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

Whether a credit union chooses to consider options relative to a merger, either merge with or absorb another credit union, the consolidation trend is projected to continue for the foreseeable future, providing credit unions with both opportunities and potential threats.

For Southeastern Federal Credit Union, we believe a critical mass exists for long-term sustainability we have not yet reached. Our projections for organic growth, while beneficial to the credit union, will not allow us to reach the critical mass we feel is necessary. We have a merger application currently pending with the NCUA, and consider the merger, although small, strategic in nature.

To be a viable candidate for credit unions that may question their long term viability, we believe it's imperative to demonstrate a core competency in merger activity that goes beyond the technical aspects of combining two institutions.

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

Mergers have the potential to negatively impact a credit union if not carefully considered, not only from a financial standpoint, but blending of cultures, technology issues, geographic challenges of distance, and any potential dilution of service to the existing membership base.

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

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

Southeastern FCU has no desire to pursue an aggressive merger strategy, accepting any and all inquiries, just as we have no intent of pursuing an aggressive organic growth strategy. We recognize there are those that pursue merger candidates at every opportunity and those that believe mergers are simply not in the best interest of the credit union.

The key to the merger question, is not any one philosophy, but rather, that credit union management and its board of directors thoroughly consider the issue, and be comfortable in the cultural decision it makes regarding merger activity going forward.

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