“The number of credit union mergers each year is slowing because the number of credit unions is dropping with those same mergers,” Dennis Dollar, principal of Dollar Associates, explained. “The percentage of credit unions merging is actually higher today than it was 10 years ago. The number of mergers has averaged one per business day since 2000. I don't see that slowing down between now and 2020. In fact, I see it increasing with the pressure for building more capital, the growing demands of members, the increasingly burdensome regulatory landscape and the need for economies of scale.”

Based on NCUA data, Dollar estimated there will be about 4,000 credit unions operating in about five years.

He also noted that his Birmingham, Ala.-based firm is now working on 15 different mergers and about 60% of the firm's phone calls are from credit unions requesting assistance with planned consolidations.

Nevertheless, perhaps what may be dragging the pace of consolidation, albeit temporarily, is simple human pride.

A president/CEO of a $900 million credit union in the Midwest was anonymously quoted in a Filene research report about the future of the industry; in the report, he stated most small credit unions are too proud to merge.

“They see merger as a failure rather than a benefit to members,” the CEO observed. “So they will only merge at the inflection point of a CEO retirement or financial stress.”

But that wasn't the case for three small military credit unions that recently decided to merge with PenFed.

In November, the $42 million Corps of Engineers Federal Credit Union in Fort Worth, Texas agreed to merge with PenFed. Ricardo Chamorro, senior vice president of mergers and acquisitions at PenFed, said North Texas is a key market and that the merger gives the credit union a greater foothold in the Fort Worth area.

On Dec. 2, the $92 million AAFES Federal Credit Union in Dallas announced it is consolidating with PenFed, which gives the credit union 6,500 new members as well as a new field of membership that includes 35,000 employees of the Army and Air Force Exchange Service. Those employees work at 2,440 facilities in more than 33 nations, U.S. territories and in every state.

Also on Dec. 2, NAVFAC Federal Credit Union in Honolulu said it is consolidating with PenFed, which expands the cooperative's field of membership to 19,000 Naval Facilities Engineering Command employees and 14,000 NAVY Exchange Retail Stores and Services employees worldwide.

Although these small military cooperatives had varying degrees of challenges with loan or membership growth, they all posted strong net worth numbers: AAFES 13.09%, Corp of Engineers 11.17% and NAVFAC 11.38% as of September 2015, according to NCUA financial performance reports.

Among the 66 mergers approved by the NCUA by the end of the third quarter, however, 10 cooperatives were forced to consolidate because of their poor financial condition. Three credit unions merged because of declining membership, two credit unions lost their sponsorship and two were unable to find a new CEO.

According to the NCUA, the credit unions that had to merge because of poor financial condition were the $1.3 million Kolmar New York Employees Federal Credit Union in Port Jervis, N.Y.; the $4.6 million Healthcare United Federal Credit Union in Baltimore, Md.; the $2.4 million N.E.A.R.M.C. Employees Federal Credit Union in Anniston, Ala.; the $1.2 million Quemado Federal Credit Union in Quemado, Texas; the $9 million Tri-Point Federal Credit Union in Pittsburgh, Pa.; the $42.9 million Kent Credit Union in Kent, Ohio; the $355,315 Consolidated Public Safety Credit Union in Macon, Ga.; the $3.2 million Parkridge Credit Union in Chattanooga, Tenn.; the $704,403 Compton Municipal Employees Federal Credit Union in Compton, Calif. and the $3.4 million Northwest Baptist Federal Credit Union in Seattle.

During the third quarter, there were three NCUA-approved mergers that involved larger cooperatives.

The $100 million United Health Services Credit Union in Spokane, Wash. merged into the $709 million Horizon Credit Union in Spokane Valley. In Wisconsin, the $120 million Community Credit Union in La Crosse consolidated with the $727 million Verve Credit Union in Oshkosh.

The largest merger of the third quarter occurred in Illinois, where the $182 million Premier Credit Union in Palatine merged into the $678 million Consumers Cooperative Credit Union in Gurnee.

The consolidation will increase Consumers' assets to more than $860 million and expand its branch network to nine, spanning from northern Cook County to the Wisconsin border in Lake County. The credit union will also become one of the largest credit unions in the state.

In the coming years, Dollar said he expects larger credit unions to merge for strategic reasons.

“Whereas credit union mergers have traditionally been smaller credit unions into larger ones and this trend will certainly not go away,” he said. “I think we will begin to see more and more strategic mergers between larger credit unions with each other – not because either are in trouble or having a difficult time competing, but because they feel they can compete better together with the economies of scale they would bring as a combined entity.”

Fifteen of the 66 mergers in the third quarter occurred in Midwestern states: Five in Ohio and four each in Wisconsin, Illinois and Iowa. Other states such as Washington, Massachusetts, Georgia, Pennsylvania and California each had four approved mergers, according to the NCUA. The small state of Hawaii, which has approximately 60 credit unions, posted three credit union consolidations at the end of the third quarter.

Among the 19 mergers approved by the NCUA in October, only one, the $349,965 Triumph Baptist Credit Union in Philadelphia, was forced to consolidate because of its poor financial condition. Triumph Baptist was approved to merge with the $330 million South Jersey Federal Credit Union in Deptford, N.J.

Poor management was cited as the reason for the $39.1 million St. Joseph's Credit Union in San Antonio to merge with the $980 million FirstMark Credit Union, also based in San Antonio.

With declining loan and fee income since 2010, St. Joseph's posted more than $1 million in net income losses from 2010 to Sept. 30, 2015, according to NCUA financial performance reports.