PORTLAND, Ore. and EUGENE, Ore. – The merger process of Portland Teachers CU and Oregon Community CU seemed to be going along fine, but appearances can be deceiving. Late in 2003 the two credit unions announced that their boards agreed to explore the possibility of a merger. At the time PTCU was $1.6 billion and Oregon Community $700 million, creating a potentially $2.3 billion CU, making it the largest CU merger ever. Very early in 2004, the boards agreed on the merger. The deal was given regulatory approval by NCUA, the state regulator and the FTC, but in June things fell apart. Though the rumor mill has been buzzing ever since about why the deal collapsed, the two CUs claim they could not reach agreement on which CU's system or products to use in key areas. Things like which CU's DP system should survive, or whose bylaws would be implemented began to bog down the process. The two also learned they had more philosophical differences than originally known. For example, PTCU relies a lot on indirect lending, whereas Oregon Community is more centralized. Oregon Community utilizes risk-based lending, PTCU doesn't. The initial reasons for the merger were clear. Portland Teachers wanted more economies of scale to compete with the very large banks in the Portland market. Oregon Community said it wanted PTCU's branch presence in Portland to reach what it estimated were 40,000 potential members in the Portland area. Oregon Community is the former U-Lane-O CU and it says it loses a lot of its University of Oregon graduates who take jobs in Portland. The theme of the merger all along was a "merger of equals", but they later admitted that may not have been the best approach. "In most mergers you have one institution that is doing the acquiring and can make the call on things one way or the other. In this (merger of equals) approach, it takes a lot more time and discussion to decide basic things," said Dias. Oregon Community CU CEO Gordon Hoerauf said, "I'm sorry to see it not gel, but these things happen." A new twist on this story emerged at press time. Portland Teachers announced that it is planning to open a loan servicing office in Eugene to serve members and potential members in Eugene and Richardson, which is prime FOM territory for Oregon Community. Portland Teachers said it is responding to demand and the office will be to offer indirect lending via Credit Union Direct Lending. Hoerauf said he's not concerned about the new office because it's another option for members, and choice is always good. [email protected]