||Ask Dr. Don
Dear Dr. Don,
The Zions First National Bank rating in "Research
Your Bank" has dropped. The CAEL went from 2 to 3, and
the star rating went from 4 to 3 stars. Does this mean the bank
is not safe? The money rate is attractive.
A Bankrate Safe & Sound CAEL rating is based on the financial
institutions' Capitalization, Asset
quality, Earnings and Liquidity.
When a bank is downgraded from
a 2 rating to a 3 rating, it has experienced a reduction in one
or more of these factors. A performing rating, which is what a CAEL
rating of 3 represents, means that the bank still meets the standards
set for these factors. This
table shows the difference between the rankings. Bankrate can
also provide you with a financial
memorandum along with the latest financial statements to help
you research Zions' financial health.
When you start chasing yield,
it's the deposit insurance that provides the safety net for your
money if the financial institution should fail. That's why it's
important to understand insurance limits when making deposits. Bankrate's
savings basics explain the FDIC limitations and how you can
manage your accounts to maximize your insurance coverage.
I'd want the bank to maintain
a higher rating for uninsured deposits, but I would be able to sleep
nights if I had money on deposit in a bank with a CAEL rating of
3, providing that the deposit were FDIC insured. You should be able
-- Posted: March 1, 2002