The bank was constructed as a branch of the State Bank of Alabama, an entity created by the legislature in 1820 as a means to acquire funds without taxing the population. As a physical emblem showcasing the strength of the state banking system, Old State Bank was constructed in the latest architectural style – Greek Revival. The massive stone columns were designed to showcase the solidity of the state, the banking system, and even Decatur, by copying one of the most ancient and traditional architectural styles. Although the banking system had initial success, by 1842 the system was dissolved due to banking failures and internal corruption. The Decatur branch was liquidated and sold to Dr. Charles Dancy (of the Dancy-Polk house) and almost a dozen other shareholders. Little is known about the use of the building until 1862 when the building is believed to have served as a field hospital and at one time it housed soldiers from the 31st Ohio Infantry during the Civil War. The bank is one of only three buildings currently standing that survived that war.

In 1975 the American Legion donated the building back to the City of Decatur where it underwent a period of renovation before being utilized as a community center, museum, and event venue. At one time tourism had their offices in the building. When entire blocks of commercial buildings on Bank and Church Street were destroyed during Urban Renewal, the Old State Bank was the one building that the citizens insisted on leaving. Its constant presence is a defining feature of the city.