Agreed Dennis Dollar, a onetime NCUA board chair who is a Birmingham, Ala.-based credit union consultant. “We have been predicting additional corporate consolidation, and this merger is certainly consistent with that expectation. When it is all said and done, there will probably be about six to eight corporates. Like the Corporate One-Southeast merger immediately preceding it, this is a merger of larger players and seems to make very good sense.”

And there is a to predict yet more mergers. “Do the math. Corporate credit unions have to scale to succeed,” said Chuck Furbee, CEO of Alloya. “Membership numbers are shrinking, larger natural person credit unions have been leaving corporates, and the corporates that remain will have to scale,” said Furbee.

Probably the most interesting part of the merger announcement is that upon completion, which CenCorp CEO Bill Walby predicted for November,  it is Walby who will assume the CEO job of the combined institutions.

Furbee, who will retire, applauded that. Frequently, said Furbee, mergers hit snags because neither CEO wants to step down. Not in this case. “We had started a search for a successor to me,” said Furbee, who had indicated a desire to step down. “We built up a list of candidates that included Bill Walby. He and I chatted when the news of the Catalyst acquisition of Western Bridge came out. We stayed in touch. This seemed to be the right time.”

Both Alloya and CenCorp had been bidders for the Western Bridge remains, a contest won in December by Plano, Tex.-based Catalyst (which itself had a tick over $2 billion in assets, per its latest report).

For his part, Walby, in an interview with Credit Union Times on the day of the merger announcement, said, “We are in a scale business. Check processing is losing value. We can get much more efficient if we put the back offices together.”

“We will look at other mergers,” he added. He stressed that the top priority on his to-do list will be securing the needed approvals for the Alloya-CenCorp merger and planning an efficient integration of staff and services, but he left it clear that more mergers may well be in the Alloya plans.

Alloya plans to maintain three main offices–the Warrenville headquarters, an Albany, N.Y., center, and the present Southfield base of CenCorp. The latter is where Walby personally plans to be based.

As part of the merger agreement, CenCorp will pick up four of the present 11 board seats at Alloya, said Fiore.

Fiore, incidentally, offered a history lesson on corporate credit union mergers. “This isn't the first time these institutions tried to merge,” he said. Back in 1997, recalled Fiore, Mid-States Corporate, which later was merged into what became Members United which begat Alloya, “had merger on its mind and we signed a letter of intent to merge with CenCorp. It never happened. It was a good match for us,” said Fiore who had also served on the Mid-States board. “It's still a really good match for us.”

He added: “To make a merger like this work, both boards have to be fully aligned. We now have that with CenCorp and Alloya.”

As for league reactions to the Alloya-CenCorp merger, Dave Adams, CEO of the Michigan Credit Union League, said, “Consolidation of corporate credit unions continues due to new restrictions on their business model. This appears to be an excellent merger for the credit unions served by these two corporates. Economies of scale and skill will drive future success for corporate credit unions under their more regulated business model.”

William Mellin, CEO of the Credit Union Association of New York, in a press statement added his organization's blessing to the proposed merger. “ I am confident that a unification of these two corporate credit unions is in the best interests of our credit unions here in New York and beyond. It will provide long-term strength and viability, not to mention long-term value and a continued service presence in New York.”

Industry experts asked to handicap the probability that the Alloya-CenCorp merger will win all necessary approvals indicated optimism. They suggested that the real focus belongs on probable additional mergers that may be announced before the year is out.

“These mergers are being driven by two factors–the consolidation of business strategies in order to be positioned to gain sufficient earnings to meet the new NCUA capital standards and the demand from natural person credit unions for more viable corporate business models before they will invest their capital again,” said Dollar.

Eyes now are shifted to yet another reshuffle of the corporate deck, one where the future of smaller, regionalized institutions seems more questionable, said experts, as scale has emerged as the formula for surviving in a world where the benchmarks are set by ever bigger financial institutions.