Two Utah credit unions, Salt Lake and Intermountain, merged with larger competitors in recent months when their real estate construction loan portfolios deteriorated to the point where their survival as independent entities was in doubt.

"For the most part, Utah credit unions remained pretty conservative during the wild party that a lot of other financial institutions were throwing for themselves the past several years," said Scott Simpson, president of the Utah League of Credit Unions.

Two nationally known rating services that monitor the financial health and strength of credit unions agree. BauerFinancial and Bankrate.com report only a few of the 102 credit unions in the state are struggling.

The bottom line for Utah consumers is that accounts at all credit unions in the state are federally insured up to $250,000 and no one has to worry about the safety of their savings, said Ed Leary, commissioner of the Utah Department of Financial Institutions.

About half of the state's 2.7 million residents belong to credit unions one of the highest percentages in the nation.

And Utahns who belong to the members-only, nonprofit financial cooperatives find it reassuring their credit unions remain relatively untouched by the national and global financial crises that have brought down big name investment banks such as Bear Stearns and Lehman Brothers.

"You just don't hear about many credit unions getting into trouble," said Mike Puentes, a retired transit worker and a member of Credit Union One in West Jordan. "They know what they are all about. They exist to serve members, not stockholders or high-paid corporate executives."

When a Utah credit union does get into trouble their management typically will turn to financially healthier credit unions for advice or as a potential merger partner. "Rather than relying upon taxpayers to foot the bill, credit unions always have viewed it as their responsibility to take care of one another," Simpson said.

It is exactly what happened at Intermountain Credit Union, whose three offices will open on Monday as branches of America First.

Faced with a declining net income and troublesome real estate loans, Intermountain earlier this year contacted America First and asked for its advice on how to work through its financial difficulties. It quickly became apparent, though, that a merger needed to be arranged and the management at Intermountain, which had $41 million in assets, agreed to combine operations with America First, the state's largest credit union with assets of some $4.5 billion.

"It [the merger] is something you hate to go through but the goal was to protect the members, and that is what happened," Jeff Blackburn, Intermountain's president, said last week after the credit union's membership voted to approve the combination.

When a bank's finances begin to fray, one of the first steps regulators often require is that the bank raise more capital to provide an additional cushion to absorb any further losses that might arise, Leary said.

"Credit unions are a little different. Unlike banks that can go to their stockholders or the capital markets, credit unions basically have to rely on retained earnings to generate the capital they need and at times that can be difficult," said Leary.

As with the state's community banks, what sets apart the state's weaker credit unions from their healthier brethren is that they have offered mortgages, construction and other real estate loans.

Utah's strongest credit union, IFA Employees Credit Union, stuck with the basics by offering only automobile and other consumer loans to its members.

IFA is a small credit union compared to most others in the state, said Barry Hatch, president of the cooperative that serves the employees of the Intermountain Farmers Association. We have less than $2 million in assets and about 430 members. We're just a plain vanilla operation."

Transwest Credit Union, which claims some 15,000 members and $150 million in assets, is among the weaker credit unions in Utah according to combined BauerFinancial and Bankrate.com ratings.

"The reason we look so bad in those ratings is that we're actively writing down the value of our mortgage and construction loans in recent quarters," said Transwest's Chief Executive Mark Mikkelson. "While they only represent a small portion of our loans, that is where we've been taking the hits."

Transwest was founded in 1935 to serve Utah railroad workers. It now draws upon the residents of Salt Lake County for its membership.

Despite all the troubles that are plaguing the national financial scene, Utah credit unions for the most part have plenty of money to lend with the only drawback these days is that not enough of their members are asking for loans.

"We're seeing some slowdown in the demand for loans, which I'm sure is what our sister credit unions are experiencing," said Scott Webre, chief executive of the Box Elder County Credit Union in Brigham City. "A lot of our members seem to be sitting back and putting the brakes on their spending, which is understandable given the uncertainty everyone is hearing about in the market."

The Box Elder County Credit Union was founded 55 years ago as the Intermountain Indian School Credit Union. It now draws upon the residents of Box Elder County for its membership base. It has approximately $80 million in assets and 12,000 members.

steve@sltrib.com

Rating Utah's credit unions

To find out how Utah's credit unions fare when ranked by performance go to http://extras.sltrib.com/credit_unions/CU_list.htm