Four banks in East Central Illinois were considered "undercapitalized" by federal regulatory standards as of March 31, according to statistics from bank call reports.

One of the banks, Strategic Capital Bank in Champaign, has since been placed in receivership by the Federal Deposit Insurance Corp., and its office has reopened as a branch of Effingham-based Midland States Bank.

The other three banks – First National Bank of Danville, John Warner Bank in Clinton and First National Bank of Gilman – continue to operate, but all three posted large losses in the first quarter of 2009.

The Danville bank reported a net loss of $7.44 million, the Clinton bank a net loss of $5.71 million and the Gilman bank a net loss of $1.13 million.

In each of those three cases, the losses came largely as the result of investments. During the first quarter, the Danville bank reported a realized loss of $7.85 million on available-for-sale securities. The Clinton bank reported a realized loss of $4.47 million, and the Gilman bank showed a realized loss of $1.22 million.

All three banks are closely tied to the Campbell family. Scott, Doug and Craig Campbell are listed as directors of the Clinton and Gilman banks, while Craig, Doug, Lyle and Kim Campbell serve as directors of the Danville bank.

In a March interview, Craig Campbell, president of the Danville bank, said the bank's fortunes were affected by "mark-to-market" charges it had to take on investment securities.

Generally, federal regulators look at three capital ratios to determine whether a bank is undercapitalized.

It falls in that category if its Tier 1 leverage ratio is less than 4 percent, its Tier 1 risk-based capital ratio is less than 4 percent and its total risk-based capital ratio is less than 8 percent.

Here's how those three banks stacked up:

– The Danville bank had respective ratios of 3.02 percent, 3.39 percent and 4.67 percent. By all three measures, it's considered undercapitalized.

– The Clinton bank had ratios of -2.55 percent, -3 percent and -3 percent – again, undercapitalized by all three measures.

– The Gilman bank had ratios of 3.86 percent, 5.24 percent and 6.01 percent. It would be considered undercapitalized by two of the three measures.

For comparison purposes, Strategic Capital Bank's ratios on March 31 were 3.47 percent, 4.48 percent and 5.74 percent, respectively.

As of March 31, Strategic Capital was by far the largest of the four banks. It had assets of $546 million.

It was followed by First National Bank of Danville ($164 million), John Warner Bank ($71 million) and First National Bank of Gilman ($43 million).

A review of data for 78 banks in East Central Illinois shows 10 recorded a loss during the quarter that ended March 31. Besides the three mentioned above, the others were:

– Bloomington-based State Farm Bank, with a $22.6 million loss.

– First State Bank of Monticello, with a $834,000 loss.

– Central Illinois Bank of Champaign, with a $685,000 loss.

– Federated Bank of Onarga, with a $275,000 loss.

– Citizens National Bank of Paris, with a $176,000 loss.

– First National Bank of Mattoon, with a $156,000 loss.

– Tuscola National Bank, with a $13,000 loss.

Of those seven banks, all but State Farm Bank and Central Illinois Bank had a profitable year in 2008. All seven banks had capital ratios well above the levels deemed "undercapitalized," and their income statements indicated securities losses had little, if any, impact on their overall losses.

Besides profit and loss, another important statistic for banks is non-performing assets. If those account for a high percentage of average tangible assets, that could indicate problems down the road for the institution.

Non-performing assets are those where principal and interest payments are not being met. They generally include commercial loans more than 90 days overdue and consumer loans more than 180 days overdue.

Of the 78 area banks, First National Bank of Danville had the highest percentage of non-performing assets – 8.53 percent, up more than 3 points from the previous quarter.

John Warner Bank was second at 6.73 percent, and Strategic Capital was third at 6.66 percent.

Other banks with relatively high percentages of non-performing assets were:

– Fisher National Bank, 4.31 percent.

– National City Bank, 3.8 percent.

– First Midwest Bank, 3.65 percent.

– Arcola Homestead Savings Bank, 3.55 percent.

Busey Bank deemed 2.84 percent of its average tangible assets as non-performing. It was followed by United Community Bank of Oakwood, 2.8 percent; First National Bank of Mattoon, 2.72 percent; Illinois National Bank of Springfield (with an office in Fairmount), 2.67 percent; First National Bank of Catlin, 2.67 percent, and Scott State Bank of Bethany, 2.59 percent.

Ratings firm downgrades 10 area banks

CHAMPAIGN – Ten area banks have been downgraded – four severely – by the BauerFinancial bank rating service, based on data filed with regulators for the quarter that ended March 31, 2009.

BauerFinancial has seven rating levels: 5-star ("superior"), 4-star ("excellent"), 3- 1/2-star ("good"), 3-star ("adequate"), 2-star ("problematic"), 1-star ("troubled") and 0 stars ("lowest rating").

First National Bank of Danville and John Warner Bank of Clinton both dropped two notches, from 2 stars to 0 stars. Also dropping two notches was First National Bank of Gilman, which fell from 3 stars to 1 star.

Strategic Capital Bank, Champaign, which previously had 0 stars, was changed to an "FDIC" mark, reflecting the Federal Deposit Insurance Corp. taking the bank into receivership in May. The office reopened the following week as a branch of Midland States Bank, Effingham. which got a 3 1/2-star rating.

Six other banks in East Central Illinois were downgraded one notch.

– First Midwest Bank, based in Itasca, was downgraded from 3 1/2 stars to 3 stars.

– Federated Bank of Onarga and Kankakee-based MainSource Bank of Illinois were downgraded from 4 stars to 3 1/2 stars.

– Citizens National Bank of Paris, First State Bank of Monticello and Gifford State Bank were downgraded from 5 stars to 4 stars.

At the same time, five area banks were upgraded:

– Dewey State Bank, Kenney Bank & Trust and Longview State Bank of Sidney were upgraded from 3 1/2 stars to 4 stars.

– Central Bank of Ashkum and Sumner National Bank of Sheldon were upgraded from 4 stars to 5 stars.

Busey Bank of Champaign and State Farm Bank of Bloomington remained steady at 3 stars in the latest ratings. Both had dropped two notches in the previous round of ratings, which covered the quarter that ended Dec. 31, 2008.

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

5-star ("superior") ratings: 33 banks

Bank of Gibson City; Buckley State Bank; Central Bank, Ashkum; Cissna Park State Bank; Country Trust Bank, Bloomington; DeWitt Savings Bank, Clinton; Farmer City State Bank; Farmers State Bank, Danforth; Farmers-Merchants National Bank, Paxton; First Federal Savings Bank of Champaign-Urbana; First Federal Savings & Loan, Mattoon; First Mid-Illinois Bank & Trust; First National Bank & Trust, Clinton; First National Bank in Paxton; First National Bank of Arcola; First National Bank of Chrisman; First National Bank of Ivesdale; First Savings Bank, Danville; First Trust and Savings Bank, Watseka; Hardware State Bank, Lovington; Hickory Point Bank & Trust; Iroquois Farmers State Bank; Iroquois Federal Savings and Loan; Philo Exchange Bank; Prairie State Bank & Trust; Sidell State Bank; State Bank of Arthur; State Bank of Bement; State Bank of Cerro Gordo; Sumner National Bank, Sheldon; Tuscola National Bank; Vermilion Valley Bank, Piper City; Woodforest National Bank.

4-star ("excellent") ratings: 23 banks

Bank of Rantoul; BankChampaign; Centrue Bank; Citizens National Bank, Paris; Citizens State Bank, Milford; Commerce Bank, N.A.; Community Bank of Hoopeston; Dewey State Bank; Edgar County Bank & Trust; First Bank & Trust Savings Bank, Paris; First National Bank in Georgetown; First National Bank of Ogden; First National Bank of Sullivan; First State Bank, Monticello; Freestar Bank; Gifford State Bank; Heartland Bank & Trust, Bloomington; Kenney Bank & Trust; Longview State Bank, Sidney; Milford Building and Loan; Old National Bank; State Bank of Chrisman; Villa Grove State Bank.

3 1/2-star ("good") ratings: 10 banks

Federated Bank, Onarga; The First National Bank, Mattoon; First National Bank of Catlin; JPMorganChase Bank; MainSource Bank of Illinois; Marine Bank, Springfield; Midland States Bank, Effingham; Regions Bank; Scott State Bank, Bethany; United Community Bank, Oakwood.

3-star ("adequate") ratings: Eight banks

Arcola Homestead Savings Bank; Busey Bank; Central Illinois Bank; First Midwest Bank; Fisher National Bank; Illinois National Bank; National City Bank; State Farm Bank.

1-star ("troubled") ratings: One bank

First National Bank of Gilman.

0-star ("lowest") ratings: Two banks

First National Bank, Danville; John Warner Bank, Clinton.