Federal and state regulators announced on Friday evening the first U.S. bank failure for fiscal year 2010. Horizon Bank of Bellingham, Wa., which has struggled for more than a year as a result of a heavy concentration of bad loans to homebuilders and developers, was closed by the Washington State Dept of Financial Institutions, which appointed the FDIC as receiver.
Washington Federal S&L Association of Seattle agreed to assume all of the deposits of Horizon Bank whose 18 branches will reopen on Monday.
The FDIC said Horizon Bank, which as of Sept. 30, saw 81.3% of its $975 million loan portfolio consist of real estate loans, had $1.3 billion in assets and $1.1 billion in total deposits. The failure is expected to cost the FDIC deposit insurance fund an estimated $539.1 million.
Horizon Financial Corp. (HRZB), the bank holding company for Horizon Bank of Bellingham, announced that all of the directors of Horizon Bank resigned from its board. In addition, Richard P. Jacobson resigned as the banks’ President and Chief Executive Officer.
Horizon Bank is the first bank to fail in the state of Washington this year. The last FDIC-insured institution closed in the state was Venture Bank, Lacey, on September 11, 2009.