The consolidation trend continues as more and more credit unions, small and large, healthy and troubled, consider merger as a legitimate strategic response to increasing competition for market share.

There was a time when the idea of one credit union openly encroaching upon the field of membership of another credit union was considered if not unthinkable, unacceptable and contrary to the spirit of credit unionism. Those were the days when credit unions, collectively, were referred to as a "movement" and when government, state or federal, would step in whenever it appeared that one credit union's expansion plan would adversely affect the financial welfare of another credit union. In those days, a traditional, single bond federal charter worried only about providing good service and a sufficient array of products to keep their members from turning to banks. That was worry enough. The concerns over those issues, coupled with effective lobbying, eventually resulted in the ability of credit unions to compete more effectively with local banks by offering their members many of the same products and services offered by banks, but at better rates and in a more personalized atmosphere. In those days, credit unions had little to fear from each other.

Today, particularly small or single bond federal credit unions have a great deal to fear from each other. NCUA's former protectionist policies have largely evaporated. In lieu of extending protection to credit unions complaining of encroachment, NCUA today advises affected credit unions to respond by competing more effectively. But the more cumbersome federal expansion rules (partly the result of the political pressures created by the lawsuits and lobbying campaigns brought by bank trade associations against NCUA) made that difficult. As a result, over the last several years, a number of large federal charters determined that their growth strategies would be better served by converting to more flexible state charters. This "trend" further fueled the competitive pressures on smaller credit unions, especially in states like Florida, because state credit union laws permitted large credit unions with memberships based on geographic boundaries to compete head to head with all of the credit unions located within those areas. And what was once viewed as "predatory encroachment" became ordinary competition. The intensified pressure on smaller and midsized credit unions necessarily began to impact growth, profit and capital, and as those effects increased, the concept of merging, as a means of perpetuating credit union service to members, became a more commonly considered-and more frequently elected-strategic alternative.