Wednesday, January 13, 2010

First Bank Closure of 2010

On January 8, 2010 the FDIC failed Horizon Bank in Bellingham, Washington. Here is the forensic page for this bank.

Horizon Bank

Note from the data that the first indications this bank was in trouble was in early 2008. At the end of 2007, the bank's Federal Home Loan Bank (FHLB) advances exceeded the 15% maximum and crossed into territory the FDIC considers to be a Moral Hazard. One quarter later(in March 2008), the lending default rate went from 1.6 basis points to 26.1 basis points. A basis point is 1/100th of 1 percent.

The track record of the next two years shows things worsening progressively finally resulting in the first FDIC closure of 2010.