As is tradition, Credit Union Times’ Year in Review issue is when I make predictions for theupcoming year. I predict YIR 2012 will be no different.

In December last year, I wrote that forward-looking credit unionleaders (and those with the resources) would grab the reins of BankTransfer Day and hold on tight; those who chose (I know some wereblocked by SEGs or other reasons) to disregard BTD chose todisregard what it is to be part of the credit union movement. Thenumbers do not lie. The industry overall is experiencing tremendousgrowth at 2.8% in the 12 months ending in October and 2.4%year-to-date, according to CUNA.

However, not everyone is on the member growth bandwagon, Glatt Consulting uncovered. Creditunions with $50 million or less in assets experienced flat tonegative membership growth through 2012. Only the larger creditunions reaped the benefits. Those in the $500 million and largerrange had 4.59% membership growth.

CUNA Mutual Chief Economist Dave Colby added that the 100 fastest-growing credit unionsaccounted for 82% of all the membership growth in the third quarterof 2012. On the other end of the spectrum, 3,241 credit unions, or46%, reported declines. They make up roughly 15% of the industry’sassets.

Certainly some credit unions’ strategy is to deepen memberengagement, which is very important as well, and growth for its ownsake is not a viable strategy either. But any business needs tocontinue adding new sources of income or it will wither away in thelong term. And bringing a new member in with a refi is a nobrainer. These new members weren’t just depositors. NorthwestResource FCU said its cross-sell figures went from 1.87% to 2.37%,and the average loan balance for new members doubled.

Overall, credit union membership growth will recede to historiclevels of 1% or so in 2013, but that will be caused mainly by thebalancing between the higher number of smaller credit unions losinga higher percentage of members or merging and the fewer in numberlarger credit unions continuing record pace membership growththrough organic growth and mergers. This is indicative of thegreater gap between the haves and have-nots I predicted in my Dec.18, 2011 column.

Credit union mergers got very interesting in 2012 and notnecessarily because of the number (279 credit unions went away thisyear, primarily due to merger, or 3.8%, in the 12 months ending inOctober, according to the most CUNA recent statistics), but alsobecause of the combinations made.

In my year-end 2011 column, I noted that Landmark CU wascompleting its sixth merger of that year, but this year it becamethe third credit union, second in 2012 after GFA FCU in Gardner,Mass., and United FCU in St. Joseph, Mich. (2011), to merge in banks. I had predicted a “handful” more of these for2012, so two is close enough for fortune telling. This tricklingtrend will continue through 2013 as ailing community banks areunable to find appropriate merger partners of the same charterwilling to make the offers.

Another interesting case involving a bank is Thrivent, which decided to convert back to a credit union afterpreviously a group of credit unions converted to this bank.Additionally, three credit union conversions to banks have beenstalled this year. TechnologyCU’s members voted down a conversion to a bank, and Har-Co FCU’s conversion has been stuck in one of the regulatorycircles in Hell, as has HarborOne CU’s conversion.

Separately, when the $388 million Educational Systems FCU planned to take in the similarly sizedand ailing MCT FCU, the new members were originally going to becharged a $35 fee to help the credit union maintain an acceptablecapital level. This was an innovative idea and one that I’vesupported, because as member-owners reap the rewards of theircredit unions, so, too, should they share in the costs of bailingit out.

I think 2013 will see similar attempts as the NCUA and ailingcredit unions become more desperate to find merger partners thatcan afford to take them on and have an appropriate cultural andfield of membership fit. The credit union will have to make up thatmoney and it will in other ways that likely will get applied to allof the members, which the existing members of the continuinginstitution wouldn’t have to be worried about if no merger hadtaken place in the first place.

I had also predicted that a larger technology vendor would makeits exit from the credit union market, and while we haven’t seen alarge one in 2012, I still believe it will happen. That’s a newprediction for 2013. One defection we did see was the disappearanceentirely of PanoLogic, immediately after announcing a big deal with RedstoneFCU.

One prediction I did nail was that Carla Decker would not be joining the NCUA board in 2012. Nowthat she’s no longer in the running and Gigi Hyland’s seat isvacant, my guess is that the Democrats will wait another year toappoint anyone. First, these things are done in pairs and MichaelFryzel’s seat is not up until August 2013. Second, the Democraticpresident can rest at ease knowing he’s still in control of theappointment in another year and give the Democratic appointee theseat to the full six-year term and leave the Republicans withHyland’s seat, which will only have four years left on it.

Finally, the tax exemption is in gravest danger right now. That it was“accidentally” included in legislation was a trial balloon, if alead one.