Kay Hoveland never intended to become a banker.

But in 1973 she applied for a loan at a credit union to buy flooring and appliances for the home she was building with her family. Rather than deny the application because Hoveland's income was insufficient, the loan officer offered her a job as a file clerk.

Thirty-plus years later Hoveland now heads the $900 million-asset Kaiser Federal Bank and its parent K-Fed Bancorp in Covina, Calif.

Hoveland was the CEO of Kaiser Permanente Federal Credit Union in 1999 when it became the first California credit union to convert to a mutual savings association. Five years later Kaiser reorganized and became a mutual holding company and has taken the first step toward going public.

While it operates in hard-hit California, Kaiser has largely avoided the loan troubles that have brought down some of its competitors. Its ratio of noncurrent loans-to-loans was 1.02 percent at June 30, less than half the average of comparably sized thrifts in the market, and chargeoffs were 0.21 percent, compared to 0.83 percent among its peers.

Hoveland credits consistent and traditional lending practices. "Our preventive measures started many years ago, when other institutions were making more money than we did on the real estate loans they made and sold," she says. "Kaiser Federal Bank was very conservative with the underwriting of the loan, originated or purchased. We looked at each loan as if we were using our own personal money."

Pat McJoynt, a managing director with Keefe, Bruyette & Woods who has known Hoveland since the late 1990s, says she thinks through ramifications before pulling any triggers.

"She wants to know and understand the risk and where things will take her," McJoynt says. "So she didn't get involved in subprime mortgages or construction lending. Things outside her area of comfort kept her company clean and focused and a winner in the long run."

Still, like every banking company in a down economy, Kaiser has had to make tough choices.

Hoveland says Kaiser's first foreclosure in 11 years was on a home owned by a woman who had been a good customer and had used her savings to help her daughter keep her home. Then that woman lost her job and couldn't afford her own house.

"We let her stay in the house a whole year, but it didn't end well," Hoveland says. "We tried everything we could... If you can prevent a foreclosure you are helping prices for the whole community. Every time there is a foreclosure it deflates everybody else's value and why would you want to kick somebody out of their house if you could keep them in it?"

Hoveland says Kaiser is small enough to maintain that sense of humanity.

"One of the best advantages of being a bank our size is we are small enough that everyone takes an interest in our customers," she says. "They are people... These are good loans and good people and they are just experiencing what is happening in the economy. If there is anyway we can keep these people in their homes, the values will eventually come back."

Hoveland has an interesting perspective on what might be holding women back in banking.

"We created our own glass ceiling," she says. "Women have a tendency to put everybody else first - children, husband, whomever - consequently we create our own glass ceiling. Men are singularly focused. They are brought up to believe it is their job to bring home the money."

Still, she is optimistic more senior management positions will be held by women. "It will happen because we can do both," she says. "We just have to believe we can."

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