Since the failure of IndyMac in this July, there are many other bank failures as reported by FDIC. First Priority Bank in Bradenton, Florida was reported to be close and FDIC has assigned SunTrust Bank to acquire the insured deposits. One week earlier, July 25, there were other two banks reported to fail. They were First National Bank of Nevada and First Heritage Bank (FDIC failed bank list). We all know that Fridays are the typical days when the Feds close banks with the FDIC taking them over. However, we never thought to see banks fail in this way.

The bad news with the new failed bank customers is some of them will lose money. According to the FDIC news press, customers will only receive 50% of their uninsured deposits (amount higher than $100,000). There were approximately $13 million in uninsured deposits held in approximately 840 accounts that potentially exceeded the insurance limits. Note that FDIC also covered only 50% of uninsured deposit for customers of IndyMac Bank. There are also rumors out there that WaMu and National City Bank are also in trouble (I believe they are safe.).

The real question is which bank is safe? Or is my bank safe?

For general bank customers, they may don’t know how to judge whether a bank is near the edge of failure or not. They don’t the current bank’s capital adequacy, asset quality, profitability, and liquidity. So you might not know whether your bank will fail or not on the next Friday. However, there’re industry experts working on this and help you to judge whether your bank is safe or not. And they will help you to make your banking decisions. There are two famous systems to help you assess your banks.

Bankrate.com’s Safe and Sound Ratings (http://www.bankrate.com/brm/safesound/ss_home.asp):

According to bankrate.com,  the Safe & Sound service is a proprietary system designed to provide information on the relative financial strength and stability of U.S. commercial banks, savings institutions and credit unions. The system employs a series of twenty-two tests to measure the capital adequacy, asset quality, profitability, and liquidity (CAEL) of each rated financial institution. You can look up the ratings of your banks and credit unions through the link as I indicated above.

BauerFinancial’s Star Ratings (http://www.bauerfinancial.com/btc_ratings.asp):

All the ratings are based on the data reported to the public regulators. BauerFinancial recommends five-star or four-star institutions. To look up your bank, you can enter the bank’s name or you can locate your bank state by state. You can also look at your credit union’s rating from BauerFinancial’s star ratings.

Another good suggestion is open account at multiple banks to minimize the risk of bank failure.