During an emotional news conference Friday night, Giannoulias reacted to the news.
"It is an incredibly sad and heartbreaking day for me and for my family," Giannoulias said.
However, the candidate says his campaign will move forward.
The building formerly known as Broadway Bank is located at 5960 North Broadway.
It only took an hour for the new owners to erase the identity of the bank the Giannoulias family spent three decades building.
"Tonight, after months of struggling to get out from under the weight of the collapsed economy, the doors of my father's business closed for the last time, and a community will never be the same," said Giannoulias.
Federal bank regulators swooped in and swarmed Broadway Bank at closing time Friday. The sign on the door said it all: "Broadway Bank is conducting its business in an unsafe and unsound manner."
CLICK HERE to see the notice posted in the bank's front window.
"The reason why the bank failed is because it had significant losses in its acquisition development, as well as in its construction loans. That -- coupled with the weak real estate market-- is what happened to this institution," said the FDIC's Rickey McCullough.
MB Financial scooped up the assets.
A source tells ABC7 Chicago federal regulators had been in and out Broadway Bank for the last several months, preparing for a smoothe transition to government control and the expected sale to a bigger, healthier bank.
Earlier Friday, customers confirmed that bank employees told them a takeover would happen later in the day.
"They said it would no longer be Broadway Bank on Monday, but our funds are safe under the FDIC," said Bob Kitsos, Broadway Bank customer.
Last year, 140 banks failed across the country. There have been 57 closures so far this year.
Friday alone in Illinois, Broadway is one of seven banks shutdown by the FDIC.
"There's plenty of blame to go around, and blame also falls on bank regulatory authorities who certainly should have seen these growing concentrations of real estate construction and development lending and done something about it," said Justin Barr of Loan Workout Advisers.
The FDIC says customers have nothing to worry about; their money is safe, and Saturday will be business as usual at the bank, albeit with a new name. More information about the takeover can be found at www.fdic.gov/bank/individual/failed/broadway.html.
"We need to make research see if we still want to put our money in this bank," one customer said Friday.
"They guarantee everything okay regarding new owner. Everything be fine," said another.
The bank's failure is undercutting the campaign of Senate candidate Alexi Giannoulias. His father founded the bank. Alexi was a senior loan officer and cited his experience as his chief credential in his campaign for his current job: state treasurer.
STATEMENT By Demetris Giannoulias, bank president and Alexi Giannoulias' brother:
"This is a difficult day for bank employees, for my family, for this community and for all those who built businesses and protected their savings with the help of this bank. We want to assure our customers that their accounts are fully protected with the money that we and other banks have paid to the FDIC insurance fund over the years.
"We fought to carry out the vision my father had when he founded Broadway Bank 30 years ago, but our bank -- like many businesses -- has struggled during these challenging times. There are thousands of small banks at risk in this country and we hope they can remain in operation to help rebuild our economy."
Broadway got into trouble loaning money to real estate developers just before the bust. Other local banks are facing the same federal takeover, but none are run by the family of an up-and-coming politician.
The other banks the FDIC says were closed Friday include:New Century Bank, Chicago, IL Citizens Bank and Trust Company of Chicago, Chicago, IL Wheatland Bank, Naperville, Illinois Peotone Bank and Trust Company, Peotone, Illinois Lincoln Park Savings Bank, Chicago, Illinois. Amcore Bank, N.A., Rockford, IL
"Amcore is another bank on the ropes. It is three or four times bigger than Broadway. From a business perspective, Amcore is a way bigger story, but the detail of a U.S. Senate candidate makes it more interesting," said Brian Battle, Performance Capital Partners.
"It's really not that unusual," Battle said. "The fact the bank is going under, it's family owned, lost money in real estate, is really an average story theses days in the banking industry."
Before the takeover, Demetrius Giannoulias wrote in a letter to the Chicago Tribune,, "All we seek is a chance to pull ourselves up. We may not be too big to fail but we shouldn't be too small to live."
Demetrius was referring to the bailouts that went to big banks but not community banks. Broadway Bank's executives had been hoping to have more time to re-establish the bank. They said they wouldl have a lot of assets when the feds moved in and sold it off as a 'fire sale.'
When the FDIC takes over a bank, employees typically get to keep their jobs. ABC7 is told that will likely be the case with the 65 people who work for Broadway Bank.