How to Research Your Bank?

[dbarberic]

Given the latest news about the fed hiring individuals to assist with the closure of banks, I decided it was time to check up on my own.

I found the FDIC tool on their website to search for my bank and check on balances and other key stats. However, I'm not to proficient in what I specificly should be looking for when I review my bank's FDIC reporting.

General FDIC reporting tool:
http://www2.fdic.gov/ubpr/UbprReport...ne/Default.asp

For example, I found that my bank has 87% of its assets in mortgages while their peer group is running at 37%. Of the 87% of its assets in mortgages, 18% is in construction and 67% is in residential. Doesn't seem so good. Very heavy on the mortgage side. :eek:

What else should I be looking for? Is there a simpler way to checking out bank safety that reviewing balance sheets? Has anyone else used the FDIC tool to research their bank?

[c1ue]

Re: How to Research Your Bank?

The FDIC data is useful - but not useful enough to base investment decisions.

Note that the SIV and its like don't show up on the balance sheet.

Ultimately you must either trust that the bank in question isn't doing anything funny, or you just avoid the sector like a plague.

[dbarberic]

Re: How to Research Your Bank?

The FDIC data is useful - but not useful enough to base investment decisions.

Note that the SIV and its like don't show up on the balance sheet.

Ultimately you must either trust that the bank in question isn't doing anything funny, or you just avoid the sector like a plague.

This is not for investment purposes, this is trying to decide if I need to pull my checking account and do business with another institution.

[Jayhawk]

Re: How to Research Your Bank?

Bauer Financial has bank ratings & TheStreet.com

[zoog]

Re: How to Research Your Bank?

Given the latest news about the fed hiring individuals to assist with the closure of banks, I decided it was time to check up on my own.

I found the FDIC tool on their website to search for my bank and check on balances and other key stats. However, I'm not to proficient in what I specificly should be looking for when I review my bank's FDIC reporting.

General FDIC reporting tool:
http://www2.fdic.gov/ubpr/UbprReport...ne/Default.asp

For example, I found that my bank has 87% of its assets in mortgages while their peer group is running at 37%. Of the 87% of its assets in mortgages, 18% is in construction and 67% is in residential. Doesn't seem so good. Very heavy on the mortgage side. :eek:

What else should I be looking for? Is there a simpler way to checking out bank safety that reviewing balance sheets? Has anyone else used the FDIC tool to research their bank?

This is not for investment purposes, this is trying to decide if I need to pull my checking account and do business with another institution.

Have idly wondered about this myself, since my checking/savings bank is one of the big national ones that seems to be in some unknown degree of trouble. Thanks for the link, but the report made my eyes glaze over, and that coming from a guy who likes to make charts. I'm basically just chiming in with you here... wish there was a simpler way to know if your bank is going to be reliable or not.

Whether or not c1ue misunderstood the purpose of your inquiry, I think he is right about this not really being enough to go on. What remains unknown is the risk... maybe few of those loans will be defaulted on. Or maybe many of them will be. How can an average person possibly know?

I have considered switching to a local bank, if for no other reason than to support local business. I also thought maybe a local bank wouldn't have messed around with risky CDO's and such. But I have already seen news items or heard rumors about four local / regional banks that are struggling with mortgages and construction loans they made during the boom.

[Jayhawk]

Re: How to Research Your Bank?

I'm moving from Chase to a local, conservative bank here is Colorado Springs (Bank at Broadmoor). They were a 5 star bank on Bauer & an A- on The Streets rating system. I was hoping to support a local bank too.

[Verrocchio]

Re: How to Research Your Bank?

I'm moving from Chase to a local, conservative bank here is Colorado Springs (Bank at Broadmoor). They were a 5 star bank on Bauer & an A- on The Streets rating system. I was hoping to support a local bank too.

Some few years ago I subscribed to Martin Weiss' Safe Money Report, and he included a free report on one American bank of my choice. The report answered the kind of question that dbarberic has asked. I don't know if Weiss still includes this in a subscription, but in these parlous times that information might be worth as much as his newsletter. His site address is here.

[c1ue]

Re: How to Research Your Bank?

Well, let me put it this way:

So long as your money is covered by FDIC - I'd rather be in the first bank to go under than the last.

As such, my primary business accounts (and personal) are in Citibank, but kept well under the $100K mark.

There are no safe havens - not until all the chickens have come home to roost.

[c1ue]

Re: How to Research Your Bank?

By the bye: an oldie but goodie from Minyan Peter:

While things like the TAF program, arranged by the Fed, have helped the banks fund the balance sheet growth, capital levels are not keeping pace. In fact, since July, bank capital levels have been essentially flat, (so every additional balance sheet loan asset represents additional leverage to the system). Further, as weak credits tend to draw down available lines first, a significant amount of the $1.0 trillion in new bank assets likely represents lower tier borrowers unable to find credit elsewhere rather than top quality credits.

http://www.minyanville.com/articles/C/index/a/15790

$500B of assets added to bank's balance sheets in the latter half of 2007; likely most, if not all, of these 'assets' are actually liabilities.

Are you scared yet?

Then let me pile it on...

From the FDIC's Q4 2007 report

http://www2.fdic.gov/qbp/2007dec/qbp.pdf

The industry’s $31.3-billion loss provision exceeded the $16.2 billion in net charge-offs by a considerable margin, and reserves grew by $14.8 billion (17.0 percent).

$500B of 'assets' added, loss provisions now all of $31B.

From the same report

Equity capital .................................................................................................... 1,352,259 1,327,202 1,247,855 8.4

Or in other words, the total equity capital in the system is all of $1.35T.

This to cover:

Loans secured by real estate ........................................................................... 4,780,631 4,701,042 4,507,714 6.1
1-4 Family residential mortgages .................................................................. 2,245,323 2,238,248 2,175,790 3.2
Nonfarm nonresidential ................................................................................. 968,401 939,426 904,368 7.1
Construction and development ...................................................................... 628,918 616,447 565,282 11.3
Home equity lines .......................................................................................... 607,396 591,363 559,307 8.6
Commercial & industrial loans .......................................................................... 1,440,314 1,388,804 1,214,754 18.6
Loans to individuals .......................................................................................... 1,059,143 1,013,345 955,263 10.9
Credit cards ................................................................................................... 422,481 384,506 384,980 9.7

$7T or so of outstanding loans ... and this is before all of the SIV and whatnot are fully brought onto the balance sheet.

Does this prompt any thoughts?