Thaindian News

BELLINGHAM, WASHINGTON (BNO NEWS) — Federal regulators shut down the Horizon Bank in Bellingham, Washington on Friday, making it the first bank failure of 2010 following an economic turbulent year that saw more than one-hundred U.S. banks fail.

The Horizon Bank was closed by regulators of the Washington State Department of Financial Institutions after its regular closing time at 6 p.m. local time. A Seattle-based bank will now assume all its deposits.

Horizon Bank, founded by Horizon Financial Corp. in 1922, operated eighteen branch locations and four commercial banking centers throughout Washington’s Whatcom, Skagit, Snohomish and Pierce Counties. In 1986, the bank became a publicly traded company through an initial public offering under the “HRZB” symbol. Its shares closed at 0.2280 when trading ended on the NASDAQ National Market on Friday.

After the Washington State Department of Financial Institutions officially closed the bank on Friday, the department appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC then entered into a purchase and assumption agreement with the Federal Savings and Loan Association, based in Seattle, to assume all of Horizon’s deposits.

Most, if not all customers, should see no or little service disruptions despite the closure of the institution. Horizon’s 18 branches will reopen during their normal business hours on Saturday as branches of the Washington Federal Savings and Loan Association. All of Horizon’s services, including checks, ATM and debit cards, will remain active. “Checks drawn on the bank will continue to be processed,” the FDIC said in a statement. “Loan customers should continue to make their payments as usual.

As of September of last year, Horizon Bank had approximately $1.3 billion in total assets and $1.1 billion in total deposits. The Washington Federal Savings and Loan Association did not pay the FDIC a premium to assume deposits of Horizon, the FDIC said. “In addition to assuming all of the deposits of the failed bank, Washington Federal Savings and Loan Association agreed to purchase essentially all of the assets of the failed bank.”

The FDIC and Washington Federal Savings and Loan Association entered into a loss-share transaction on approximately $1.0 billion of Horizon Bank’s assets. Washington Federal Savings and Loan Association will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.

The FDIC said it estimates that the cost to the Deposit Insurance Fund (DIF) will be $539.1 million. It said Washington Federal Savings and Loan Association’s acquisition of the deposits was the “least costly” resolution.

Friday’s closure was not only the first U.S. bank failure of 2010 but was also Washington’s first bank failure since September 11, 2009. Regulators then closed the Venture Bank in Lacey.