Select Credit Union and Encompass Credit Union are likely to join the trend of ADIs converting to mutual bank status once the pair merge in the second half of 2016.Select Credit Union, which has an average member age of 54, spelled out some of the rationale in its 2015 annual report."Consumer surveys consistently show that non-members do not understand what a credit union is, and confirm that everyone over the age of six knows what a bank is," the company wrote in the report.Encompass and Select reached a memorandum of understanding to merge the two organisations from July 2016. "As with relatively smaller financial institutions, Select and Encompass have been exposed to market and regulatory challenges and associated cost pressures," Select explained in its report to members."These same market challenges have caused an escalation in voluntary merger activity throughout the credit union sector, as credit unions have sought to maintain their competitiveness … The consequence of these changes is that credit unions have become stronger and more viable financial institutions."A change in status is only feasible following a merger, since "individually however, both Select and Encompass are too small to be able to use the word 'bank'." Both have net assets of only A$40 million or so, less than the APRA minimum for a mutual bank of $50 million. The merger get them over the threshold.