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Bank Rating Methodology

FIS Rating Methodology – The composite FIS Bank ratings are comprised of four CAMEL components: Liquidity, Asset Quality, Capital adequacy, and Earnings. The overall composite rating is determined by weighting the individual component ratings. Ratings are rounded to two decimal points.

The best score that can be achieved is 1.00 and the worst score is 5.00

For banks, the weights are as follows:

Liquidity 10%
Asset quality 30%
Capital adequacy 30%
Earnings 30%

Bank, thrift, and credit union ratings are weighted as follows: 10% from liquidity and 30% each from asset quality, capital adequacy, and earnings.

Holding company ratings are weighted as follows: 30% each from asset quality and capital adequacy and 40% from earnings.

Sample Bank Rating:

Banks – Liquidity
Liquidity is determined using three categories:

    • Quick Ratio
    • Unpledged securities as a % of assets
    • Core deposits as a % of assets

Banks – Asset Quality:
Asset quality is determined using four categories:

    • High risk loans as a % of total loans
    • Loan loss allowance as a % of nonperforming loans plus restructured loans
    • Non-performing assets as a % of total assets
    • Non-performing loans plus restructured loans as a % of total loans

Banks Capital Adequacy:
Capital adequacy for banks is determined using three categories:

    • Nonperforming loans plus restructured loans/Core capital plus loan loss allowance
    • Tangible equity capital as a % of tangible assets
    • Tangible equity capital as a % of tangible assets, adjusted for loss allowance excess (deficiency)

Banks – Earnings:
Earnings for banks is determined using two categories:

    • Core return on average equity
    • Efficiency ratio

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