WASHINGTON — Moody's Investors Service looks at corporate credit unions with the same eye it does all the organizations it rates, according to Senior Vice President Blaine Frantz.

The key dimensions include franchise strength and breadth; management and governance; funding and liquidity; asset quality and diversification; capital adequacy; profitability and earnings volatility; and earnings diversification. There is also a qualitative side to the score that looks at whether the formal strategic plan is realistic and considers contingencies and how does performance measure up against near- and long-term targets, among other things. "What we're really trying to do is get inside the heads of management," Frantz explained. Corporate credit unions have many positive things going for them: the cooperative structure limits short-term profit motivations, leads to a conservative fiduciary culture and enhances their political support. Balance sheets are high quality and liquid. Corporates have regulatory oversight and debt obligations are senior to member shares. "This is definitely a unique industry. Whenever I pull in people outside my immediate group, they enjoy it," Frantz said.

On the other side of the coin though, the cooperative structure could lead corporates to be "too member friendly." Corporates have weak profitability compared to other financial institutions and low absolute capitalization. He added that credit, market, interest-rate, and liquidity risks are better handled than operational risk. Frantz said the recent move of corporates toward enterprise risk management is a positive.