The State of Credit Union Mergers: What 2025 Data Reveals About Trends and Strategy

Credit union mergers maintain a consistent pattern that board members and executives should understand. From nearly 20,000 charters in the mid-20th century, the industry has consolidated to approximately 4,600 federally insured credit unions by the end of 2025. This consolidation reflects operational realities rather than industry weakness.

Formation of new credit unions has slowed dramatically. Where the late 1930s and early 1980s saw hundreds of new charters annually, only three new credit unions received charters in 2025. Meanwhile, approximately 3% of credit unions merge each year, a rate that has held steady for over a decade.

In this article, we examine:

• Historical context for credit union consolidation
• Asset size trends among merging institutions
• Primary motivations driving merger decisions
• Geographic distribution patterns
• Emerging considerations for 2026 and beyond

The Historical Arc of Credit Union Consolidation

Credit union formation peaked at nearly 2,000 new charters in the late 1930s, with additional surges in the late 1950s and over 250 new charters annually through the early 1980s. Those numbers contrast sharply with current formation rates, where starting a credit union requires multi-year planning and substantial donated capital.

Operating a credit union has become increasingly complex. Members expect sophisticated digital experiences. Technology spending continues to rise. Regulatory requirements demand more resources. Competition from banks and fintech companies intensifies. These factors combine to make scale more critical than ever.

The result is a consistent merger rate of approximately 3% annually. Between 2014 and 2025, this percentage remained stable even as the average asset size of merging credit unions increased from $23 million to over $80 million. The median asset size tells a more consistent story, suggesting that while large mergers capture attention, most consolidations involve smaller institutions.

Which Credit Unions Are Merging

Credit unions under $50 million in assets represent 70% of all mergers as of year-end 2025. This proportion has remained relatively constant, though larger institutions increasingly participate in strategic combinations.

The largest merger in credit union history occurred in 2025 between Digital and First Tech. This transaction signals a shift toward strategic consolidation among successful institutions, not just defensive mergers among struggling ones. These larger combinations reflect challenges that affect even well-positioned credit unions competing with sophisticated fintechs and national banks.

Asset size correlates with operating efficiency. Looking at operating costs compared to total assets shows that larger credit unions run more efficiently, especially as they grow significantly in size. While organic growth can move credit unions along this efficiency curve, inorganic growth through mergers accelerates that progression.

Why Boards Choose to Merge

Expanded services drives 70% of merger decisions, according to NCUA data from the last three years. This category encompasses economies of scale, additional branches, enhanced digital features, and broader product offerings. Credit unions pursuing this path view consolidation as strategic rather than reactive.

Succession planning represents another consistent motivation. Smaller credit unions operating in limited markets often struggle to groom executive talent. The inability to obtain qualified officials affects institutions that lack deep talent pools or face geographic constraints in recruiting leadership.

Poor financial condition increased as a merger reason in both 2024 and 2025. This trend warrants attention, particularly as credit unions face margin pressure and elevated operating costs. While the majority of mergers remain strategic, reactive consolidations appear to be rising.

Other motivations include lack of sponsor support, which primarily affects single-sponsor credit unions with concentrated risk tied to one employer or associational group. If that sponsor experiences financial difficulty or disaffiliation, the credit union faces immediate challenges.

Geographic Distribution and Regional Patterns

Pennsylvania, Texas, New York, Ohio, California, and Michigan recorded the highest merger counts over the last three years. However, raw numbers can mislead without considering the total credit union population in each state.

Connecticut, despite fewer total mergers, saw consolidations represent over 18% of all Connecticut credit unions during this period. Texas, with 34 mergers, saw just over 8% of its credit unions combine. This distinction matters when assessing whether regional economic conditions correlate with merger activity.

No clear regional pattern emerges from the data. Mergers occur across diverse economic environments without strong geographic concentration. This suggests that institution-specific factors matter more than broader regional dynamics in merger decisions.

Looking Ahead to 2026

Current merger announcements indicate the 140 to 160 credit union range will likely hold for 2026, maintaining the approximately 3% annual rate. Strategic mergers among larger institutions appear poised to increase as a proportion of total consolidations.

The NCUA implemented new succession planning guidance for 2026. Credit unions under $100 million face lighter requirements, but examiners will review actual succession plans during examinations. This regulatory focus could influence merger motivations in two directions.

One possibility is that succession planning requirements prompt difficult conversations at smaller institutions, potentially increasing mergers in that category. The alternative is that enforced succession planning actually prevents mergers by compelling credit unions to develop leadership pipelines they would otherwise neglect. Both outcomes seem plausible depending on institution-specific circumstances.

Two credit unions had proposed mergers voted down by members in recent months. Member votes rejecting mergers average approximately one per year across 140 to 160 annual consolidations. Two rejections in two months represents an unusual cluster, though it remains unclear whether this signals a broader trend or statistical noise.

The Member Benefit Question

Commentary around credit union mergers increasingly focuses on demonstrating member benefits, particularly for strategic consolidations. When 70% of merging credit unions cite expanded services rather than financial distress, articulating member value becomes critical to fiduciary duty.

Scale and operating efficiency translate to financial outcomes for members. Lower non-interest expense ratios mean better rates on deposits, lower loan costs, or both. Additional branches provide access. Enhanced digital platforms improve convenience. These benefits are real but often presented qualitatively.

Quantifying member benefits requires comparing products and services at a granular level. This means analyzing loan rates by product type, share dividends across account categories, and fee structures side by side. The result expresses expected member benefit on a per-person, per-year basis, creating a concrete financial outcome rather than general statements about improved service.

This quantification serves multiple purposes. Boards fulfill fiduciary responsibilities by demonstrating due diligence. Members receive specific information about financial impact. Regulators see evidence of member-focused decision-making. Most importantly, credit unions pursuing mergers for economies of scale can prove that consolidation serves the not-for-profit mission.

What Boards Should Consider

Credit unions exploring mergers should conduct thorough due diligence beyond financial statements and regulatory compliance. Understanding the real impact on members requires detailed product analysis, demographic modeling, and scenario testing.

Field of membership compatibility matters more than many boards initially recognize. Charter structures must align to complete a merger. Sometimes this requires preliminary charter work before merger applications proceed. Federal Multiple Common Bond credit unions face different considerations than community charter institutions.

Geographic footprint affects integration complexity. Combining credit unions with overlapping service areas differs substantially from mergers that extend reach into new markets. Branch strategy, systems integration, and operational consolidation all depend on these geographic factors.

Member communication deserves careful planning. Boards must explain merger rationale in terms that demonstrate clear member benefit. This communication should include specific financial advantages, not just qualitative service improvements. Members who understand concrete outcomes are more likely to support proposed consolidations.

The NCUA approval process involves multiple steps. After confirming field of membership compatibility, credit unions submit merger applications. The NCUA posts notices for comment, though this requirement may change as part of broader deregulation efforts. Following approval, members vote. If approved, charter combination and operational integration begin.

Final Thoughts: Strategic Consolidation as a Growth Path

Credit union mergers reflect industry maturation rather than decline. Consistent 3% annual merger rates over more than a decade demonstrate that consolidation serves as a deliberate growth strategy for many institutions.

Strategic mergers among successful credit unions appear to be increasing. These combinations pursue economies of scale that improve member outcomes through better rates, enhanced services, and greater operational efficiency. This differs from defensive mergers driven by poor financial condition or succession failures, though both categories will continue.

Boards considering mergers must balance strategic opportunity with member impact. Quantifying member benefits transforms general statements about improved service into specific financial outcomes. This analytical approach supports fiduciary duty while strengthening the case for strategic consolidation.

The credit union movement built its foundation on serving member needs above all else. Strategic mergers that demonstrably improve member financial outcomes honor that mission while addressing operational realities. For boards ready to explore consolidation, the question is not whether mergers serve the industry, but whether a specific combination serves members better than standalone operation.

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You can watch the webinar recording here. If you are considering a strategic merger, CUCollaborate's Merger Network takes a data driven approach to ensure credit union's are matched with their best fit partner to maximize member benefit.