By Ray Birch
LAKE TAPPS, Wash.—Credit unions are increasingly turning to a once-rare strategy to tackle two of their biggest challenges: CEO succession and the need for scale.
According to new research from CEO Advisory Group, mergers of equals are becoming more common as institutions realize they can simultaneously solve leadership transitions and double their size to deliver more value back to members.
Glenn Christensen of CEO Advisory Group said the trend represents a significant shift in how boards are thinking about the future.
“Historically, credit unions have looked internally or turned to recruiting firms when searching for a successor,” he explained. “What we’re seeing now is a more strategic approach—using a merger of equals to not only find a new leader but also to achieve instant scale.”
Why It’s Happening Now
Christensen pointed to several converging forces behind the movement. Many credit unions are confronting pending CEO retirements, while at the same time facing pressure to invest in technology, expand services, and compete against larger players.
“Even if you bring in a high-performing CEO, growth is constrained by market realities,” Christensen said. “But through a merger of equals, a credit union can double in size on day one—capturing economies of scale, lowering operating costs, and delivering better loan and deposit pricing to members.”
CEO Advisory Group’s latest white paper, Strategic Succession: The Case for Merger-Driven CEO Transitions, underscores the point with compelling data. Institutions with assets between $1 and $5 billion provide 30–60 basis points more in member value compared to smaller credit unions, thanks to lower expense ratios, reduced loan rates, and higher deposit yields. These same institutions also demonstrate stronger membership growth. In contrast, 60–70% of credit unions under $200 million in assets are seeing membership decline—a problem well recognized within credit unions.
“With the average credit union projected to reach $3.4 billion in assets by 2040—nearly seven times today’s average—the question isn’t whether scale matters, but how quickly institutions can achieve it,” Christensen said.
The Succession Squeeze
The succession challenge adds urgency to the equation, Christensen said. Every day in 2025, an average of 11,400 Americans turn 65, marking what demographers call “Peak 65.” Among them are many longtime credit union leaders preparing to retire. At the same time, the CEO pipeline is thinning. CEO turnover hit record highs in 2024 and continued rising into 2025, while surveys reveal many emerging executives are reluctant to pursue the top job.
Credit unions are not immune. A 2023 NCUA exam survey found one in four credit unions lacked an adequate succession plan, and America’s Credit Unions reports that only 54% of credit unions currently have a plan in place.
“The clock is ticking,” Christensen warned. “For those without a plan, the new NCUA requirements taking effect in January 2026 will force boards to confront succession directly.”
Regulatory Pressure Ahead
NCUA’s mandate, expected to take effect next year, will require credit unions to establish board-approved succession plans for key leadership positions. Beyond compliance, Christensen argued, the rule creates an opportunity to think more strategically.
“Succession planning is no longer just an internal HR matter,” he said. “Regulators want to see boards thinking bigger. For many, the merger of equals will check both the compliance box and the growth imperative.”
Indeed, the NCUA itself has acknowledged that weak succession planning is among the most common causes for unplanned and unforced credit union mergers. Christensen contends that by pairing merger discussions with natural leadership transitions, boards can avoid crisis-driven decisions and instead create member-focused, forward-looking outcomes.
The Strategic Case For Mergers Of Equals
The white paper makes clear the merger timeline is not significantly longer than a CEO search. Both processes often take nine to 18 months, but with vastly different outcomes.
“With a CEO hire, you hope the individual can gradually build the CU toward scale over many years,” Christensen explained. “With a merger, you achieve scale immediately, acquire leadership talent throughout the organization, and position the credit union for long-term competitiveness.”
For example, CEO Advisory Group found that a $750-million credit union with an expense ratio of 3.4% could, through a merger doubling its size to $1.5 billion, achieve an average expense ratio of 3.13%. The difference flows directly back to members through lower loan rates, higher deposit returns, and reduced fees. On average, billion-dollar credit unions charge lower rates on loans (4.72% vs. 4.83%), pay higher deposit yields (+10 basis points), and assess lower fees (–8 basis points) than their smaller peers.
Overcoming Resistance
Despite the clear benefits, mergers of equals often encounter cultural resistance, Christensen said. Mid-career CEOs may resist a merger that risks their own position. But when one leader is nearing retirement, the conversation changes.
“In these cases, boards have the freedom to ask: should we spend a year searching for the perfect candidate, or should we use this transition as an opportunity to double in size, strengthen our market position, and better serve members?” Christensen said.
Strategic mergers also open new growth avenues. A smaller credit union may merge into a larger institution to secure succession, while the larger credit union gains market entry into a new metro area or state. Conversely, two like-sized credit unions may merge, instantly creating a stronger, more competitive organization that can reinvest in technology and expand services, Christensen reiterated.
The industry’s broader trajectory makes this shift inevitable, Christensen asserted. From more than 23,000 credit unions in 1970, the sector is projected to shrink below 3,000 by 2040. Far from being a story of weak institutions fading away, Christensen views it as a natural restructuring toward the scale required for modern financial services.
“In every strategic planning session, the topic of scale comes up,” he said. “Mergers of equals allow credit unions to address succession challenges and achieve the scale needed to thrive. That means more resources for technology, more competitive pricing, and stronger long-term sustainability. These deals will shape the future of the credit union movement.”
A complimentary copy of the whitepaper is available at: https://resources.ceoadvisory.com/strategic-succession-white-paper.html