In the aftermath of the NCUA's release of second-quarter data, several interestingpieces made their way to my inbox last week. One analysis thatstirred quite a bit of debate came from The Financial Brand, stating that if current merger and closuretrends continue, there will be half the number of credit unions inexistence two decades from now.

The stat just stands there, neither positive nor negative. It'ssimply exhibited naked to the world. The number of credit unionswith less than $100 million in assets has declined by more than2,200 between 2007 and 2012. Meanwhile, the credit unions with morethan $1 billion in assets have increased by 71 to 194, but theyonly represent 2.7% of credit unions. Credit unions under the $100million threshold represent 79.6% of credit unions, down from 85%,according to The Financial Brand.

The figures are what they are. The only way to change them is toincrease the relevancy at the lagging smaller credit unions (and acouple of the larger ones, too) that members apparently feel areirrelevant. Simple denial that many smaller credit unions areunable to serve their members needs isn't going to fix theproblem.

With strong and intelligent leadership and barring extremesituations, nearly every credit union of any size can be healthy.For example, Glatt Consulting's latest HealthScore showed the top90th percentile of credit unions averaging $601 million in assets,but the minimum asset size for the healthiest of credit unions(based on 11 different criteria) was just $975,000 in assets.Survival isn't entirely about having scale–but it sure can help, asthe trends of larger credit unions have demonstrated.

The bottom 10th percentile represented just 1% of the assets, soit's not a huge risk to the insurance fund, but it also representsmore than 10% of the industry. Would these 754 credit unions bemissed by anyone (other than the employees, unfortunately) if theywere gone tomorrow?

The least healthy credit unions aren't all small, for those whothink I pick on them. The largest credit union in this categoryholds more than $371 million in assets. Size isn't necessarily thesavior.

Conversely, despite the number of smaller credit unions, TheFinancial Brand found that credit unions' overall membership growthof 1.5 million or 1.62% has been fueled primarily by the largest100 credit unions. Approximately 84% of net membership growthoccurred at the largest 100 credit unions. More than 30% of creditunion members belong to these 100 credit unions, an increase from28.6% just two years prior. Not surprisingly, these credit unionsalso represent 45.3% of the industry's asset growth.

If these credit unions are gaining so many members and assets,it stands to reason some are heading in the other direction.Membership at credit unions with less than $100 million in assetsare losing members, to the tune of approximately 1 million per yearbetween 2007 and 2012 (more than 2 million between 2009 and 2010)for a total negative growth rate of 6 million members.

That figure is before accounting for population growth in theU.S., which according to Wikipedia was 0.91% for the 12 monthsending July 2011, based on U.S. Census data. That negative 6million is even worse than it appears. And these credit unions havelost more than $5 billion in assets during that time.

Of course there are many really great credit unions with lessthan $100 million in assets, but for the others, small or large,negative membership and asset growth is not a sustainable businessmodel.

That doesn't spell the doom for existing small credit unions.Certainly during that time some grew their way over the $100million hump, including by merger.

Credit unions of all varieties are necessary to maintain ahealthy system. As Ron Shevlin of Aite Group pointed on in hiscomments posted to Mt. Lehman Credit Union General Manager GeneBlishen's Tinfoiling.com blog in response to The Financial Brand'sanalysis, he refers to all industries and businesses as anecosystem where symbiotic relationships abound.

The metaphor is particularly apt for cooperative industrieswhere smaller credit unions get advocacy, compliance, back-officeand other assistance from larger credit unions and third-partyvendors, and smaller credit unions provide the mom and pop feel totake up to members of Congress and talk about legislative andregulatory burden. All are capable of being worthy and need eachother.

As an aside, despite the predictions that the branch is dead,the larger credit unions are increasing their branch networks as the rest of the industry decreases itsnumber of branches. In 2012, the number of credit union branchesactually decreased for the first time. The Financial Brand rightlysurmises that 2011 was the likely peak of the branch.