Mercantile Bancorp Inc., an Illinois bank holding company, sought bankruptcy protection with an agreement to sell virtually all its assets to United Community Bancorp Inc. for about $22.3 million, Bloomberg News reported today. The Quincy, Ill.-based company listed debt of more than $50 million and assets of less than $50 million in chapter 11 documents filed yesterday. Mercantile was forced to seek bankruptcy protection from creditors after “the precipitous decline in the financial markets during 2007 and 2008, foreclosure rates, delinquency rates and default rates” at the six subsidiary banks caused them to suffer “tremendous losses,” Chief Executive Officer Lee Roy Keith said in an affidavit. The company sold three of those bank subsidiaries in 2009 for $53.6 million, in an attempt to “right the ship.” The efforts were unsuccessful and its Heartland Bank and Royal Palm Bank were closed by state regulators in July 2012 and the Federal Deposit Insurance Corp. took over as receiver.
