Three area financial institutions were downgraded — two of them deeply — in the latest ratings from the BauerFinancial rating service, based on data for the quarter that ended June 30.
First Federal Savings & Loan Association of Central Illinois, based in Shelbyville, and First National Bank of Sullivan previously had BauerFinancial's highest rating — 5-star ("superior").
But in the latest evaluation, the rating for the Shelbyville savings and loan plummeted to 2-star ("problematic") and the rating for the Sullivan bank dropped to 3-star ("adequate").
Meanwhile, the rating for Kansas City, Mo.-based Commerce Bank — which has an office in Champaign — was downgraded from 5-star to 4-star ("excellent").
The other 74 banks in East Central Illinois retained the ratings they had at the close of the March 31 quarter.
Nearly half of area banks received BauerFinancial's highest rating of 5-star. No area banks received the lowest and second-lowest ratings — zero stars and 1-star. The Shelbyville savings and loan was the only area institution to receive a 2-star rating.
Tadd C. Brachbill, chief executive officer of First Federal Savings & Loan Association of Central Illinois, said the institution's downgrade came as a result of a switch in regulators — from the Office of Thrift Supervision to the Office of the Comptroller of the Currency.
Brachbill said the new regulators had "issues" with the institution's loan policy and administration with regard to treatment of allowances for loan losses.
The institution has worked to resolve those issues and come in line with what the regulatory agency wants, he said.
First Federal is keeping the agency informed, and the agency typically does an on-site review within a year, he added.
Brachbill said First Federal's earnings and capital ratios exceed the average of those in its peer group.
Its June 30 call report showed $332,000 in net income for the first six months of 2013, as well as a $218,000 provision for loan and lease losses.
The institution, which has offices in Shelbyville, Windsor and Charleston, had total assets of $103.6 million as of June 30. Charleston Federal Savings & Loan merged with the Shelbyville institution in 2008, and the Windsor branch was opened three years later.
First National Bank of Sullivan, in its June 30 call report, listed a net loss of $759,000 for the first six months of 2013. The bank listed a $1,034,000 provision for loan and lease losses and a $605,000 charge-off of commercial and industrial loans.
As of June 30, the Sullivan bank had total assets of $65 million.
A call was placed to bank President Paul Hrvol seeking comment on the downgrade, but the call was not immediately returned.
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 distinguishes itself from others by making its ratings accessible to the public.
Area bank ratings for second quarter 2013
Here's the breakdown of BauerFinancial's ratings of 77 banks with offices in East Central Illinois based on data from the quarter that ended June 30:
— Arcola First Bank
— Bank of Gibson City
— Bank of Rantoul
— Buckley State Bank
— Busey Bank
— Cissna Park State Bank
— Community Bank of Hoopeston
— DeWitt Savings Bank, Clinton
— Farmers State Bank, Danforth
— First Bank & Trust Savings Bank, Paris
— First Federal Savings & Loan of 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 Trust and Savings Bank, Watseka
— Fisher National Bank
— Flanagan State Bank
— Hardware State Bank, Lovington
— Hickory Point Bank & Trust
— Illinois National Bank
— Iroquois Farmers State Bank
— Iroquois Federal Savings and Loan
— Midland States Bank
— 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 Lincoln
— Tuscola National Bank
— Vermilion Valley Bank, Piper City
— Villa Grove State Bank
— Woodforest National Bank
— Commerce Bank
— Edgar County Bank & Trust
— Farmers-Merchants National Bank, Paxton
— Federated Bank, Onarga
— 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 Neighbor Bank, Toledo
— First Savings Bank, Danville
— First State Bank, Monticello
— Gifford State Bank
— Heartland Bank & Trust, Bloomington
— Kenney Bank & Trust
— MainSource Bank
— Old National Bank
— Peoples Bank & Trust, Pana
— State Bank of Chrisman
— State Bank of Cerro Gordo
— State Farm Bank
— Sumner National Bank, Sheldon
— United Community Bank, Oakwood
— U.S. Bank
— Bank of America
— First National Bank of Catlin
— JP MorganChase
— Longview State Bank, Sidney
— Marine Bank, Springfield
— Milford Building & Loan
— PNC Bank
— Regions Bank
— CIBM Bank
— Citizens State Bank, Milford
— Dewey Bank
— First National Bank of Sullivan
— First Federal Savings & Loan of Central Illinois, Shelbyville
Source: BauerFinancial Inc.