Washington Federal bank ready to move beyond 2010 Horizon Bank takeover


BELLINGHAM - More than three and a half years after the takeover of Horizon Bank, Seattle-based Washington Federal is moving from repair mode into what its leaders expect will be a period of growth in Whatcom County.

That was the message given by Roy Whitehead, chairman and CEO of the bank, in a celebration hosted by the bank last week at Squalicum Boathouse in Zuanich Point Park. Whitehead was on hand to provide guests an update on the bank and to congratulate local employees on what they've accomplished in Whatcom County.

Prior to 2010, Washington Federal had a relatively small market share in Whatcom County banking, with just one branch office in Bellingham. That changed in January 2010 when it took over Horizon Bank, which was shut down by government regulators.

Horizon Bank had been under a cease-and-desist order by regulators for nearly a year, struggling with non-performing construction loans and a deteriorating real estate market. In June 2009 it had the highest market share in Whatcom County, at 24.6 percent.

Looking back at that period, Whitehead said the "cumulative pain" of the Horizon Bank failure and the transition that followed resulted in the loss of many good employees and customers.

"We know that many (employees and customers) needed a fresh start," Whitehead said in an interview during the event. "Now we're starting to get some of those clients back."

He said the bank is now experiencing a renaissance in Whatcom County. One reason, according to Whitehead, is that Washington Federal is focused on playing the long game through good banking practices, something customers are recognizing.

Overall, the company is in a growth mode. Last month, Washington Federal announced it was acquiring 51 Bank of America branches in Washington, Idaho, New Mexico and Oregon. Since the beginning of 2013, shares of Washington Federal stock have risen from $16.87 to $21.97 a share.

The period around the Horizon Bank takeover was a chaotic time: 157 U.S. banks failed that year.

Of the things Washington Federal could control when it was taking over Horizon Bank, Whitehead said he wished he had done one differently. The conversion from Horizon Bank's operating system to the one used by Washington Federal was made too quickly.

"That was one more layer of pain that wasn't necessary," he said, noting that Horizon employees had already been through quite a bit of turmoil. "We could have waited."

Overall, Whitehead is optimistic about banking in Whatcom County.

"Our hope is to lend more money into the community to help it grow," he said. "It was our good practices that got us here, so we will continue to play the long game, but we love working in communities of this size."

Reach DAVE GALLAGHER at dave.gallagher@bellinghamherald.com or call 715-2269.

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