Safe and Sound

DESERT FINANCIAL

Phoenix, AZ
5
Star Rating
DESERT FINANCIAL is a PHOENIX, AZ-based, NCUA-insured credit union started in 1939. The credit union has assets of $4.33 billion, according to December 31, 2017, regulatory filings.

Thanks to the work of 884 full-time employees, the credit union holds loans and leases worth $1.93 billion. Its 320,284 members currently have $3.66 billion in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, DESERT FINANCIAL exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the credit union faired on the three important criteria Bankrate used to grade American credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for members during times of financial instability for the credit union. It follows then that when it comes to measuring an an institution's financial fortitude, capital is essential. When it comes to safety and soundness, more capital is preferred.

On our test to measure the adequacy of a credit union's capital, DESERT FINANCIAL racked up 16 out of a possible 30 points, beating the national average of 15.65.

DESERT FINANCIAL had a capitalization ratio of 16.00 percent in our test, equal to the average for all credit unions, suggesting that it's running neck and neck with its peers.

Asset Quality Score

This test's purpose is to try to understand how the credit union's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid mortgages.

Having extensive holdings of these kinds of assets could eventually force a credit union to use capital to absorb losses, shrinking its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in depressed earnings and potentially more risk of a failure in the future.

DESERT FINANCIAL scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 38.09.

A lower-than-average ratio of troubled assets of 0.00 percent in our test was potentially indicative of greater financial strength than other credit unions.

Earnings score

A credit union's profitability has an effect on its long-term survivability. Earnings can be retained by the credit union, expanding its capital cushion, or be used to address problematic loans, potentially making the credit union more resilient in tough times. Credit unions that are losing money, however, are less able to do those things.

DESERT FINANCIAL scored 22 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 10.11.

One sign that DESERT FINANCIAL is outperforming its peers in this area was its earnings ratio of 0.00 percent in our test, better than the average for all credit unions.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.