The $3.1 billion Kinecta Federal Credit Union and the $1.1billion NuVision CU have called off what would have been thenation's second-largest merger of credit unions.

In a statement Thursday, the two blamed the lengthy, future timeframe and its disruption of the business cycle as the reason forcalling off the merger first announced two years ago and oncedescribed as a model for future consolidation of large CUsparticularly on the West Coast.

The statement said Roger Ballard will continue as joint CEO ofboth California credit unions while Kinecta conducts a CEO searchand puts a transition plan in place.

“As two independently strong, well-capitalized credit unions,both boards agreed at the outset that they would move forward withthe merger only if it offered substantial benefits with minimaldisruption to members and each organization's business strategiesand operations,” the statement said.

“As both credit unions have continued to assess the length oftime required for merger review, approval and integration, they now estimate anadditional two-year timeframe given the economic environment. Bothcredit unions have come to the conclusion that continuing themerger process for this amount of time would be disruptive to theirbusiness and members,” it said.

The statement cited the demands on resources and staff inmerging two large, diverse institutions.

Last month Kinecta said it was postponing the date for startingfinal regulatory and membership approval until mid-2013 after itposted a $30.6 million loss for 2011. Kinecta, located inManhattan Beach, was hit particularly hard by California's mortgage meltdown in2007-2009.

The statement Thursday quoted Darryl Johnson, Kinecta chairman,as stating, “We still believe there are great synergies between ourcredit unions, and look forward to exploring strategicopportunities that benefit our members. We have tremendous respectfor the NuVision organization, and know they have a great futureahead.

“The Kinecta board has begun a search for a new CEO, and we areconfident we will have a smooth and seamless transition. We alsowant to express our appreciation to Roger, who has done anoutstanding job as Kinecta's CEO and played a key role in workingwith our leadership team to build capabilities that will drive ourbusiness for a successful 2012.”

The original announcement of the merger was made in June 2010 andfollowed on the heels of another mega merger now complete of the$4.9 billion First Tech FCU and Addison Avenue, now operating asFirst Tech FCU out of Portland, Ore.