Valley Community Bank, St. Charles, Illinois, joined the failed bank list today as the Illinois Department of Financial and Professional Regulation swooped in to close the bank. The FDIC was appointed as receiver to protect depositors and sold the failed bank to First State Bank, Mendota, Illinois, which will assume all deposits of Valley Community.
The five branches of Valley Community Bank will reopen under normal business hours on Saturday as branches of First State. Depositors will have full access to their money over the weekend and all customers of Valley Community will automatically become depositors of First State Bank.
Valley Community was a privately owned community bank that collapsed under a mountain of bad loans. The troubled asset ratio of the Bank was 363% compared to a national average of 15%. Once a bank’s troubled asset ratio hits 100%, it is almost a certainty that the bank will fail.
Community Valley was established in 1996. The Bank was small with only $124.2 million in total deposits at the time of closing. According to the Bank’s website:
Valley Community Bank is a true independent Community Bank owned by the residents of the communities it serves, local people who believe in the community banking concept…old fashioned banking service with modern products and technology.
While most banks offer similar services, it is the people who make the difference. Visit Valley Community Bank and experience the difference!
This is the first acquisition of a failed bank by First State which was founded in 1940 and is locally owned. First State is the 63rd largest bank in Illinois, has over 400 employees and is well capitalized. First State will purchase all of the assets of failed Valley Community which amounted to $123.8 million.
Valley Community is nation’s 23rd banking failure of the year and the second in Illinois. The failure of Valley Community is expected to cost the FDIC Deposit Insurance Fund $22.8 million. Small banks have found it very difficult to raise additional capital and account for the majority of banking failures over the past two years as real estate markets remain depressed.