<p>ALEXANDRIA, Va. And HIGHLAND FALLS, N.Y. – The third time was the charm for the $4.4 billion Pentagon FCU and the $51 million West Point FCU. The two credit unions will merge effective April 1. According to leaders of both credit unions, they have explored a merger at least twice before, but could never come to an agreement. What's changed? "I think our story has gotten better. We were able to present to the West Point board a choice that made sense for its membership in terms of greater product and service breadth of offerings," said Pentagon FCU President/CEO Frank Pollack. West Point FCU has been serving West Point cadets for over 45 years. Its assets have grown very little over the last decade, and West Point FCU Chairman Seth Hudgins said the CU needed some economies of scale to compete with local financials. "In about their junior year these youngsters take out car loans to buy their first automobile. There is a lot of competition with some of the larger local financials. The kids take their car loans with them, and sometimes all their accounts switch over. We can't retain those accounts as they get into money making, higher salary situations," said Hudgins. Being the FCU for West Point has some obvious advantages. One being that each year it gets a new class of 1,000 cadet freshman, and their families, to sign on as members. But as many university CUs know, this doesn't equate to big deposits. "Unfortunately our FOM, albeit a very elite one, has members whose amount of funds is about nil. We started looking around at the possibility of a community charter or joining forces with a credit union locally. We ended up being in conversation with Pentagon," said Hudgins. Hudgins said that West Point FCU gives Pentagon FCU its first commissioning source, that is the ability to get commissioned officers once they enter the Army. "Pentagon has no other source for that commissioning, so that was important to them," said Hudgins. "This is our chance to interact and hopefully attract the future leaders of the Army," said Pollack. "We're trying to be a military credit union. This really does fit us." Pollack said one immediate benefit West Point FCU members will get is expanded Internet capabilities. The Internet has become a key channel for Pentagon FCU. Currently, Pentagon FCU members do more on the Net with the CU than they do in branches or over the phone. "We obviously have branches all over the world, but our story is you can pick up the phone and go on the Net to do almost anything. We open about 25% of all new accounts over the Internet. No matter where these cadets ask to go, we can be there with them." One interesting thing to watch with this merger is the branding. Pollack said Pentagon FCU definitely wants to establish its brand at West Point, however it is also cognizant of the prestige of the West Point name. Some type of dual branding may occur, but Pollack said none of that had been determined. "The board asked us to be sensitive of the brand. Clearly we want the Pentagon brand there, but because of the nature of the cadets of West Point, we want to keep that uniqueness. We're going to try and do a little bit of both," said Pollack. For Pentagon FCU, this is the third merger in the last 18 months. It acquired the $5 million Fort Myer FCU, Arlington, Va. and the $12 million Bolling FCU, Washington. Pentagon FCU has quickly increased business at these branches. Today the Fort Myer FCU represents $48 million of Pentagon FCU's assets, and Bolling CU represents $37 million, both up dramatically from time of the merger. CUES President/CFO Fred Johnson, a graduate of West Point, former faculty member and former member of West Point FCU's board, said West Point FCU always had the potential to grow. "There's a terrific influx of members. It's not just the 1,200 or so new cadets. A third of the faculty turns over every years, and it also serves the Association of Graduates," said Johnson. "What they now have with Pentagon FCU is really going to help with the economies of scale." Johnson said when he was on the board in the early `80s, there was talk of merging with Pentagon FCU, but it failed for reasons he could not recall. [email protected]</p>