Valley Community acquired by First State Bank

Valley Community Bank, in St. Charles, which had been under tight government scrutiny for more than a year, was closed Friday but all of its locations will reopen Saturday as branches of First State Bank of Mendota.

The Illinois Department of Financial and Professional Regulation Division of Banking closed the St. Charles-based bank and appointed the Federal Deposit Insurance Corporation as the receiver.

The FDIC then arranged a so-called marriage, or acquisition, where First State Bank of Mendota acquired all deposits and assets of Valley Community in order to protect depositors. Each location of Valley Community — in St. Charles, Geneva, Batavia and North Aurora — will reopen during their normal business hours on Saturday as branches of First State.

“Now our emphasis is on turning it around,” said FDIC spokesman David Barr. A spokeswoman for the Illinois Department of Financial and Professional Regulation could not comment further and instead referred all questions to state documents, including an April 2010 consent order between the government and the bank.

As of Dec. 31, Valley Community had about $123.8 million in total assets and $124.2 million in total deposits. In addition to assuming all of the deposits of the failed bank, First State Bank agreed to purchase essentially all of the assets.

Valley Community officials had signed a consent document last April, agreeing to a strict set of deadlines to boost capital and follow banking laws and regulations. The document said Valley Community did not admit to or deny any “charges of unsafe or unsound banking practices,” the order said. It had been under scrutiny for being under capitalized.

Depositors of Valley Community will then become depositors of First State. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage up to applicable limits. Customers of Valley Community Bank should continue to use their existing branches until they receive notice from First State Bank that it has completed systems changes to allow other First State Bank branches to process their accounts as well, the FDIC said.

Depositors of Valley Community can access their money by writing checks, 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.

Customers who have questions can call the FDIC toll-free at (800) 357-7599.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $22.8 million.

The last FDIC-insured institution closed in the state was Community First Bank in Chicago on Feb. 4.