By Becky Yerak | A
consent order with U.S. and Illinois banking regulators requires Valley
Community Bank of St. Charles to raise capital, restrict dividends and
bolster its reserves for loan losses by at least $480,000.

Valley, with $155.2 million in assets and locations in St. Charles, Geneva, Batavia and North Aurora, posted an $816,000 loss in the first quarter. It has more than $20 million in loans that are either more than 90 days past due or not accruing any interest, as well as about $6 million in foreclosed real estate. It had total loans of $104 million as of March 31.

But the bank said it’s making progress in trying to sell some of those distressed assets.

The order, which imposes no fines or penalties, was effective April 29.

The bank, established in 1996, needs to raise about $7 million to be in compliance with the order. It had about $6.5 million in capital as of March 31.

Within 90 days of the effective date of the order, the bank shall achieve and maintain a Tier 1 leverage capital ratio of at least 9 percent and a total Risk based capital ratio of at least 13 percent.

At March 31, the bank’s Tier 1 leverage capital ratio was 4.35 percent and its total risk based capital ratio was 7.62 percent.

The company has hired Paul O’Connor of Angkor Strategic Advisors to help it raise the capital and/or sell the bank.

Bob Hoge, chief executive of Valley Community Bank, said the bank has already addressed, or taken steps to address, the requirements of the order and is confident the bank “will be successful in addressing all the matters raised in the consent order.”

  “I want to remind our customers that they still receive full deposit protection available through the FDIC,” Hoge said.  Standard deposit insurance is now $250,000.