The lesson we learned is a bubble is great when you are riding it up, but then the bubble can become really horrible when it bursts.

Keeping up with the Joneses-trying to do what others are doing-can be really stupid. What was happening was Washington Mutual, Bank of America, Countrywide and other big lenders were chasing this bubble. They all were making sub-prime loans, stated income loans and other risky products, and others tried to follow.

To survive the recession we had to do a lot of things, none of which were perfect. Closing branches meant saving money, but it also meant good people lost their jobs and members did not get the service they were used to. Getting smaller is not a long-term survival model. It builds the net worth ratio in the short term, but a credit union can have a great ratio right until it goes out of business.

My goal is to have our loans outstanding stop shrinking. That would be a really exciting thing. That means producing new loans, having fewer charge-offs and proactively refinancing our members into loans with us instead of other lenders.

John Tippets
President and CEO
North Island CU, San Diego

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