The new year got off to a great start, with stock markets climbing and only one bank failing the first week of the year. However, now that the honeymoon period is over, it looks like we are back to the slew of bank failures we saw last year, with three banks failing last Friday.
Closed
Horizon Bank
The largest bank to fail this year has been Horizon Bank of Bellingham, Washington, which closed its 18 branches on January 8th. The FDIC went into a purchase agreement with Washington Federal Savings and Loan to assume all deposits of Horizon Bank, which were estimated to be $1.1 billion as of September of last year, with an additional $1.3 billion in assets.
Failures in Illinois, Minnesota and Utah
The three banks to fail last week were all smaller than Horizon, but in perhaps a more frightening turn of events, the FDIC was unable to find an assuming institutions for one of them, demonstrating that the market may not be willing or able to absorb any more failed banks.
The institution that was unable to find a buyer of its assets was the Barnes Banking Company of Kaysville, Utah. Of course, depositors accounts are still insured up to the $250,000 limit, and in order to make sure that all despoitors are able to recover their money the FDIC created the Deposit Insurance National Bank of Kaysville which will remain open until February 12, 2010, to allow customers time to open accounts at another institution.
The Last Year of High Bank Failure Rates?
While experts are saying that bank failures are expected to continue and even increase this year, many are hoping that this will be the peak of failures, and the rate will start to decline by the end of 2010 and into early 2011. Hopefully the FDIC will be able to continue finding banks willing to assume the failed assets of these banks however, as paying out the insurance on these last four banks cost the Deposit Insurance Fund an estimated $835.4 million.
For more information on bank failures in 2010, visit our new 2010 Failed Bank List here.
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