1 reply to this topic

[EdHeisler]

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 rating system

1 *****Superior
2 **** Sound
3 *** Performing
4 ** Below peer group
5 * Lowest rated


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.

To find out the rating of your bank(s) or credit union(s) go to:


http://www.bankrate....und/ss_home.asp

[EdHeisler]

You might want to recheck the current financial standing of your bank or credit union at this website.

I just did that and one of the banks (a major one) we do business with was dropped from four stars (sound) to three stars (performing) with a warning that it had problems which could cause it to receive a poorer rating in the near future.

So I and my wife are keeping an eye on it, ready to quickly transfer funds to another, sounder bank if necessary.