The courtship and close ties between two mid-size Marylandcredit unions, Educational Systems FCU and the ailing MontgomeryCounty Teachers FCU, have been ongoing for years but “really in thelast week they accepted our proposal” for a merger, according toEducational Systems' president/CEO Chris Conway.

“We realize that Montgomery County suffered that capital hit afew years ago and has made progress coming back but we also knowthis is really a perfect match – the same educational membership,next-door neighbors and we operate on the same wave length,” Conwaysaid of his $367 million institution.

He said the parties quickly came together in signing a letter of intent after an original proposal submitted severalmonths ago went unanswered from the Montgomery management andboard.

“I think we received a courtesy letter from them politelyrecognizing our offer but that was it,” recalled Conway.

It was well known, sources said, that the $384 million MCT foryears had been under the watchful eye of NCUA examiners after itsuffered large losses in its secondary mortgage portfolio, thoughit was unclear how much merger shopping may have been done. MCT lost $739,000 last year on top of a $6 million loss in 2010 andhas a net worth ratio of 4.4%.

Rockville-based MCT had taken on a large portfolio of HELOCs,secondary mortgages and unsecured loans, experiencing large losseswhen the Maryland economy and real estate took a nose dive severalyears ago.

Conway stressed that Educational Systems will be doing its duediligence but anticipates no problems on a merger which might takea year to complete once member and regulatory approval isreceived.

“Let me add this is not a deal brokered by NCUA,” saidConway.

“I've worked on many things with Thom and I know theirstaff and some of their board,” said Conway, who was a lendingofficer and then vice president of finance at MCT when he left theCU to join Educational Systems as chief operating officer in1998.

Thom Beck, president/CEO of MCT, will become a vice presidentunder the merged credit union, Conway said.

In citing the partnership ties, Conway noted that he and Beckare both directors of an indirect CUSO, Credit Union Auto LoanNetwork, based in Linthicum and with 15 credit unionowner/participants.

In another example of close ties, the credit unions are locatedwithin 25 miles of each other in neighboring counties. EducationalSystems is headquartered in Greenbelt in Prince George's County andhas field of membership that includes four other Maryland counties:Charles, St. Mary's, Calvert and Talbot.

On another topic, Conway told a Credit Union Timesinterviewer that he remains a strong credit union advocate, adding“I'm still scratching my head” on the Maryland-based $183 millionHAR-CO Maryland FCU's impending move to become a mutual bank. The Bel Air credit union, located northof Baltimore, has said it had hoped to become a bank by April 1,though a spokeswoman said Friday “we're just waiting.”

Concluded Conway, “that is their prerogative but I see growth asa credit union. We have a better story to tell.”