IDC Financial Publishing, Inc. (IDC), a bank rating agency, has been rating the safety and soundness of banks, savings institutions, and credit unions since 1985. Every quarter, IDC calculates a one-number rank for over 15,000 financial institutions, using our unique "CAMEL" analysis of 24 key financial ratios. Our bank safety ratings range from 1 (the lowest) to 300 (the highest) and fall into one of six categories: Superior, Excellent, Average, Below Average, Lowest Ratios, and Rank of One.
As a bank rating agency, IDC's methodology for ranking financial institutions for safety is an open platform, allowing banks, savings institutions, credit unions, and any client to understand financial ratios and rank for a specific institution. Our staff is available to clients, allowing them to question ranks or specific calculations used in the rating process. Our analysis is strictly based on the financial information reported by each institution to agencies of the federal government.
John E. Rickmeier, CFA, President and Editor-in-Chief of IDC, a bank rating agency, developed a unique method of evaluating financial institutions based on the acronym "CAMEL" – Capital adequacy, Asset quality, Margins, Earnings returns, and Leverage and Liquidity. IDC emphasizes the M in CAMEL to measure management's performance based on analysis of margins, which include net interest margin, operating profit margin, and net operating return on equity capital compared to the cost of equity capital.
Since 1989, bank and savings institution failures (excluding failed institutions due to fraud, and small banks under $5 million in total assets) and bank holding company failures totaled over 1,000 financial institutions. Of these, 98% were ranked less than 75 (lowest ratios and rank of one) up to 5 months prior to failure. Of the 1,000 or more financial institution failures, 89% were ranked less than 125 (below average, lowest ratios, and rank of one) up to 17 months prior to failure and 78% were ranked less than 125 up to 29 months prior to failure. The track record provided by IDC's bank rating methodology has made IDC the standard in ranking the safety and soundness of financial institutions.
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