PORTLAND, Ore. – It's more than just talk now. The $1.6 billion Portland Teachers CU and the $700 million Oregon Community CU have decided to go forward with a merger. The boards of the two CUs announced last year that they were going to explore the possibility, but they cautioned that nothing was definite. If it happens it will result in a $2.3 billion credit union and the largest merger ever between natural person credit unions, topping the $970 million merger of TRW Systems FCU and Western FCU. It will employ 500 people and serve some 234,000 members. It will result in a financially stable CU with more than $184 million in reserves. The credit unions have shed a little more light on what the surviving credit union will look like. It will be called Oregon Community Credit Union and retain Oregon Community CU's community charter. Portland Teachers CU President/CEO Cliff Dias said the PTCU name has a sterling reputation, but it has its limits. "One of our challenges candidly is we're having to explain our name because of teachers in it and Portland. People not from Portland and not teachers say, `I didn't know I could join' or `I thought I had to be a teacher to join,' " Dias said. " Our biggest challenge will be getting people to let go if you will of the Portland Teachers name. It's a great name and it's been around since 1932. It was a tough decision," said Dias, who pointed out that right now only about 20% of the CU's 155,000 members are teachers. Any problems from the PTCU name go away with the name Oregon Community CU and Dias said it will be more appropriate given that the merged CU will assume Oregon Community CU's charter which covers 1.9 million potential members in 10 Oregon counties. To illustrate how encompassing that is, the entire state of Oregon has 2.4 million people. The two credit unions already have field of membership overlap in five counties, but because Oregon Community's charter is so new the CU's don't think actual overlap of members is significant. Oregon Community CU serves the 10 Western Oregon counties of Benton, Clackamas, Columbia, Lane, Linn, Marion, Multnomah, Polk, Washington, and Yamhill. Portland Teachers doesn't have a community charter but it serves employees of schools and nonprofit educational organizations and their families in Clackamas, Columbia, Multnomah, Washington and Yamhill – all which are in Oregon Community CUs' FOM. Dias, 55, the initiator of the merger discussions, will become the CEO of the surviving credit union, and Oregon Community CU President CEO Gordon Hoerauf, 58, will assume the EVP/COO role. Dias did note that one of the first priorities of the board once the merger is complete will be CEO succession planning. Hoerauf said he can handle not being captain of the ship. "I'm willing to step back to the No. 2 position for the tremendous benefit to the credit union and the members. I've been doing this for 32 years and hopefully I haven't done anything that wasn't in the best interest of the members," said Hoerauf. So Why Merge? Both CUs are growing and have solid capital so why make this deal? "Cost efficiencies and the fact that if you can combine two financially safe and sound credit unions, have a pooling of resources, reduce your expenses, and pass the cost savings on to members, why wouldn't you?" said Dias. "We were interested in somebody that was financially strong like we are and provided good services. It was just a good fit and we consider them to be a tough competitor. They are doing a lot of loans in Portland. So rather than compete and cross swords why not join forces with them," said Dias. He also noted that both CUs have educational roots. One of Oregon Community CU's core groups is the University of Oregon. From Hoerauf's point of view, Portland Teachers gives Oregon Community something overnight that it would take years to accomplish on its own – a branch network in Portland. "I know studies have said in the past that brick and mortar is going away, but that's not proving true. It would take us up to 18 years to get the branching network (10 branches) in Portland that Portland Teachers already has," said Hoerauf. Hoerauf believes despite remote delivery capabilities, consumers want branch access to commit completely to a financial institution. He said the CU has done studies that show about 45,000 University of Oregon alumni who are eligible for membership in Oregon Community CU live in the Portland area, and despite some intense direct mail campaigns, the CU has been unsuccessful in penetrating this group, many who are middle to high income. "We've tried shared branching, Co-Op ATMs – all of those remote delivery devices. We became a member of CUDL and we were getting car loans, but couldn't get other services. They want to see branches in Portland," he said. Oregon Community CU was originally known as Lane County Credit Union. It later changed its name to U-Lane-O to reflect the importance of the University in its FOM. It moved to a community charter and its new name just last year because its penetration levels were so high with its previous FOM, said Hoerauf. For example, it has 45% the people in Lane County as members. Hoerauf said the CU used advertising, member communications, and outside PR help to get across its new name in the community. Dias said the merged CU would do the same once the Portland Teachers name is gone. "We work with Weber Marketing out of Seattle. We're in the process of working with them to put together a plan that includes radio, TV, buses, billboards and everything it will take to get the new name out there," said Dias. The merged CU will have 17 full-service branches and 63 surcharge-free ATMs. Its headquarters will be at Portland Teachers CU current headquarters in Portland, with Oregon Community CU's headquarters in Eugene staying put as an administrative office. No layoffs are expected, though some employees' jobs will change. Both Dias and Hoerauf said the toughest challenge to pulling this merger off will not be operations or the financials, but the people. "My personal belief is it's always the culture, the people issues. Everybody is used to one way of doing things. Systems issues, payroll and all that other stuff will be pretty much transparent," said Dias. On the tech side, the data processing systems will have to be merged. Portland Teachers uses XP Systems, while Oregon Community CU uses ULTRADATA. Dias said the merged CU will go with XP Systems. Probably the biggest date in the merger timeline is June 1. That is the date Portland Teachers CU will hold a special meeting for members to vote on the deal. A majority of those PTCU members voting must approve the merger. Dias thinks members will sanction the merger. Oregon Community CU members will not have to vote since it has the surviving charter. Interestingly, both CUs had their annual meetings on March 18 and said reaction to the merger has been good. "Everyone is very positive. People can see the reasons, they can see the long term value for them," said Dias. If all goes as planned the merger will be finalized on Nov. 1. The credit unions have hired D.Hilton and Associates to help with the merger process. [email protected]