Two area banks downgraded; one upgraded

First Federal Savings Bank of Champaign-Urbana was one of two area banks downgraded in the latest ratings from BauerFinancial. It was downgraded from 5-star ("superior") to 4-star ("excellent"), based on data for the quarter that ended Dec. 31.

Also downgraded was Milford Building & Loan Association, which went from 3 1/2-star ("good") to 3-star ("adequate"). It was the second consecutive quarterly downgrade for the Iroquois County institution, which fell from 4-star to 3-star based on data from the previous quarter.

The only area bank to receive an upgrade in the most recent quarter was Flanagan State Bank, which has a branch in LeRoy. it was upgraded from 3 1/2-star to 4-star.

First Federal, which had held a 5-star rating for 26 consecutive quarters, declined to comment on the downgrade.

First Federal had $353,000 in net income for the quarter that ended Dec. 31, according to its quarterly report to the Office of Thrift Supervision. At year's end, the bank's assets totaled $160 million.

Milford Building & Loan showed a net loss of $26,000 in the fourth quarter, according to Office of Thrift Supervision records.

Craig Luke, managing officer for Milford Building & Loan, said the fourth-quarter loss was due to expenses incurred in taking back properties. He said the institution had net income of $125,000 for 2011.

Luke said he hadn't had communications from BauerFinancial and didn't know the reason for the downgrade. But he said the bank took back properties, accepting deeds in lieu of foreclosures, and he wondered whether the rating service might have "frowned" on that.

He said last year was the first year the bank "got hit" by such repossessions, which are categorized as non-performing assets.

"Hopefully, we're back on the right track, and better days are on their way," Luke said.

Two banks included in previous ratings disappeared from this round, as a result of being merged into other banks.

Freestar Bank merged into First Financial Bank of Terre Haute, Ind., in late December. Earlier that month, First National Bank of Ivesdale was merged into its sister bank, the State Bank of Bement.

Also disappearing from the list of area banks was Centrue Bank, which sold its office in Champaign to Springfield-based Marine Bank. Centrue continues to operate elsewhere and was upgraded from zero-star ("lowest") to 1-star ("troubled").

Seventy-three banks in East Central Illinois maintained their previous quarter's rating. More than half of those — 38 — received 5-star ratings, the highest level that BauerFinancial gives.

Champaign-based CIBM Bank continued to receive a 2-star ("problematic") rating. The bank operates locally as Central Illinois Bank.

BauerFinancial bases its ratings on capital ratios, profitability trends, levels of delinquent loans, charge-offs and repossessed assets, liquidity, historical data and supervisory ratings by regulatory agencies.

BauerFinancial is one of several bank-rating services. It differentiates itself from others by making its ratings accessible to the public.

Here's the breakdown of its ratings of 76 banks with offices in East Central Illinois based on data from the quarter that ended Dec. 31:

5 stars ("superior")

38 banks

Arcola First Bank; Bank of Rantoul; Buckley State Bank; Cissna Park State Bank; Commerce Bank; Community Bank of Hoopeston; DeWitt Savings Bank, Clinton; Farmer City State Bank; Farmers State Bank, Danforth; First Bank & Trust Savings Bank, Paris; First Federal Savings & Loan, Mattoon; First Financial Bank of Terre Haute, Ind.; First National Bank & Trust, Clinton; The First National Bank, Mattoon; First National Bank in Paxton; First National Bank of Chrisman; First National Bank of Nokomis; First Neighbor Bank, Toledo; First Savings Bank, Danville; First State Bank, Monticello; First Trust and Savings Bank, Watseka; Hardware State Bank, Lovington; Heartland Bank & Trust, Bloomington; Iroquois Farmers State Bank; Iroquois Federal Savings and Loan; Peoples Bank & Trust; Philo Exchange Bank; Prairie State Bank & Trust; Scott State Bank, Bethany; Sidell State Bank; Soy Capital Bank & Trust, Decatur; State Bank of Arthur; State Bank of Bement; State Bank of Cerro Gordo; State Bank of Lincoln; Tuscola National Bank; Vermilion Valley Bank, Piper City; Villa Grove State Bank.

4 stars ("excellent")

22 banks

BankChampaign; Busey Bank; Citizens State Bank, Milford; Dewey Bank; Edgar County Bank & Trust; Farmers-Merchants National Bank, Paxton; First Federal Savings Bank of Champaign-Urbana; First Mid-Illinois Bank & Trust; First National Bank in Georgetown; First National Bank of Ogden; First National Bank of Sullivan; Flanagan State Bank; Gifford State Bank; Hickory Point Bank & Trust; Illinois National Bank; Kenney Bank & Trust; Midland States Bank; Old National Bank; State Farm Bank; Sumner National Bank, Sheldon; United Community Bank, Oakwood; Woodforest National Bank.

3 1/2 stars ("good")

10 banks

Bank of Gibson City; First Midwest Bank; First National Bank of Catlin; Fisher National Bank; JP MorganChase; MainSource Bank; Marine Bank, Springfield; PNC Bank; Regions Bank; State Bank of Chrisman.

3 stars ("adequate")

Five banks

Bank of America; Citizens National Bank, Paris; Federated Bank, Onarga; Longview State Bank, Sidney; Milford Building & Loan.

2 stars ("problematic")

One bank

CIBM Bank.

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