On the Internet: Is My Bank Safe?
by CI Staff
Typically, the insurance covers deposits of up to $100,000 per account holder per bank. For example, a single account holder is covered on all deposits at one bank up to $100,000 and joint account holders are insured up to $200,000 for all deposits at one bank.
On October 3, 2008, Congress passed the Emergency Economic Stabilization Act of 2008, which required the FDIC and the NCUA to increase deposit insurance coverage from $100,000 to $250,000 per account holder per bank until December 31, 2009.
If you want to find out if your bank is safe and want to learn more about the FDIC and NCUA, here are a few Web sites that can help.
Federal Deposit Insurance Corporation
One of the best ways to learn about something is to go right to the source. The FDIC’s Web site offers a wealth of free information, including facts about deposit insurance, lists of insured banks, articles, FAQs, consumer reports and more.
The homepage has links to new and frequently updated information, including more in-depth data about the Emergency Economic Stabilization Act of 2008. You can also call the FDIC help desk (877/275-3342) if you have questions not answered on the site. A great feature is the Quick Links by User area on the top left of the homepage. This list of links collects all related data on the site for specific users, such as bankers, consumers, analysts, and investors.
The FDIC Web site is broken down into various sections. The Deposit Insurance section helps you determine if your bank funds are federally insured. The Bank Find tool lets you search for insured banks, view branch locations, find merger and acquisition information, and learn about your bank’s history. Another tool called Are My Deposits Insured? helps you estimate the coverage of your deposits. You can also see which types of investments are not covered and learn about international deposit insurance.
The Consumer Protection area provides links to free publications regarding the FDIC and its offerings as well as tips for protecting your money and picking the right mortgage. The regularly updated Industry Analysis page provides bank data and statistics, research and analysis on national banking trends, and information on failed banks. Other sections of the site include archived press releases, news conferences and commentary.
BankRate.com provides a wealth of data on bank-related products. The site is updated regularly with interest rate data as well as editorial and educational content.
An interesting feature is the site’s Safe & Sound ratings for banks. These ratings are based on the relative financial strength and stability of U.S. banks and credit unions. Twenty-two factors measure profitability, asset quality, capital adequacy and liquidity. Banks are rated with stars, where one star denotes the lowest rating and five stars indicates a superior rating.
In addition to the star ratings, BankRate.com prepares written reports for each institution with at least four quarters of historical financial data. These reports discuss current and prior year’s earnings; asset quality, which focuses on loan yield, risk and more; an analysis of capital trends, including durability and liquidity; a summary of financial statement data and ratios; and a summary of the bank’s history including historical performance data.
To learn about a bank’s Safe & Sound rating and to read the accompanying report, go to the “Checking & Savings” area and look for the “Safe & Sound ratings” link in the Savings Calculators section.
The CDs & Investments and Checking & Savings sections provide investors with tools to evaluate their banks. You can compare rates at thousands of FDIC-insured banks for checking, savings and money market accounts as well as CDs. The star rating is posted by each banking institution in any rate comparison chart or tool. The national checking and savings rate averages, updated regularly, are provided as well.
In addition, you can learn how to make sure your investments are safe through the many educational articles and calculators. Recent article topics include: “Is your money market fund safe from the turmoil?” and “If your bank fails, will the FDIC be there?”
BauerFinancial analyzes banks and credit unions using a star rating. To find star ratings for specific banks, you can search by state and bank name. You will be shown the star rating and find links to various reports. The star ratings are based on capital ratio, profitability and loss trends, level of delinquent loans, market versus book value of investment portfolios and more.
A highlights report costs $10, a summary report costs $20, an analytical report is $40 and the LLAMAS Report (which combines the analytical and summary report with additional analysis) costs $49.
BauerFinancial also compares CD rates for banks and credit unions. A comparison table shows the star rating, minimum deposit amount, rate and contact information. Access to CD and star ratings is free. Additional reports cost extra.
National Credit Union Administration
The National Credit Union Administration (NCUA) is the equivalent of the FDIC for credit unions—member-owned financial co-operatives—and this free site provides information about NCUA insurance policies (which mirror the FDIC). A phone number for the NCUA Consumer Assistance Center is listed on the homepage (800/755-1030) along with links to related current news stories and updates. You can also read about the NCUA’s insurance coverage rules and regulations.
The site is a bit sparse, but does provide the data you need in a format that is easy to use. The Resources for Consumers and Share Insurance areas provide the most useful information for investors. The Resources for Consumers area includes a search tool that lets you find credit unions by state. Each credit union listed includes a detailed data page with contact information.
The Share Insurance area includes a tool to determine if your credit union is covered by federal insurance as well as a tool that estimates your total coverage amount. Answers to frequently asked questions about credit unions, a link to a complaint center, and brochures and educational materials round out the site’s offerings.
TheStreet.com's Banks and Thrifts Screener
TheStreet.com offers market news, commentary and a number of free tools for investors. TheStreet.com Ratings publishes financial-strength ratings on over 8,000 banking institutions on a quarterly basis. Criteria are based on adequate capital and earnings and the quality of the institution’s assets.
To access the quarterly ratings, you can use the Banks and Thrifts Screener. The screener is accessed by choosing “Portfolio & Tools” from the top menu bar and then “Banks and Thrifts Screener.”
The tool allows you to search by bank name, type, state and rating (A-excellent, B-good, C-fair, D-weak, and E-very weak). Results can be displayed in a table with up to 100 banks on one page. You can also see a full count of the number of banks that meet your criteria. Results can also be sorted by symbol or rating.
To learn more about the bank, click the bank name and a link to download a report will be displayed. The reports are in a downloadable PDF format. Each report is one page in length and discusses a bank’s overall rating (A to E) and then breaks the rating down by more specific factors like capitalization, asset quality, liquidity, profitability and stability. Each of these factors is given a rating from 1 to 10 and results are displayed in a bar graph.