Tucson: Pima Federal Credit Union Expands

2 area credit unions in merger

By Dale Quinn

ARIZONA DAILY STAR

Tucson-based Desert Energy Credit Union has merged with Pima Federal Credit Union, the companies announced Thurs­day.

The partnership between Desert Energy and the larger Pima Federal creates one of the biggest credit unions in Southern Ari­zona, with more than $330 million in assets and more than 50,000 members, the com­panies said.

Before the merger, Desert Energy had 8,513 members and $61.2 million in assets, while Pima Federal had 42,166 members and $274 million in assets, according to the National Credit Union Administration.

Nathanael Tarwasokono, president and CEO of Pima Federal, said the merger will create a bigger, stronger credit union with a stronger position in the market.

All employees of Desert Energy will be kept and become part of Pima Federal Credit Union, the companies said. With the merger, Pima Federal will have six Tucson branch locations and one in Springerville, on the eastern edge of Arizona.

Desert Energy accounts and services won’t be switched to Pima Federal until a computer conversion is completed at the end of October, the companies said.

The first quarter of 2009 was a rough one for Tucson’s credit unions in terms of earn­ings. All Tucson-based federally insured credit unions posted losses exacerbated by payments into an industry stabilization fund. Tarwasokono said that with increasing unemployment, many Pima Federal mem­bers have struggled with their finances, es­pecially on automobile loans. The credit union doesn’t have many defaults in mort­gage loans because it’s conservative in that portfolio, he said.

“As this recession has lengthened, it’s re­sulted in many members not being able to keep up with their finances,” Tarwasokono said.

Pima Federal Credit Union lost $2.36 million in the first quarter, with near­ly $2.1 million attributed to the stabilization fund — which was used to rescue two wholesale credit unions that made risky loans in the run-up to the financial crisis.

Desert Energy lost $450,783 after paying $451,947 into the stabilization fund.

Still, BauerFinancial Inc., a Florida-based bank and credit union analyst, gave Pima Federal its highest rating of five stars, or “su­perior,” based on its financial reports from the first quarter of 2009. Desert Energy received three stars — “adequate” —from Bauer.

Tarwasokono said Desert Energy’s lower Bauer rating could be attributed to the smaller credit union’s lower capital ratio, a ratio of capital to assets.

“Desert Energy is a strong credit union financially,” he said.

Contact reporter Dale Quinn at 573-4197 or dquinn@azstarnet.com.