SAN DIEGO — In the nearly 10 years it has been offering businessservices and loans, North Island Credit Union has earned areputation in the community for being a hands-on innovator takingpride in its ability to make home-grown decisions. With thedepartment's staff having a combined 238 years of business lendingexperience, being the first credit union in San Diego to become aSmall Business Administration Preferred Lender, moving to a statecharter, and a system conversion in 2001, North Island has builtits business services methodically and through old-fashioned “goodword of mouth.”

“The first ingredient is the people we have on board,” said JeffStone, executive vice president of business services at NorthIsland on the credit union's successes. “We didn't try to doeverything at once. We did it gradually.”

North Island started in 1997 with the objective to grow its corebusiness deposits, Stone said. At the time, the $1.5 billion creditunion served mostly defense-based employees. Increasing depositscame as North Island was looking to transition from its oldcomputer and software systems to something more efficient. After adue diligence search, it went with Open Solutions, Inc. because ofits open interface and faster product development processes. Manybusiness members were coming to the credit union to process checksso the timing could not have been more perfect, Stone said.

“In the old days, if we wanted to develop a new loan product, itwas a four to six month process,” said Robert Reck, first vicepresident/business product administration officer at North Island.“In the [Open Solutions] world, you look at the product, copy itinto a test environment, test it for a week or two and then you'reup and running in two to three weeks.”

The conversion took place in July 2001, a year earlier, NorthIsland changed from a federal to a state charter and also had amore complete line of business products and services in place.Today, the credit union serves nearly 108,000 members through 14branches around San Diego and surrounding areas. It has $118million in business deposits with $126 million in loans on thebooks and $260 million in loans under management.

Stone said the use of Open Solutions' Member Business ProcessingSolutions has allowed the credit union to model business memberloans using the framework of similar consumer loans. Sinceimplementing MBPS, North Island has increased its deposits throughmember business lending.

“We were fortunate we had something to move to,” Stone said.“For other credit unions, they have to take the time to stop andthink about the costs.”

For instance, North Island has seen a steady increase in taxdeposits, Reck pointed out. The conversion has helped to handlesuch unique deposits. Still, the credit union has partnered withother vendors that have the systems to process other untraditionalbusiness services, he added. Those partnerships have helped toservice all types of loan amounts and business owners. Stone saidbusiness loans range between $500 and $4 million and real estateloans go from $49,000 to $19 million. Everyone from the lawn mowerrepairman to a defense contractor is served.

“The relationship officers are critical to bringing in newbusiness. The branch managers are very active,” Reck said.

In fact, North Island is in the midst of an advertising campaignthat invites business owners to consider the financial institutionfor all their business banking and personal financial needs.

“The biggest objection is they don't think a credit union can doboth,” Stone said.

To help manage the 12.25% member business lending cap, thecredit union participates out loans and offers lines of creditagainst that limit. Stone said if North Island did not sell loanparticipations, it would be at 140% of its cap. The credit unionhas $32 million in unused lines of credit and is in the process ofapplying for a member participation waiver.

“Normally, we don't want to get that high,” Reck said on the140% threshold. “In 2003, during the booming real estate market, wewere getting in the 75 to 80% range.”

Looking ahead, North Island is planning to launch Positive Payfor those who are avid check writers. The product aims to protectagainst check fraud. By early 2008, plans are also in place topossibly debut remote capture, which digitizes checks using specialcheck-reading equipment and transmits the electronic checks to afinancial institution for immediate deposit. In 2009, the creditunion will prep to offer an “off-balance” sheet sweep account andseek out partnerships with entities like Lehman Brothers to servicehigher balance accounts.

North Island's biggest competitors on the real estate side comefrom savings and loans, community banks, life insurance companiesand other credit unions. What helps, Stone said, is the localdecision making.

“We're home grown, [business owners] are talking to the decisionmakers here and we're making the loan decisions,” Stone said.–[email protected]