SAN FRANCISCO -- Contradicting the rosy glow of a recent federal survey, a private research firm released a survey on Monday indicating that more than one in five of the nation's banks and savings and loans are behind schedule in preparing for the year 2000 problem.

In the survey,

Weiss Ratings

, a Florida-based financial ratings firm, reports that 17% of 1,128 banks and savings and loans that responded to the survey received a Y2K rating of "below average," and 5% were rated "low." While no banks with assets of larger than $1 billion received a "low" rating, some of the larger savings institutions were assigned a "below average" rating, including

Wachovia

(WB) - Get Report

,

Charter One

(COFI)

and

People's Bank

(PBCT) - Get Report

of Bridgeport, Conn.

Meanwhile, 16% of institutions received a "high" progress in their Y2K preparations, including

Palmetto Bank

of Laurens, S.C.,

First Security Bank of Searcy

, Arkansas and

Marquette Savings Bank

of Erie, Pa.

The largest laggards tagged with a "low" rating include

FirstBank

of Colorado,

MidSouth Bank

of Monette, Ark., and

Bar Harbor Bank

(BHB) - Get Report

of Maine. The ratings of banks and thrift associations are available to the public for $15 per query or $149 for the complete list.

"I sort of chuckle at the ratings," says FirstBank of Colorado's Y2K project manager Gordon Banks, who noted that the bank mailed back a standard form instead of the questionnaire. "We're on target to meet all the deadlines established by our regulators."

Wachovia Bank and Bar Harbor Bank did not return calls to

TSC

.

Weiss Ratings urges consumers and analysts to judge the Y2K ratings in the context of a bank's overall financial health. A well-capitalized bank will likely be better equipped to cope with Y2K than less cash-rich institution. To rate the overall financial well-being of a bank, Weiss Ratings doles out a separate "Safety Rating."

"A weak Weiss Safety rating combined with a low Y2K rating indicates the real possibility for financial difficulties, which could have an adverse impact on depositors," according to a statement that defines the ratings.

Then again, Lackey downplayed the notion that the millennium bug will cause deposits to vanish into thin air. "It's not a question of whether your money is going to be lost," said Lackey, who said that even the most laggardly banks will eventually get their act together. "It's more a question of accessibility. If you need to transfer money, will your bank be able to handle that transfer?"

A previous Y2K rating survey released by Weiss in October 1998 reported that 12% of the banks were behind schedule, suggesting that banks were losing ground. "It's because the old numbers were based on expectations of the future," said Weiss Ratings' president David Lackey, who estimates that 25% to 30% of the banks it rates are publicly traded companies. "The current numbers are based on actual accomplishments. Banks may have underestimated the scope of the activity up front."

Surprisingly, many institutions acknowledged their failure to meet federal regulatory mandates on the issue. The current 13-question Weiss survey was mailed to 10,715 federally insured banks on Dec. 30. Designed to assess the Y2K preparedness of each company, the survey asked questions about a bank's timeline for completing various milestones. One question, for example, asked whether an institution had fixed and tested all of its core computer systems before Dec. 31, a date by which regulations require systems be "substantially" fixed and tested. More than one-third answered "no."

The

Federal Deposit Insurance Corporation

reported that as of the end of 1998, 97% of the nation's 10,415 depository institutions were making satisfactory progress repairing the millennium bug, while 3% received a "needs improvement" rating. Sixteen banks were considered "unsatisfactory." But don't count on having a look at those federal ratings. Current government regulations prohibit banks from releasing their federal year 2000 examination report cards.

"Everything we expect to them to do, they're doing," says David Barr, a spokesman for the FDIC. "FDIC examiners are based on on-site exams. These regulators are turning over rocks and poking around." The FDIC has trained 1,000 examiners to do Y2K audits, plus another 300 state examiners, and the examiners spend an average of three to 10 days depending on the size and complexity of an institution.