Notice of Special Meeting of the Members of
Inspirus Credit Union

The Board of Directors of Inspirus Credit Union has called Special Meeting of the Members of Inspirus Credit Union at The Bricklayers Union Building, 15208 52 nd Ave. S. Ste. 120, Tukwila, Washington, 98188 on July 23, 2019, at 6:00 o'clock p.m.

Purpose of Special Meeting & Member Action The purpose of the Special Meeting & Member Action is:

  1. To consider and act upon a Merger Plan and proposal for merging Inspirus Credit Union of Tukwila, Washington with Gesa Credit Union of Richland, Washington (Continuing Credit Union) whereby all assets and liabilities of Inspirus Credit Union will be merged with and into the Continuing Credit Union. All members of Inspirus Credit Union will become members of the Continuing Credit Union and will be entitled to and will receive shares in the Continuing Credit Union for the shares they own in Inspirus Credit Union on the effective date of the Merger.
  2. To ratify, confirm and approve the action of the Board of Directors in authorizing the officers of Inspirus Credit Union, subject to the approval of members, to do all things and to execute all agreements, documents, and other papers necessary to carry out the proposed merger. The Board of Directors of Inspirus Credit Union encourages you to attend the meeting and vote on the proposed merger. Whether or not you expect to attend the meeting, we urge you to sign, date and promptly return an electronic ballot accessed at https://inspiruscu.cuballot.com or the enclosed mail ballot to vote on the proposed Merger. You may also cast your vote in person at the meeting.

If you wish to submit comments about the Merger to share with other members, you may submit them to the National Credit Union Administration (NCUA) at https://www.ncua.gov/services/Pages/resources-expansion/comments-proposed-merger.aspx or NCUA, Credit Union Resources and Expansion, 1775 Duke Street, Alexandria, VA 22314. The NCUA will post comments received from members on its website, along with the member’s name, subject to the limitations and requirements of its regulations.

You have the right to vote on the proposed merger by written or electronic ballot prior to the Special Meeting.

Other Information Related to the Proposed Merger

The Board of Directors has carefully evaluated and analyzed the assets and liabilities of the Credit Unions and the value of shares in both credit unions. The financial statements of both Credit Unions, as well as the projected combined financial statement of the Continuing Credit Union, follow as separate documents. In addition, the following information applies to the proposed Merger.

Reasons for Merger.

The Board of Directors has concluded that the proposed Merger is in the best interests of members. The proposed merger will benefit their respective memberships by achieving operational cost savings and improving the operational and financial strength of the Continuing Credit Union, ultimately enhancing member value.

Benefits to the ICU Membership will include:

  • Increased convenience and improved service resulting from the additional 18 branch locations of GCU in central and eastern Washington and membership and services In Idaho.
  • Commercial deposit accounts, loan products, cash management, remote deposit capture and more extensive business services to serve local businesses and members.
  • Expansion of home mortgage loan services through more robust first mortgage products and programs.
  • Expansion of deposit products including money market and IRA CD accounts.
  • New investment management services.

Benefits to GCU Credit Union membership will include:

  • Increased convenience and improved service resulting from the additional western Washington and Seattle metropolitan branch locations.
  • Participation in a nationwide shared branching network.
  • Increased "return to member" in the form of improved rates and fees with increased cost-savings and efficiencies from the scale achieved by the merged credit unions.
  • More advanced electronic services and online technologies, including online and mobile banking and remote services.
  • Increased expertise and use of market analytics and digital advertising.
  • Expanded focus on educational community and community involvement.

Benefits to the Combined Organization will include:

  • Increased capital and financial strength ensuring long-term sustainability.
  • A Continuing Credit Union with $3.3 billion in assets has more money to lend at competitive rates
  • More members and more locations will lower operating costs overall and bring savings back to members.
  • Enhanced member value through expanded financial product and service offerings, distribution channels, scalability and competitive rates and fees. Both Credit Unions have unique expertise in different product areas which can be leveraged across the new organization to provide greater service offerings to members.
  • Additional cost efficiencies in operations, resulting from pooled resources, consolidated back office support functions, and greater market presence and bargaining power.
  • Leveraging the best outreach and educational programs of each credit union will enrich the lives of members and the communities the Continuing Credit Union will serve.

Banking and financial services is a competitive industry. By joining together, ICU and GCU will retain their members-first philosophy and be better positioned to offer competitive financing and enhanced services for our members. Merging these two strong organizations will combine shared values and will provide members additional financial protection against future economic downturns.

Net Worth. Gesa Credit Union's net worth as of the end of 2017 was $177.23 million and net worth ratio was 9.31% with Inspirus Credit Union’s net worth at $126.94 million and 10.09%. As of September 30, 2018 the net worth ratios were 9.51% and 10.32%, respectively. The combined net worth projection for the Continuing Credit Union as of December 31, 2018 is $328.4 million and 9.91% net worth ratio. Upon the merger, the net worth of ICU, as merging credit union will transfer to the Continuing Credit Union. While Inspirus Credit Union has a higher net worth ratio than Gesa Credit Union, the Inspirus Credit Union Board believes retention of the net worth better serves the ICU members long term and no distribution of net worth to the ICU members is planned.

No Share Adjustment. Inspirus Credit Union will not distribute a portion of its net worth to its members in the Merger. The Board of Directors has determined a share adjustment, or other distribution of Inspirus Credit Union’s net worth is unnecessary. The Directors of ICU and GCU have carefully analyzed the assets and liabilities of the Credit Unions and have appraised each Credit Union’s share values. It is the opinion of the Board of Directors of ICU and GCU that the merger should be completed without any adjustment in shares of the members of ICU upon completion of the merger. Based on the current financial and statistical reports, the Credit Unions have made a joint appraisal of assets and liabilities to determine the value of shares in each Credit Union. An analysis of the share values of ICU, GCU, and the combined probable asset/share ratio value of the Continuing Credit Union are as follows: ICU 1.12%; GCU 1.11%; and Continuing Credit Union 1.11% The Credit Unions have determined that the shares in each Credit Union are substantially equal in value and no share adjustments are warranted.

Locations of Merging and Continuing Credit Union. Inspirus Credit Union’s main office at 5200 Southcenter Blvd., Tukwila, Washington will remain open. All branch offices of Inspirus Credit Union will remain open following the Merger.

Changes to Services and Member Benefits. The Credit Unions have made no post-merger plans to reduce branch facilities, robust surcharge-free ATM network access, or existing accounts and services offerings currently offered or available to Inspirus Credit Union members. The Continuing Credit Union may analyze the future branching and ATM network offering to members.

Merger-related Financial Arrangements. NCUA Regulations require merging credit unions to disclose certain increases in compensation that any of the Merging Credit Union’s officials, CEO or the four most highly compensated employees have received or will receive in anticipation of or upon completion of the Merger. Due to the change in his executive position with the Continuing Credit Union and the termination of his Employment Agreement and Deferred Compensation Agreement prior to or upon the effective date of the merger, Scott Adkins, President and CEO of ICU will be paid contract termination benefits pursuant to his current Employment Agreement in the amount of $822,000. Except for these contractual benefit payments, no merger related financial arrangement or other financial incentive has been offered or provided to any official (Board or Supervisory Committee Member) management staff or employee of ICU or GCU in connection with the approval or consummation of the Merger.

Summary of Merger Plan. In addition enclosed is a Summary of the Merger Plan which provides important Merger information including: the organization of the Board of Directors and Supervisory Committee; information on Senior Management and existing contracts and benefit plans; information on products and services anticipated after the Merger; and an itemized estimate of the direct costs of the merger.

Effective Date. Subject to approval by the Washington DFI, NCUA and members of ICU, the Credit Unions have planned an effective date for the merger of August 1, 2019.

Merger Approval and Ballot. In order to accomplish the merger, it is necessary to obtain approval of a simple majority of the members of ICU who vote on the proposal. In accordance with its Bylaws, ICU is conducting the member vote on the merger proposal through a mail and electronic ballot to the ICU members. The ballot distribution, collection, custody and tabulation will be conducted entirely by an independent third party company. Enclosed with this Notice of Special Meeting is a Ballot for Merger Proposal. Please complete the Ballot and return electronically or by U.S. Mail to CU Ballot. Your ballot must be received: for mail ballots by 4 pm on July 23, 2019 and electronic ballots by the call for voting at the Special Meeting, July 23, 2019. Electronic or mail Ballots received after this date and time will not be counted. You may also cast your ballot in person at the meeting.

BY ORDER OF THE BOARD OF DIRECTORS


Rich Rutkowski, Board Chair
Date: May 20, 2019