Loading ...FDIC: Horizon Bank “Unsafe or Unsound”
The Horizon Bank in Pine City is one of five banks in Minnesota that received orders to cease and desist from the Federal Deposit Insurance Corp. The FDIC says the bank is engaging in “unsafe or unsound business practices”.
The announcement was made public, Friday, February 27th, but is based on an investigation in January.
The order finds the bank, was “operating with inadequate capitol and an inadequate allowance for loans and leases held,” “operating with inadequate liquidity in light of the Bank’s assets and liquidity mix,” and “operating with an excessive level of adversely classified loans or assets. ”
In order to get back into compliance, the FDIC ordered the bank “immediately obtain and maintain a sufficient level of capital for a Total Risk-Based Capitol of not less than 12 percent and a Tier 1 Leverage Capital Ratio of not less than 8 percent.”
Horizon must also submit a written report “describing the primary means and timing by which the bank shall increase its capital ratios.” The plan must also detail contingency plans for the sale, merge, or liquidation of the bank in case the capital funds are not available.
The bank will face legal action if it continues regular activity.
On February 6th, Horizon issued this statement on their website, “Recently, to counter the effects of the housing downturn on our loan business, we have adjusted our business model. We have significantly increased the funds we hold in reserve to compensate for loans that may go into default. We are also forging new customer relationships that will ensure that we’re in a strong position when the economy recovers.”
Horizon has branches in both Pine City and North Branch. At the end of 2008, Horizon in Pine City had ove $92-million in assets.