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Business & Tech

Valley Community Bank Shuts Down, Reopens as First State Bank

The Valley Community Bank was closed Friday.

St. Charles-based , which has branches in Geneva and Batavia, was closed at 5 p.m. Friday by the Illinois Department of Financial and Professional Regulation.

The bank has reopened this morning (Saturday) and is operating under the name of the bank that is in the process of acquiring it—First State Bank of Mendota, IL.

Gerald Billings, senior ombudsman specialist for the Federal Deposit Insurance Corporation, said Saturday morning that about 70 employees of the FDIC were in town to make sure the transition goes smoothly.

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Billings assured bank customers that their funds are secure.

"That would be the case even if we had issues looking though the assets of the bank," he said. "The FDIC is a regulator and ensurer of deposits, and depositors are guaranteed their funds regardless of the closing of the bank. So everyone’s money is safe."

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He also said that no positions had been cut at this time.

"Everyone has a job," he said. "They (First State Bank) need these folks to run the branches. There may be some change along the road. But I would say at this point  everyone has their jobs."

The five branches of Valley Community Bank—in St. Charles, Geneva and Batavia—reopened during their normal business hours as branches of First State Bank, an FDIC press release said.

The press release goes on to say the following:

Depositors of Valley Community Bank will automatically become depositors of First State Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order 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.

Over the weekend, depositors of Valley Community Bank can access their money by writing checks or 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.

As of December 31, 2010, Valley Community Bank had approximately $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.

Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-357-7599. The phone number will be operational this evening until 9 p.m., Central Standard Time (CST); on Saturday from 9 a.m. to 6 p.m., CST; on Sunday from noon to 6:00 p.m., CST; and thereafter from 8 a.m. to 8 p.m., CST. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/valleycomm.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $22.8 million. Compared to other alternatives, First State Bank's acquisition was the least costly resolution for the FDIC's DIF. Valley Community Bank is the 23rd FDIC-insured institution to fail in the nation this year, and the second in Illinois. The last FDIC-insured institution closed in the state was Community First Bank-Chicago, Chicago, Illinois, on February 4, 2011.

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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,757 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). 

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