NEW YORK – Regulators shut Horizon Bank in Bellingham on Friday, the first bank closing of 2010.
The Federal Deposit Insurance Corp. said that Seattle-based Washington Federal Savings and Loan Association has agreed to take on the deposits of Horizon Bank and to purchase essentially all of the bank’s assets.
As of Sept. 30, Horizon Bank had assets of $1.3 billion and deposits totaling $1.1 billion.
The 18 branches of Horizon Bank will reopen today as branches of Washington Federal Savings and Loan.
As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated and sapped billions out of the federal deposit insurance fund. It fell into the red last year.
The FDIC estimates that the closing of Horizon Bank will cost its insurance fund $539.1 million.
The 140 bank failures last year were the highest annual tally since 1992 at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion last year.
FDIC Chairman Sheila Bair has said the number of bank failures could rise further this year. The agency expects the cost of resolving failed banks to grow to about $100 billion over the next four years.
The FDIC last year mandated banks to prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.
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