How to Determine If Your Bank is Headed for Failure

With 84 bank failure this year, it’s more important for consumers and businesses than ever to make sure that their bank is financially secure. There are signs that a bank is going to fail and you can make sure to switch banks before yours gets taken over by federal regulators.

There are currently 416 banks of the Federal Deposit Insurance Corporation’s troubled list and you can look at how they’re doing by visiting the FDIC’s website at www.fdic.gov. Simply click on the Bank Find page and enter in the name of the bank and perform a search. You’ll find a lot of information to consume and it’s clear as mud as to how to read it. Once you find your bank listed, click “Last Financial Information.” Select “assets and liabilities” then click search. This will provide a summary of your bank’s financial status.

On the FDIC website for your bank, you can also find the name of the primary regulator of the bank. You can also search that regulator’s website to find enforcement actions taken against the bank. If there major actions that have been taken against your bank by the regulator, a bank failure may be on the way. However, enforcement actions aren’t necessarily a sign of a bank failure, but are not a good sign.

You can also visit www.bankrate.com which rates the stability of banks. Their “safe and sound” rating system will give you a 1-5 star rating about the bank’s overall financial picture based on their assets, deposits and liabilities.

Your best defense against a bank failure is to make sure that your funds are FDIC insured. Currently, consumers have $250,000 of coverage across all of their accounts through 2013. If you and your spouse have a joint account, there’s a total of $500,000 in coverage. You can determine your coverage on Electronic Deposit Insurance Estimator on the FDIC’s Web site or call 877-275-3342 to make sure you are fully protected.

Credit unions provide similar coverage through the National Credit Union Administration. You can view your NCUA-SIF coverage with their online calculator at www.ncua.gov.



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