Valley Bank of Fort Lauderdale, Florida, was one of two banks shuttered by regulators today. The other banking failure was Valley Bank, Moline, Illinois. Both failed banks were owned by the same holding company, River Valley Bancorp, Inc., Davenport, IA. The holding company was not included in the bank closings or the receivership.
Florida state regulators closed Valley Bank and thereafter appointed the FDIC as receiver. To protect depositors, the FDIC sold the failed bank to Landmark Bank, N.A., Fort Lauderdale, FL, which assumed all deposits of failed Valley Bank.
Although Valley Bank of Fort Lauderdale was relatively small with only $81.8 million in total assets, Valley Bank, Moline, Illinois, was the largest banking failure of the year in terms of total assets.
Valley Bank has been around for almost half a century, having been established in October 1974. The Bank had been under regulatory scrutiny since 2009 and had agreed to a consent order with the FDIC dated December 18, 2013, in which the FDIC detailed numerous unsafe or unsound banking practices and violations of law, rule, or regulation alleged to have been committed by the Bank. Valley Bank was unable to comply with the orders issued by the FDIC consent order and became significantly undercapitalized which lead to its failure.
All four branches of Valley Bank will reopen as branches of Landmark Bank and FDIC deposit insurance coverage will continue uninterrupted for depositors of the failed bank. Over the weekend depositors of Valley Bank can access their money through the use of checking accounts, ATMs, and debit cards.
At March 31, 2014, Valley Bank had total assets of $81.8 million and total deposits of $66.5 million. Landmark Bank agreed to purchase all of Valley Bank’s assets from the FDIC. Keeping failed banking assets in the private sector is considered the most cost effective approach by the FDIC in resolving failed bank.
The cost to the FDIC deposit insurance fund for the failure of Valley Bank is $7.7 million. Valley Bank becomes the 11th banking failure of 2014 and the first in Florida.