SNL said it drew its conclusions after interviews with “industry observers” and executives who said they would like to merge but can't find a partner.

The report blames credit unions' not-for-profit status and lack of investors for the alleged inefficient stance towards merging, arguing that mergers happen in for-profit banks and thrifts because investors in those institutions push boards of directors to maximize institutional value for them.

“Average, weak and marginal credit unions continue to exist because their boards are not held accountable and are uninterested in pursuing opportunities that may offer members access to more services or better rates,” the consultancy reported as some of the observations of Peter Duffy, managing director at investment banking firm Sandler O'Neill.

Sandler O'Neill led the industry in the number of financial mergers and acquisitions (51) that it facilitated or otherwise consulted on in 2012, according to the firm's website. The firm also assists in the conversions of credit unions to mutual thrifts and mutual thrifts to stock-issuing banks.

The report quoted Henry Wirz, CEO of the 165,000-member, $1.9 billion SAFE Credit Union in North Highlands, Calif., as an example of a credit union executive that would like to see his credit union merge with another but who has been unable to find a partner.

SNL reported that Wirz would like to SAFE become a $3-5 billion credit union but has been unable to find a partner to do so.

“The hurdle is to find the right kind of incentives for management and the board, and those are hard to come by because the people that control the credit union have to be willing to give up some control,” the consultancy quoted him as saying, adding, “What we have today is an irrational merger and consolidation process in credit unions. It's bad for the whole system the way we're doing it.”

The report also reported the views of Charles McQueen, president of McQueen Financial Advisors, discussing the phenomenon of federal credit unions merging with state-chartered credit unions and then taking the state charter.

“State charters generally have the potential for a more expansive field of membership, causing some federal credit unions to merge and then replace its federal charter with the state charter to grow their membership base, even if the federal institution was larger before the merger,” SNL reported.