MOLINE - Valley Bank has been forced to take a $25.5 million write-down on the value of its assets and has entered a corrective action agreement with state and federal regulators.
Larry Henson resigned as the bank's CEO and director in June and the bank has agreed to a consent order with the Federal Deposit Insurance Corporation and the Illinois Department of Financial and Professional Regulation, Division of Banking.
The order required the bank to hire a new president and CEO, subject to the approval of the FDIC and state regulators, and to to hire an accounting firm to perform a "full scope audit" of Valley's books.
Valley also must report weekly to the FDIC and state regulators regarding the progress made under the audit.
The audit, by accounting firm McGladrey LLP, is under way, Valley's board of directors also has moved to appoint Dennis Hanson as acting president and CEO.
"I'm very optimistic about the plans to restore the bank to satisfactory levels," Mr. Hanson said Friday. "I have every confidence in the ability of our staff and our shareholders are willing to work with us."
In a letter to shareholders dated Aug. 16, Jim Woods, vice-chairman of Valley's board of directors, said the bank was required to write-down assets valued at $25.5 million as a result of an "unfavorable examination" by the FDIC.
Mr. Woods said in the letter that the bank's leverage ratios were below regulatory thresholds and if they deteriorate further the bank could be subject to takeover by the FDIC.
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Valley Bank's parent company is River Valley Bancorp, Inc., and its senior lender has notified the company that it is in default and the lender has the right to proceed with collection action, Mr. Woods wrote to shareholders.
River Valley Bancorp also owns Freedom Bank in Sterling and Valley Bank Florida in Fort Lauderdale, Fla. Mr. Hanson said the company would consider selling either of those subsidiaries but wanted to retain Valley Bank as its core business.
Valley Bank was founded in 1993 in Eldridge, according to the bank's website, and is now headquartered in Moline.
The bank has 16 branches in Illinois and Iowa, including locations in Davenport, Moline and Bettendorf. Valley had 163 employees and had $583 million in assets as of March 31 and $534 million in liabilities, according to the FDIC.
The most recent bank to fail locally was Citizens First National Bank in Princeton last year, with the bank's deposits assumed byHeartland Bank and Trust Company.
Country Bank in Aledo failed in 2011 and was later acquired byBlackhawk Bank & Trust, according to the FDIC's website.