Horizon Bank becomes first failure of 2010

Regulators seized Horizon Bank in Bellingham, Wash., on Friday, making it the first bank failure of 2010.

The Federal Deposit Insurance Corp. arranged for Washington Federal Savings and Loan Association to take over Horizon's 18 branches, $1.1 billion in deposits and $1.3 billion in assets.

The FDIC and Washington Federal entered into a loss-sharing arrangement covering roughly $1 billion of the failed bank's assets.

Washington Federal is based in Seattle. It received $200 million in aid through the Treasury Department's Troubled Asset Relief Program in 2008, but repaid the money last May, citing "onerous additional restrictions'' imposed by Congress.

State and federal regulators issued a cease-and-desist order to Horizon in March, instructing the bank to raise capital, reduce certain types of lending, suspend stock dividends and take other actions to boost its financial strength.

On Dec. 3, the FDIC gave Horizon 30 days to either lift its capital ratios to acceptable levels or find a buyer or merger partner.

The FDIC said that the failure would cost its deposit insurance fund an estimated $539.1 million.