Two Large Oregon CUs Exploring Potential Merger

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Portland Teachers Credit Union and Eugene-based Oregon Community CU said they have "expressed an interest" in a possible merger.

If the merger takes place, Cliff Dias, president and CEO of Portland Teachers CU, said it would be the largest in credit union history. PTCU has more than $1.4 billion in assets and serves 149,000 members; OCCU is a $650-million credit union with 78,000 members.

"We have been talking about this possible merger for a couple of months," Dias told The Credit Union Journal. "I initiated the discussions with Oregon Community Credit Union. Four years ago, our board gave me approval to pursue any merger possibilities that seem appropriate, so this is not a spur of the moment decision."

Dias said despite the fact PTCU is the largest credit union in the state, it has been looking for partners because the competition is so strong. He said five of the 15 largest banks in the U.S. have a presence in Oregon. "With the recent bank mergers, they ended up with many branches in Portland, and they are attacking the market."

An Appealing Partner

Dias said Oregon Community CU-which was known until earlier this year as U Lane O Credit Union-was an appealing potential partner because its strength is outside of Portland. OCCU converted to a community charter in March and wanted to expand into the Portland market.

"If they are coming in here, it is better for the two of us to join forces rather than compete," he said. "We can be more effective competing with the banks as a combined credit union with $2 billion in assets. We can do more advertising and offer better rates to savers and borrowers."

Gordon Hoerauf, president and CEO of Oregon Community CU, said he recognized merger as a way to better serve members several years ago. Before it converted to a community charter, OCCU's field of membership included state employees and faculty, staff, students and alumni at the University of Oregon in Eugene. After charter conversion, its FOM became anyone living or working in the 10 western Oregon counties of Benton, Clackamas, Columbia, Lane, Linn, Marion, Multnomah, Washington and Yamhill-which combined contain approximately 70 percent of the state's population.

"That expanded our potential membership from 150,000 to 2.4 million, including 1.9 million in the Portland area," said Hoerauf. "We've been trying for several years to penetrate that market because many U of O alumni live there. We have some members in Portland, but we lose a lot of people who are members during their four years at the university but close their accounts when they move back."

"We only have one ATM in Portland, and without a brick-and-mortar presence, we weren't making inroads," he continued. "We would have to have five branches at a minimum to serve the Portland area properly. Portland Teachers Credit Union has 10 branches there. It would be very expensive and time consuming for us to build a branch network that size."

Whether or not the merger takes place, Hoerauf vowed OCCU would expand into Portland.

The two CUs said they publicly announced their interest in a merger because they want the employees, members and community to know what is happening.

"We need to do due diligence of the data processing systems, the accounting systems, our loan portfolios, and many other things," Dias said. "We want people to know we have an interest, because we don't want to have to meet in secret; we want to do it in the open."

Dias predicted the merger will take 12 to 18 months to complete.

Long Way To Go

Hoerauf agreed: "We are a long way from merging. I hope it goes quickly, because uncertainty is hard on an organization, but the next step is information gathering. It's like we just had the first date-it looks good at first blush, but we haven't met the future in-laws yet."

Both Dias and Hoerauf said their respective CUs are contemplating the possible merger because of the mutual benefits, not because credit unions of their size cannot compete with banks. Asked if this merger would invite bank criticism, Dias said: "They criticize everything we do. We don't criticize their mega-mergers. The marketplace should dictate what happens."

Dias said there would be no branch closures or employees laid off if the merger goes through, as there is no geographic overlap.

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