Once on the brink of collapse, the $1.1 billion North Island Financial Credit Union of San Diego reported $1.24 million in second quarter net income Tuesday, adding that the results followed a positive performance in the first quarter and "confirms the credit union's gradual recovery."
During the peak of the 2008-2009 California recession, North Island was among CUs at the top of NCUA's watch list as a candidate for conservatorship or merger.
The San Diego credit union closed seven of 17 branches, laid off nearly 200 employees and reduced operational expenses by 45%.
"I have to give credit to our architect and leader for guiding us in our turnaround," said Geri LaChance, chief operating officer, referring to John Tippets, the former American Airlines CU head brought in from retirement in November 2009 to run North Island.
LaChance, who served as interim CEO prior to Tippets' entry, said one of the most rewarding factors now "is that Bankrate has given us three stars." At one time North Island had the lowest net worth of major CUs at 2.16%.
It currently is at 6.43%, a climb from year-ago 4.3%. North Island earned $11.4 million last year.
In a statement by Tippets, North Island said with reduced delinquencies and a decrease in loan losses," the credit union was able to reverse excess reserves at the end of the first quarter and as a result, 2011 income year-to-date is $11.92 million."
Total capital, including reserves for future loan loss exposure, has reached $103.3 million or 8.93%.
The credit union added that positive 2011 results are the outcome of many factors, including: a restored and reduced balance sheet which has allowed for stable net interest margin management, and a fully leased headquarters building with the year-end 2010 Guild Mortgage tenancy of two floors.
The CU also saw "substantially reduced annual operating expenses, now about 45% below 2007 levels."
Net loan demand remains "very soft," however but the credit union recently launched a new proprietary Island Rewards MasterCard, and is optimistic the credit card will be well accepted by the membership," said Tippets.
For two years, he added, North Island has not been making new member business loans but plans to re-enter that market within the next month. Member business lending has been a great strength of North Island Credit Union, he said.
"And, we will be very pleased to once again meet the borrowing needs of many San Diego business members," he said.
Tippets acknowledged the San Diego market continues to undergo a "tough economy" with some members experiencing poor financial health.
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