BELLINGHAM - Horizon Bank was shut down by government regulators on Friday, Jan. 8, and then taken over by Seattle-based Washington Federal Inc.
Stung by non-performing construction loans and a deteriorating real estate market, the Bellingham-based company was the first bank shut down by government regulators in 2010. The Federal Deposit Insurance Corp. put Horizon under a cease-and-desist order in March 2009. Horizon was issued a "prompt corrective action directive" by the FDIC on Dec. 3, giving the bank 30 days to either bring in new capital or combine with another bank.
For most Horizon customers, little will change. They can still write checks and use their ATM cards. Online services also will remain available.
Most of Horizon's Whatcom County branches will reopen Monday, Jan. 11, as branches of Washington Federal. The Barkley and Meridian branches will reopen Saturday, Jan. 9, under normal hours as Washington Federal.
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Washington Federal representatives will be at the Barkley and Meridian branches Saturday morning to answer customer questions.
Horizon Bank was first closed by the Washington State Department of Financial Institutions, which appointed the FDIC as a receiver. Then the FDIC entered into a purchase and assumption agreement with Washington Federal. The FDIC estimates that the cost to the Deposit Insurance Fund will be $539.1 million.
The FDIC covers money deposited in savings accounts, checking accounts and certificates of deposit up to $250,000. That isn't a strict per-person limit - it can be $250,000 per category, such as single, joint, held-in-trust and retirement accounts. The FDIC will notify each customer in writing that Horizon Bank has been taken over by Washington Federal.
Because Washington Federal and Horizon Bank have different computer systems, Horizon customers won't immediately be able to access their accounts at Washington Federal's lone Whatcom County office at 1100 Lakeway Drive, said Roy M. Whitehead, chairman and CEO of Washington Federal.
Likewise, customers of Washington Federal prior to Friday's takeover won't immediately be able to do transactions at former Horizon Bank offices.
The initial scene after the takeover on Friday evening at Horizon's headquarters seemed relatively calm.
As FDIC lawyers and accountants in dark suits wheeled their luggage in the front entrance of Horizon Bank off Champion Street, a customer ambled up to get some cash from the ATM. It worked.
Ray Rudnicki, an FDIC ombudsman based in Irvine, Calif., said that's the experience his agency hopes all the failed bank's customers will have: no disruption.
"We're here to make sure there's a smooth transition," Rudnicki said.
Between 50 and 60 FDIC personnel came to Whatcom County to manage the transition. That includes everyone from lawyers and accountants to the uniformed, sidearm-wearing security guards who stood inside the locked front doors as employees and FDIC people got to know each other in the main lobby.
Rudnicki said the FDIC staff would be busy going over the bank's books to make sure the transition goes smoothly.
Before the takeover of Horizon's 18 branches, Washington Federal had 124 offices throughout Washington state, and 26 more in Arizona, Idaho, Nevada, Oregon, Texas, Utah and New Mexico.
Originally founded in 1922, Horizon Bank has played a significant role in funding area projects, whether in construction, business or consumers getting home loans, said Ken Oplinger, president of the Bellingham/Whatcom Chamber of Commerce & Industry.
"The closing of Horizon is very unfortunate to this community," Oplinger said. "They were important when it came to funding local construction projects, which was also what got them into the issues that led to the closure. I think many people will be sad to see it go."
Horizon Bank had $778.2 million in Whatcom County deposits as of June 30. That's 24.6 percent of Whatcom County's total deposits, the highest market share among the 16 banks that have branches in this area.
ABOUT WASHINGTON FEDERAL
The Seattle-based savings and loan took over Bellingham-based Horizon Bank on Friday, Jan. 8
Some key facts about Washington Federal:
Founded in 1917 as Ballard Savings and Loan Association.
Holding company, Washington Federal Inc., is publicly traded.
Local office at 1100 Lakeway Drive.
124 offices in Washington, with other locations in Arizona, Idaho, Nevada, Oregon, Texas, Utah and New Mexico.
Claims "nearly twice the capital considered to be 'well-capitalized.'"
Source: Company Web site
ABOUT HORIZON BANK
Officers: V. Lawrence Evans, chairman; Rich Jacobson, president and CEO.
Board of directors: Robert C. Diehl, Gary E. Goodman, James A. Strengholt, Robert C. Tauscher, V. Lawrence Evans, Richard P. Jacobson.
Total assets: $1.3 billion, as of Sept. 30, 2009.
Total deposits: $1.2 billion, as of Sept. 30.
Number of branches: 18 in four counties.
Other notes: Had the highest market share of deposits in Whatcom County as of June 30, 2009, with $778.2 million. Horizon's market share was 24.6 percent; Peoples Bank has the next highest market share at 18.8 percent.