The Federal Deposit Insurance Corp. announced Monday that 12% of the 6,034 banks it regulates have shown less than satisfactory progress in addressing their year-2000 computer issues.

Nearly 700 banks, or 11.5% of the state banks the FDIC oversees, got "needs improvement" ratings, which means an on-site review revealed they performed less than satisfactorily on one or more phases of their year-2000 plan. Forty-three banks were rated "unsatisfactory," meaning they managed at least one phase poorly. None of the banks were identified by name.

The vast majority of banks - 5,296, or 87.8% - were judged "satisfactory." This means a bank's senior management and board of directors understand the year-2000 problem, are active in overseeing corrective efforts, and are dedicating adequate resources to fix it.

"We consider year-2000-associated risks to be the No. 1 safety-and- soundness concern for the banking industry," said Nicholas J. Ketcha Jr., the FDIC's director of supervision. The FDIC began its on-site year-2000 reviews last summer and completed its last one May 29, a month ahead of the June 30 deadline established for federal banking regulators.

Oversight of the less-than-satisfactory banks has grown tighter. According to the FDIC, "unsatisfactory" banks were hit with a supervisory action if they did not commit to addressing their problems. They will receive quarterly visits and reviews by FDIC examiners, and further supervisory actions may be forthcoming. No bank has been issued a year-2000-related cease-and-desist order since three affiliated Georgia banks received them in November.

Poor year-2000 ratings can also lead to denial of merger applications, civil money penalties, an increase in deposit insurance premiums, and a lower Camels rating.

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