Consolidations and mergers remain facts of life in the financialinstitution world, both for credit unions and banks.

Whether a credit union chooses to consider options relative to amerger, either merge with or absorb another credit union, theconsolidation trend is projected to continue for the foreseeablefuture, providing credit unions with both opportunities andpotential threats.

For Southeastern Federal Credit Union, we believe a criticalmass exists for long-term sustainability we have not yet reached.Our projections for organic growth, while beneficial to the creditunion, will not allow us to reach the critical mass we feel isnecessary. We have a merger application currently pending with theNCUA, and consider the merger, although small, strategic innature.

To be a viable candidate for credit unions that may questiontheir long term viability, we believe it's imperative todemonstrate a core competency in merger activity that goes beyondthe technical aspects of combining two institutions.

First, any consideration of absorbing a credit union has tofirst make sense for our membership, and won't be based solely onthe opportunity to increase in size. Second, we have to be able toprovide a better long-term solution for members and employees ofthe merger candidate, or we will pass on the opportunity. Ourcurrent merger opportunity met the criteria outlined above.

Mergers have the potential to negatively impact a credit unionif not carefully considered, not only from a financial standpoint,but blending of cultures, technology issues, geographic challengesof distance, and any potential dilution of service to the existingmembership base.

As credit unions, we often consider the potential consequencesof loan participations, and changes in core system, but no onetransaction has the potential to affect the credit union,positively or negatively, like a merger.

Our credit union believes the consolidation in financialservices will provide select opportunities for those interested inevaluating prospects, not just financially but with a member-based, holistic approach, as they become available.

Southeastern FCU has no desire to pursue an aggressive mergerstrategy, accepting any and all inquiries, just as we have nointent of pursuing an aggressive organic growth strategy. Werecognize there are those that pursue merger candidates at everyopportunity and those that believe mergers are simply not in thebest interest of the credit union.

The key to the merger question, is not any one philosophy, butrather, that credit union management and its board of directorsthoroughly consider the issue, and be comfortable in the culturaldecision it makes regarding merger activity going forward.

Michael Gudely is president/CEO of Southeastern FederalCredit Union. He can be reached at 229-293-1221or [email protected].