Warning Signs That Your Bank Is In Trouble - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Warning Signs That Your Bank Is In Trouble

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San Diegans have a lot of questions when it comes to their bank accounts these days, and the first and most important thing experts say you should look at in order to gauge your bank's health is its capital relative to its assets.

SDSU finance professor David Ely says all banks must file reports with regulators and post the information online and in some cases, even on your bank statements. He says it's important to look at the capital, or cushion, the institution has relative to its assets.

"The greater the capital, the greater the ability it has as an institution to absorb the losses and therefore the safer the institution," Ely said.


Another key item to evaluate is the mix of assets the financial institution holds.

"Is it mortgages, is it sub-prime mortgages, is it commercial loans - is it a diversified mix of assets," Ely said.

Banks at risk of collapsing don't attract investors, so Ely says you should also check on how your bank is doing in the stock market. But he's quick to point out this research should only be done by depositors with more than $100,000 in the bank.

"If you have less than $100,000 in a bank, then you probably don't want to go through the bother of doing the research," he said.

The FDIC insures your money up to $100,000, $200,000 for joint accounts and $250,000 for retirement accounts.

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