Beyond CAMELS

Guaranteed No Conflict Of Interest
       - No Links to Banks on the VERIBANC web-site.
              - No Bank has ever paid VERIBANC to rate them.
            - No Advertising or referral fees from Banks.

THE B.E.S.T. BANKING INVESTMENT
(Balanced, Effective, Seasoned, Transparent)

The VERIBANC® Difference
Financial & Operational Analysis
Financial Analysis Only
Ratings Company
Financial Analysis Only Ratings Company
Management Interviews & Financial Analysis Ratings Company
VERIBANC
TYPE A
TYPE B
TYPE C
1. Ratings Effectiveness is over 99%
Yes
NA
NA
NA
2. Published Track Record(Transparent)
Yes
No
No
No
3. 3rd Parties Have Audited our Methodology
Yes
No
No
No
4. Remarkable Ratings System Performance in Good & Bad Banking Times (1981 - Current)
Yes
NA
NA
NA
5. Compensation: advertising, "finder's" or "sponsoring" fees from banks we rate.
No
NA
Yes
Yes
6. Monthly Ratings
Yes
No
No
No
7. Bank Ratings
Yes
Yes
Yes
Yes
8. Thrift Ratings
Yes
Yes
No
Some
9. Credit Union Ratings
Yes
No
Yes
Some
10. Singular Mission:
"Bank" Safety
Yes
No
No
No

NA - Information is Not Available, or Company was Not Around,
"Bank" - Banks, Thrifts, and Credit Unions

1) Our Rating's Effectiveness is over 99 percent. When it comes to predicting bank failure no other rating's firm has the balance in assigning a top rating versus assigning a lower rating when a deficiency exists.

Why is balance important to me?

While other rating services may claim perfection at predicting bank failures, you have to ask the question - "How can that be?" The answer lies in the way they apply their criteria. Their tests are so onerous that they sweep a large percentage of the industry into their lower ratings categories at the expense of perfectly good institutions. At VERIBANC we balance potentially missing a failure with the number of institutions that will receive one of our lower ratings. This philosophy has tracked the actual failure history of banks.

From 1995 through 2007 the average number of bank and thrift failures per year was 5. From 2008 through 2010 this average jumped to 107. The average number of banks and thrifts from 2008 through 2010 was almost 8,000.

So there is not much value in those rating systems that throw 40, 50 percent or more of the industry into their lower rating categories. Please see our track record for our rating system effectiveness versus false alarm rate. Interestingly, VERIBANC has consistently classified over 78 percent of the bank, savings association, and credit union industry with our highest, Green with Three Stars, rating from 1991 through 2010.

Our Blue Ribbon Bank™ commendation of excellence, presented every quarter since June, 1982, is the country’s oldest and most prestigious form of national recognition banks can earn for their financial safety and soundness. The banks meeting these criteria, approximately 2,000 each quarter, appear on our Blue Bank Report® lists (see reports for consumers). Since 1982 there has been only one* Blue Ribbon Bank failure.

* Fraud committed by the president whereby he was surreptitiously diverting deposits for his personal use.

All Six CAMELS Factors - VERIBANC’s analysis of financial institutions takes into account data associated with all six CAMELS factors (Capital strength, Asset quality, Management ability, Earnings sufficiency, Liquidity, and Sensitivity to market risk) used by federal regulators. Most other rating services consider only three, four or five of these. VERIBANC is the only bank rating firm that has quantified management risk.

We have quantified the risk for the "Source of Strength Doctrine".

This is a regulatory mechanism by which capital can be moved or taken from one subsidiary bank of a multi-bank holding company and used to prop up any other of the subsidiary banks. This way the FDIC can reduce the potential cost to the FDIC insurance fund. There are at least two well documented historical examples of this regulation being implemented: Bank of New England Corporation, 1991 and First City Bancorporation, 1992. In both cases the FDIC failed "good" banks in these multi-bank holding companies because the "bad" banks were so rotten (significant problem loans) that by failing the good banks, the FDIC's loss to the insurance fund was significantly reduced.

Only VERIBANC has expanded its risk assessment model beyond the CAMELS factors.

2) Open Record - VERIBANC, Inc. is also unique in that we are the only bank rating firm that discloses its rating criteria and its track record. Not surprisingly, our system performs very well. For example, from 1991 through 2010 there have been 616 banks that have failed. Over 99 percent of all these failures were rated in one of our lower rating categories.

3) Used to Insure Deposits - In addition, our company is the only rating agency whose assessments were used as the principal underwriting basis for issuing excess FDIC deposit insurance policies. The DEPOSITSURE® program ran from 1993 until 2000 and was backed by General RE, one of the nation’s largest insurers. Since 2000 we have had several insurance companies audit and approve our methodology to resurrect this product. Unfortunately, other insurance factors have prevented this from happening.

4) The First Rating Service - VERIBANC began rating the safety and soundness of banks, savings and loan associations, credit unions, and bank holding companies in 1981. No one else, at that time, provided the general public with information on the financial condition of these institutions. Twenty-one banks and thrifts had failed in 1980; over two thousand have failed in the two and one-half decades since.

Leveraging this rich set of failure data we constantly stress our ratings model. Our actuarial based approach is in sharp contrast to many of our competitors that use peer grouping as the basis for their ratings. The problem with peer grouping is in "poor banking times" - "good banks" (the high end of the peer group) may not be.

VERIBANC's rating system has proven its effectiveness since our inception in 1981. Through the good and the challenging banking cycles, our 99 percent efficiency in predicting bank failure has consistently been published. No other rating system can offer you this success and longevity. How will you know if any other rating system can stand up to a poor banking cycle? With VERIBANC's success you already know!

Leading Source - VERIBANC’s research is recognized as a leading source in alerting the public to changes in the banking industry. As early as 1982, we noted that thrift “industry problems are more severe than at any other time since the 1929 depression.”

5) Completely Independent - VERIBANC’s ratings, research, and analysis have always been 100 percent independent of those financial institutions being rated. We offer no so-called "free" or "sponsored" ratings (i.e., paid for by the financial institutions being rated), and VERIBANC has never accepted advertising income from banks. Consumers and bankers pay the same fee for the same service. VERIBANC has no conflicts of interest and we pride ourselves for providing trustworthy, unbiased information to our customers.

6) Monthly Ratings - only VERIBANC publishes ratings on a monthly basis for those institutions whose ratings have suffered a degradation due to a management and/or operational deficiency.

7, 8, & 9) - Bank, Thrift, and Credit Union Ratings - Only VERIBANC has rated all Commercial Banks, Savings Banks, Savings Associations (Thrifts or S&Ls), and Credit Unions continuously since our beginning in 1981.

10) Timeliness - With our singular focus on Banking Safety and Soundness, when new quarterly, call report data on all banks are released by the Federal Reserve Board, VERIBANC is the first organization (often by several weeks or more) to make this information, our analysis and our updated ratings available to the public.

Thank you for your interest in VERIBANC.

If you have questions or would like to know more about our company or our reports and data sets, please:

Call 1-800-837-4226 (1-800-VERIBANc)
Mail to VERIBANC, Inc., PO Box 608, Greenville, Rhode Island 02828

Or, send us an Email.

We look forward to hearing from you.

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