Over 23% of Credit Unions Fail to Meet Bank Standard Rating at Year-End 2009 - Expert John Rickmeier

www.idcfp.com

Risks of failure increased for credit unions reporting the fourth quarter of 2009. The bank standard rating of 125 is based on the IDC Financial Publishing (IDC) ranking of all financial institutions, ranging from (1) the lowest to (300) the highest rank. Your credit union could be at risk of failure with merger into a successful surviving credit union or closed by the National Credit Union Administration (NCUA). Check your credit union score to determine its safety and soundness.

While credit union deposits and share accounts are currently insured up to $250,000 per individual by the NCUA, insurance coverage drops to $100,000 on January 1, 2014 for individuals and remains at $250,000 for certain retirement accounts. Yet, individuals require investments in shares or deposits remain in quality, well-run credit unions. Also, insurance companies and other product suppliers prefer safe and sound financial concerns.

IDC ranks 612 credit unions (rank less than 75) as problem credit unions, based on December 31, 2009 financial statements, up from 553 based on September 30, 2009 financials. Of these high-risk credit unions, those with the lowest rank of 1 (110 institutions) are experiencing severe problems. The 1,164 credit unions ranked below average (124 to 75) are not rated problem credit unions, but rank below the bank standard of 125 established as the minimum quality level for investment in certificates of deposit.

Credit union assets are approaching $900 billion with $64 billion of assets in institutions ranked 124 to 75 (below average), $64 billion of assets in problem credit unions ranked 74 to 2 (lowest ratios), and $8 billion of assets in the highest risk credit unions ranked 1 (lowest rating). These credit unions below the bank standard rank of 125 suffer from excess loan delinquencies and potential short-falls in capital and surplus.

IDC ranks 7,696 credit unions reporting to the NCUA, evaluating 17 financial ratios with its unique "CAMEL" analysis. Capital (C) measures the financial strength of the institution. Adequacy (A) of capital and loan loss reserves compared to loan delinquency calculates default risk. Margins (M) evaluate management´s ability to produce profitability and control costs. Earnings (E) from operations compared to earnings from leverage measure the effectiveness of the credit unions plan of operation. Liquidity (L) measures the credit unions ability to support leverage of outstanding shares and other debt or deposit obligations.

For a rank and one-line analysis of your credit union or other financial institution, please call 1-800-525-5457 or visit the IDC website at www.idcfp.com.

John E. Rickmeier, President of IDC Financial Publishing, Inc., has analyzed and rated all financial institutions reporting to the FDIC and OTS since 1984.