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) as
receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement
with Bank of the Ozarks, Little Rock, Arkansas, to assume all of the deposits and essentially all
of the assets of Horizon Bank.

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

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 dramatic
declines in the value of Florida real estate resulted in a wave of loan defaults.   A May 2009
regulatory exam resulted in Horizon Bank charging off a significant amount of commercial and
real estate loans which caused the bank’s total risk-based capital to fall below required minimum
levels.

In August 2009 the Atlanta Federal Reserve Bank declared Horizon Bank to be undercapitalized
and 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 Federal
Reserve to immediately take measures to make the Bank adequately capitalized.  Horizon
Bancorporation’s attempt to raise additional capital in a secondary stock offering were
unsuccessful and regulators were forced to close the bank.

Shareholders in Horizon Bancorporation are facing a complete loss as the stock last traded today
at 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 FDIC
did not receive a premium on the sale of Horizon’s deposits to Bank of the Ozarks.  The FDIC
and Bank of the Ozarks entered into a loss-share transaction on $150.4 million of Horizon
Bank’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 and
is based in Little Rock, Arkansas.  The company’s stock price and earnings have recovered
significantly 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 the
twenty-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 down
Friday by the Florida Office of Financial Regulation and received by the Federal Deposit
Insurance 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 this
year 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 Horizon
Bank following a purchase and assumption agreement with FDIC.

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

“Deposits 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 notice
from Bank of the Ozarks on completion of systems changes to allow its other branches to process
their 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. Loan
customers 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 million
in total deposits.

Bloomberg

Horizon Bank Closed by Regulators, Is 119th Failure of 2010

September 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 in
Little Rock, Arkansas, according to a statement on the Federal Deposit Insurance Corp.’s
website. The closure cost the agency’s deposit-insurance fund $58.9 million.

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

The FDIC’s list of “problem” banks climbed to 829 lenders with $403 billion in assets at the end
of 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 in
the state, marking the 119th U.S. bank failure of 2010.

“The bank was closed by the Florida Office of Financial Regulation after its regular closing
time 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 to
assume all of the deposits of the failed bank.”

“Following 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. bank
failures 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 high
unemployment rate continue to take their toll on such institutions. Failure of both residential and
commercial 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 banking
system has worsened, increasing the possibility of more bank failures. Economic threats emanating
from the European debt crisis, the impact of tighter regulations of the new financial reform law and
weak 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 the
safety 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 red
with a deficit of $15.2 billion.
 
The failed Horizon Bank is expected to cost the FDIC about $58.9 million.”