Officials said both CUs maintain a similar base of government employees with some member overlap.

However, Milestone management said that after a strategic conference in October of its management, directors and staff it was clear that most believed the only means for the CU to survive in the future was to merge with a larger partner. "When you look at what has happened in the last five years with Netbank, the Charles Schwabs, Bank of America and the challenges to small credit unions everywhere, you simply have to be realistic about your future," said Steve Silva, vice president of marketing and business development at Milestone.

More than a year ago, said Silva, Milestone, which is now SEG-based, had looked at grouping together like-minded, smaller CUs in Massachusetts in a merger. That came after a 2004 merger with AGFA CU, a smaller Massachusetts CU. However, management soon realized that a CU in the $500 million asset range would be more feasible. "We had only had four employees at our McLean branch," so the lack of a presence in Virginia ruled out scouting for a merger partner in that state, said Silva

Once the CEOs of Milestone and Hanscom began talking, they realized the mutual benefits of a merger to members.

One such advantage, said Hanscom, is in allowing its members to apply for mortgage or home equity loans in all 50 states, where previously they were limited to New England properties.

Also, said Hanscom, the merger allows broader access to the network of 65,000 surcharge-free ATMs. "Our members will have better access than customers at many of the large national banks," said Marotta, the Hanscom chairman. [email protected]