WASHINGTON Jan 8 U.S. regulators closed
Horizon Bank HRZB.O of Bellingham, Washington, on Friday,
kicking off what has been forecast as a peak year for small
The Federal Deposit Insurance Corp said Horizon Bank had
approximately $1.3 billion in total assets and $1.1 billion in
total deposits as Sept. 30.
Friday's bank failure is expected to cost the FDIC's
insurance fund a total of $539.1 million.
The 18 branches of Horizon Bank will reopen during their
normal business hours beginning on Saturday as branches of
Washington Federal Savings and Loan Association and deposits
will continued to be insured by the FDIC.
Community banks are facing persistent pressure from
deteriorating loans, many tied to commercial real estate
projects that have collapsed or are in decline.
Regulators closed 140 banks last year, the highest level
since 1992 when officials were still cleaning up from the
savings and loan crisis. That compares with 25 in 2008 and only
three in 2007.
FDIC Chairman Sheila Bair has said in the current banking
crisis, failures will peak in 2010 and then start to subside.
The price tag for the bank closings is expected to total
$100 billion from 2009 through 2013, according to the FDIC.
The failures have drained the agency's deposit insurance
fund, but the agency recently collected about $45 billion by
having banks prepay three years of industry assessments.
The FDIC expects the insurance fund's balance will remain
negative until 2013 but says it has plenty of access to cash,
including the ability to tap a $500 billion line of credit with
In a new twist in the way the FDIC collects fees, the
agency may propose next week that banks with risky employee
compensations practices be ordered to pay more for deposit
The proposal is preliminary and it is unclear if it will
gain favor with other regulators or the industry.
(Reporting by Doug Palmer and Karey Wutkowski; Editing by Gary