Bauer updates safety ratings for banks, credit unions
Readers often wonder how to check the soundness of their bank or credit union, so it's worth noting that Bauer Financial Inc. has updated its ratings of financial institutions based on year-end regulatory filings.
Bauer allows you to search separately for its star ratings of banks or credit unions. One technique is to call up an alphabetized list of every bank or credit union headquartered in a given state -- there are 272 banks based in California, for example, and 440 credit unions.
The big banks are mostly based in other states, and to look them up it's probably best to leave the "state" search field blank and instead simply plug in the name of the institution. Otherwise you might not find your too-big-to-fail bank at all.
The main banking subsidiary of San Francisco's Wells Fargo & Co., for example, is based in scenic Sioux Falls, S.D., and doesn't appear on a "California" search. The principal Citibank subsidiary of New York's Citigroup Inc. is in lively Las Vegas; and while JPMorgan Chase may be Big Apple to the core, its biggest Chase banking unit is in colorful Columbus, Ohio.
A cautionary note: Bauer doesn't rate recently failed (and then reincarnated) banks. Pasadena's OneWest Bank, the S&L formerly known as IndyMac Bank, was recapitalized plentifully by the hedge-fund barons who took it over after its collapse in July 2008. But as far as Bauer is concerned, it remains an unrated start-up.
Star ratings also are available free at a Bankrate.com site, although at this writing they were still based on third-quarter financial reports.
The ratings are just the opinions of Bauer and Bankrate, but they are based on evaluations of hard financial data such as capital levels and nonperforming assets.
Of course, the Federal Deposit Insurance Corp. insures individual depositors at banks and thrifts for at least $250,000 and the National Credit Union Administration does the same for members of the credit unions it insures.
So assuming you stay prudently within the insurance limits, there's nothing to worry about even if your institution bites the dust like IndyMac. Do make sure it is protected by deposit insurance, though.
-- E. Scott Reckard
Photo: Depositors wait outside IndyMac Bank in Pasadena after its failure in July 2008. Credit: Al Seib / Los Angeles Times