Glenn Christensen, president of the CEO Advisory Group in Kent, Wash., a merger and acquisition consulting firm, reported his credit union clients that underwent consolidations in 2017 fielded more questions and received more requests from NCUA staff for documents involving executive compensation and in other areas.

"I think there's a little bit more urgency from some credit unions to move on the mergers before the rules are put into place. I think a lot of credit unions, too, are feeling that the NCUA has already started to implement some of the changes that were talked about," he said. "They're definitely requiring a lot more documentation already from credit unions in the whole merger process," he said. "I don't have all the details but at least they're asking for a lot more salary history from the executive team."

Curt Long, NAFCU's chief economist and vice president of research, also indicated the NCUA is stepping up its merger review processes.

"We have heard from our members that the procedural hurdles to getting a merger approved by the NCUA have increased," Long said. "The challenges to operating a small credit union remain high, and unfortunately we expect to see more consolidation for the industry in 2018."

Last May, Board Chairman J. Mark McWatters and board member Rick Metsger introduced proposed regulations that they said would provide more disclosures, more communication and more information that can help members make an informed decision on whether to support their credit union consolidation. Critics of the current merger process argue mergers are always painted as a win-win deal, but that may lead members to support a merger without having sufficient information to judge for themselves.

A top issue that apparently drove board members to introduce these proposed changes was compensation for executives and others of the merged credit union. The NCUA has proposed a new rule that would require the merging federal credit union to disclose to its members all merger-related financial arrangements in whatever form they may take that are paid to its CEO, the next four highest employees, the board of directors and members of the supervisory committee.

According to an analysis by NCUA staff, an estimated 75% to 80% of credit union consolidation agreements contained significant merger-related compensation for top executives. But the NCUA staff indicated that this information was usually not disclosed to members before they voted on merging their credit union. The federal agency staff said it reviewed "many merger packets over several months."

But the NCUA did not publicly release this analysis report that would have allowed executives to review the information, and the federal agency declined to provide a copy of the analysis when requested by CU Times.

Apparently, however, many credit union executives who submitted comments to the NCUA were not convinced that the lack of compensation disclosure was a major problem in merger deals.

Roger Ballard, president/CEO of the $1.5 billion Nuvision Credit Union in Huntington Beach, Calif., for example, wrote that the proposed rule is seeking to address rare exceptions that can be adequately addressed within the existing regulatory framework.

Professionals who serve the credit union industry and credit union executives are worried the new merger rules as proposed by the NCUA board could delay or prolong mergers or perhaps even discourage some consolidations, which could ultimately harm the movement.

But some industry leaders question whether the proposed merger rules will ever be adopted because of the uncertainties surrounding the NCUA board members.

"I'm always in favor of more disclosure and more transparency," Paul Stull, president/CEO of the Credit Union Association of New Mexico in Albuquerque, said. "But what I know about those proposals is that they're extremely preliminary at the moment and with the current makeup of the NCUA board, I don't get too excited about anything there, because I don't see an awful lot of changes and rulemaking coming, unless something else happens. I don't know what's going to shake out, but if we wind up with one board member, there isn't going to be a lot happening there."

McWatters is being considered as the next CFPB director. If he were appointed to that position, it would leave the NCUA with only Metsger on the board, whose term technically has expired. He can continue, however, to serve until President Trump nominates a replacement.

If McWatters and Metsger end up leaving this year and a new board is appointed then that means it is anyone's guess whether the proposed merger rules will ever be adopted.

What is not expected to change is the credit union merger rate, which has consistently held within the range of 2% to 3% since 2000. Even though this rate of consolidations is expected to be maintained over the next few years, the actual number of approved consolidations overall has been declining.

Last year and in 2016, the number of mergers approved by the federal agency was 200. That's down from the 238 approved mergers in 2015, 262 consolidations in 2014, 258 mergers in 2013 and 261 in 2012.

The NCUA's December Insurance Report of Activity listed only eight credit unions that received approval to merge.

Two of the credit unions received the green light to merge because they were unable to find a new CEO and/or new board members, or as the NCUA described it, "inability to obtain officials." They were the $14.7 million Monad Federal Credit Union in Pasco, Wash., into the $2 billion Numerica Credit Union in Spokane Valley, Wash., and the $1.8 million RTA Hayden Federal Credit Union in East Cleveland, Ohio into the $382 million Century Federal Credit Union in Cleveland.

All but one of the credit unions that received the OK to merge managed assets of less than $50 million.

December's largest consolidation was the $103 million MemberFocus Credit Union in Dearborn, Mich., into the $247 million Our Credit Union in Royal Oak, Mich.

Christensen said he believes there is an emerging trend of credit unions with $100 million in assets or more that will be consolidating with other credit unions that manage similar or greater assets in order to gain economies of scale.

"The number of credit unions with over $100 million in assets that merged last year, as an example, was 17 credit unions and in 2014 there were just nine credit unions with over $100 million in assets that merged," he said.

In addition, in 2015 there were 15 credit unions with more than $100 million in assets that consolidated, though in 2016 there were only eight.

"It's not like these are credit unions that are hurting financially," Christensen said. "It's really just a case of them trying to do the thing that's in their best interest for the members."