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How safe is your bank?

Here at Bankrate.com, we pound the table trying to get folks to put their financial houses in order. But it's not just consumers who need to wisely manage their finances, banks do, too.

The Bankrate.com Safe & Sound ratings feature is a quick and easy way for you to check the financial health of a bank, thrift or credit union before you open an account. It's an independent resource to assist you in making banking decisions.

Ratings structure

Presented below is an explanation of Bankrate's Safe & Sound CAEL rating system for commercial banks, savings institutions, and credit unions.

Bankrate.com's 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 22 tests to measure the capital adequacy, asset quality, profitability, and liquidity (CAEL) of each rated financial institution. Individual performance levels are determined from publicly available regulatory filings and are compared to asset-size peer norms, industry standards and key absolute benchmarks. Combined results form the basis for our Composite CAEL and Star Ratings. When possible, the system also produces a report that provides a detailed explanation of our findings, for each rated financial institution.

Safe & Sound® rating system
Star ratingDefinition
starstarstarstarstarSuperior
starstarstarstarSound
starstarstarPerforming
starstarBelow peer group
starLowest rated
Not Rated "NR"Complete data not available
ClosedInstitution is closed
GDesignates high growth

What the ratings mean

The strongest Safe & Sound CAEL rating is one; the weakest is five, in accordance with industry standards. Bankrate.com has reversed this order in its graphic rankings for easy visual recognition. No report is available for institutions that don't have four quarters of historical financial data on file with the federal regulatory agencies. This may simply mean that the institution is too new to rate; it's not necessarily an indication of financial strength or weakness.

Financial institutions that show higher than normal asset growth are assigned a "G" qualifier in addition to their Safe & Sound CAEL rating. The "G" identifies institutions that have shown annual asset growth rates of 25 percent or greater. This rapid growth can be a sign of speculative, and perhaps imprudent, activity on the part of management. Regulatory agencies pay close attention to high asset growth that isn't a result of a merger.

The Bankrate.com Safe & Sound rating feature provides comprehensive information for depositors, borrowers, creditors, industry professionals and regulators who need information regarding financial conditions of banks, thrifts and credit unions.

This information is believed to be reliable but the information is not guaranteed. In addition, events since the information was collected may have altered an institution's financial condition.

To check your bank's rating, see the Safe & Sound ratings home page.

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