FDIC Reports One Bank Failure To Start New Year Following The Most Costly Year In History
Following a year of record bank failures, the Federal Deposit Insurance Corporation announced just one bank failure for the first week of 2010. Horizon Bank of Bellingham, WA saw its assets and deposits seized by regulators on Friday and the FDIC was named receiver of the failed bank.
The one bank closure to kickoff 2010 is a welcome sign after the agency had to take over 140 failed banks in 2009, costing its deposit fund more than $36 billion. That figure easily marks the most costly year of bank failures in U.S. history.
Though 534 banks failed in 1989, the cost of those failures was not nearly as high as what was incurred in 2009. In fact, the four-year period from 1987 to 1992, which saw 1,049 bank failures, cost nearly $30 billion, still short of the 2009 losses.
In a press release, the FDIC said Horizon Bank will reopen on Monday as branches of Washington Federal Savings and Loan Association. Horizon deposits will continue to be insured by the FDIC.
The bank had roughly $1.3 billion in total assets and $1.1 billion in deposits as of September 30, 2009. Washington Federal Savings and Loan did not pay the FDIC a premium to assume all of Horizon’s deposits and will purchase just about all $1.3 billion of the banks assets.
Washington Federal entered into a loss sharing agreement with the FDIC on $1 billion of Horizons assets. By entering into a loss share agreement with Washington Federal, the FDIC keeps Horizon assets in the private sector where returns can be better maximized.
Elsewhere, the FDIC also announced Friday that it sold $1 billion in commercial real estate loans to a private investment fund managed Colony Capital. The FDIC received the loans through failed banks and said they mainly secure loans for properties in Georgia, California, Florida and Nevada.
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