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Explanation
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 twenty-two 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, which are described below. When possible, the system also produces a report that provides a detailed explanation of our findings, for each rated financial institution.
Bankrate provides its Safe & Sound CAEL ratings information for businesses and consumers to use as only one factor in connection with their banking decisions. In connection with this decision, Businesses and Consumers are advised to independently evaluate all financial institutions, consider other information, including the strength of the financial institution's management, and to individually contact financial institutions to seek answers to their questions. Bankrate's rating information should not exclusively be relied upon 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:
Safe & Sound CAEL Ratings
Bankrate's Safe & Sound CAEL ratings are comparisons to both industry
peer norms and standards. In a very small number of instances, operating
strategies that differ from industry norms lead to ratings that
are not truly reflective of an institution’s financial condition.
A CAEL rating of 4 or 5 does not suggest that we believe direct
regulatory action is imminent or even likely. A CAEL rating of 4
or 5 only indicates that certain below average performance factors
have been found during the applicable rating cycle. Quarterly updates
of CAEL ratings allow us to monitor changes that may occur and CAEL
ratings may fluctuate on a quarterly basis.
The most desirable Safe & Sound CAEL rating is one; the least desirable is five, in accordance with industry standards. Bankrate.com has reversed this order in its graphic rankings for easy visual recognition. Accordingly, the top star rating is five; the lowest star rating is one. Performing institutions will generally receive a rating of three or more stars with the majority of financial institutions falling into the three- to four-star range. By contrast, the performing Safe & Sound CAEL range would be one, two and three with the majority of financial institutions falling into the two range.
Reports In addition to issuing a Safe & Sound CAEL rating for a financial institution, Bankrate.com also prepares a written report for each rated financial institution that has at least four quarters of historical financial data on file with the applicable federal regulatory agencies. This report includes(i) an earnings analysis examining profitability, component contributions to current year results and prior year performance, (ii) a review of asset quality - focusing on nonperforming asset levels, loss reserve coverage, category risk and loan yield, (iii) an analysis of capital trends, adequacy, quality and durability, liquidity and interest rate risk, (iv) a summary of organizational information and historical financial data and (v) a separate financial summary section, including a balance sheet and operating and ratio data. No report is available for financial institutions that do not have at least four quarters of historical financial data on file with the applicable federal regulatory agencies. Therefore, the lack of a report for a particular financial institution is not necessarily an indication of its financial strength or weakness – the financial institution may simply be too new for Bankrate to prepare a report.
No Report "U" An institution with a "U" rating may be too new to rate. The "U" is not any indication of financial strength or weakness. The Safe & Sound Rating 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.
"G" modifider Bankrate.com deems financial institutions that exhibit asset growth of 25 percent, or more, during a 12-month period as "high growth" and identifies these institutions with a "G" modifier next to its Safe & Sound CAEL rating. High growth financial institutions may be assuming more than normal risk, which could impact future safety and soundness. Accordingly, businesses and consumers with actual or potential credit exposure to commercial banks, savings institutions and credit unions carrying our "G" modifier should consider seeking clarification from the financial institution's management as to the nature of reported asset growth.
The FDIC - short for the Federal Deposit Insurance Corporation - is an independent agency of the United States government. The FDIC was created by Congress in 1933 to make the savings of millions of Americans secure. The FDIC protects depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government. The basic insurance amount is $100,000 per depositor, per insured bank. Certain entitlements and different types of accounts may be insured for more than the $100,000 limits. To check whether your bank or savings association is insured by FDIC, call toll-free 1-877-275-3342, use "Bank Find" at www.fdic.gov/deposit/index.html, or look for the official FDIC sign where deposits are received.
Source: FDIC Web site 2007/Insuring Your Deposits
Disclaimers; No Representations or Warranties.
ALL SAFE & SOUND CAEL RATINGS AND REPORTS ARE PROVIDED TO YOU ON AN "AS-IS" AND "AS AVAILABLE" BASIS. BANKRATE MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, AS TO THIS INFORMATION. WITHOUT LIMITING THE GENERALITY OF THE PREVIOUS SENTENCE, NO REPRESENTATIONS, WARRANTIES OR GUARANTEES ARE MADE REGARDING THE ACCURACY, CORRECTNESS, COMPLETENESS, OR TIMELINESS OF THIS INFORMATION. YOUR USE OF SAFE & SOUND CAEL RATINGS AND REPORTS IS AT YOUR SOLE RISK. YOU SHOULD CONTACT YOUR FINANCIAL INSTITUTION TO EVALUATE ITS FINANCIAL CONDITION.
ALL SAFE & SOUND CAEL RATINGS AND REPORTS ARE INTENDED ONLY TO ASSIST YOU WITH FINANCIAL DECISIONS AND DO NOT CONSIDER YOUR PERSONAL FINANCIAL SITUATION. YOUR PERSONAL FINANCIAL SITUATION IS UNIQUE AND THE INFORMATION MAY NOT BE APPROPRIATE FOR YOUR PERSONAL SITUATION. ACCORDINGLY, BEFORE MAKING ANY FINAL DECISIONS REGARDING YOUR FINANCIAL INSTITUTION, BANKRATE RECOMMENDS THAT YOU OBTAIN ADDITIONAL INFORMATION AND ADVICE OF FINANCIAL ADVISERS WHO ARE FULLY AWARE OF YOUR INDIVIDUAL CIRCUMSTANCES.
EVENTS OCCURRING AFTER SAFE & SOUND CAEL RATINGS AND REPORTS WERE PREPARED AND BEFORE THEY ARE UPDATED AS SCHEDULED MAY HAVE ALTERED AN INSTITUTION'S FINANCIAL CONDITION. FOR EXAMPLE, THE FDIC REPORTS THAT APPROXIMATELY 280 BANKING INSTITUTIONS WERE IMPACTED BY HURRICANE KATRINA.
BANKRATE SHALL IN NO EVENT BE RESPONSIBLE TO, OR LIABLE TO, YOU, OR ANY THIRD PARTY, WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY DAMAGES, INCLUDING, BUT NOT LIMITED TO, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES THAT INCLUDE, BUT ARE NOT LIMITED TO, DAMAGES FOR ANY LOSS OF PROFIT, REVENUE OR BUSINESS, AS A DIRECT OR INDIRECT RESULT OF YOUR RELIANCE UPON OR USE OF THE SAFE & SOUND CAEL RATINGS AND REPORTS.
