After 17 consecutive quarters of being rated “superior” by Bauer Financial, First Bank & Trust has been downgraded to “excellent,” stockholders were told this week.
Robert Yohanan, managing director and CEO of the bank’s parent First Evanston Bancorp, Inc., told stockholders “we were surprised to learn” of the downgrading from a 5-star rating to a 4-star rating.
“After our investigation with Bauer Financial,” he wrote, “we learned that the rating decrease to 4-star, which is also a high rating, was due entirely to the very dramatic growth we have experienced over the last three years and the consequent impact on our risk based capital ratio.”
Nevertheless, the bank’s key indicators—loans, deposits, and total assets—were all higher at the end of the first quarter this year, compared to a year ago, the bank reported.
Loans on March 31, 2013, net of an allowance for loan losses, stood at $556 million, compared with $496 million on the same date in 2012.
Deposits were $778 million vs. $699 million, and total assets grew from $771 million a year ago to $854 million at the end of the latest quarter.
Net income for the company amounted to $865,000, which was down 10 percent from the year-ago first-quarter earnings of $962,000. Basic income per share was 56 cents, compared to 64 cents last year.
Yohanan attributed the lower earnings to “the continuing narrowing of our net interest margins as a result of the substantial liquidity we are experiencing and increased competition for loans.”
The bank’s chief noted that it was chosen to be the primary bank for the City of Evanston, which he said was “a goal we have had since we opened our doors nearly 18 years ago.”
Despite the ratings downgrade from Bauer Financial, Yohanan said “we are pleased to report that Veribanc, Inc. again afforded us its highest Green 3 Star rating.”
He concluded his quarterly letter to shareholders on a positive note, saying that “although the banking marketplace is very competitive due to excess liquidity and low market rates, your company continues to attract new individual, company, and not-for-profit businesses as customers.”