Horizon Bank

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Horizon Bank, Bradenton, FL, Closed By Regulators

By Bill Zielinski on September 10th, 2010

September 10, 2010 - Horizon Bank, Bradenton, Florida, was closed by the Florida Office of

Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) asreceiver. To protect the depositors, the FDIC entered into a purchase and assumption agreementwith Bank of the Ozarks, Little Rock, Arkansas, to assume all of the deposits and essentially allof the assets of Horizon Bank.

All four branches of Horizon Bank will reopen on Monday as of branches of the Bank of theOzarks and all Horizon Bank depositors will automatically become depositors of Bank of theOzarks.

Horizon Bank, a mid sized commercial bank owned by parent company Horizon Bancorporation,Inc. was chartered in 1998. Horizon Bancorporation conducted an initial public offering in 1999

which raised approximately $5 million to capitalize Horizon Bank.

In early 2009 Horizon Bank suffered serious deterioration in its financial condition as dramaticdeclines in the value of Florida real estate resulted in a wave of loan defaults. A May 2009regulatory exam resulted in Horizon Bank charging off a significant amount of commercial andreal estate loans which caused the bank¶s total risk-based capital to fall below required minimumlevels.

In August 2009 the Atlanta Federal Reserve Bank declared Horizon Bank to be undercapitalizedand required the bank to submit a capital restoration plan. Subsequent attempts by Horizon Bank to raise additional capital were deemed inadequate by regulators.

On March 4, 2010, Horizon was issued a Prompt Corrective Action by the Board of the FederalReserve to immediately take measures to make the Bank adequately capitalized. HorizonBancorporation¶s attempt to raise additional capital in a secondary stock offering wereunsuccessful and regulators were forced to close the bank.

Shareholders in Horizon Bancorporation are facing a complete loss as the stock last traded todayat 13 cents. Horizon¶s stock had traded as high as $14 per share in 2007.



HZNB.OB Horizon Bancorporation -Courtesy Yahoo Finance

Horizon Bank had $187.8 in total assets and $164.6 in total deposits at June 30, 2010. The FDICdid not receive a premium on the sale of Horizon¶s deposits to Bank of the Ozarks. The FDICand Bank of the Ozarks entered into a loss-share transaction on $150.4 million of HorizonBank¶s assets under which the FDIC and Bank of the Ozarks will share in the losses on the failed bank¶s assets.

Bank of the Ozarks had received $75 million under the Troubled Asset Relief Program but fully paid back the Treasury in November 2009. Bank of the Ozarks has over $3 billion in assets andis based in Little Rock, Arkansas. The company¶s stock price and earnings have recoveredsignificantly since the lows of 2008.



OZRK - COURTESY STOCKCHARTS.COM

The estimated loss to the FDIC Deposit Insurance Fund for the failure of Horizon Bank is $58.9

million or 31% of Horizon¶s total assets. Horizon is the 119th banking failure of 2010 and thetwenty-third in Florida. Florida now leads the nation in banking failures (see Banking Failures by State).

Florida¶s Horizon Bank Shuts Down

Bradenton, Florida, United States (AHN) ± Horizon Bank based in Bradenton was shut downFriday by the Florida Office of Financial Regulation and received by the Federal DepositInsurance Corporation (FDIC) to protect depositors.

Florida¶s Horizon Bank Shuts Down

The closure listed Horizon Bank as the 119th FDIC-insured institution to fail nationwide thisyear and the 23rd in Florida. The last closure in the state was that of Community National Bank at Bartow, Bartow Aug. 20.



The Bank of the Ozarks based in Little Rock, Arkansas has assumed all deposits of HorizonBank following a purchase and assumption agreement with FDIC.

The four branches of Horizon Bank will reopen Monday as branches of Bank of the Ozarks withdepositors of the former automatically transferred to the latter.

³Deposits will continue to be insured by FDIC, so there¶s no need for customers to change their banking relationship to retain their deposit insurance coverage,´ FDIC said in a statement.

Customers of Horizon Bank should continue to use their existing branch until they receive noticefrom Bank of the Ozarks on completion of systems changes to allow its other branches to processtheir accounts as well.

Over the weekend, depositors of Horizon Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loancustomers should continue to make their payments as usual.

As of June 30, Horizon Bank had approximately $187.8 million in total assets and $164.6 millionin total deposits.

Bloomberg

Horizon Bank Closed by Regulators, Is 119th Failure of 2010September 10, 2010, 7:38 PM EDT

Sept. 10 (Bloomberg) -- Regulators closed Bradenton, Florida¶s Horizon Bank and sold it to

Bank of the Ozarks as the number of U.S. lenders closed this year climbed to 119.

Horizon Bank¶s $164.6 million in deposits will be transferred to Bank of the Ozarks, based inLittle Rock, Arkansas, according to a statement on the Federal Deposit Insurance Corp.¶swebsite. The closure cost the agency¶s deposit-insurance fund $58.9 million.

³Deposits will continue to be insured by the FDIC, so there is no need for customers to changetheir banking relationship in order to retain their deposit insurance coverage,´ the FDIC said.

The FDIC¶s list of ³problem´ banks climbed to 829 lenders with $403 billion in assets at the endof the second quarter, a 7 percent increase from the 775 on the list in the first quarter, the FDIC

said last month. Banks are suffering from real estate losses and a sluggish economic recovery.

Federal regulators on late Friday closed the Florida-based Horizon bank and its four branches inthe state, marking the 119th U.S. bank failure of 2010.

³The bank was closed by the Florida Office of Financial Regulation after its regular closingtime on Friday. The Federal Deposit Insurance Corp. (FDIC) said it immediately entered into a



purchase and assumption agreement with the Bank of the Ozarks in Little Rock, Arkansas toassume all of the deposits of the failed bank.´

³Following a lull in bank failures for the last week of August and the first week of September, U.S.regulators last Friday shuttered Bradenton, Florida-based Horizon Bank, pushing up U.S. bankfailures to 119 so far in 2010. This compares with a total number of 140 bank failures in 2009, 25 in

2008 and just 3 in 2007.

While the bigger banks benefited greatly from the various programs launched by the government,many smaller banks are still weak. Tumbling home prices, soaring loan defaults and a highunemployment rate continue to take their toll on such institutions. Failure of both residential andcommercial real estate loans as a result of the credit crisis has primarily hurt banks.

With the industry absorbing bad loans made during the credit explosion, the trouble in the bankingsystem has worsened, increasing the possibility of more bank failures. Economic threats emanatingfrom the European debt crisis, the impact of tighter regulations of the new financial reform law andweak economic growth data further add to the concerns.

Horizon Bank had total assets of about $187.8 million and total deposits of about $164.6 million as of June 30.

This recent failure represents another blow to the Federal Deposit Insurance Corporation (FDIC)fund meant for protecting customer accounts, as it has been appointed receiver for the bank.

The FDIC insures deposits in 7,830 banks and savings associations in the country and promotes thesafety and soundness of these institutions. When a bank fails, the FDIC reimburses customers for deposits of up to $250,000 per account.

Though the FDIC managed to shore up its deposit insurance fund during the last couple of quarters,the outbreak of bank failures has tested its limits. As of June 30, 2010, the fund remained in the redwith a deficit of $15.2 billion.

The failed Horizon Bank is expected to cost the FDIC about $58.9 million.´

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Horizon Bank