In a combined operation, Brandsma said the two CUs could retain enough heft to compete more vigorously against larger CUs across the state, including the $9.1 billion BECU of Seattle, which serves Boeing Co. employees. Both Sound and Watermark, which began a merger dialogue five months ago, had been on separate expansion trajectories across the north and south ends of Puget Sound, noted Brandsma.

"We explored all strategic alternatives and a partnership with Sound Credit Union presented a great opportunity," said Bob Valentine, chairman of Watermark.

The merger would "allow the ongoing organization to better serve member/owners with full-service branches from Lynnwood to Olympia."

Watermark, based in Seattle, had sought to expand in the south Puget Sound region while Sound had planned member growth to the north, said Brandsma, citing the potential for new expansion in both Pierce and King counties. Future branches are planned in those areas, he said.

Given the current economic environment, mid-sized CUs like Sound and Watermark have pursued a merger to remain competitive and perhaps this could be a pattern in the future for other like-minded CUs in metro areas, Brandsma suggested.

Nonetheless, mergers "are much harder to put together with many more internal hurdles," observed Brandsma. For one thing, managers have "to get past the pride factor" since many boards disfavor giving up their brand and identity.

In the case of Sound and Watermark, the timing was right and the outlook looks bright, he concluded.

According to industry sources, Watermark, which itself has gone through several name changes, remains an attractive entity because of its real estate holdings, including its headquarters building in Seattle.

Despite the closeness in size, the CUs retain differing staff levels. Sound has 115 employees and Watermark has 170.

There are no current plans to reduce staff, "though we expect to see changes through attrition," said Brandsma.