POSTED: Thursday, Jan. 28, 2010

Horizon Bank transition 'very smooth'

The local commercial lending market has changed with the disappearance of Horizon Bank and Seattle-based Washington Federal strengthening its presence.

In the first two weeks, the transition has been "very smooth," said Roy Whitehead, chairman and CEO of Washington Federal. The most common questions have been about the changes taking place in customers' Certificate of Deposit accounts.

"Once we explained the reason for the changes to customers, they were very understanding," Whitehead said. "Overall we're impressed with the high quality of the former Horizon employees and the customers' understanding of the process."

When it comes to existing business customers and borrowers, Whitehead said they are striving for consistency, making very few changes right now.

"Any changes that do take place will be phased in over time," Whitehead said.

As for future lending, some of the standards might be different; Horizon's aggressive lending practices were considered a factor in getting into trouble. Whitehead said they have $1 billion in reserves that they want to lend out to those who can qualify.

He acknowledged that this is an environment where it is more difficult to get credit, but in some ways it should be because lending got way out of control.

"Like consumers, we all need to work on paying down debt," Whitehead said. "Being leveraged is wonderful, but it is also a double-edged sword."

While it's a difficult environment right now, he expects the pendulum to start swinging back in the coming months and the credit crunch to ease. The two biggest factors he's looking for is getting people back to work and eliminating the uncertainty around regulations and liquidity.

"At some point banks will become more concerned with revenue growth and less about bad asset issues," Whitehead said.