ALEXANDRIA, Va. (7/2/10)--The National Credit Union Administration (NCUA) on Thursday provided credit unions with background information on its purchase and assumption (P&A) and merger process and detailed the criteria that the agency uses to evaluate P&As and mergers. The NCUA letter to credit unions also covers the NCUA’s identification of merger and P&A partners as well as its “selection of an acquirer in the limited circumstances when NCUA is involved in making the choice.” The Credit Union National Association’s merger task force, which was led by Ohio Credit Union League President Paul Mercer, pushed for this guidance. According to the letter, the NCUA allows credit unions that are in a state of financial distress to undertake voluntary liquidation, involuntary liquidation, an involuntary liquidation followed by a P&A, or voluntary, unassisted supervisory, or assisted mergers. According to the NCUA, its role in voluntary mergers and unassisted supervisory mergers is mainly supervisory. However, the agency said it does take on a “much greater” role in assisted mergers and P&As. That role includes identifying and selecting the failing credit union’s “continuing credit union partner.” However, the NCUA adds, that role depends on several factors, including the potential loss to the National Credit Union Share Insurance Fund (NCUSIF), and the size, the financial stability, and the complexity of the acquired credit union. When deciding to approve, defer, or deny merger or P&A applications, the NCUA said it fully examines if the continuing credit union “can safely and soundly absorb the financial and operational impact that will result from the acquired credit union.” The NCUA also attempts to determine “whether the acquired credit union’s field of membership is compatible with the continuing credit union’s field of membership” and “whether the required membership notice sent by the acquired credit union properly informs the membership about the action.” For the full NCUA letter, use the resource link.