ANN ARBOR, Mich. — When the real estate boom was booming, Huron River Area Credit Union boomed right along with it. But as the tide turned, so did the CU's financials.

The contrast offers a lesson for CU managers and boards now that speculating in real estate development by mid-sized CUs isn't the best way to achieve a positive balance sheet. The CU's second-quarter loss is $58.9 million. Huron's total loan portfolio was $193 million at the end of 2005 then jumped to $311 million in 2006, a remarkable 61% increase. At the end of June, HRACU had to put aside $61.5 million for loan loss reserves to cover loans likely to go south. But the bleeding wasn't over; it further beefed up reserves as delinquencies kept mounting. So far this year it has reserved $73.1 million.

What a difference a year (and a down mortgage market can make) as Huron posted a profit of $2.6 million at the end June 2006. After Michigan regulator Roger Little declared it to be near insolvency, the federal regulators took it over in February.