MADISON, Wis. — For the first time ever credit union membership has topped the 90 million mark, according to industry estimates.

At the end of March, total membership was estimated at 90.1 million, with a net addition of 824,000 members in the first quarter, according to data from CUNA Mutual Group's latest Credit Union Trends Report and CUNA economics and statistics data. The bump in growth during the first three months of 2008 is consistent with historical patterns, said Dave Colby, chief economist at CUNA Mutual.

“Looking back over the past four years, we see on average, 55% of all membership gains occurred in the first quarter of the year,” Colby said.

Credit union marketing budgets, which are typically awash with cash at the beginning of each year, continue to push the numbers up, Colby said. Adding more select employee groups, for instance, is one of many top priorities for credit unions as they kick off the New Year.

The pullback tends to start at the end of the year when funds have been depleted. This is the same time when some credit unions start taking a hard look at inactive members to either offer more opportunities to build more relationships or close down accounts, Colby said.

Compounding that inactivity are indirect borrowers. As their loans are paid off, credit unions, again, consider whether they want to build more relationships.

“It's expensive [to keep inactive accounts on the books]. “We don't want our best members subsidizing the costs of those members,” Colby offered.

CUNA Mutual forecasts membership growth to slow sharply by the end of the year due to economic conditions, the pay off of indirect loans and very few new indirect borrowers.

Annual growth is expected to average just over 900,000 members each year for the next three years with total membership topping 92 million by the end of 2010, according to the trends report. Colby emphasized that membership growth is probably the hardest data to track.

Still, as membership has picked up, credit union mergers are also on the rise. At the end of the first quarter, initial estimates by CUNA economics and statistics showed 8,337 credit unions, reflecting a net loss of just nine credit unions during March and 272 over the past twelve months, Colby noted. The credit union count dropped by 59 in the first quarter and the uptick in consolidation may have an impact on the industry's future.

“Exploratory merger discussions are on the rise for institutions of all sizes. These discussions, once seen as a position of weakness or aggressiveness, are now a regular part of good financial stewardship and fiduciary responsibility,” Colby said.

Over the past six months or so, Colby said he has noticed a major change in attitudes during meetings with credit union CEOs. Mergers are now considered “good strategic planning.”

“It's a healthy change. Adding members, absorbing a smaller institution or larger credit unions merging with one another–with extreme competition, some credit unions see it as a function of preserving [the industry],” Colby said.

Market consolidation is expected to pick up by year-end with a net loss of 321 credit unions forecast for 2008, according to the trends report data. The decline through 2010 averages about 350 credit unions, a pace just above the 10-year average, Colby pointed out. The net result is an estimated 7,350 credit unions by the end of 2010, roughly 1,000 below today's level.

“Credit unions are getting their ducks in a row and are getting ready to serve members in a difficult economy,” Colby said. “That might mean merging with another credit union to keep the doors open.”

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