By MaryHelen Swanson
A tarp-like drape with the name Stearns Bank was hanging over the Horizon Bank sign in North Branch this weekend signaling the acquisition of Horizon Bank by the St. Cloud-based institution Stearns Bank N.A.

It means that insured depositors  and loan customers have now become customers of Stearns Bank.

Chief Risk Officer for Stearns Bank Harley Vestrum said Monday it means business as usual at both the North Branch office and the Pine City office of the former Horizon Bank.

He said he feels very strongly about this being a good acquisition for Stearns, a financial institution that was established in 1912.

Chief Executive Officer Norm Skalicky has been the owner for 45 years.

A press release noted that Stearns Bank has locations in St. Cloud, Albany, Holdingford and Upsala, Minn., along with Scottsdale, Ariz.

The North Branch branch of Horizon Bank which opened in October 2007 is now called now Stearns Bank as indicated by the draped sign. State bank regulators shut down the Pine City-based Horizon Bank late Friday, June 26.  Photo by MaryHelen Swanson 

Vestrum said customers should find a seamless transition and they will find the same people at the bank.

While customers were not informed of the acquisition before it actually occurred Vestrum said a notice will be sent to all customers by Monday of next week.

All deposits are still insured by the FDIC, Vestrum noted and Stearns purchased all loans and will service the accounts, he added. Customers are invited to stop in at the bank to meet some of the new Stearns people, but will find the same people behind the counter.

Vestrum said a major reason Stearns can acquire the bank is because of its strong capital position.

CEO Skalicky was no available for comment Monday but in a press release he said, “We are very pleased to have the opportunity to welcome the customers of Horizon Bank to Stearns Bank. We have always maintained a strong capital position at Stearns Bank. This strategy, along with the confidence provided by our regulators, is very important in these unparalleled economic times.”

More information about Stearns Bank, including their annual report, can be found at www.stearns-bank.com.

Horizon’s recent history
On Feb. 27, 2009, the Federal Deposit Insurance Corporation (FDIC) issued a cease and desist order to Horizon Bank, for what it called “unsafe and unsound banking practices.”

The FDIC report said the bank was operating with inadequate capital and inadequate allowances for loan losses.

At the time, acting President Tom Palmer spoke with the ECM Post Review  over the phone and said the situation stems from “loans consumers are having trouble paying back.”

The cease and desist order required Horizon to “immediately obtain and maintain a sufficient level of capital for a Total Risk-Based Capital Ratio of not less than 12 percent and a Tier 1 Leverage Capital Ratio of not less than eight percent.” Tier 1 capital is a key measure of a bank’s ability to absorb losses.
 

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