of SAFE want us to believe that by disclosing their self-dealing and conflicts of interests, it is OK that they, and no one else, has any agreement on anything about future commitments. Transparency does not change the fact of corruption and the total failure to protect the interests of members. The payments to these seven leaders are the only legal requirements benefiting the entire SAFE organization and member-owners of this $4.5 billion financial cooperative. No one else who has supported the credit union—the employees, the members, the various community groups–receives a commitment that is either measurable or enforceable.
Giving Members’ Equity Away for Free
In the Notice, a very clear and misleading statement about the members’ collective ownership reads: “the net worth of a merger credit union, transfers to the continuing credit union.” This total net worth of $430 million is being given away free. Bonus dividends and multiple other ways members can directly benefit from a merger are documented in other mergers, but not a cent in this case.
BECU has net worth almost double the required NCUA’s 7% well capitalized standard. SAFE members could be paid out their entire equity. The new combined credit union’s equity would be in excess of 9.2%, two percentage points higher than NCUA’s well capitalized requirement.
But no, the seven leaders decided to keep all the surplus as their own “reward” for this magnanimous act of giving away their credit union to another one, 750 miles away.
Multiple Harms
But the absurdity of this financial transaction goes far beyond the damage to SAFE’s member value facilitated by leadership’s self-dealing.
The worst outcome for credit union members is to lose their charter. That is what regulatory oversight and democratic self-governance are supposed to prevent.
If the merger were to proceed, members would lose all of their local control. No more independent decisions about how their collective financial resources and community business priorities are directed.
Per the merger agreement, no other employee’s future is guaranteed anything. After the transition period for back office conversion, there will be redundant positions, unnecessary levels of branch oversight and the human toll of lost career opportunities and layoffs will begin.
Members will be subject to BECU’s bylaws, which are different from SAFE’s. BECU is subject to Washington credit union regulations which have significant differences from California’s.
SAFE has provided zero information about BECU’s business priorities or its plans for SAFE. The 245,000 Sacramento area residents will have no regulatory or political recourse if they want to challenge a BECU action or policy. This merger is worse than a blind date. It is a scam marriage arranged by leaders whose basic responsibility is to protect members’ best interests.
Destroying the Credit Union Option
This merger proposal is the complete negation of everything SAFE has accomplished for it members in 85 years. It sells out all future options. But worst of all, it is a betrayal of member hopes and trust. Not just for SAFE members but the entire credit union system’s reputation. This example, if successful, will accelerate these cases of cooperative malpractice.
This destruction of member belief in credit unions is stated clearly in the posted public comments on NCUA’s website:
“I voted no as it is not in the best interest of the SAFE credit union members to give the executives golden parachute exit package.”
“I thought I was escaping this kind of behavior when I moved from a bank to a credit union. Offensively over-compensated executives don’t need to reward themselves any further bonuses, especially not at the cost of members.”