5 area banks upgraded, 5 downgraded

5 area banks upgraded, 5 downgraded

65 banks retain same ratings from previous quarter

Five area banks were upgraded and five were downgraded in the latest ratings from the BauerFinancial rating service, based on data for the quarter that ended Dec. 31.

Bloomington-based Heartland Bank & Trust was downgraded from 5-star ("superior") to 4-star ("excellent"). It has six offices in East Central Illinois, including two each in Champaign and Urbana and one each in Farmer City and Gibson City.

Also downgraded from 5-star to 4-star were First Savings Bank in Danville and First State Bank, which has locations in Monticello, Champaign, Tuscola, Atwood and Hammond.

Two banks were downgraded from 31/2-star ("good") to 3-star ("adequate"): Citzens State Bank, with offices in Milford and Crescent City, and the Dewey Bank, with offices in Dewey and Saybrook.

It was the second straight quarter that those two banks were downgraded. Both were downgraded from 4-star to 31/2-star in December, based on data for the quarter that ended Sept. 30.

Both banks have as their holding company Milford-based Arthur R. Murray Inc.

Craig Horsch, senior vice president and chief financial officer of Dewey Bank, said the bank's downgrade likely stemmed in part from a property that was foreclosed on and repossessed.

Another factor, he said, was that the bank has grown as a result of strong agricultural deposits.

But if an increase in assets isn't accompanied by a proportional increase in reserves, the bank's capital ratio goes down.

Many Dewey Bank customers have enjoyed good years as a result of the strong farm economy, Horsch said. Crop insurance propped up income this past season, and good yields and crop prices boosted income in previous years.

But in order to make money, the Dewey Bank, like all banks, depends on making loans.

"Some are funding their farming operations with cash rather than borrowing," Horsch said.

At Citizens State Bank in Milford, Chairman and President Art Murray said the bank took significant write-downs on two large loans last year. The bank subsequently made a recovery on one loan, but the recovery wasn't reflected in the bank's initial year-end report.

"I'm sure we'll be able to recover without too much problem," Murray said. "We don't have any more loans of similar nature to those."

Murray said earnings aren't great, "but it's tough to make good earnings in this environment."

On a brighter note, two banks were upgraded from 31/2-star to 4-star. They included Greensburg, Ind.-based MainSource Bank, with area offices in Watseka and Hoopeston, and Itasca-based First Midwest Bank, with area offices in Champaign and Danville.

Three banks were upgraded from 4-star to the top rating of 5-star. They included Villa Grove State Bank, Bank of Gibson City and Toledo-based First Neighbor Bank, which has area offices in Mattoon, Charleston and Newman.

While those 10 banks received new ratings, the other 65 banks in East Central Illinois retained the same ratings they had at the close of the previous quarter.

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.

Nearly 60 percent of area banks received BauerFinancial's highest rating of 5-star. No area banks received the lowest rating — zero stars — and no area banks got 1-star ("troubled") or 2-star ("problematic") ratings.

Four area banks got 3-star ratings. In addition to Citizens State Bank and the Dewey Bank, Champaign-based CIBM Bank and Sidney-based Longview State Bank were in that category.

CIBM Bank, which does business in this area as Central Illinois Bank, has two offices in Champaign and an office each in Urbana, Danville, Monticello, Bloomington and Peoria.

In addition to the Sidney office, Longview State Bank does business as Villa Grove First in Villa Grove, Camargo Bank in Camargo and Newman Bank in Newman.

Bank ratings

Here's the breakdown of BauerFinancial's ratings of 75 banks with offices in East Central Illinois based on data from the quarter that ended Dec. 31:

5-star ("superior")

43 banks

Arcola First Bank; Bank of Gibson City; Bank of Rantoul; Buckley State Bank; Busey Bank; Cissna Park State Bank; Commerce Bank; Community Bank of Hoopeston; DeWitt Savings Bank, Clinton; Farmers State Bank, Danforth; First Bank & Trust Savings Bank, Paris; First Federal Savings & Loan, Mattoon; First Mid-Illinois Bank & Trust; 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 National Bank of Sullivan; First Neighbor Bank, Toledo; First Trust and Savings Bank, Watseka; Fisher National Bank; Flanagan State Bank; Hickory Point Bank & Trust; Illinois National Bank; Iroquois Farmers State Bank; Iroquois Federal Savings and Loan; Midland States Bank; 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; United Community Bank, Oakwood; Vermilion Valley Bank, Piper City; Villa Grove State Bank; Woodforest National Bank.

4-star ("excellent")

19 banks

BankChampaign; Edgar County Bank & Trust; Farmers-Merchants National Bank, Paxton; First Farmers Bank & Trust, Converse, Ind.; First Federal Savings Bank of Champaign-Urbana; First Financial Bank of Terre Haute, Ind.; First Midwest Bank; First National Bank in Georgetown;

First National Bank of Ogden; First Savings Bank, Danville; First State Bank, Monticello; Gifford State Bank; Hardware State Bank, Lovington; Heartland Bank & Trust, Bloomington; Kenney Bank & Trust; MainSource Bank; Old National Bank; State Farm Bank; Sumner National Bank, Sheldon.

31/2-star ("good")

Nine banks

Bank of America; Federated Bank, Onarga; First National Bank of Catlin; JP MorganChase; Marine Bank, Springfield; Milford Building & Loan; PNC Bank; Regions Bank; State Bank of Chrisman.

3-star ("adequate")

Four banks

CIBM Bank; Citizens State Bank, Milford; Dewey Bank; Longview State Bank, Sidney.

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