"I think there is a shift in NCUA philosophy from a couple of years ago which has helped force  a drying up of the merger market," said Burniske citing a change in the agency's past practice of frequently inviting credit unions of his size to bid on potential merger candidates ready for conservatorship.

That era seems to have passed, said Burniske, noting the NCUA's record of taking on numerous conservatorships and running credit unions using hired talent. The spate of conservatorships was highlighted in March by NCUA's seizure of the $318 million Telesis Community Credit Union of Chatsworth, Calif., which merged in June into the $1.3 billion Premier America Credit Union in a purchase/assumption transaction.

Chartway FCU is known for merging ailing credit unions, in particular, picking up weak sand state entities. Burniske maintains that mergers can prove highly beneficial in providing economies of scale to those credit unions unable to significantly grow. Yet, there are some boards that continue to give a blind's eye to merger prospects out of pride, intransigence, distrust or fear, some experts have noticed.

Tom Glatt Jr. head of a Wilmington, N.C.-based credit union consultation firm, maintains that too many of the well-capitalized credit unions are slowly shrinking through negative net member growth and some of these, while financially sound, will find their good member relationships ending at some future point.

"The credit unions that are reaping the benefits of Bank Transfer Day activities and the like, need capital to feed that growth," argued Glatt adding, however, "that unless some well-capitalized though shrinking credit unions begin to merge so that their capital can be put to better use, I fear the pace of new member growth will slow and this new national enlightenment with regard to the existence of the credit union community will fade away."

Ted Thames, senior director of Cornerstone Advisors, a financial industry research firm in Scottsdale, Ariz., suggested that opportunities remain for small credit unions but that viability is based on what kind of member value is created.

"Organizations that provide value to members cannot be considered as market clutter," Thames said. "However, a full 36% of all credit unions today are under $10 million assets but hold only 1% of total industry assets. That's a lot of time and effort for not much market value created."

Volunteer leaders of these credit unions should seriously consider whether their members would not do better if they were part of a larger organization that does create value, Thames said.  "Sitting on a big capital base while providing minimal value for members is the model that should be rejected," Thames pointed out.

Any kind of regulatory or supervisory cleansing of troubled credit unions through mergers is neither needed nor appropriate, said Dennis Dollar, the former NCUA chairman who heads up a consultation firm in Birmingham, Ala.

"Nor do I believe that has ever been the intent of NCUA," Dollar said. "Many previously troubled credit unions have come through their problems and are today strong institutions benefitting their members tremendously. That is always the best outcome, if it can happen and many times it can."

While there is a great deal of merger activity taking place and NCUA is working with credit unions to make a number of mergers happen, Dollar has another view of what the future holds.

"I don't think there is a matrix on the wall in Alexandria that specifies how many credit unions they plan to knock off in the next few years," Dollar said.

Sterling Nielsen, president/CEO of the $3.1 billion Mountain America Federal Credit Union in Salt Lake City, said the industry is hardly alone in sharing the challenges faced by smaller units. "The banking industry faces very similar problems," Nielsen said on consolidation and serving bank customers.