Australia's mutual banking sector has entered another frenetic bout of consolidation, with NSW-based Police Bank and Tasmania's Heritage Isle Credit Union the latest players to hatch a merger plan.There are at least six mergers set to occur in the next three months, which will reduce the number of mutual banks and credit unions to about 66 supervised entities.The other mergers across Australia already approved or in the pipeline are:•    Queenslanders CU - Qeensland Country merger to take effect on 1 April;•    My CU officially hooks up with Beyond Bank on 16 April;•    Cape CU scheduled to join Community First CU around the middle of the year;•    Newcastle-based Nova CU members to vote on proposal to join Bendigo Alliance on 22 March; and•    Central Coast CU continues search for a merger partner.Heritage Isle's 6500 members are due to vote on the tie-up with Police Bank at a special general meeting on 19 April.If the deal between the two boards is approved, the merged entity will have a membership base of almost 73,000 and total assets of more than A$1.8 billion.While the Heritage Isle business is dwarfed by Police Bank's asset base, the Tasmanian credit union has maintained a conservative balance sheet, with all lending funded through retail deposits.Heritage Isle's deposit growth outpaced new lending throughout 2017 - a sign that the credit union's existing menu of financial products and market reach might be limiting the mutual's business potential.According to the credit union's 2017 balance sheet, deposits rose by 7.4 per cent to $91.46 million while the loan book expanded by only five per cent to $76.9 million."By coming together we can partner to provide many benefits including access to a broader range of products and services whilst retaining the Heritage Isle brand, our Tamar Valley branches and our staff," said Swain.Police Bank chief executive Tony Taylor highlighted the cultural fit of the proposed union, saying that the merged entity would be well placed to serve the needs of Heritage Isle members."Heritage Isle has a large proportion of members under 18 and we believe the merger will support those customers as their financial needs evolve," he said."The credit union has strong relationships with schools and sporting associations in the Tamar Valley and those relationships say a lot about the quality of its community bonds and the executive team."For the NSW-based Police Bank, Taylor said another strategic attraction of the merger was the opportunity to rebuild a mutual banking brand for people employed in the Tasmanian police force.Taylor said he remained committed to "bringing the blue back to Police Bank" and would look to market banking services to the state's 1200 police officers and their families.Police Bank is one of the fastest growing lenders in Australia, having expanded its loan book by almost 13 per cent last year.Taylor believes the mutual can continue to grow without having to widen its distribution network to include brokers and introducers."We still have plenty of opportunities to grow through our proprietary channels," he said.