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Regulators warn Citizens Bank of Chatsworth

Regulators warn Citizens Bank of Chatsworth

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BLOOMINGTON — State and federal regulators warned the Citizens Bank of Chatsworth to fix “unsafe or unsound banking practices,” or it could risk takeover.

The bank did not admit or deny any wrongdoing as part of a consent decree with the Federal Deposit Insurance Corp. and the Illinois Department of Financial and Professional Regulation’s Banking Division.

A spokesman with Citizens Bank of Chatsworth declined to comment on the agreement Thursday.

Under the June 28 agreement, Citizens Bank must tighten up its lending policies; collect or sell off unpaid debt or troubled assets; and produce “realistic, comprehensive” budgets and strategies that will increase its capital, according to FDIC records. It is also banned from paying dividends.

If the bank fails to maintain capital at an acceptable level, the FDIC could order it to sell itself or merge with another bank. It currently has locations in Chatsworth, 502 E. Locust St., and Normal, 1710 E. College Ave.

Banks under such decrees have been taken over by federal authorities in the past, but others have come out stronger, said IDFPR spokeswoman Susan Hofer.

As of June, the bank had $47.9 million in assets and $44.7 million liabilities, compared to $55.7 million in assets and $51.9 million in liabilities in June 2012.

Between June 2012 and June 2013, the bank sold about $3.3 million of its $4 million in real estate. During that same period, the bank reduced its employees from the equivalent of 27 full-time employees to 17, according to FDIC records.

One independent measure of bank stability, Bankrate’s Safe & Sound Ratings, gave the bank a two-star rating, its second-lowest in a five-star grading system, for the quarter ending March 31. The rating is defined as “below peer group.” The group identified “Early warning indicators” of potential concern, including net interest margin; non-interest income; non-performing assets; commercial real estate and construction lending and capital adequacy.

Hofer declined to comment on specifics of the Citizens Bank circumstances. The bank examination process is confidential. State and federal authorities conduct regular bank examinations and issue such consent decrees in cases where they discover unsound practices, Hofer said.

“Those examinations are to ensure that banks are behaving in a sound and fiscally responsible way,” Hofer said. “If we find a problem, we work with the bank and, if necessary, issue an order.”

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