17% of U.S. Banks Receive 'Below Average' Y2K Grades; 5% Rated 'Low'.

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--March 8, 1998--

Findings Contradict Regulators' Tallies

In a new survey of Y2K preparedness, 247 of 1,128 banks and S&Ls reported completion dates that were deemed to be inadequate, according to Weiss Ratings Inc., a leading bank rating agency.

Of those, 195, or 17%, were assigned a Y2K grade of "Below Average," while 52, or 5%, were rated "Low."

The Weiss Y2K survey, mailed on Dec. 30, 1998 to 10,715 federally insured depository institutions, asked 13 questions about each company's timeline for completing various milestones in the Y2K remediation and testing process.

In response to one of the most important questions -- Did the institution fix and test all internal mission-critical systems before year-end 1998? -- more than one third answered "no." This was despite a regulatory mandate that these systems be "substantially" completed by Dec. 31, 1998.

"The varying interpretations of the word `substantially' by the banks and S&Ls are creating industry-wide ambiguity," commented Martin D. Weiss, Ph.D., chairman of Weiss Ratings, Inc. "Many banks report they've complied with this regulatory benchmark, even though their expected completion dates remain months into the future. We believe they may need that time to complete the additional tasks of fixing and testing service providers' systems and `non-mission-critical' computer programs."

The Weiss results contradict recently announced tallies by the FDIC -- that only 2.9% of insured institutions have failed to achieve a "satisfactory" rating in their Y2K compliance evaluations.

"This discrepancy is a mystery to me," added Dr. Weiss. "The regulators are either basing their statistics on old data or are interpreting the word `substantially' very liberally. The end result is that consumers are not being given an accurate picture."

By evaluating the banks' actual or expected completion dates for critical tasks, the Weiss Y2K survey separates those that have truly made good progress from those that appear to be lagging behind.

On the other end of the spectrum, 177 institutions, or 15.6%, reported data that Weiss interpreted as an indication of "High" progress in their Y2K preparations. The balance, representing 62.5% of respondents, indicated a level of progress that was deemed "Average," reflecting adequate preparations at this time.

Weiss advises consumers and analysts to judge the Y2K ratings in the context of a company's overall financial strength. A bank with abundant capital resources is better equipped to remedy its Y2K problems today and cope with any consequences after the year 2000. In contrast, a bank with apparent deficiencies in both its Y2K progress and its financial stability may be at serious risk.

Institutions receiving a "Low" Y2K progress rating and a "Fair" or "Weak" financial safety rating, include:

-- Stillwater NB&TC (Stillwater, Okla.)

-- Centier Bank (Whiting, Ind.)

-- MidSouth Bank (Monette, Ariz.)

Among institutions receiving both a "High" Y2K grade and an "Excellent" financial safety rating are:

-- Piedmont FS&LA (Winston-Salem, N.C.)

-- Centreville Savings Bank (West Warwick, R.I.)

-- American NB&TC (Danville, Va.)

None of the very large banks surveyed by Weiss (with $1 billion or more in assets) received "Low" or "High" Y2K grades. However, banks such as Wachovia Bank (Winston-Salem, N.C.), Charter One Bank (Cleveland), and People's Bank (Bridgeport, Conn.) were graded "Below Average" for their Y2K progress, while Bank of America (San Francisco), Washington Mutual (Stockton, Calif.) and Fleet NB (Providence, R.I.) received a grade of "Average."

Weiss Calls For Industry Disclosure

Both consumers and regulators have expressed growing concerns that ill-prepared financial institutions may be unable to properly process account transaction and money transfers after Jan. 1, 2000.

In order to help quell these concerns and protect consumers from doing business with ill-prepared companies, Weiss is urging state and federal regulators to require disclosure regarding the Y2K readiness of the institutions they supervise.

In the absence of this disclosure, the Weiss Y2K Ratings are currently the only evaluations available to consumers. For $15 per company, consumers may acquire both a Weiss Y2K Rating and a Weiss Safety Rating on a financial institution by calling 800/289-9222.

If a Y2K Rating is not available, consumers will receive a Weiss Safety Rating, plus specific information on how to contact the Year 2000 project manager or financial officer at their bank.

Weiss publishes financial safety and Y2K readiness ratings on insurers, banks and S&Ls. The accuracy of its ratings has been favorably reviewed by the U.S. General Accounting Office (GAO) as well as national consumer organizations. For more information, visit the Weiss Ratings web site at www.weissratings.com.

Note to editors: Ratings on specific banks are available upon request along with a blank copy of the Weiss Y2K survey.