For Thomas E. Sargent, there is no guilt by association with Microsoft Corp.

Mr. Sargent considers it a compliment that the institution he heads, First Technology Credit Union of Beaverton, Ore., is the embattled software giant's credit union.

The president and chief executive officer of what is known as First Tech could say the same thing of Intel Corp., Nike Inc., and 400 other companies in his field of membership.

As its and its members' names would imply, First Tech takes its technology and customer-service mission seriously. It has been known to adopt innovations well ahead of larger competitors.

In the 13 years that Mr. Sargent, 48, has been at the helm, First Tech has dramatically diversified its corporate affiliation list, introduced financial products from insurance to brokerage services, and multiplied assets almost seven times, to $512 million.

All that happened without what would have been Mr. Sargent's biggest dealmaking coup: a $1.4 billion-asset alliance with Patelco Credit Union and Seattle Telco Federal Credit Union. Announced in 1994, what would have been the largest-ever credit union merger had to be scuttled because of regulatory complications. Among other things, regulators looked askance at the novelty of co-CEOs.

But that did not deter First Tech from its leading-edge growth course. Its accomplishments are soon to be symbolized by a move across the street in its suburban Portland, Ore., office park to a building that will nearly double its square footage.

The situation was far different in 1985 when the volunteer board of the $75 million-asset Tektronix Employees Federal Credit Union recruited Mr. Sargent, then president of the Clark County (Ore.) School Employees Federal Credit Union, to succeed its retiring CEO.

The members then came entirely from Tektronix Inc., a venerable Pacific Northwest electronics manufacturer going through a downsizing. Employment went from a peak of 28,000 in 1982 to 6,000 last year.

With the broader First Technology name, Mr. Sargent took advantage of a 1982 National Credit Union Administration policy to expand the employer- sponsor base.

"At the time, we could have brought in any company," said Mr. Sargent.

"We went through a decision process-'Do we want to expand geographically or across the industry?'" Mr. Sargent recalled. "Our thought at the time was, and still is, that our product mix is more in tune with our high-tech employees."

Although the Supreme Court ultimately disagreed, ruling last February in the AT&T Family Credit Union decision that regulators had impermissibly expanded the "common bond" definition, NCUA officials said that one key reason for the rule change was concern about troubled or fading companies like Tektronix.

Being stuck with a sluggish corporate partner is "no way for a credit union to survive," said Carolyn Strong, the volunteer chairman of First Technology Credit Union and a 15-year employee of Tektronix.

She said such single-company credit unions would have a hard time keeping members who leave the employer. And amid fears of job losses, "if you are still at Tektronix, you are not taking out any loans."

Fearing that "we would have been folded down" by a negative Supreme Court ruling on multiple-employer affiliations, Mr. Sargent re-chartered First Tech last year to serve the electronics industry in Oregon. The credit union has a reciprocal right to operate in neighboring Washington.

Mr. Sargent, who had a scholarship to the University of Oregon from the old U.S. Bank of Portland, avoids the populist rhetoric favored by some in the credit union movement. He argues that credit unions pay a price for their nonprofit status: lack of access to the capital markets.

Mr. Sargent said he uses high-tech "toys" and promises of flexible schedules to attract talent that might expect stock options from other types of companies.

The formula has produced 20% annual asset growth in the last five years and a healthy 1.5% return on assets.

"The whole issue of taxation is related to equity," Mr. Sargent said.

"Most credit unions maintain equity by not paying taxes. I don't think anybody would want credit unions to become a problem like the savings and loans," he said, referring to the solvency crisis of almost a decade ago.

Mr. Sargent's technological affinity does not jump out at a casual observer. In a six-year program at the University of Oregon, he earned bachelor's degrees in economics and political science and worked part-time at U.S. Bank. Then after nine years with U.S. Bank, now part of Minneapolis-based U.S. Bancorp, he jumped to the credit union world, where he said he enjoyed the greater responsibility for credit decision-making that was the historical hallmark of community-based financial institutions.

Bit by bit, Mr. Sargent and his board have steered First Tech into a place of prominence in the Seattle-Portland technology corridor. (At the Portland end it is sometimes called Silicon Forest.)

Expansion began with Tektronix spinoffs Mentor Graphics Corp., Lattice Semiconductor Corp., and Floating Point Systems.

First Tech scored major coups when it picked up Intel and Nike, large local employers. Palo Alto, Calif.-based Intel sponsored the credit union for its Oregon employees, who design the Proshare video conferencing software that the credit union uses in its video kiosks.

Nike, its nearby headquarters in Beaverton instantly recognizable by the red swoosh on its gates, sought access to First Technology as early as the late 1980s. Mr. Sargent was later able to defend this noncomputer company's entry because of its proximity, youthful demographics, and employee mix.

The high-tech ground is fertile for First Tech because "if any eight- to 10-person company fails, they are all re-employable," Mr. Sargent said.

Now he is rejecting seven companies a month that want to be part of the family. (First Tech accepts an average of five a month.) Many of those turned down argue they should be eligible because they use computer hardware or software, but Mr. Sargent has drawn some lines to reinforce the common bond.

That becomes a springboard for the credit union's operations and strategies, with some unique twists. As high-tech as it is, for example, First Tech has no chief information officer. Four people share the responsibility.

With a board of directors that is younger and more forward-looking than at most financial institutions, and an explicit focus on "early adopters," First Technology has been aggressive at introducing products and services that can take ages at tradition-bound banks.

The membership began clamoring for home banking in the late 1980s, when 40% of First Tech households owned personal computers. That was twice the national average. Today the PC penetration is still twice the norm, at 80%.

"We were three to four years ahead of curve," said Mr. Sargent. "What everyone went through in the mid-1990s, we were there in 1990."

Being ahead of the game, First Tech could not find a software vendor able to supply electronic connections to its back-end systems. So it wrote Personal Branch, a program that it later sold to CFI Proservices Inc. of Portland. CFI later rewrote the software, which was based on the DOS (Data Operating System) language, to run on Microsoft Windows, Unix systems, and the Internet.

Within nine months, 15% of the 40,000 customers First Tech had in 1990 were using the software. Now offering Internet connections, a Microsoft Money personal financial management service, and other options, First Tech says 30% of its current 63,000 members are on-line in some way. Two-thirds of these have switched to the lowest-cost option, the Web.

"They look to be on the absolute cutting edge of everything," said Matthew W. Chapman, chairman and CEO of CFI Proservices, which is also a sponsor of the credit union. "It is one of the best-managed financial institutions in the world and has been on the successful front end of every technology."

The relationship with Microsoft began when First Tech found it too expensive to link its system with the market-leading personal financial management product, Intuit Inc.'s Quicken. First Technology went to Intuit rival Microsoft, which had frequently recruited employees from the Beaverton area, and soon found itself building a full-service branch, one of six, just south of Microsoft's Redmond, Wash., headquarters.

The alliance produced other fruits. Last year when it announced MSFDC, the joint bill payments venture with First Data Corp., Microsoft named First Technology to an eight-member steering committee for the Open Financial Exchange data standard. Among the others represented were BankAmerica Corp., Chase Manhattan Corp., Citicorp, and Wells Fargo & Co.

The credit union has automated teller machines in each of Microsoft's cafeterias and high-speed server computers in Microsoft's main computer room. ATMs total 25, and First Tech also has four video kiosks and two unstaffed electronic branches.

Mr. Sargent said he does not go in for every technology that comes along. He turned away from screen phones, for example, when he decided that the $500 cost of devices developed by Pacific Telesis was not low enough to effectively displace $1,500 computers.

Mr. Sargent gives his chairman, Ms. Strong, credit for introducing him to the World Wide Web.

"Our joint reaction was that this was a desktop-independent way of getting people transaction information," recalled Ms. Strong, who works in electronic publishing at Tektronix. "That fundamentally changed banking from something you go to a building to do, to being something much more ubiquitous and independent of where you physically are."

The credit union quickly built an Internet site for members and an intranet for tellers.

"From our paying jobs, some of us on the board know that it ain't pretty to be in the software development and support business," Ms. Strong said. "The whole world can change overnight, and you can be in a real rough spot" when a competitor comes along with a better software product that undercuts existing methods of distribution.

First Tech supports multiple access options but is hoping to get more of its members on the Web with a soon-to-be offered Internet-based e-mail account.

"To the extent that a credit union can be a supermarket for financial services, (First Tech) is 7-Eleven," said Ted Spooner, First Tech's former chief financial officer who is chief executive officer of Corillian Corp., a Beaverton home banking software company.

Mr. Sargent's failure to complete the credit union "megamerger" four years ago still stings, but the convictions behind it live on.

"We could have proven that it was good for the credit union industry," he said. "The banking world is showing us that you need those types of efficiencies."

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