North Island Celebrates a Strong Performance in 2010

Despite area challenges in unemployment and housing prices, the credit union has improved its net income, operating costs, and loan losses.


North Island Financial Credit Union ($1.2B, San Diego, CA) marked its 70th anniversary in 2010, but the credit union has more that its longevity to celebrate.

For the credit union, 2010 was a “significant turning point in financial results,” said president and CEO John Tippets in a press release.

It just reported net income of $11.5 million for 2010. Its net worth ratio has improved from 3.4% at year-end 2009 to 5.26% as of December 2010. North Island’s capital ratio reached nearly 9.1% in September of this year, a remarkable increase from the low of 7.9% reported in March of 2009. The Allowance for Loan Loss, which is included in capital but not net worth, accounts for approximately 41% of the capital ratio. To grow both net worth and capital, the credit union has carefully lowered its asset size over the past 12 months.

North Island Capital/Assets

For every $1 in delinquent loans, North Island reported $1.35 in the Allowance for Loan Loss account as of September 30, 2010. Reportable delinquency as of September was 4.26% with a charge-off ratio of 2.55%. However, delinquent modified loans, including real estate, business, and consumer loans comprised 72.4% of all delinquent loans. The credit union holds nearly $86 million in modified real estate loans.

North Island ALL/Delinquent Loans

In every quarter of 2010, North Island Financial posted a positive return. After losing money in both 2008 and 2009, the credit union reported an $11-million bottom line as of September 30, 2010. That’s a $50-million turnaround in the 12 months since it reported a loss of $40 million in September of 2009.

North Island ROA

“Consumer and business credit union members have been loyal in these most difficult times,” Tippets said. “And that is greatly appreciated.

The credit union has no plans of slowing down in 2011. To repay its members for their continued loyalty, the credit union is planning several service-expanding initiatives, including installing 22 ATMs with check- and cash-scanning capabilities, participating in shared branching, and launching two credit card products through the institution rather than a third party.

“We are poised for the future,” said Tippets in a CUSP interview conducted in 2010. “We have the players, plan, processes, and principles in place to not only get through these difficult times but also take advantage of the economy's upswing when it comes.”

Judging by year-end data, the credit union’s strategy is paying off.