Washington Federal Savings and Loan Association to take over Horizon’s 18 locations

By Lance Henderson

Federal regulators shut down Horizon Bank on Friday, Jan. 8, according to the Federal Deposit Insurance Corporation (FDIC). Horizon is the first FDIC-insured institution to fail in the nation and Washington state in 2010.

The FDIC has entered into a purchase and assumption agreement with Washington Federal Savings and Loan Association in Seattle to assume all of the deposits of Horizon Bank.

As of September 30, 2009, Horizon Bank had approximately $1.3 billion in total assets and $1.1 billion in total deposits. In addition to assuming all of the deposits of the failed bank, Washington Federal Savings and Loan Association agreed to purchase essentially all of the assets of the failed bank, according to the FDIC.

The 18 branches of Horizon Bank will reopen beginning Jan. 9 as branches of Washington Federal Savings and Loan Association. Depositors of Horizon Bank will automatically become depositors of Washington Federal Savings and Loan Association. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage, according to the FDIC. Customers should continue to use their existing branch until they receive notice from Washington Federal Savings and Loan Association that it has completed systems changes to allow other Washington Federal Savings and Loan Association branches to process their accounts as well.

Over the weekend, depositors of Horizon Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

The FDIC and Washington Federal Savings and Loan Association entered into a loss-share transaction on approximately $1 billion of Horizon Bank’s assets. Washington Federal Savings and Loan Association will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $539.1 million. Washington Federal Savings and Loan Association’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives.  The last FDIC-insured institution closed in the state was Venture Bank in Lacey, Wash. on September 11, 2009.

Customers who have questions about this transition, call the FDIC toll-free at 1-800-430-6165 or visit the FDIC’s Web site here. The phone number will be operational Friday evening until 9 p.m., Pacific Standard Time (PST); on Saturday from 9 a.m. to 6 p.m., PST; on Sunday from noon to 6 p.m., PST; and thereafter from 8 a.m. to 8 p.m., PST.