Friday brought the first failure of the year as Horizon Bank in Bellingham, Wash., was closed by state regulators.
The Federal Deposit Insurance Corp. sold the operations of the $1.3 billion-asset bank to Washington Federal Savings and Loan in Seattle. The acquirer assumed all of Horizon's $1.1 billion in deposits, without paying a premium, and also agreed to take over virtually all of its assets. The buyer did sign a loss-sharing agreement with the FDIC on $1 billion of Horizon's loans. The FDIC estimated the failure would cost it $539 million.
The failed bank's 18 branches will reopen as part of Washington Federal on Saturday.
The failure kicked off what is widely expected to be another busy year for the FDIC, which had to resolve 140 bank failures in 2009. Most analysts predict this year will match or even surpass that total.
In a press release, state regulators said problems related to construction loans contributed to Horizon's demise. The last failure in Washington was in September when the $970 million-asset Venture Bank in Lacey, failed.
"Horizon's capital has been depleted by large loan losses," said Brad Williamson, the director of the division of banks in the Washington Department of Financial Institutions. "Like many banks across the country, Horizon's real estate construction and development portfolio has suffered as real estate values have fallen."
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