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PORTLAND, Ore. – The last few years has been a very interesting time at Oregon’s largest credit union – and the twists just keep coming. The $2 billion Portland Teachers CU has done something that has been talked about for years at that credit union, mostly behind closed doors- it is giving up the venerable teacher’s name. It will now be known as OnPoint Community Credit Union. OnPoint Community CU CEO Cliff Dias said this was the most difficult issue the board has faced for many reasons. The first being the Portland Teachers name has so much brand equity – it’s a known entity in the Portland market which is fiercely competitive. Six of the nation’s largest banks have a major presence in the area. Adding to the difficulty is the fear of alienating teachers, who the credit union was established for. But today only 20% of the CU’s 165,000 members are teachers. The CU has spent millions of dollars over the years for marketing campaigns to explain that you don’t have to be a teacher to join. The name also had geographical limitations with potential members, said Dias. He said he’s heard countless times that potential members thought they had to either live in Portland or work for the school district – that wasn’t true then, and is even less true now. As part of its image transformation, OnPoint Community CU has also been approved for a new expanded community charter. As of Jan. 1, it will now be able to serve Oregonians in the following 10 counties: Benton, Clackamas, Columbia, Lane, Linn, Marion, Multnomah, Polk, Washington and Yamhill. It gives the CU a potential membership of 2.2 million people, not bad in a state that only numbers roughly 4 million. “I think we’re all struggling for members. What I’ve come to learn of single sponsors is you have to grow. If you’re not growing, you’re dying. At one time there were over 25,000 credit unions – one third of our financial marketplace has disappeared,” said Dias. He noted it took the CU 65 years to get to $1 billion, and only eight years to get the next billion. He believes a name that will appeal to existing and new members is critical for OnPoint to continue growing. It’s an interesting expansion because now OnPoint can serve exactly the same people Oregon Community CU can serve as it also has that 10-county region in its FOM. Of course Oregon Community and then Portland Teachers were on their way to merging last year, in what would have been the largest natural person merger ever. The deal eventually fell through. The two CUs were talking about FOM overlap back then, and now it’s even more pronounced. Dias said the overlap is another reason he hopes the boards of both CUs reexamine merging at some point in the future, which may be when he’s gone. Dias recently announced that he is retiring next May at the age of 57. Gordon Hoerauf, CEO of Oregon Community, says OnPoint becomes just another competing CU for Oregon Community. He noted that Oregon Community already has FOM overlap with other CUs such as Unitus Community, Northwest Community and Selco Community. “It’s getting more competitive, more credit unions have felt the need to expand. We also have two or three start-up banks in the area,” said Hoerauf. OnPoint plans to use every possible marketing avenue to get the new name out there, whether it’s billboards, buses or direct mail. “We’ve been Portland Teachers since 1932. I’m telling you people love this credit union, there is a great deal of equity in our name so we’re going to be very careful in how we transition the name,” said Dias. He said he’s been trying to build up the CU’s war chest (member equity) to prepare for this new push. The CU is closing in on $200 million in member equity. The CU had to present a detailed business plan to the state regulator to get approval for the community charter. Dias did not want to reveal the CU’s plan at this time, but new branches are certainly in the cards. “We’ve already done that to a degree in Eugene. We opened up a loan servicing office there a couple months ago and we did almost $5 million in loan originations in Eugene for car loans through CUDL.” Interestingly, Dias said the CU’s charter expansion application was also looked over by the Department of Justice, which according to him is unprecedented at least in Oregon. He’s not sure why the additional scrutiny was done, but the fact that DOJ signed off on it further shows the CU has a solid plan to serve its new area, he said. Dias speculated that the regulator may have wanted DOJ to also view the charter application to help it fend off any criticism from bankers. According to Ed Simkins, finance section manager for the Oregon state regulator, the review by the DOJ was more of an internal issue, and the community charter case in Utah also played a role. “We just wanted them to look at the statute and rule as that applies to community credit unions and see whether or not we had sufficient information to make a reasonable conclusion,” said Simkins. “Some of this probably stems from the Utah case last year; we’re trying to make sure we’re in compliance with what the statute says.” It is the first time the regulator has done this. Community charters have only been allowed in Oregon since 1999. There are 11 in the state. Up until now and including OnPoint, the community charters were required to have “community” in their name. That rule was just changed, and Simkins said the CUs could ask for an amendment to take “community” out if they so chose. Dias, a former banker, believes that banks are most fired up about credit union field of membership expansion. “It’s not the size of the credit unions that is really annoying the bankers, that is absolutely not true. I have a lot of friends in the banking industry and they could care less about the size. It’s when they see the common bond go away and FOMs get larger, that’s what they care about,” said Dias. Speaking of banks, Dias believes credit unions are very appealing to those forces trying to convert them to banks because of all the equity CUs have built up as well as the low cost of funds CUs have compared to banks. “If you start stripping away the balance sheet, there are a lot of low cost funds. A lot of people have money in savings accounts. Banks on the other hand have more money in CDs and higher cost accounts,” said Dias. As for the new name, Dias said it was a frustrating process because not only do you have to worry about taking a name that already exists, you also can get in trouble if you choose a name that is or very close to a company’s product name. “We looked at like 500 names. A number of different names we liked, the lawyers threw them out,” said Dias. The CU held focus groups, both of members and non-members, and of all age groups. He said the research shows the new name conveys up an image of an institution that is positive, upbeat, savvy, knowledgeable, unlimited, distinctive, responsive and fast. Dias said teachers as a group consider themselves knowledgeable and distinctive so the CU feels the new name honors its past. “We didn’t want to be restricted geographically. We wanted a name that would point toward the future, but really it was important for us not to abandon our teachers.” OnPoint used two firms to help research names – Database Marketing Agency and Weber Marketing. The next step is to develop a new logo. [email protected]

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