He changed the criteria for loans. Instead of being based on land value, they were based on an average cash flow over a period of time, both good and bad. This more accurately calculates what a farmer or rancher can pay. He brought together a management team to deal with the mounting portfolio of bad loans to farmers. He realized that to continue with the hard stance the association had taken in past years was a mistake.
Foreclosures cost money in lost loans and legal fees.
He put together a team that was as flexible as possible to different payment schemes. But that still meant some of the farms and ranches had to be foreclosed upon. Such actions didn't sit well with farmers and ranchers, especially in parts of Montana and Idaho that had been hit particularly hard in the late 1980s. The fiercely independent farmers felt they were being unfairly singled out. The situation escalated after Penick's arrival.