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Valley Bank Gets Cease-And-Desist Order and Takes Corrective Action
Posted By News On October 1, 2009 @ 6:30 am In Today’s Local News | Comments Disabled
The Federal Deposit Insurance Corporation, or FDIC, and the state of Illinois issued a cease-and-desist order to Valley Bank, which has 21 banking locations in Iowa, including branches in Knoxville and Oskaloosa.
The order states that the bank has engaged in a number of unsafe or unsound banking practices, including allowing the bank’s financial condition to deteriorate, and insufficient liquidity. The bank has a variety of deadlines to comply with various orders, including a December 31 deadline to submit a profit plan and budget. Susan Hofer, with the state of Illinois Department of Financial and Professional Regulation states that fewer than 20 banks in Illinois have received similar orders so far this year, out of the approximately 500 banks registered in Illinois.
Denny Hansen, Regional President of Valley Bank, Clive, tells KNIA KRLS News that the order relates to investment losses from the purchase of Moody’s triple A rated mortgage bonds that turned ‘toxic’ resulting in an approximate 9 million dollar loss for the bank. Similar losses in the financial industry helped bring the US economy into a recession, with a government response of bailing out banks with the Troubled Asset Relief Program, or TARP.
Hansen relates that rather than take TARP funds, Valley Bank absorbed the losses, has increased its liquidity, and returned to a well capitalized position and is well on the way to meeting the orders specified by the FDIC and the State of Illinois. He also states that day to day operation of the bank continues as normal, that all depositor assets are safe and FDIC insured.
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