Saturday, January 9, 2010

Horizon Bank is the first to fail in 2010

NEW YORK ( -- The first bank to fail in 2010 is Horizon Bank, based in Bellingham, Washington.

State regulators seized the bank's 18 branches on Friday. But Horizon customers are protected. The Federal Deposit Insurance Corporation, which has insured bank deposits since the Great Depression, currently covers accounts up to $250,000.

The FDIC said customers of the failed bank can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.

Authorities said that Seattle, Washington-based Washington Federal Savings and Loan Association, will assume all of Horizon's deposits, which totaled $1.1 billion as of Sept. 30, 2009. Additionally, Washington Federal Savings agreed to purchase essentially all of Horizon's $1.3 billion in assets.

Every Horizon branch will reopen Saturday during their normal business hours as branches of Washington Federal Savings and Loan Association. The closure will cost the FDIC approximately $539.1 million

Beginning Monday, customers with deposits exceeding $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?"

A total of 140 banks failed in 2009 -- the highest number since 1992, when 181 banks failed. But that tally is far from 1989's record high of 534 closures which took place during the savings and loan crisis.

The spike in failures has raised concerns about the FDIC's deposit insurance fund, which has slipped into the red for the first time since 1991.

The fund was $8.2 billion in the hole as of the end of September. But that includes $21.7 billion the agency has earmarked for future bank failures.

By staff