How to Check Your Bank's Financial Stability

By: | WSPA-TV
Published: October 06, 2008

After the failure of Wachovia bank last week, the Associated Press is reporting that experts predict up to one hundred more banks could fail over the next year, despite the $700 billion dollar economic bailout.

That has many consumers worried about the safety of their money. After some viewers asked Seven On Your Side how you can be sure your bank is stable, we got some answers for you in this Seven On Your Side Consumer Watch.

Indymac, WaMu, Wachovia. 13 banks across the country have failed this year. Another 117 are on the FDIC's problem list. That's less than one percent of all banks, but it still has consumers worried.

So how can you know if your bank is financially stable? We asked Kitty Payne with First National Bank of the South in Spartanburg. The easiest way: get your bank's annual or quarterly report and look at the "total risk based capital ratio." You can get your bank's annual report by asking them for one or on the bank's website. Said Payne, "A bank that maintains a total capital ratio of greater than 10% is considered to be well capitalized."

Payne says below 6% may mean your bank is struggling. You can find your bank's quarterly report online at this link on the FDIC website.

But even if a bank is struggling, most banks have FDIC insurance, which was just increased on Friday. That means you're covered up to 250 thousand dollars per account, per person.

To find whether each different type of account you have is insured and for how much, you can actually just go to www.fdic.gov and look for financial advisor Suze Orman's picture. Then you plug in your information and program will tell you whether or not your money is protected.

While some large banks have failed, the Spartanburg Herald Journal reports many smaller, community banks are doing fine, even seeing an increase in customers. Said Payne, "We've gotten a lot of inquiries from people who want to establish relationships with community banks during these times."

If your bank does fail, Payne says be sure to research whether your new bank is FDIC insured, rather than risk stuffing your money under a mattress.

If you bank with a credit union, make sure it's insured by the NCUA.