First State Bank purchase ends Valley Community Bank troubles
The purchase of Valley Community Bank late last month wasn’t the first time First State Bank of Mendota had done business in the Fox Valley.
But for the downstate financial services company, the acquisition of the failed Tri-Cities bank would mark the first time First State Bank had brought its array of banking services to the suburbs directly.
On Feb. 25, federal and state banking regulators ordered the St. Charles-based Valley Community Bank to close. The regulators then immediately facilitated a transfer of Valley Community Bank’s holdings to First State Bank of Mendota.
The very next day, Valley Community Bank’s five local branches opened for business as the first Tri-Cities branches of First State Bank.
The sale ended a troubled final two years for Valley Community Bank, which had served the Tri-Cities and surrounding communities since the mid-1990s. Stung by losses on bad loans made to local builders, VCB had operated since the spring of 2010 under an order from federal banking regulators to improve its financial standing.
The bank had, in late 2009, announced a deal with a group of Chicago-area investors to take ownership of VCB. That deal fell through just before it closed in early 2010, however, and the bank was forced to scramble to find other ways to raise capital.