- Banking: measurement of a bank or thrift institution's capitaladequacy, management and other factors as compared to other insured financial institutions. There are two broad categories of organizations providing some form of analytical coverage of financial institutions: bank rating firms and bank ranking firms.
Bank rating firms follow a limited number of large banks and thrift institutions, and provide detailed commentary about each financial institution covered, reporting on recent changes in management, the general economic climate and other factors considered significant by rating firm analysts. Different ratings may be released for long-term and short-term obligations of a bank or Financial Holding Company (FHC). Some rating firms assign country risk and political risk ratings for banks operating internationally. Bank ratings are available as subscription services.
Among the best known and most widely used rating firms are: Dominion Bond Rating Service, Inc. 55 Broadway New York, N.Y. 10016; Fitch Ratings, One State Street Plaza, New York, N.Y. 10004; Moody's Investors Service, 99 Church Street, New York, N.Y. 10007; Standard & Poor's, 25 Broadway, New York, N.Y. 10004.
Bank ranking firms generally cover all financial institutions in a category, such as commercial banks, bank holding company, and savings and loans. They assign each institution covered a grade or numerical score using an analytical formula. The assigned rankings are meant to indicate a covered institution's financial strength and ability to protect depositors' funds. Ranking firms compute their evaluations from the same criteria-capital, assets, management, earnings, and liquidity-that bank examiners review during scheduled examinations of insured financial institutions. Bank rankings are also available as subscription services.
Among the best known and most widely used ranking firms are BauerFinancial Inc., P.O. Box 14350, 2655 Lejeune Road, Coral Gables, FL 33134 (www.bauerfinancial.com); Creative Investment Research, Inc., P.O. Box 55793, Washington, D.C. 20040-5793 (www.creativeinvest.com); Highline Data LLC, 807 Las Cimas, Suite 320, Austin, TX 78746 (www.highlinedata.com/banking); IDC Financial Publishing, P.O. Box 140, 700 Walnut Ridge Drive, Suite 201, Hartland, WI 53029 (www.idcfp.com); LACE Financial Corp., 118 North Court Street, Frederick, MD 21701 (www.lacefinancial.com); Veribanc, P.O. Box 1610, One Social Street, Woonsocket, RI 02895 (www.veribanc.com); Weiss Ratings, Inc., 15430 Endeavor Drive, Jupiter, FL 33478 (www.weissratings.com). - Credit Rating: compiled by one of the major credit bureau, recording previous credit history, late payments, charge-offs, and legal judgments reported on an individual.
- Bond Rating: evaluation of a bond issuer's credit risk (probability of default) by a nationally-recognized statistical rating organization (NRSRO) such as Duff & Phelps, Fitch Investors Service, Moody's Investors Service, and Standard & Poor's.
In general: process of systematically assigning ranks to goods and services.
Credit, investment: evaluation of securities investment and credit risk by rating services such as Fitch Investors Service, Moody's Investors Service, Standard & Poor's Corporation, and Value Line Investment Survey. See also credit rating.
Insurance: using statistics, mortality tables, probability theory, experience, judgment, and mathematical analysis to establish the rates on which insurance premiums are based.
Credit and investments: evaluation of securities investment and credit risk by rating services such as fitch ratings moody's investors service morningstar rating system standard & poor's corporation, and value line investment survey. see also credit rating; event risk; not rated.
Insurance: using statistics, mortality tables, probability theory, experience, judgment, and mathematical analysis to establish the rates on which insurance premiums are based. There are three basic rating systems: class rate, applying to a homogeneous grouping of clients; schedule system, relating positive and negative factors in the case of a particular insured (for example, a smoker or nonsmoker in the case of a life policy) to a base figure; and experience rating, reflecting the historical loss experience of the particular insured. Also called rate-making.
Fitch and Standard & Poor's may use + or - to modify some ratings. Moody's uses the numerical modifiers 1 (highest), 2, and 3 in the range from Aa1 through Ca3.
a valuation of risk of an individual or organization.
Broadcast: size of an actual listening or viewing audience for a particular program or commercial as compared to the size of the potential audience. The potential audience consists of all households in a geographic area that have broadcast receivers (radios and televisions), whether or not these broadcast receivers are turned on. One rating point represents 1% of the households making up the potential audience. Thus, if a program had a rating of 10 (10 rating points), it would mean that 10% of all households in a particular geographic area had sets tuned in to that program. Ratings and rating points are an integral part of the broadcast evaluation system, particularly television, and are used in the planning of broadcast media schedules for advertising campaigns. A program with a high rating will deliver a large audience to advertisers for their commercials.
Outdoor advertising: estimate of the number of persons exposed to an outdoor sign. Each outdoor structure is rated in terms of the number of persons who pass by on a daily basis as compared to the entire population in the area where the structure is located. If a structure located in an area with a population of 1000 has 100 passersby on a daily basis, that structure has a 10% rating and each rating point is equal to 10 passersby. These numbers play an important role in determining the cost per thousand for outdoor advertising.
