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Name change for Washington Federal
What the change will do, Smith said, is to help the local bank continue to expand its business opportunities here and beyond its traditional "footprint" of Washington County, where it has eight branches.
Washington Federal has applied to the Pennsylvania Department of Banking to convert from a federally chartered savings bank to a state-chartered one.
According to Smith, the approval process, which takes about 90 days, means that the local bank that will be regulated by the Commonwealth of Pennsylvania and the Federal Deposit Insurance Corp.
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"If you aren't federally chartered, you can't have 'federal' anywhere in your name," he said.
But more important, Smith said, is that a federal charter places limitations on how much commercial real estate business the bank can do, explaining that it can't exceed 20 percent of its capital.
Like a lot of savings institutions, Washington Federal started out with a strong orientation toward home mortgages, but as the local business climate changed, the bank adapted to other opportunities in the local market.
Today, Smith said, Washington Federal's loan portfolio breaks out by thirds to commercial loans, consumer loans and home mortgages.
On the commercial side, "We have all of the products and services that a small- or mid-sized business would expect," Smith said. "We really are a full-service commercial bank."
Smith said other reasons for the charter change have to do with the number of mergers and consolidations occurring in the banking industry as well as because of a rapidly changing regulatory climate that could adversely affect banks that have an abundance of long-term fixed assets on their books.
He noted that in addition to a loan portfolio that now serves three distinct markets, Washington Federal has continued to grow significantly in assets and deposits, despite the economic downturn of the past year.
For the fiscal year that ended June 30, it saw assets grow by 13 percent and deposits increase by 17 percent. Smith noted that Washington Federal - like virtually all other local "Main Street" banks - had no exposure to subprime loans.
The bank maintains a "five-star" rating, the highest possible from Bauer Financial, a national rating agency that analyzes the performance of banks and credit unions. Smith stressed that the new state charter won't alter the bank's methodology for making new loans.
"We're sticking to our conservative underwriting standards; that's not changing," he said.
He said a state charter will allow the bank to continue to grow its presence here and elsewhere in the region.
"Today, our lending portfolio is dispersed throughout Western Pennsylvania," Smith said. "We are currently looking at sites inside of Washington County and possibly in Allegheny County." Several years ago, it opened a loan generation center in Wexford that employs three people.
While it awaits approval for the new state charter, Smith said the bank is at work on new signage, letterhead and bank documents that will reflect the new name.
Smith said there will be no changes to customer account numbers, and that customers will continue to use their current debit card and check supply.
