Serendipity
After noticing one of the gazillion ads at a news site about finding out your “credit score” [I suspect a con to gather more personal information, as well as sell you some program to “improve” it] I considered writing a post about needing to find out your bank’s “credit score” before you put any more money in it.
As the fates would have it Susie Madrak provided a source for that information: Safe & Sound® ratings.
When you see the ratings for your bank or credit union you want low numbers [1 or 2] and lots of stars [4 or 5].
8 comments
Thanks for the link. My credit union has a low number (2) and four stars, so I suspect it’s pretty safe for now. That’s a relief!
I know the feeling. My Mother has already moved some of her money based on the information.
2, ****
i’ve mentioned before that i love my bank. glad to know i haven’t been wrong.
This tells whether they have been stretched too thin. I noticed that a couple of smaller banks in my area have bad ratings and I’m sure it is because of overexposure in the mortgage market and construction loans. They weren’t into the “new and improved” mortgages, but there have been a lot of defaults simply because people were building houses and condos on speculation and they never sold. So these banks are “land rich and cash poor” which is not good for a bank.
Thanks for the link. My bank gets a 1 and 5 stars. But the bank my mom was considering switching to gets a 4G and 2 stars. I’ve sent her the link.
The ratings are quarterly, so they may stabilize, but now is not a time for risks.
Reading their analysis of my credit union, their main concern was liquidity. But my credit union has over $420M of liquid assets on their balance sheet (I picked up the latest financial statement at the credit union yesterday) and plenty of reserves to handle bad loans (and almost no exposure to credit card risk — you needed to have no debt and a 750 FICO to get a credit card there, even I don’t qualify for one of their credit cards!) so I’m not quite sure what the deal there is. In any event, looking at the balance sheet, I’m glad that my money is where it is, because they aren’t going anywhere.
This credit union is run by people who are tighter than Scrooge when it comes to money. For example, their overhead is 10% of what is typical for banks or credit unions of their size. They built a new HQ building after the lease on their old one ran out, for example (and their old one was a bunch of portable buildings on federal land that got sold off from under them to a private business to build a new office tower so they weren’t exactly living lavishly to begin with) but then they leased out a quarter of their new (modern but not particularly large and definitely *not* lavish) HQ building to a health club and about a quarter of their new HQ to various Lockheed-related contractors, which pays enough rent to pretty much pay the mortgage. And these are folks who are managing $3 billion in deposits! That’s just how they do things — they make every nickle squeak. Old school bankers. I like.
I think you have to be really big and diversified to get the 5-star rating, Badtux. The smallest bank I saw with a 5-star is regional with locations in very different markets so that a down turn in one location won’t cause major stress.
Your credit union is at 14% liquidity, and they would probably prefer 15%.
It sounds good to me, and I wouldn’t have a problem with it.